SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) for the
fiscal year ended December 31, 1993, OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
for the transition period from to
Commission File Number 1-7834
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization: Delaware
I.R.S. Employer Identification Number: 22-1682767
Address of principal executive offices: Park 80 East,
Saddle Brook, New Jersey 07662-5291
Registrant's telephone number, including area code: (201) 791-7600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Stock, par value New York Stock Exchange
$0.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
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 ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the registrant's Common Stock
held by non-affiliates of the registrant on March 15, 1994 was
approximately $555,231,000.
The number of outstanding shares of the registrant's Common
Stock as of March 15, 1994 was 19,879,355.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1993 Annual Report to Stockholders
are incorporated by reference into Part I and Part II of this Annual
Report on Form 10-K.
Portions of the registrant's definitive proxy statement for
its 1994 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Annual Report on Form 10-K.
PART I
Item 1. Business
Sealed Air Corporation (together with its subsidiaries,
the "Company") is engaged primarily in the manufacture and sale
of a wide variety of protective and specialty packaging materials
and systems.
The Company's operations are conducted primarily in
North America, Europe and the Far East, and its products are
distributed in these areas as well as in other parts of the
world. Information by geographic area, including net sales,
operating profit and identifiable assets, for each of the three
years in the period ended December 31, 1993 appears in Note 4 of
the Notes to Consolidated Financial Statements, which are
contained in the Company's 1993 Annual Report to Stockholders.
Such Note is incorporated herein by reference.
Products
The Company's principal protective and specialty
packaging products are engineered products, surface protection
and other cushioning products, and food packaging products.
Certain of these products are also produced for non-packaging
applications. The Company also manufactures and sells certain
other products discussed below.
The net sales contributed by each class of product for
each of the five years in the period ended December 31, 1993
appears in the table under the caption "Selected Financial Data"
in the Company's 1993 Annual Report to Stockholders, which data
is incorporated herein by reference.
Engineered Products
The Company's engineered products include its
Instapak(R) polyurethane foam packaging systems, specialty
polyethylene foams for packaging and non-packaging uses, and
Korrvu(R) suspension packaging.
Instapak(R) Systems
Instapak(R) polyurethane foam packaging systems consist
of proprietary blends of polyurethane chemicals and specially
designed dispensing equipment, certain features of which are
patented. The Company also manufactures a line of Instamate(R)
polyolefin films, which are high-performance plastic films
designed for use with Instapak(R) packaging systems. Most of
the Company's net sales from Instapak(R) systems are attributable
to the sale of the polyurethane chemicals and polyolefin films
used in the systems installed at customer locations.
Instapak(R) chemicals, films and equipment are marketed
as integrated packaging systems to provide protective packaging
for a wide variety of products, including computer, electronic,
office, medical and communications equipment, compressors and
motors, furniture and spare parts, and void-fill packaging of
office supplies, books, cosmetics and other small products for
distribution. Instapak(R) systems are also used to produce
polyurethane foams used in certain non-packaging applications,
including Instapak(R)-Floral, a foam introduced in 1993 for use
as a design base for artificial flower arrangements.
An Instapak(R) packaging system allows a customer to
create protective cushions for products of any shape and thus to
tailor its protective packaging to its individual products and
needs. When Instapak(R) chemicals are mixed together and
dispensed, they expand up to 200 times their liquid volume within
seconds after they are dispensed to form a foam cushion. Because
Instapak(R) chemicals expand significantly in volume only when
mixed together, the storage space required for the chemicals
before use is very low.
The Company purchases chemicals from various suppliers,
including major chemical companies, and blends these chemicals
according to its own proprietary formulations. The Company
offers its Instapak(R) customers a family of protective packaging
foams, ranging from low-density foams used for light cushioning
and void-fill applications to heavy-duty foams used for blocking
and bracing heavy items.
The Company produces a number of dispensing equipment
models for low, medium and high volume use and maintains an
ongoing program to develop new equipment models to meet evolving
customer needs. Hand-held equipment models range from low-volume
single station systems to microprocessor-controlled multiple
station systems. The Company also offers its high speed
Instapacker(TM) automated system and its VersaPacker(TM) system,
a bench-top version of the Instapacker(TM) system, both of which
produce ready-to-use foam cushions consisting of Instamate(R)
film bags filled with Instapak(R) foam. Generally, customers may
either buy or lease equipment from the Company for use with
Instapak(R) systems.
The Instapak(R) foam-in-place process generally
involves either dispensing liquid chemicals into a container and
separating the product being packaged from the rising foam
cushion with Instamate(R) film or producing foam-filled
Instamate(R) film bags that are inserted into the container with
the product being packaged. Once the container is closed and
sealed, the expanding foam cushion fills the box and completes
the package for shipment. The foam cushions either encapsulate
the product in its container or, in the case of foam-filled bags,
can be used as top or bottom cushions or as a void-fill material
to restrain the product in its shipping container.
Customers are also able to produce pre-formed
Instapak(R) foam cushions for use in packaging a wide range of
products. The Company offers assistance to its customers in
producing, or in preparing the molds used to produce, such pre-
formed cushions. The Company offers Instamolder(TM) semi-
automated cushion molding equipment that produces Instapak(R)
cushions using the Instapacker(TM) system.
Specialty Polyethylene Foams
The Company manufactures and sells extruded plank foams
and Polylam(R) laminated foams for packaging and non-packaging
applications. Extruded plank foam is offered in varying
densities and thicknesses up to 4 inches. Polylam(R) foam is
produced in various densities and laminated into thicknesses
ranging up to 6 inches. These polyethylene foams are generally
sold to fabricators and converters for packaging and non-
packaging applications in which a clean, non-abrasive material is
required with such properties as shock absorption, vibration
dampening, thermal insulation or buoyancy. These foams can be
produced in various colors and are available in anti-static and
flame-retardant forms. In packaging applications, these foams
are fabricated into a wide range of protective packaging shapes,
forms and die-cuts for designed packages in which a clean,
attractive appearance and cushioning or blocking and bracing
performance is needed. Non-packaging applications for specialty
foams include construction, automotive, sporting and athletic
equipment products. During 1993, the Company introduced post-
consumer recycled content into certain of its specialty
polyethylene foam product lines.
Korrvu(R) Suspension Packaging
The Company is engaged in the development, manufacture
and sale of Korrvu(R) suspension packaging, which is covered by
certain patents. A Korrvu(R) package suspends the product to be
packaged in the air space of its shipping container between two
strong, flexible low-slip films.
Surface Protection and Other Cushioning Products
The Company's surface protection and other cushioning
products include air cellular cushioning materials, protective
and durable mailers, thin polyethylene foams, paper packaging
products, automated packaging systems and certain other packaging
products.
Air Cellular Cushioning Materials
The Company manufactures and markets air cellular
cushioning materials primarily under the trademarks AirCap(R) and
PolyCap(R). These materials consist of air bubbles encapsulated
between two layers of plastic film, each containing a barrier
layer to retard air loss, that form a pneumatic cushion to
protect products from damage through shock or vibration during
shipment. The Company's PolyCap(R) R line of air cellular
cushioning material is similar to AirCap(R) cushioning in
construction except that its plastic film contains a lighter
barrier layer.
The Company's air cellular cushioning materials are
used by a wide variety of end users, including both manufacturers
and retailers. AirCap(R) cushioning is used primarily to protect
a wide variety of lightweight and medium-weight delicate items,
such as instruments, electronic components and glassware, that
have no limitation on their shipping and shelf-life cycles.
PolyCap(R) R cushioning is used primarily for a wide variety of
lightweight products that have a relatively short shipping and
shelf-life cycle. The Company also markets anti-static and
flame-retardant forms of its air cellular cushioning materials.
The Company's air cellular cushioning materials are
produced in various forms, including continuous rolls, perforated
rolls and sheets, depending on customer preference. These
materials can be used alone or laminated to other materials such
as paper or cardboard. They are also available in bag form
(marketed under the trademark Bubblebags(R)), primarily used to
provide product protection to small parts. The Company's air
cellular cushioning materials can be varied in the size, shape
and spacing of their encapsulated air bubbles and the thickness
of the plastic to provide specific types of performance in
protective packaging and cushioning. Since the beginning of
1993, the Company has broadened the use of post-industrial and post-
consumer recycled polyethylene resin content in its Aircap(R)
and Polycap(R) R product lines.
The Company also manufactures and sells adhesive-coated
air cellular cushioning material under the trademark Bubble
Mask(R) and cohesive air cellular cushioning material under the
trademark Cold Seal(R) AirCap(R). Polypride(TM) air cellular
materials, added to the Company's product line in 1993, are
multi-web materials with high tensile strength used primarily as
furniture wrapping.
Protective and Durable Mailers
The Company manufactures and markets a variety of
protective and durable mailers that are made in several standard
sizes and are used for mailing or shipping a wide variety of
items for which clean, lightweight preconstructed protective
packages are desirable. They can provide the user with
significant postage savings, ease of use and enhanced product
protection relative to other types of mailers and shipping
containers.
The Company's protective mailers include lightweight,
tear-resistant, heat-sealable mailers marketed under the
trademark Jiffylite(R) that are lined with air cellular
cushioning material. The Company's Jiffylite(R) R line of
mailers are made from recycled kraft paper and the Company's
PolyCap(R) R air cellular cushioning materials.
These products also include the widely used Jiffy(TM)
padded mailers made from recycled kraft paper padded with
macerated recycled newspaper, Jiffy(TM) reinforced mailers, which
are highly tear resistant and moisture retardant, Jiffy(TM)
utility mailers, which are low-cost, lightweight mailers without
padding, and Jiffy(TM) Rigi Bag(R) mailers, which are rigid
mailers without padding that are well suited for products such as
books and photographs. The Company also manufactures and markets
Jiffy(TM) foam-lined mailers and Jiffy(TM) floppy disk mailers,
which are lined with thin polyethylene foam. During 1993, the
Company increased the recycled content of the kraft paper used in
many of these mailer lines and introduced post-consumer recycled
content into the foam lining of certain foam mailer products.
During 1993, the Company expanded its mailer product
line with its acquisition of the Shurtuff(R) durable plastic
mailer product line. These mailers, which are produced from
coextruded polyethylene film, are lightweight, water-resistant,
tamper-evident and puncture-proof and are used by a wide range of
customers, including air courier, mail order, banking, security
and office supply services.
Thin Polyethylene Foams
In addition to the specialty polyethylene foams
described previously, the Company manufactures thin polyethylene
foams in roll or sheet form in low, medium and special densities,
in flat, ribbed or bag form and in a number of colors and
thicknesses up to one-half inch. The Company also sells thin
polyethylene foam that has anti-static properties and foam
laminate products in which the foam is laminated to paper,
polyethylene film or other substrates for specialized
applications. The Company's Quicksilver(TM) polyethylene film
and foam laminates have cohesive properties for masking and other
applications. During 1993, the Company introduced post-consumer
recycled content into certain of its thin polyethylene foam
product lines.
Low-density thin polyethylene foam manufactured by the
Company is marketed primarily in the United States, Canada and
Europe under the trademark Cell-Aire(R) and is used primarily for
surface protection and light-duty cushioning.
Medium-density thin polyethylene foam is marketed in
the United States under the trademark Cellu-Cushion(R) as a
cushioning material to protect products from damage through shock
or vibration during shipment. The Company also manufactures
special density polyethylene foams for a variety of packaging and
non-packaging applications.
Paper Packaging Products
The Company manufactures recycled kraft, tissue and
creped paper in the United States. Some of such paper is used as
a raw material in the manufacture of the Company's protective
mailer and food packaging products or sold to unaffiliated
customers. The Company also manufactures and sells paper
packaging products under the trademarks Kushion Kraft(R), Custom
Wrap(TM), Jiffy(TM) Padwrap(R), and Void Kraft(TM) for industrial
surface protection, furniture surface protection, moving and
storage blankets, and for use as cushioning or void fill in
various packaging applications.
Packaging Systems
The Company produces and markets the Instasheeter(TM)
high-speed converting system, designed for on-line packaging
applications, which automatically converts the Company's flexible
packaging materials, including air cellular cushioning materials,
thin polyethylene foam and paper packaging materials, described
above, into sheets of a pre-selected size and quantity. The
Company also produces and markets the Accu-Cut(TM) converting
system, an economical system for converting the Company's
flexible packaging materials in off-line packaging applications.
The Company's Jiffy Packer(TM) high-speed dunnage
system, which is marketed in Europe under the name Paper Boy(TM)
and in Japan under the name EcoPacker(TM), produces paper dunnage
material on site from the Company's 3-ply Void Kraft(TM) recycled
kraft paper. During 1993, the Company introduced a benchtop
version of the Jiffy Packer(TM) system.
During 1993, the Company began selling its VoidPak(TM)
inflatable packaging system, which consists of a compact,
portable inflator and self-sealing inflatable plastic bags,
available in several sizes. When inflated, the bags can be used
in a wide range of void fill applications, and they can be
deflated and re-inflated for reuse.
Other Packaging Products
The Company participates in a joint venture called
PolyMask Corporation with Minnesota Mining and Manufacturing
Company ("3M") that manufactures and sells protective tapes
consisting of adhesive-coated polyethylene films marketed by 3M.
These products are used primarily for protecting the surfaces of
polished metal, glass, plastic and other materials from abrasion
during fabrication, handling and shipping. This joint venture is
accounted for using the equity method.
Food Packaging Products
The Company manufactures in the United States and the
Netherlands and sells in the United States, Canada, the Far East,
Europe and other areas certain food packaging products, including
primarily Dri-Loc(R) absorbent pads, certain features of which
are covered by U.S. patents. The Company has also introduced
other absorbent pads that utilize the features of its Dri-Loc(R)
pads, including the Company's Pad-Loc(TM) pad for the poultry
processor industry. These products are used in meat, fish and
poultry trays to absorb excess fluids.
The Company's Dri-Loc(R) pads consist of two layers of
polyethylene film sealed on all four sides which enclose a layer
of fluffed virgin wood-pulp fibers. On one side, the layer of
film has tiny holes that permit fluids to be absorbed and
retained by the enclosed fibers. The Company believes that Dri-
Loc(R) pads are more effective and aesthetically attractive than
conventional absorbent pads.
The Company also manufactures conventional padding,
sold as individual pads and in roll stock form for use by
converters and processors to prepad trays. This padding consists
of layers of bleached crepe tissue with one or two outer layers
of polyethylene film. The Company also sells supermarket display
case liners, which are similar in construction to conventional
padding, under the trademark Cellu Liner(TM).
Other Products
The Company's other products consist primarily of
loose-fill polystyrene packaging, products that control static
electricity, and recreation and energy conservation products.
Subsidiaries of the Company in Hong Kong, Malaysia,
Mexico, Singapore and Taiwan produce loose-fill polystyrene
packaging for sale under the trademark Mic-Pac(TM) to customers
in those countries.
In addition to air cellular cushioning materials and
polyethylene foam with anti-static properties, the Company sells
other products related to the elimination and neutralization of
static electricity, including conductive shielding bags, floor
mats, worktable coverings, and wrist and foot straps. Static
control products, which are sold primarily in the United States
and the Far East, are used principally by manufacturers of
static-sensitive microelectronic devices.
Subsidiaries of the Company in Canada and Europe
manufacture translucent air cellular material similar to
AirCap(R) cushioning that is fabricated into solar pool covers.
In the United States, the Company manufactures and sells solar
heating systems for swimming pools that use thermostatically
controlled pumps to circulate pool water through plastic solar
collector panels.
Foreign Operations
The Company has subsidiaries in Canada, England,
France, Italy, Mexico, Spain and Sweden that manufacture certain
of its surface protection and other cushioning products, a
subsidiary in the Netherlands that produces Instapak(R)
chemicals, Instamate(R) films and Dri-Loc(R) pads, a 50%-owned
joint venture in Canada that manufactures specialty and thin
polyethylene foams, and a subsidiary in Germany that manufactures
Korrvu(R) suspension packaging. Together with a sales and
marketing subsidiary in Belgium, these subsidiaries market most
of the Company's products in Canada, Mexico and Europe. During
1993, the Company introduced its Instapak(R) products into
Mexico, established two new manufacturing operations for air
cellular cushioning materials in Europe, and expanded the sale of
Dri-Loc(R) food packaging products in Europe and the Far East.
Subsidiaries of the Company in Hong Kong, Japan,
Malaysia, Singapore and Taiwan are engaged primarily in the
marketing of Instapak(R) products in those countries and other
countries in the Far East. Certain of these subsidiaries also
produce or market certain of the Company's other protective
packaging products. A new subsidiary was established in early
1994 in Korea to market Instapak(R) and other products in that
country.
The Company has foreign licensees that manufacture
certain of its surface protection and other cushioning products
in Australia, Chile, England, Germany, Italy, Japan, South Africa
and Sweden. Licensing revenues are not material to the Company's
consolidated financial statements.
During 1993, 1992 and 1991, foreign net sales
represented approximately 27%, 30% and 32%, respectively, of the
Company's total net sales, while operating profit from foreign
operations represented approximately 20%, 25% and 32%,
respectively, of the Company's total operating profit. For a
discussion of the factors affecting these changes in foreign net
sales and operating profit, see Management's Discussion and
Analysis of Results of Operations and Financial Condition, which
appears in the Company's 1993 Annual Report to Stockholders and
is incorporated by reference into Item 7 of this Annual Report on
Form 10-K. In maintaining its foreign operations, the Company
runs the risks inherent in such operations, including those of
currency fluctuations.
Marketing, Distribution and Customers
The Company employs several hundred sales and account
representatives in the countries in which it has operations who
market the Company's products through a large number of
distributors, fabricators and converters as well as directly to
end users. In the United States and certain other countries, the
Company has separate sales and marketing groups for its
engineered products, its surface protection and other cushioning
products, its food packaging products and certain of its other
products. These groups often work together to develop market
opportunities for the Company's products.
To assist its marketing efforts and to provide
specialized customer services, the Company maintains packaging
laboratories in many of its United States and foreign facilities.
These laboratories are staffed by professional packaging
engineers and equipped with drop-testing and other equipment used
to develop and test cost-effective package designs to meet the
particular protective packaging requirements of each customer.
Certain of these laboratories also design and construct molds for
Instapak(R) packaging customers who prefer to use preformed foam
cushions.
The Company has no material long-term contracts for the
distribution of its protective packaging products. In 1993, no
customer or affiliated group of customers accounted for as much
as 5% of the Company's consolidated net sales.
Raw Materials
The raw materials utilized in the Company's operations
generally have been readily available on the open market and are
purchased from several suppliers, reprocessed from scrap
generated in the Company's manufacturing operations or obtained
through participation in recycling programs. The principal raw
materials used in the Company's operations include polyethylene
resins and films, polyurethane chemicals, and paper and wood pulp
products (including recycled or reprocessed paper products,
resins, films and chemicals) and blowing agents used in foam
products.
Product Development
The Company incurred expenses of $9,168,000 related to
Company-sponsored research and development in 1993 compared with
$9,414,000 during 1992 and $9,876,000 during 1991. The Company
maintains a continuing effort to develop new products based on
its existing product lines as well as new packaging and non-
packaging applications for its products. The Company also
maintains ongoing efforts to add or increase recycled or
reprocessed content in its product lines.
Patents and Licenses
The Company is the owner or licensee of a number of
United States and foreign patents and patent applications that
relate to certain of its products, manufacturing processes and
equipment. While some of these patents and licenses, as well as
certain trademarks which the Company owns, offer some protection
and competitive advantage for the Company's products and their
manufacture, the Company believes that its success depends
primarily on its marketing, engineering and manufacturing skills
and on its research and product technology.
Competition
The Company's engineered products and its surface
protection and other cushioning products compete with similar
products made by others and with a number of other packaging
materials, including various forms of paper packaging products,
expanded plastics, corrugated die cuts, loosefill packaging
materials, and, for protective mailers, also with envelopes,
reinforced bags, boxes and other containers and various
corrugated materials. Heavy-duty applications of the Company's
engineered products also compete with various types of molded
foam plastics, fabricated foam plastics and mechanical shock
mounts and with wood blocking and bracing systems. Certain firms
producing competing products are well established and may have
greater financial resources than the Company. Competition for
most of the Company's protective packaging products is based
primarily on packaging performance characteristics, service and
price. As discussed below under "Environmental Matters," the
Company is also subject to competitive factors affecting
packaging materials that are based upon customers' environmental
preferences.
Because of the light but bulky nature of the Company's
air cellular, polyethylene foam and protective mailer products,
significant freight savings may be realized by locating
manufacturing facilities for these products near markets. To
realize the benefit of such savings, the Company has facilities
for manufacturing these products in various locations in
proximity to major markets in North America and Europe. The
Company believes that it is the leading manufacturer of air
cellular cushioning materials containing a barrier layer and
polyurethane foam packaging systems in the geographic areas in
which it sells these products.
There are a number of competing manufacturers of food
packaging products in the United States, Canada and Europe. The
Company believes that its Dri-Loc(R) products have a competitive
advantage over conventional pads because of their efficiency and
aesthetic appearance. Conventional pads and display case liners
compete primarily on the basis of price, absorbency and service.
The Company believes it is one of the leading suppliers of meat,
fish and poultry absorbent pads to supermarkets and poultry
processors in the United States.
Environmental Matters
The Company, like other manufacturers, is subject to
various laws, rules and regulations in the countries,
jurisdictions and localities in which it operates regulating the
discharge of materials into the environment or otherwise relating
to the protection of the environment. The Company believes that
compliance with current environmental laws and regulations has
not had a material effect on the Company's capital expenditures
or financial position.
In response to the United States Clean Air Act
Amendments of 1990 and regulations thereunder, which prohibit the
sale of packaging foams manufactured with chlorofluorocarbons
("CFCs") and hydrochlorofluorocarbons ("HCFCs") in the United
States after the end of 1993, and the Montreal Protocol, as
amended, during 1993 the Company completely eliminated the use of
CFC and HCFC blowing agents in its polyurethane and polyethylene
foam products and processes. The Company's capital expenditures
for environmentally related projects related to such transition
have not been material.
In some jurisdictions in which the Company's packaging
products are sold or used, laws and regulations have been adopted
or proposed that seek to regulate, among other things, recycled
or reprocessed content, sale or disposal of packaging materials.
In addition, customer demand has increased during the last few
years for packaging materials that are viewed as being
"environmentally responsible" and that minimize the generation of
solid waste. While these issues have become a competitive factor
in the marketplace for packaging materials, the Company maintains
active programs designed to comply with these laws and
regulations, to monitor their evolution, and to meet such
customer demand. The Company believes that its protective
packaging materials offer superior packaging protection, enabling
customers to achieve lower package cube and weight using the
Company's protective packaging materials than with many
alternative packaging methods, thereby reducing the disposal of
damaged products as well as the generation of packaging waste.
Because the Company offers both plastic-based and paper-based
protective packaging materials, customers can select the
protective packaging materials that they consider to best meet
their performance and cost needs and environmental preferences.
A number of the Company's product lines incorporate recycled or
reprocessed content, and the Company maintains ongoing efforts to
add or increase recycled or reprocessed content in many of its
product lines.
The Company also supports its customers' interests in
eliminating waste by offering or participating in collection
programs for certain of the Company's products or product
packaging and for materials used in certain of the Company's
products, including a program with Dow Chemical Company aimed at
recovering and recycling polyethylene materials from customers,
an Instapak(R) foam return program with return sites throughout
the United States, collection programs for packaging materials in
Germany and elsewhere in Europe, and local newspaper collection
programs to obtain materials used to produce Jiffy(TM) padded
mailers and certain other products. Whenever possible, materials
collected through these collection programs are reprocessed and
either reused in the Company's operations or offered to other
manufacturers for use in other products. Certain of the
Company's protective packaging products can be reused and, as an
alternative to recycling or disposal in solid waste landfills,
are suitable fuel sources for waste-to-energy conversion
facilities.
Employees
At December 31, 1993, the Company had approximately
2,750 employees, with approximately 250 employees covered by
collective bargaining agreements. The Company believes that its
employee relations are satisfactory.
Item 2. Properties
The Company's products are manufactured at twenty-two
locations in the United States, three other locations in North
America, including facilities in Puerto Rico, Canada and Mexico,
nine locations in Europe, including facilities in England,
France, Germany, Italy, the Netherlands, Spain and Sweden, and
four locations in the Far East, including facilities in Hong
Kong, Malaysia, Singapore and Taiwan.
In the United States, the Company's Instapak(R)
products are manufactured at a facility in Connecticut and its
surface protection and other cushioning products, its food
packaging products and certain of its other products are
manufactured at facilities in California, Illinois,
Massachusetts, Mississippi, New Jersey, New York, North Carolina,
Pennsylvania and Texas. The Company occupies other facilities
containing sales, technical or administrative offices at several
locations in the United States and abroad and maintains sales
offices in Belgium and Japan.
The Company owns twenty-one of its manufacturing
facilities, certain of which are owned subject to mortgages or
similar financing arrangements. The balance of the Company's
manufacturing facilities are located in leased premises. The
Company's manufacturing facilities are located in general purpose
buildings in which the Company's specialized machinery for the
manufacture of one or more products is contained.
Item 3. Legal Proceedings
In December 1992, the United States Environmental
Protection Agency ("EPA") issued a unilateral administrative
order under Section 106 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), to the Company and approximately sixteen other
persons, including several major corporations, whom it alleged to
be potentially responsible parties ("PRPs"), ordering the listed
PRPs to undertake certain interim remedial actions at a National
Priorities List site known as the Skinner Landfill in West
Chester, Ohio (the "Site"). The Company understands that the EPA
designated the Company as a PRP for the Site based on the EPA's
allegation that the Company is a successor to a company that the
EPA alleges disposed of wastes at the Site in the years 1958
through 1963. Based upon the information currently available
about the Site, the Company believes that there is no basis for
the EPA's position that the Company should be properly designated
as a PRP with respect to the Site, and accordingly the Company
advised the EPA that it did not intend to comply with the
order. To the Company's knowledge, the EPA has not yet
determined whether to commence an action to attempt to enforce
the order against the Company. However, the Company believes,
based upon the available information about the Site, that it had
sufficient cause not to comply with the order, and the Company
intends to defend its position should such an action be
commenced.
The Company is also involved in various lawsuits and
administrative and other proceedings (including environmental
proceedings relating to superfund sites and other alleged clean-
up obligations) incidental to its business. The Company believes
that the outcome of any such lawsuits or other proceedings
(including the environmental matter described above) will not
have a material adverse effect on its consolidated financial
statements.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
stockholders during the fourth quarter of 1993.
Executive Officers of the Registrant
The information appearing in the following table sets
forth the current position or positions held by each executive
officer of the Company, his age as of March 15, 1994, the year in
which he first was elected to his current position and the year
in which he first was elected an officer of the Company:
Name and Age as of First Elected to First Elected
Current Position March 15, 1994 Current Position an Officer
T. J. Dermot Dunphy 61 1971 1971
President, Chief
Executive Officer
and Director
Elmer N. Funkhouser III 52 1984 1982
Senior Vice President
William V. Hickey 49 1990 1980
Senior Vice President-
Finance
Warren H. McCandless 53 1991 1990
Senior Vice President
Dale Wormwood 59 1991 1989
Senior Vice President
Peter B. Ayrton 59 1992 1992
Vice President
James A. Bixby 50 1990 1990
Vice President
Bruce A. Cruikshank 51 1990 1990
Vice President
Jean-Luc Debry 48 1992 1992
Vice President
Robert A. Pesci 48 1990 1990
Vice President
Horst Tebbe 53 1986 1986
Vice President
Robert M. Grace, Jr. 47 1981 1981
General Counsel
and Secretary
All of the Company's officers serve at the pleasure of
the Board of Directors. All officers have been employed by the
Company or its subsidiaries for more than five years. In
December 1989, Mr. Funkhouser entered into an agreement with the
U.S. Department of Justice pursuant to which he pled guilty to a
misdemeanor charge relating to willful disclosure of a false
document prepared and filed by a former employee of the Company
with the U.S. Department of the Treasury.
There are no family relationships among any of the
Company's officers or directors.
PART II
Item 5. Market for Registrant's Common
Equity and Related Stockholder Matters
The information appearing under the caption "Common
Stock Information" in the Company's 1993 Annual Report to
Stockholders is incorporated herein by reference.
Item 6. Selected Financial Data
The information appearing under the caption "Selected
Financial Data" in the Company's 1993 Annual Report to
Stockholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information appearing under the caption
"Management's Discussion and Analysis of Results of Operations
and Financial Condition" in the Company's 1993 Annual Report to
Stockholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
Interim Financial Information (Unaudited)
The information appearing under the caption "Interim
Financial Information (Unaudited)" in the Company's 1993 Annual
Report to Stockholders is incorporated herein by reference.
Financial Statements and Schedules
See Index to Consolidated Financial Statements and
Schedules on page F-2 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
There has been no change in the independent auditors of
the Company's financial statements during 1992 or 1993 or
subsequent thereto.
PART III
Item 10. Directors and Executive Officers of the Registrant
Part of the information required in response to this
Item is set forth in Part I of this Annual Report on Form 10-K
under the caption "Executive Officers of the Registrant," and the
balance will be set forth in the Company's Proxy Statement for
its 1994 Annual Meeting of Stockholders under the caption
"Information Concerning Nominees." All such information is
incorporated herein by reference.
Item 11. Executive Compensation
The information required in response to this Item will
be set forth in the Company's Proxy Statement for its 1994 Annual
Meeting of Stockholders under the caption "Directors'
Compensation" and under the subheadings "Summary Compensation
Table" and "Compensation Committee Interlocks and Insider
Participation" under the caption "Executive Compensation," and
such information is incorporated herein by reference. Such
incorporated information does not include the information under
the subheadings "Report of Organization and Compensation
Committee on Executive Compensation" and "Common Stock
Performance Comparison" under the caption "Executive
Compensation" in such Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners
and Management
The information required in response to this Item will
be set forth in the Company's Proxy Statement for its 1994 Annual
Meeting of Stockholders under the caption "Voting Securities,"
and such information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K
(a) Documents filed as a part of this Annual Report on Form
10-K:
(i) Financial Statements and Financial Statement Schedules
See Index to Consolidated Financial Statements and
Schedules on page F-2 herein.
(ii) Exhibits
Exhibit Description
Number
3.1 Unofficial Composite Certificate of Incorporation
of the Company as currently in effect. (Exhibit
(2)(B) to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1992,
File No. 1-7834, is incorporated herein by
reference.)
3.2 Amendment to the By-Laws of the Company adopted on
December 16, 1993.
3.3 By-Laws of the Company as currently in effect.
4 Indenture dated as of July 1, 1989 between the
Company and The First National Bank of Boston, as
Trustee. (Exhibit 4.1 to the Company's
Registration Statement on Form S-2, Registration
No. 33-28940, is incorporated herein by
reference.)
10.1 Contingent Stock Plan of the Company, as amended.
(Exhibit 4(c) to the Company's Registration
Statement on Form S-8, Registration No. 33-41734,
is incorporated herein by reference.)*
10.2 Restricted Stock Plan for Non-Employee Directors
of the Company. (Exhibit A to the Company's Proxy
Statement for the annual meeting held on May 17,
1991, File No. 1-7834, is incorporated herein by
reference.)*
10.3 Revolving Credit Agreement between United Jersey
Bank and the Company dated March 10, 1994.
13 Portions of the Company's 1993 Annual Report to
Stockholders that are incorporated by reference
into this Annual Report on Form 10-K.
22 Subsidiaries of the Company.
24 Consent of KPMG Peat Marwick.
*Compensatory plan or arrangement of management required to be
filed as an exhibit to this report on Form 10-K.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during
the fiscal quarter ended December 31, 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
Date: March 22, 1994 By T. J. DERMOT DUNPHY
T. J. Dermot Dunphy
President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date
By T. J. DERMOT DUNPHY March 22, 1994
T. J. Dermot Dunphy
President and Director
(Principal Executive Officer)
By WILLIAM V. HICKEY March 22, 1994
William V. Hickey
Senior Vice President-Finance
(Principal Financial Officer
and Principal Accounting Officer)
By JOHN K. ARMSTRONG March 22, 1994
John K. Armstrong
Director
By JOHN K. CASTLE March 22, 1994
John K. Castle
Director
By LAWRENCE R. CODEY March 22, 1994
Lawrence R. Codey
Director
By CHARLES F. FARRELL, JR. March 22, 1994
Charles F. Farrell, Jr.
Director
By DAVID FREEMAN March 22, 1994
David Freeman
Director
By SHIRLEY A. JACKSON March 22, 1994
Shirley A. Jackson
Director
By ALAN H. MILLER March 22, 1994
Alan H. Miller
Director
By R. L. SAN SOUCIE March 22, 1994
R. L. San Soucie
Director
Page F-1
SEALED AIR CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Years ended December 31, 1993, 1992 and 1991
Page F-2
SEALED AIR CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
Independent Auditors' Report *
Financial Statements:
Consolidated Statements of Earnings for the years
ended December 31, 1993, 1992 and 1991 *
Consolidated Balance Sheets - December 31, 1993 and 1992 *
Consolidated Statements of Shareholders' Equity (Deficit) for
the years ended December 31, 1993, 1992 and 1991 *
Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991 *
Notes to Consolidated Financial Statements *
Independent Auditors' Report on Schedules F-3
Schedules:
V - Property, Plant and Equipment F-4
VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment F-5
VIII - Valuation and Qualifying Accounts F-6
IX - Short-Term Borrowings F-7
X - Supplementary Income Statement Information F-8
______________________________
*The information required appears on pages 17 through 30 of the
Company's 1993 Annual Report to Stockholders and is incorporated by
reference into this Annual Report on Form 10-K.
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
Page F-3
Independent Auditors' Report on Schedules
The Board of Directors and Shareholders
Sealed Air Corporation:
Under date of January 19, 1994, we reported on the consolidated balance
sheets of Sealed Air Corporation and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of earnings,
shareholders' equity (deficit), and cash flows for each of the years in
the three-year period ended December 31, 1993, as contained in the 1993
annual report to shareholders. These consolidated financial
statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1993. In connection with our
audits of the aforementioned consolidated financial statements, we also
have audited the related financial statement schedules as listed in the
accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our
audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set
forth therein.
S/KPMG Peat Marwick
KPMG Peat Marwick
Short Hills, New Jersey
January 19, 1994
Page F-4
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
ADDITIONS AT COST
BALANCE AT PROPERTY & TRANSFERS OTHER
BEGINNING CAPITAL EQUIPMENT RETIREMENTS BETWEEN ADDITIONS/ BALANCE AT
CLASSIFICATION OF YEAR EXPENDITURES ACQUIRED(1) OR DISPOSALS CLASSIFICATIONS (DEDUCTIONS)(2) END OF YEAR
1993
<S> <C> <C> <C> <C> <C> <C> <C>
Land and buildings $ 50,086 $ 1,447 $ - $ - $ 9,077 $ (1,952) $ 58,658
Machinery and equipment 113,749 2,200 4,453 845 5,207 (2,982) 121,782
Leasehold improvements 5,523 1,058 14 1,748 (28) (617) 4,202
Furniture and fixtures 10,680 256 28 1,361 834 (257) 10,180
Construction in progress 5,094 17,513 - - (15,090) (131) 7,386
Totals $185,132 $ 22,474 $ 4,495 $ 3,954 $ - $ (5,939) $202,208
1992
Land and buildings $ 49,052 $ 373 $ 778 $ 37 $ 395 $ (475) $ 50,086
Machinery and equipment 108,564 1,460 353 484 7,324 (3,468) 113,749
Leasehold improvements 5,397 79 - - 133 (86) 5,523
Furniture and fixtures 10,036 300 - 427 937 (166) 10,680
Construction in progress 4,922 9,014 - - (8,789) (53) 5,094
Totals $177,971 $ 11,226 $ 1,131 $ 948 $ - $ (4,248) $185,132
1991
Land and buildings $ 47,828 $ 2,171 $ - $ 8 $ 265 $ (1,204) $ 49,052
Machinery and equipment 81,955 3,151 26,421 1,612 6,413 (7,764) 108,564
Leasehold improvements 4,441 483 - 14 528 (41) 5,397
Furniture and fixtures 9,680 147 - 138 688 (341) 10,036
Construction in progress 2,174 9,993 685 - (7,894) (36) 4,922
Totals $146,078 $ 15,945 $ 27,106 $ 1,772 $ - $ (9,386) $177,971
<FN>
(1) Property, plant and equipment of companies acquired at dates of acquisition (see note 3 of Notes to Consolidated
Financial Statements).
(2) Principally foreign currency translation adjustments and, in 1991, assets of businesses sold (see notes 1 and 3 of the
Notes to Consolidated Financial Statements).
</TABLE>
Page F-5
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES SCHEDULE VI
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
BALANCE AT ADDITIONS OTHER NET(1)
BEGINNING CHARGED RETIREMENTS ADDITIONS/ BALANCE AT
CLASSIFICATION OF YEAR TO INCOME OR DISPOSALS (DEDUCTIONS) END OF YEAR
1993
<S> <C> <C> <C> <C> <C>
Buildings $11,874 $ 1,895 $ - $ (306) $13,463
Machinery and equipment 50,648 10,849 657 (1,575) 59,265
Leasehold improvements 2,992 525 1,407 (393) 1,717
Furniture and fixtures 7,456 1,065 1,278 (230) 7,013
Totals $72,970 $14,334 $ 3,342 $ (2,504) $81,458
1992
Buildings $10,362 $ 1,599 $ - $ (87) $11,874
Machinery and equipment 41,571 10,576 282 (1,217) 50,648
Leasehold improvements 2,555 527 - (90) 2,992
Furniture and fixtures 6,958 1,068 339 (231) 7,456
Totals $61,446 $13,770 $ 621 $(1,625) $72,970
1991
Buildings $ 9,017 $ 1,475 $ - $ (130) $10,362
Machinery and equipment 38,098 8,207 511 (4,223) 41,571
Leasehold improvements 2,319 580 10 (334) 2,555
Furniture and fixtures 5,967 1,206 99 (116) 6,958
Totals $55,401 $11,468 $ 620 $(4,803) $61,446
<FN>
(1) Principally foreign currency translation adjustments, transfers between asset classifications and, in 1992, assets of
businesses sold (see notes 1 and 3 of the Notes to Consolidated Financial Statements).
</TABLE>
Page F-6
<TABLE>
SCHEDULE VIII
SEALED AIR CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
DESCRIPTION OF YEAR EXPENSES ACCOUNTS(1) DEDUCTIONS(2) END OF YEAR
Year ended December 31, 1993-
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts $2,665 $ 734 $ 6 $ 730 $2,675
Year ended December 31, 1992-
Allowance for doubtful
accounts $2,872 $ 716 $ 20 $ 943 $2,665
Year ended December 31, 1991-
Allowance for doubtful
accounts $2,586 $1,084 $ 799 $1,597 $2,872
<FN>
(1) Primarily recoveries of bad debts and allowance for doubtful accounts of companies acquired at dates of
acquisition.
(2) Primarily accounts receivable balances written off.
</TABLE>
Page F-7
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES SCHEDULE IX
SHORT-TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
AVERAGE OUTSTANDING OUTSTANDING INTEREST
CATEGORY OF AGGREGATE BALANCE AT INTEREST DURING DURING THE RATE DURING
SHORT-TERM BORROWINGS END OF YEAR RATE THE YEAR YEAR(1) THE YEAR(2)
Year ended December 31, 1993-
<S> <C> <C> <C> <C> <C>
Bank Borrowings $ 5,557 12.1% $ 6,723 $ 4,718 14.4%
Year ended December 31, 1992-
Bank Borrowings $ 3,511 16.2% $ 9,907 $ 7,151 13.8%
Year ended December 31, 1991-
Bank Borrowings $ 9,361 8.6% $17,121 $10,447 11.6%
<FN>
(1) Based on average of month-end balances during the year.
(2) Based on total interest expense on short-term borrowings for each year divided by the
average of month-end amounts outstanding during the year.
</TABLE>
Page F-8
<TABLE>
SCHEDULE X
SEALED AIR CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
CHARGED TO COSTS AND EXPENSES
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $ 6,507 $ 6,428 $ 7,102
Amortization of intangible assets,
pre-operating costs and similar
deferrals:
Deferred financing and other costs $ 2,612 $ 2,655 $ 4,341
Deferred compensation 2,929 2,802 2,889
Patents, patent applications
and rights 1,306 1,257 1,027
Excess of cost over fair value of
net assets acquired 562 303 845
Other 1,577 1,822 840
Total $ 8,986 $ 8,839 $ 9,942
</TABLE>
EXHIBIT 3.2
RESOLVED that the first and second sentences of
Article III, Section 1, of the By-Laws of the
Corporation, as heretofore amended, shall be and are
amended effective immediately to read in their entirety
as follows:
"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."
EXHIBIT 3.3
BY LAWS
OF
SEALED AIR CORPORATION
(as amended through December 16, 1993)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of
the Corporation shall be in Wilmington, Delaware.
Section 2. 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 II
MEETINGS OF STOCKHOLDERS
Section 1. 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. 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 a board of 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 3. 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 4. 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 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 5. Special Meetings. Special meetings of the
stockholders may be called by the president, by resolution of the
board of directors, or at the request in writing of stockholders
owning a majority in amount of the entire capital stock of the
Corporation issued and outstanding and entitled to vote. Any such
resolution or request shall state the purpose or purposes of the
proposed meeting.
Section 6. 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 7. Business Transacted. Business transacted at
any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 8. Quorum. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, 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 by 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 a such adjourned meeting, any business may be
transacted which might have been transacted at the original
meeting.
Section 9. Vote Required. When a quorum is present at
any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall
decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or
of the certificate of incorporation a different vote is required,
in which case such express provision shall govern and control the
decision of such question.
Section 10. Proxies, Etc. 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 on 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 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 his 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 his 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 12. Action by Consent. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be
taken for or in connection with any corporate action by any
provision of the statutes, the meeting and vote of stockholders may
be dispensed with if all of the stockholders who would have been
entitled to vote, or less than all but not less than the holders of
a majority of the stock entitled to vote upon the action if such
meeting were held shall consent in writing to such corporate action
being taken; provided that the written consent shall be 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; and provided further that prompt notice
shall be given to all stockholders of the taking of corporate
action without a meeting and by less than unanimous written
consent.
ARTICLE III
DIRECTORS
Section 1. Number. 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 stockholders, except as provided in Section 2 of
this Article, and each director shall hold office until his
successor is elected and qualified or until his earlier resignation
or removal. Directors need not be stockholders.
Section 2. 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 each of the directors so chosen shall hold office until the
next annual election and until his successor is elected and
qualified or until his earlier resignation or removal.
Section 3. 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 4. 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 5. Annual Meeting. The first meeting of each
newly elected board of directors shall be held immediately
following the adjournment of the 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.
Section 6. Regular Meetings. 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 7. Special Meetings. Special meetings of the
board of directors may be called by the president and shall be
called by the secretary upon the instructions of the president or
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, telegraph, telex or similar means of electronic
transmission. The notice need not specify the business to be
transacted.
Section 8. Emergency Meetings. In the event of an
emergency which in the judgment of 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 9. 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 10. Committees. The board of directors may, by
resolution adopted by a majority of the whole board, 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 any exercise the powers of the board of
directors in the management of the business and affairs of the Corporation,
including the power and authority to declare a dividend, to
authorize the issuance of stock, and to adopt a Certificate of
Ownership and Merger pursuant to Section 253 of the Delaware
General Corporation Law, and may authorize the seal of the
Corporation to be affixed to all papers which may require it;
provided that no such committee shall have the power or authority
to amend the certificate of incorporation, adopt an agreement of
merger or consolidation, recommend to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's
property and assets, recommend to the stockholders a dissolution of
the Corporation or a revocation of a dissolution, or amend the by-
laws 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 11. Minutes of Committee Meetings. The
committees shall keep regular minutes of their proceedings and,
when requested to do so by the board, shall report the same to the
board of directors.
Section 12. 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 or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
board or committee.
Section 13. Participation by Conference Telephone. The
members of the board of directors or any committee thereof may
participate in a meeting of such board or 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 14. 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.
ARTICLE IV
NOTICES
Section 1. 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 2. 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 by-laws, 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 V
OFFICERS
Section 1. 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
president, who shall be a director, one or more vice presidents, a
general counsel and a secretary. Any number of offices may be held
by the same person.
Section 2. 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.
Section 3. Term of Office, Etc. The officers of the
Corporation shall hold office at the pleasure of the board of
directors. Each officer shall hold his office until his successor
is elected and qualified or until his 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 4. President. The president shall be the chief
executive officer of the Corporation, shall preside at all meetings
of the stockholders and the board of directors, shall have the
responsibility for the general and active management and control of
the affairs and business of the Corporation, shall perform all
duties and have all powers which are commonly incident to the
office of chief executive or which are delegated to him by the
board of directors, and shall see that all orders and resolutions
of the board of directors are carried into effect. The president
shall have the authority to sign all 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. Vice Presidents. The vice presidents shall
act under the direction of the president and in the absence or
disability of the president shall perform the duties and exercise
the powers of the president. They shall perform such other duties
and have such other powers as the president 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
president shall descend to the vice presidents in such specified
order of seniority.
Section 6. Vice President-Finance. One of the vice
presidents shall be designated as the vice president-finance. The
vice president-finance of the Corporation shall be, and shall have
the usual powers of, the chief financial officer and the chief
accounting officer of the Corporation. Subject to the direction of
the president and not in limitation of his powers as chief
financial officer and chief accounting officer, the vice president-
finance shall have the custody of corporate funds and securities,
shall keep full and accurate accounts of receipts and disbursements
in books belonging to the Corporation, shall deposit all moneys and
other valuable effects in the name and to the credit of the
Corporation is such depositories as may be designated under
authority of the board of directors, shall maintain adequate
records of all assets, liabilities and transactions of the
Corporation and see that adequate audits thereof are currently and
regularly made. He shall disburse the funds of the Corporation as
may be ordered under authority of the president or the board of
directors, taking proper vouchers for such disbursements, and shall
render to the president and the board of directors at its regular
meetings, or when the president or the board of directors so
requires, an account of the financial condition of the Corporation
and an account of all his transactions as vice president-finance of
the Corporation. He shall also supervise the accounts of any
company which the Corporation controls by stock ownership or
otherwise. He shall have all of the powers of a treasurer of a
corporation and shall be the officer designated to sign any
instrument for which the signature of a treasurer of a corporation
is needed by reason of any requirement of statute, by-law or
otherwise.
Section 7. Secretary. The secretary shall act under the
direction of the president. Subject to the direction of the
president, he 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 he shall perform like
duties for the standing committees of the board of directors when
requested to do so. He 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 president or
the board of directors. He 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 his 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
his signature.
Section 8. Assistant Secretaries. The assistant
secretaries in order of their seniority, unless otherwise
determined by the president 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 president or the
board of directors may from time to time prescribe.
Section 9. General Counsel. The general counsel of the
Corporation shall act under the direction of the president of the
Corporation, shall be the chief legal officer of the Corporation,
shall have all the usual duties and responsibilities of the general
counsel of a corporation, shall supervise and have general
responsibility for the legal affairs of the Corporation, and shall
render to the board of directors at its regular meetings, or when
the board of directors or the president so requires, reports of
matters affecting the legal affairs of the Corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Issuance. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or
in the name of the Corporation by, 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 him in the Corporation.
Section 2. 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 3. Lost Certificates, Etc. The board of
directors 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 4. 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, of the by-laws and
of the law regarding the transfer of shares have been duly complied
with, to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its
books.
Section 5. 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. Record Date. In order that the
Corporationmay determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, 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.
ARTICLE VII
MISCELLANEOUS
Section 1. 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 2. 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 3. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the board of directors.
Section 4. 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 VIII
INDEMNIFICATION
Section 1. 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
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 him 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 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 2. 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 3. 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 IX
AMENDMENTS
Section 1. By the Stockholders. The by-laws may be
amended by a majority vote of all the stock issued and outstanding
and entitled to vote 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 2. By the Board of Directors. The board of
directors by a majority vote of the whole board at any meeting may
amend these by-laws, including by-laws adopted by the stockholders,
but the stockholders may from time to time specify particular
provisions of the by-laws which shall not be amended by the board
of directors.
REVOLVING CREDIT AGREEMENT
between
UNITED JERSEY BANK
and
SEALED AIR CORPORATION
March 10, 1994
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made as of March 10,
1994 between United Jersey Bank, a banking institution of the State
of New Jersey (the "Bank"), and Sealed Air Corporation, a Delaware
corporation (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower, certain of its subsidiaries,
various financial institutions and Bankers Trust Company, as agent
("Bankers Trust") are parties to that certain Credit Agreement
dated as of April 27, 1989, as amended by thirteen amendments
thereto (the "Sealed Air I Credit Agreement"); and
WHEREAS, the Borrower, various financial institutions and
Bankers Trust are parties to that certain Credit Agreement dated as
of May 22, 1991 and amended and restated as of August 15, 1991, as
amended by three amendments thereto (the "Sealed Air II Credit
Agreement" and together with the Sealed Air I Credit Agreement, the
"Prior Credit Agreements"); and
WHEREAS, the Borrower has requested the Bank to extend
certain credit and make certain loans to the Borrower in an
aggregate amount not to exceed $35,000,000 for the purpose of,
among other things, repaying all amounts owing by the Borrower
under the Prior Credit Agreements; and
WHEREAS, the Bank is willing to extend such credit and
make such loans to the Borrower upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
mutual agreements herein contained, the parties hereto hereby agree
as follows:
I. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following words and terms shall have the following meanings:
"Adjusted Net Worth" as of the end of any fiscal year of
the Borrower shall mean (i) Cumulative EBITDA as of the end of such
fiscal year less (ii) the sum of (a) cumulative cash interest
expense of the Borrower and its Subsidiaries, (b) cumulative
Dividends (other than the special one-time dividend of $40 per
share paid by the Borrower to the holders of record of the
Borrower's common stock on May 8, 1989) paid on its capital stock
and (c) cumulative cash tax expense not previously deducted in
calculating EBITDA for such fiscal year of the Borrower and its
Subsidiaries, in each case for the period commencing on January 1,
1989 and ending as of the end of such fiscal year.
"Advance" shall have the meaning ascribed to such term in
Section 2.1 hereof.
"Affiliate" shall mean, with respect to any Person, any
other Person (i) directly or indirectly controlling (including, but
not limited to, all directors and officers of such Person),
controlled by, or under direct or indirect common control with,
such Person or (ii) that directly or indirectly owns more than 5%
of the voting securities of such Person. A Person shall be deemed
to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Revolving Credit Agreement
together with any and all exhibits, amendments or supplements
hereto.
"Applicable Margin" shall mean (i) in the case of LIBO
Rate Loans, 75 basis points and (ii) in the case of Secondary CD
Based Rate Loans, 87.5 basis points; provided that on each date
upon which the annual or quarterly financial statements required
pursuant to the provisions hereof are delivered, if no Event of
Default then exists and the ratio of EBITDA to Consolidated Cash
Interest Expense determined for each of the four consecutive fiscal
quarters ending on the last day covered by such financial
statements is within the range set forth below in column 1, then
the Applicable Margin for each type of Fixed Rate Loan shall be
reduced to the respective amount of basis points set forth in
columns 2 and 3, as the case may be, opposite the ratio set forth
in column 1, (x) if such date is a date upon which quarterly
financial statements are delivered in respect of the first or
second quarterly accounting period in any fiscal year, for the
period commencing on such date and ending on the next date upon
which quarterly financial statements are delivered (or if not
delivered, on the last date on which required to be delivered)
pursuant to the provisions hereof, (y) if such date is a date upon
which quarterly financial statements are delivered in respect of
the third quarterly accounting period in any fiscal year, for the
period commencing on such date and ending on the next date upon
which annual financial statements are delivered (or if not
delivered, on the last date on which required to be delivered)
pursuant to the provisions hereof, and (z) if such date is a date
upon which annual financial statements are delivered, for the
period commencing on such date and ending on the next date upon
which quarterly financial statements are delivered (or if not
delivered, on the last day on which required to be delivered)
pursuant to the provisions hereof:
(1) (2) (3)
Interest Coverage LIBO Rate Secondary CD Based
Ratio Loans Rate Loans
3.1:1 to 4:1 50 62.5
4.1:1 or better 45 57.5
Notwithstanding the foregoing, for the period from the date hereof
until the first date upon which annual or quarterly financial
statements required pursuant to the provisions hereof are
delivered, the Applicable Margin shall mean (i) in the case of LIBO
Rate Loans, 50 basis points and (ii) in the case of Secondary CD
Based Rate Loans, 62.5 basis points.
"Application" shall mean the application or similar
agreement used by the Bank from time to time in connection with the
issuance of letters of credit.
"Available Commitment" shall mean an amount equal to the
excess, if any, of (i) the Commitment, over (ii) the aggregate
principal amount of all Advances and L/C Obligations then
outstanding.
"Bank" shall mean United Jersey Bank, a banking insti-
tution of the State of New Jersey, and its successors and assigns.
"Bank Costs" shall mean all filing, recording, publi-
cation and search fees incurred in connection with and relating to
the Borrower paid by the Bank; all reasonable out-of-pocket costs
incurred and sums expended by the Bank, with or without suit, to
correct any default, to enforce any right or remedy of the Bank, or
in connection with any other provision of any Loan Document; all
reasonable out-of-pocket costs of suit incurred by the Bank in
enforcing or defending this Agreement or any other Loan Document or
any portion thereof; all reasonable out-of-pocket costs and
expenses including reasonable attorneys' fees and expenses incurred
by the Bank in preparing, reviewing, enforcing, amending,
modifying, administering, defending or otherwise concerning this
Agreement or any other Loan Document or any portion hereof or
thereof; and whether or not suit is brought, all out-of-pocket
costs of arbitration and insolvency proceedings.
"Base Rate" shall mean the rate of interest announced
from time to time by the Bank as its "base rate" or "base lending
rate". This rate of interest is determined from time to time by
the Bank as a means of pricing some loans to its customers and is
neither tied to any external rate of interest or index nor does it
necessarily reflect the lowest rate of interest actually charged by
the Bank to any particular class or category of customers of the
Bank.
"Base Rate Loan" shall mean a Loan bearing interest at
the Floating Rate.
"Borrower" shall mean Sealed Air Corporation, a Delaware
corporation, and its successors and assigns.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which state or federally chartered banks in
the State of New Jersey are authorized to close.
"Capital Lease" shall mean any lease which, in accordance
with the Statement of Financial Accounting Standards No. 13, issued
in November 1976 by the Financial Accounting Standards Board and as
in effect on the date hereof, is required to be capitalized on the
books of the lessee.
"Capitalized Lease Obligations" shall mean Indebtedness
represented by obligations under a Capital Lease and the amount of
such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with the principles referred
to in the preceding definition.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by
the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than
three months from the date of acquisition, (ii) time deposits and
certificates of deposit of (a) the Bank or any commercial bank
incorporated in the United States or any State thereof or the
District of Columbia of recognized standing having capital and
surplus in excess of $100,000,000 or (b) any commercial bank of
recognized standing having capital and surplus in excess of the
local currency equivalent of $100,000,000 incorporated in a country
where the Borrower has one or more locally operating Subsidiaries,
and that is, as of the date hereof, providing banking services to
the Borrower or any of its Subsidiaries, in either case with
maturities of not more than three months from the date of
acquisition by such Person, (iii) repurchase obligations with a
term of not more than seven days for underlying securities of the
types described in clause (i) above, provided that there shall be
no restriction on the maturities of such underlying securities
pursuant to this clause (iii) entered into with a bank meeting the
qualifications specified in clause (ii) above, (iv) commercial
paper issued by the parent corporation of the Bank or any
commercial bank (provided that the parent corporation and the bank
are both incorporated in the United States) of recognized standing
having capital and surplus in excess of $500,000,000 and commercial
paper issued by any Person incorporated in the United States rated
at least A-1 or the equivalent thereof by Standard & Poor's
Corporation or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing not more than
three months after the date of acquisition by such Person, (v)
bankers acceptances and current accounts maintained at (a) any bank
meeting the qualifications specified in clause (ii) above, in
either case with maturities of not more than three months from the
date of acquisition by such Person, and (vi) investments in money
market funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (v) above.
"Commitment" shall mean $35,000,000, or such lower amount
to which the Commitment shall be reduced by the Borrower in
accordance with the terms hereof.
"Consolidated Cash Interest Expense" for any period shall
mean Consolidated Interest Expense for such period less the sum of
(i) amortization of debt discount and debt issuance costs and (ii)
amortization of non-cash discount and non-cash costs of any Hedging
Agreements of the Borrower and its Subsidiaries on a consolidated
basis for such period.
"Consolidated Current Assets" shall mean, at any time,
the current assets of the Borrower and its Subsidiaries determined
on a consolidated basis (excluding cash and Cash Equivalents),
provided that the then Available Commitment shall be considered a
current asset of the Borrower in making the foregoing
determination, and provided further, that any current deferred
assets resulting from the application of Financial Accounting
Standards Board Statement No. 109 shall not be considered current
assets for purposes of making the foregoing determination.
"Consolidated Current Liabilities" shall mean, at any
time, the current liabilities of the Borrower and its Subsidiaries
determined on a consolidated basis, provided that for purposes of
making the foregoing determination, the following shall not be
considered current liabilities: (i) the current portion of Funded
Debt and any current deferred liabilities resulting from the
application of Financial Accounting Standards Board Statement No.
109, (ii) accrued interest on the Permanent Subordinated Debentures
and (iii) an amount equal to the outstanding principal balance of
all term loan borrowings under the Prior Credit Agreements
immediately prior to the date hereof.
"Consolidated Interest Expense" for any period shall mean
total interest expense (including Capitalized Lease Obligations and
amortization of debt discount and debt issuance costs) of the
Borrower and its Subsidiaries on a consolidated basis for such
period.
"Cumulative EBITDA" shall mean, as of the end of any
fiscal year of the Borrower, EBITDA for the period (taken as one
accounting period) commencing January 1, 1989 and ending as of the
last day of such fiscal year.
"Default" shall mean any of the events specified in
Article IX hereof which, with the passage of time or giving of
notice or both, would constitute an Event of Default.
"Dividends" shall mean with respect to any Person all
dividends declared or paid by such Person, whether in cash or by
the distribution of property (other than capital stock of such
Person), and any money or other property paid or distributed by
such Person in connection with the purchase, redemption,
cancellation or retirement of any capital stock of such Person,
other than the repurchase by the Borrower of its Common Stock under
its Contingent Stock Plan.
"Domestic Subsidiary" shall mean a Subsidiary
incorporated or organized under the laws of the United States or
any State thereof which conducts all or substantially all of its
business in the United States.
"EBIT" shall mean, for any period, the consolidated net
income of the Borrower and its Subsidiaries, before interest
expense and provision for income taxes and without giving effect to
any extraordinary gains and gains from sales of assets (other than
sales of inventory in the ordinary course of business); provided
that the gains resulting from aggregate gross proceeds of all sales
of up to $1,000,000 of assets in the ordinary course of business
(other than any such sale of assets the value of which individually
exceeds $500,000) in the fiscal year in which such period occurs
shall be considered gains from sales of assets for the purpose of
the foregoing calculation only to the extent such gains exceed
losses relating to such sales.
"EBITDA" for any period shall mean EBIT, adjusted by (i)
adding thereto the amount of (a) all amortization of goodwill and
other intangibles, (b) depreciation, (c) all non-cash contributions
or accruals to or with respect to deferred profit sharing plans and
(d) all non-cash compensation and accruals, in each case to the
extent deducted in arriving at EBIT for such period, and (ii)
subtracting therefrom the amount of all non-cash gains that were
added in arriving at EBIT for such period other than such gains
arising from sales of inventory in the ordinary course of business.
"Event of Default" shall mean any of the events specified
in Article IX hereof, provided that any requirement for notice or
lapse of time or any other condition has been satisfied.
"Federal Funds Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Bank from three federal funds brokers of recognized standing
selected by it.
"Fixed Rate(s)" shall mean the LIBO Rate and the
Secondary CD Based Rate, individually and collectively.
"Fixed Rate Loan(s)" shall mean a Loan which bears
interest at a Fixed Rate.
"Floating Rate" shall have the meaning set forth in
Section 2.3 hereof.
"Funded Debt" shall at the time of determination thereof
mean Indebtedness of the Borrower and its Subsidiaries which by its
terms is payable more than one year from such date or which may be
extended at the option of the respective borrower under a revolving
credit or similar agreement to a date more than one year from such
date of determination.
"GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from time
to time.
"Guarantee" shall mean, as to any Person, any obligation
of such Person guaranteeing any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Hedging Agreements" shall mean as to any Person (i) any
interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap or other
interest rate hedge or arrangement under which such Person is a
party or beneficiary and (ii) any swap, futures, forward or option
agreements or other agreements or arrangements designed to limit or
eliminate the risk and/or exposure of such Person to fluctuations
in currency exchange rates.
"Indebtedness" shall mean as to any Person, without
duplication (i) all indebtedness (including principal, interest,
fees and charges) of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) the face
amount of all letters of credit issued for the account of such
Person and all drafts drawn thereunder, (iii) all Capitalized Lease
Obligations, (iv) all Guarantees, (v) obligations of such Person in
respect of banker's acceptances or similar obligations issued or
created for the account of such Person, (vi) all liabilities of
such Person arising under Hedging Agreements and (vii) all
indebtedness, obligations and liabilities of the type described in
this definition secured by any Lien upon any property of such
Person, regardless of whether such indebtedness, obligations or
liabilities have been assumed by such Person.
"L/C Commitment" shall mean $3,000,000.
"L/C Obligations" shall mean, at any time, an amount
equal to the aggregate then undrawn and unexpired amount of
outstanding Letters of Credit.
"Letter(s) of Credit" shall mean one or more letters of
credit issued by the Bank for the account of the Borrower hereunder.
"LIBO Rate" shall have the meaning ascribed to such term
in Section 2.3 hereof.
"LIBO Rate Loan" shall mean a Loan bearing interest at
the LIBO Rate.
"Lien" shall mean any lien, mortgage, hypothecation,
pledge, charge, encumbrance, deposit arrangement, assignment or
other security interest or any preference, priority or other
security agreement or preferential arrangement of any kind or
nature, including any conditional sale or other title retention
agreement or other security interest or encumbrance of any kind in
respect of any property or Person or upon the income, rents or
profits therefrom, and further including any Capitalized Lease
having substantially the same economic effect as any of the
foregoing.
"Loan" shall mean any Advance or other borrowing by the
Borrower under the Loan Documents.
"Loan Documents" shall mean all agreements, instruments,
certificates and documents evidencing or relating to the
Obligations arising under this Agreement, including without
limitation, this Agreement, the Note and each Application and
Letter of Credit.
"Maturity Date" shall mean the date which is 364 days
from the date hereof.
"Note" shall mean the revolving credit note executed by
the Borrower and delivered to the Bank pursuant to Section 2.2
hereof.
"Obligations" shall mean all loans, advances, extensions
of credit, debts, liabilities, obligations, payments, guarantees,
covenants and duties owing by the Borrower to the Bank of any kind
and description arising under this Agreement, whether direct or
indirect, voluntary or involuntary, absolute or contingent, due or
to become due, now existing or hereafter incurred or created and
further including all Bank Costs.
"Permanent Subordinated Debentures" shall mean the
Borrower's $170,000,000 12-5/8% Senior Subordinated Notes due July,
1999 issued pursuant to the Indenture dated as of July 1, 1989
between the Borrower and The First National Bank of Boston, as
Trustee.
"Person" shall mean any individual, corporation,
partnership, association, joint stock company, trust,
unincorporated organization, joint venture, court or government or
political subdivision or agency thereof.
"Prior Credit Agreements" shall have the meaning ascribed
to such term in the second WHEREAS clause of this Agreement.
"Secondary CD Based Rate" shall have the meaning ascribed
to such term in Section 2.3 hereof.
"Secondary CD Based Rate Loan" shall mean a Loan bearing
interest at the Secondary CD Based Rate.
"Significant Subsidiary" shall mean a Domestic Subsidiary
meeting the definition set forth in Rule 1-02 of Regulation S-X as
promulgated by the Securities and Exchange Commission.
"Stated Amount" of each Letter of Credit shall mean the
maximum amount available to be drawn thereunder (regardless of
whether any conditions for drawing could then be met).
"Subsidiary" shall mean, as to any Person, (i) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which
such Person and/or one or more Subsidiaries of such Person has more
than a 50% equity interest at the time.
II. REVOLVING CREDIT
2.1 Advances. From time to time, during the period from
the date hereof until the Maturity Date, in the manner hereinafter
set forth, the Borrower may borrow from the Bank, and, upon the
request of the Borrower and upon the terms and conditions contained
herein, the Bank shall lend to the Borrower a sum or sums
("Advances") which will not exceed the Available Commitment at such
time.
2.2 Revolving Credit Note. The indebtedness of the
Borrower to the Bank resulting from all Advances made from time to
time and otherwise arising hereunder shall be evidenced by a
revolving credit note (the "Note"), the form of which is attached
hereto as Exhibit A, made payable to the Bank, dated the date
hereof, signed by the Borrower and delivered to the Bank. All
Advances made by the Bank to the Borrower shall be noted by the
Bank on the reverse side or last page of the Note, and the Bank is
authorized to make such notations which shall be prima facia
evidence of the principal amount outstanding thereunder at any
time; provided, however, that any failure to make such a notation
(or any errors in notation) shall not limit or otherwise affect the
obligation of the Borrower hereunder or under the Note, which is
and shall remain absolute and unconditional. All amounts
outstanding under the Note shall be due and payable on the Maturity
Date.
2.3 Interest Rate. The Note shall bear interest in the
manner hereinafter provided (computed on the basis of the actual
number of days elapsed in a year of 360 days) on the principal
amount thereof remaining unpaid from time to time. Except with
respect to Fixed Rate Loans, interest shall be payable quarterly in
arrears on the last Business Day of each calendar quarter,
commencing on the last Business Day of the first calendar quarter
following the date of the Note and continuing on the last Business
Day of each calendar quarter thereafter until the Note shall be
paid in full. Interest shall accrue and be payable at the
following rates:
(a) Except as provided in subsection (b) below, the Note
shall bear interest from the date thereof on the outstanding daily
principal balance thereunder at a fluctuating rate per annum equal
to the Floating Rate. As used herein, the term "Floating Rate"
shall mean the greater of (i) the Base Rate minus one hundred basis
points or (ii) the Federal Funds Rate plus seventy five basis
points. Each change in the Base Rate or the Federal Funds Rate
shall be effective as of the opening of business on the day on
which such change shall be announced and be effective.
(b) Provided no Default or Event of Default shall then
exist, the Borrower may, in accordance with the terms and
conditions set forth herein, elect to have all or any portion of
the outstanding principal balance of the Note, in an amount equal
to or greater than $1,000,000, bear interest at one of the
following rates for any Interest Period (as such term is
hereinafter defined):
(i) A rate per annum (the "LIBO Rate") equal to the
Applicable Margin plus the Base LIBO Rate (as hereinafter defined)
of the Bank applicable to such Interest Period. The "Base LIBO
Rate" applicable to a particular Interest Period shall mean a rate
per annum equal to the product arrived at by multiplying the Fixed
LIBO Rate (as hereinafter defined) applicable to such Interest
Period by a fraction (expressed as a decimal), the numerator of
which shall be the number one (1.0) and the denominator of which
shall be the number one (1.0) minus the aggregate reserve
percentages (expressed as a decimal) from time to time established
by the Board of Governors of the Federal Reserve System of the
United States and any other banking authority to which the Bank is
now or hereafter subject, including, but not limited to any reserve
on "Eurocurrency Liabilities" as defined in Regulation D (or any
successor provision) of the Board of Governors of the Federal
Reserve System of the United States at the ratios provided in such
Regulation from time to time, it being agreed that any portion of
the Note bearing interest at a LIBO Rate shall be deemed to
constitute Eurocurrency Liabilities, as defined by such Regulation,
and it being further agreed that such Eurocurrency Liabilities
shall be deemed to be subject to such reserve requirements without
benefit of or credit for prorations, exceptions or offsets that may
be available to the Bank from time to time under such Regulation
and irrespective of whether such Bank actually maintains all or any
portion of such reserve. The "Fixed LIBO Rate" applicable to a
particular Interest Period shall mean a rate per annum equal to the
rate of interest at which U.S. dollar deposits in an amount
approximately equal to the portion of the Note which will bear
interest at a particular LIBO Rate during such Interest Period, and
with maturities comparable to the last day of such Interest Period,
are offered in immediately available funds in the London Interbank
Market by leading banks in the Eurodollar Market at 11:00 a.m.,
London time, three Business Days prior to the commencement of such
Interest Period. Each determination of the LIBO Rate, the Base
LIBO Rate and the Fixed LIBO Rate applicable to a particular
Interest Period shall be made by the Bank and shall be conclusive
and binding upon the Borrower absent manifest error.
(ii) A rate per annum (the "Secondary CD Based
Rate") equal to the Applicable Margin plus the Reserve Adjusted
Secondary CD Rate. The "Reserve Adjusted Secondary CD Rate" shall
mean the average of the Secondary Certificate of Deposit Rates
reported, for the latest day for which such rates shall have been
reported as of two (2) Business Days prior to the first day of the
relevant Interest Period, in Federal Reserve Statistical Release
H.15 - Selected Interest Rates (or any comparable successor
publication) for certificates of deposit having a maturity closest
to the relevant Interest Period adjusted for any reserves that the
Bank may now or hereafter be required or may elect to maintain
(irrespective of whether the Bank actually maintains all or any
portion of such reserve) and any assessment rate for insurance of
time deposits made in United States Dollars at the offices of the
Bank then charged by the Federal Deposit Insurance Corporation, or
any successor thereof, all as determined by the Bank.
(iii) As used herein, "Interest Period" shall mean
30, 60, 90 or 180 days, as designated by the Borrower, with respect
to Advances which bear interest at the Secondary CD Based Rate, and
one-month, two-months, three-months or six-months, as designated by
the Borrower, with respect to Advances which bear interest at the
LIBO Rate. For purposes of the foregoing, the period of time
commencing on any day of any month and continuing until the same
date of the immediately following month shall be deemed a period of
one month. No Interest Period shall extend beyond the Maturity
Date.
(c) The Borrower shall pay (i) all accrued and unpaid
interest on the outstanding principal amount of each Fixed Rate
Loan on the last day of the Interest Period applicable thereto (the
"Fixed Rate Interest Payment Date") and (ii) for each Fixed Rate
Loan having an Interest Period which exceeds 90 days or three
months, as the case may be, all unpaid interest accrued on such
Fixed Rate Loan on the last Business Day of such 90 day or three
month period following the making of such Fixed Rate Loan and on
the Fixed Rate Interest Payment Date; provided, however, that if
any Fixed Rate Interest Payment Date shall not be a Business Day,
then such payment shall be made on the next succeeding Business
Day, unless, with respect to a LIBO Rate Loan, the next such
succeeding Business Day falls in the next calendar month, in which
case such payment shall be made in the next preceding Business Day.
Unless the Borrower shall have requested a further Fixed Rate Loan
in accordance with the terms hereof, each Fixed Rate Loan shall
automatically convert to a Base Rate Loan on and as of the Fixed
Rate Interest Payment Date applicable thereto.
(d) Notwithstanding the foregoing, at no time shall the
Note bear interest at more than six interest rates.
(e) Overdue principal and, to the extent permitted by
law, overdue interest in respect of each Loan shall bear interest
at a rate per annum equal to the Base Rate plus three and one-half
percent (3.5%) per annum and shall be payable on demand.
2.6 Prepayments. (a) The Borrower shall have the right
to prepay the principal amount of the Note, in whole or in part, at
one time or from time to time. Except as described below with
respect to Fixed Rate Loans, there shall be no premium or penalty
as the result of such prepayment. Any prepayment of the Note shall
not permanently reduce the amount which may be borrowed pursuant to
Section 2.1 hereof and the Borrower may borrow, prepay and reborrow
in the manner provided herein. Each prepayment shall be made in
immediately available funds and shall be made (i) in the case of
Base Rate Loans, upon one Business Day's prior notice and (ii) in
the case of Fixed Rate Loans, upon three Business Day's prior
notice and shall be accompanied by accrued interest to the date of
such prepayment (and in the case of Fixed Rate Loans, the
applicable payments required under Section 3.2 hereof).
(b) If at any time the outstanding principal amount of
Advances hereunder exceeds the Available Commitment of the Bank at
such time, such excess amount shall be immediately due and payable.
It is expressly agreed that the foregoing does not in any way
impair or restrict the rights of the Bank under Section 3.2 hereof.
2.7 Use of Proceeds. All amounts advanced to the
Borrower hereunder shall be used for repayment of all amounts
outstanding under the Prior Credit Agreements and thereafter for
working capital and general corporate purposes.
2.8 Disbursement Procedure for Advances. All requests
for Advances shall be in writing or by telephone (promptly
confirmed in writing for Fixed Rate Loans) and shall state (i) the
principal amount requested, (ii) the requested date of advance and
(iii) with respect to Fixed Rate Loans, the interest rate selected
and the applicable Interest Period. Each request (i) for a Base
Rate Loan shall be made no later than 11:00 a.m. on the requested
date of advance, (ii) for a Secondary CD Based Rate Loan shall be
made at least two Business Days prior to the requested date of
advance and (iii) for a LIBO Rate Loan shall be made at least three
Business Days prior to the requested date of advance. Each Loan
shall be in a minimum principal amount of $1,000,000.
2.9 Commitment Fee. The Borrower agrees to pay to the
Bank a commitment fee on the average daily unused portion of the
Available Commitment from time to time, from the date hereof until
the earlier of the Maturity Date or the termination of the
Commitment as provided in Section 2.10 hereof, at the rate of 1/4
of 1% per annum, payable, in arrears, on the last Business Day of
each calendar quarter following the date hereof and on the Maturity
Date (or upon such earlier date as the Commitment shall be
terminated). The commitment fee shall be computed on the basis of
the actual number of days elapsed over a year of 360 days (having
12 months of 30 days each).
2.10 Termination or Reduction of the Commitment. The
Borrower shall have the right, upon no less than three Business
Days' prior written notice to the Bank, to terminate in whole or
reduce in part the unused portion of the Available Commitment,
provided that each partial reduction shall be in the amount of
$5,000,000. Simultaneously with any termination of the Available
Commitment, the Borrower shall pay the aforesaid commitment fee as
accrued and unpaid to the date thereof.
2.11 Net Payments. The Borrower shall make each payment
hereunder and under the Note not later than 12:00 Noon (New York
City time) on the day when due in lawful money of the United States
of America and in immediately available funds to the Bank at its
office set forth in Section 12.1 hereof, without set-off or
counterclaim, and in the case of any Fixed Rate Loan, without
deduction or withholding for any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (but
excluding, except as provided below, any tax imposed on or measured
by the net income of the Bank) and all interest, penalties or
similar liabilities with respect thereto (collectively, "Taxes").
If any Taxes are so levied or imposed, the Borrower agrees to pay
the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due hereunder,
under the Note or under any other Loan Document, after withholding
or deduction for or on account of any Taxes, will be not less than
the amount provided for herein or in the Note. The Borrower will
furnish to the Bank within 45 days after such payment of any Taxes,
or any withholding or deduction on account thereof, certified
copies of tax receipts evidencing such payment by the Borrower.
The Borrower will indemnify and hold harmless the Bank, and
reimburse the Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid or withheld by the Bank. If
the Bank shall obtain a refund, credit or deduction as a result of
the payment or indemnification for any Taxes made by the Borrower
to the Bank pursuant to this Section, the Bank shall pay to the
Borrower an amount with respect to such refund, credit or deduction
equal to any net tax benefit actually received by the Bank as a
result thereof which the Bank determines, in its sole discretion,
to be attributable to such payment.
2.12 Business Days. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on any day
other than a Business Day, then, except as otherwise provided in
Section 2.5 hereof, such payment shall be made on the next
succeeding Business Day and such extension of time shall in such
case be included in the computation of payment of interest (or
commitment fee).
2.13 Charge. Without in any way limiting any right of
offset, counterclaim or banker's lien which the Bank may otherwise
have at law, the Borrower hereby irrevocably authorizes and directs
the Bank, if and to the extent any payment of principal, interest
or any fee is not otherwise made on any day when due, to charge
against the Borrower's account or accounts at the Bank, an amount
or amounts equal in the aggregate to such aforesaid sums as are due
and payable from time to time to the Bank.
III. SPECIAL PROVISIONS
3.1 Alternate Interest Rate. If within one Business Day
of any date that the Borrower requests a Fixed Rate Loan, the Bank
shall determine in its sole discretion, reasonably exercised, that
it is unable to quote the requested Fixed Rate or that it is unable
to fund the requested Fixed Rate Loan for the Interest Period
requested, the Bank shall promptly notify the Borrower of such
determination and no Fixed Rate Loan shall be made by the Bank on
the borrowing date for which such request was made. Upon receipt
of such notification, the Borrower may withdraw any outstanding
request for a Fixed Rate Loan by giving written notice of
withdrawal to the Bank prior to such borrowing date. Unless
withdrawn in accordance with this Section 3.1, any outstanding
request for such Fixed Rate Loan shall be deemed to be a request
for a Base Rate Loan in equal principal amount, and such Base Rate
Loan shall be made on such borrowing date.
3.2 Indemnification. Except as provided in Section 3.1
hereof, each request for a Fixed Rate Loan shall be irrevocable and
binding upon the Borrower. The Borrower hereby agrees to indemnify
the Bank, upon demand by the Bank at any time, against any and all
actual losses (including any actual loss of profit), costs or
expenses which the Bank may at any time or from time to time
sustain or incur as a consequence of: (a) any breach by the
Borrower of its obligation to borrow on the borrowing date
specified in any Borrowing Notice requesting a Fixed Rate Loan, (b)
any failure by the Borrower to pay punctually on the due date
thereof, any amount payable by the Borrower to the Bank on Fixed
Rate Loans, (c) the acceleration of the time of payment of any of
the Borrower's obligations in respect of Fixed Rate Loans in
accordance with any of the provisions of this Agreement, (d) the
repayment or prepayment of the principal of any of the Fixed Rate
Loans on a date other than the end of the applicable Interest
Period or (e) the conversion of a Fixed Rate Loan to a Base Rate
Loan on a date other than the end of the applicable Interest
Period. Such losses, costs or expenses shall include, without
limitation, (i) any costs incurred by the Bank in carrying funds
which were to have been borrowed by the Borrower or in carrying
funds to cover any overdue principal, overdue interest or any other
overdue sums payable by the Borrower to the Bank in respect of
Fixed Rate Loans, (ii) any interest payable by the Bank to the
lenders of the funds referred to in the immediately preceding
clause (i), and (iii) any actual losses (including any actual loss
of profit) incurred or sustained by the Bank in liquidating or
reemploying funds acquired from third parties to make any of the
Fixed Rate Loans or to fund or maintain all or any part of the
principal of any of the Fixed Rate Loans.
3.3 Changes in Circumstances. If at any time, the Bank
shall reasonably determine that:
(a) the Bank is unable to obtain funds in the principal
amount specified in any request for a Fixed Rate Loan for periods
equal to the specified Interest Period;
(b) the Fixed Rate does not or will not accurately
reflect the cost to the Bank of obtaining or maintaining any Fixed
Rate Loan during any Interest Period despite the Borrower's
compliance with its obligations under Section 3.4 hereof; provided,
however, that the foregoing shall not apply to market fluctuations
of the Reserve Adjusted Secondary CD Rate or the Fixed LIBO Rate or
to changes in the Base LIBO Rate or the Secondary CD Based Rate
which are within the Bank's discretion and control; or
(c) any present or future law or regulation (or in the
interpretation thereof by any governmental authority charged with
the administration or interpretation thereof) has made or will make
it unlawful for the Bank to make or maintain any Fixed Rate Loan or
to comply with any of the Bank's obligations in respect of any
Fixed Rate Loans;
then, in each case, the Bank may promptly give notice of such
determination and reasons for the determination to the Borrower.
Upon such notification, the Bank's obligation to make Fixed Rate
Loans shall be suspended until the Bank determines that the
circumstances described in subparagraphs (a), (b) and (c) of this
Section 3.3 have ceased to exist. Following the Bank's notice
under subparagraphs (b) or (c) of this Section 3.3, all outstanding
applicable Fixed Rate Loans of the Bank shall be converted to Base
Rate Loans at the end of the applicable Interest Period; provided,
however, that if it shall be unlawful for the conversion of such
Fixed Rate Loans to Base Rate Loans to be effective as of the end
of the applicable Interest Period, such conversion shall be deemed
to occur as of the date of such notice by the Bank.
3.4 Additional Costs and Expenses. The Borrower
recognizes that the cost to the Bank of making or maintaining Fixed
Rate Loans or any portion thereof may fluctuate, and the Borrower
agrees to pay to the Bank, within ten (10) days after written
demand, an additional amount or amounts as the Bank shall
reasonably determine will compensate the Bank for additional costs
incurred by the Bank in maintaining Fixed Rate Loans or any portion
thereof as a result of:
(i) the imposition after the date of any Fixed Rate
Loan of, or changes after the date of any Fixed Rate Loan in, the
reserve requirements promulgated by the Board of Governors of the
Federal Reserve System of the United States, including, but not
limited to, any reserve on Eurocurrency Liabilities as defined in
Regulation D of the Board of Governors of the Federal Reserve
System of the United States at the ratios provided in such
Regulation from time to time, it being agreed that the portion or
portions of the Note bearing interest at Fixed Rates shall be
deemed to constitute Eurocurrency Liabilities, as defined by the
such Regulation, and it being further agreed that such Eurocurrency
Liabilities shall be deemed to be subject to such reserve
requirements without benefit of, or credit for, prorations,
exceptions or offsets that may be available to the Bank or from
time to time under such regulations, and irrespective of whether
the Bank actually maintains all or any portion of the reserve; or
(ii) any change, after the date of any Fixed Rate
Loan, in any applicable laws, rules or regulations or in the
interpretation or administration thereof by any domestic or foreign
governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) or
by any domestic or foreign court changing the basis of taxation of
payments to the Bank of the principal of or the interest on any
Fixed Rate Loan or any other payments made hereunder (other than
taxes imposed on all or any portion of the overall net income of
the Bank), or imposing, modifying or applying any reserve, special
deposit or similar requirement against assets of, deposits with or
for the account of, credit extended by, or any other acquisition of
funds for loans by the Bank, or imposing on the Bank or on the
London Interbank Market any other condition affecting this
Agreement or the portion or portions of the Note bearing interest
at Fixed Rates so as to increase the cost to the Bank of making or
maintaining Fixed Rate Loans or to reduce the amount of any sum
received or receivable by the Bank under the Note (whether of
principal, interest or otherwise); or
(iii) if after the date of any Fixed Rate Loan, the
Bank shall have determined that the applicability of any law, rule,
regulation or guideline adopted or arising out of the July 1988
report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after
the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change therein, or any change in
any of the foregoing or in the interpretation or administration of
any of the foregoing by any domestic or foreign governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank
or by the Bank's parent holding company, if any, with any request
or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return
on the Bank's capital, or on the capital of the Bank's parent
holding company, if any, as a consequence of the Bank's obligations
with respect to the Advances or under a Note or this Agreement, to
a level below that which the Bank, or the Bank's parent holding
company, if any, could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's, or the Bank's,
parent holding company's policies, if any, with respect to capital
adequacy).
Any amount or amounts payable by the Borrower to the Bank
in accordance with the provisions of this Section shall be paid
within ten (10) days of receipt by the Borrower from the Bank of a
statement setting forth the amount or amounts due and the basis for
the determination from time to time of such amount or amounts,
which statement shall be conclusive and binding upon the Borrower
absent manifest error. Failure on the part of the Bank to demand
compensation for any increased costs in any Interest Period shall
not constitute a waiver of the Bank's right to demand compensation
for any increased costs incurred during any such Interest Period or
in any other or subsequent or prior Interest Period; provided,
however, the Borrower shall have no liability for any such claims
not made by the Bank within one year following the full payment of
all Advances owing to the Bank hereunder.
IV. LETTERS OF CREDIT
4.1 L/C Commitment. (a) Subject to the terms and
conditions hereof, the Bank agrees to issue standby letters of
credit ("Letters of Credit") for the account of the Borrower on any
Business Day prior to the Maturity Date in such form as may be
approved from time to time by the Bank; provided that the Bank
shall have no obligation to issue any Letter of Credit if, after
giving effect to such issuance, (i) the L/C Obligations would
exceed the L/C Commitment or (ii) the Available Commitment would be
less than zero.
(b) Each Letter of Credit shall (i) be denominated in
U.S. Dollars and shall be a standby letter of credit issued to
support obligations of the Borrower, contingent or otherwise, to
provide credit support for workers' compensation, other insurance
programs and other corporate purposes and (ii) expire no later than
one Business Day prior to the Maturity Date.
(c) Each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time, and, to the extent
not inconsistent therewith, the laws of the State of New Jersey.
(d) The Bank shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict
with, or cause the Bank to exceed any limits imposed by, any
applicable law, treaty, rule or regulation of any governmental,
regulatory or judicial authority.
4.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that the Bank issue a Letter
of Credit by delivering to the Bank at its address for notices
specified herein an Application therefor, completed to the
satisfaction of the Bank, and such other certificates, documents
and other papers and information as the Bank may reasonably
request. Upon receipt of any Application, the Bank will process
such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue
the Letter of Credit requested thereby by issuing the original of
such Letter of Credit to the beneficiary thereof or as otherwise
may be agreed by the Bank and the Borrower. The Bank shall furnish
a copy of such Letter of Credit to the Borrower promptly following
the issuance thereof.
4.3 Fees, Commissions and Other Bank Charges. (a) The
Borrower shall pay to the Bank a non-refundable letter of credit
fee in respect of each Letter of Credit (the "Letter of Credit
Fee") for the period from and including the date of issuance of
such Letter of Credit to and including the termination date of such
Letter of Credit, computed at the rate of one percent (1%) per
annum on the average daily Stated Amount of such Letter of Credit.
Letter of Credit Fees shall accrue and be due and payable in
immediately available funds quarterly in arrears on the last
Business Day of each calendar quarter of each year and, with
respect to each Letter of Credit, on the date upon which such
Letter of Credit terminates in accordance with its terms.
(b) In addition to the foregoing fees and commissions,
the Borrower shall pay or reimburse the Bank for such normal and
customary costs and expenses as are incurred or charged by the Bank
in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
4.4 Reimbursement Obligation of the Borrower. (a) The
Borrower agrees to reimburse the Bank on each date on which the
Bank notifies the Borrower of the date and amount of a draft
presented under any Letter of Credit and paid by the Bank for the
amount of (i) such draft so paid and (ii) any taxes, fees, charges
or other costs or expenses incurred by the Bank in connection with
such payment. Each such payment shall be made to the Bank at its
address for notices specified herein in lawful money of the United
States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this subsection from the
date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which
would be payable on any outstanding Base Rate Loans.
(c) Each drawing under any Letter of Credit shall
constitute a request by the Borrower to the Bank for a Base Rate
Loan in the amount of such drawing, and each such Base Rate Loan
shall be deemed to have been made as of the date of such drawing.
4.5 Obligations Absolute. (a) The Borrower's obliga-
tions under Section 4.4(a) shall be absolute and unconditional
under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or
have had against the Bank or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Bank that the Bank
shall not be responsible for, and the Borrower's reimbursement
obligations hereunder shall not be affected by, among other things,
(i) the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any
other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Borrower against any beneficiary
of such Letter of Credit or any such transferee.
(c) The Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or
omissions caused by the Bank's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted
by the Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the
standards of care specified in the Uniform Commercial Code of the
State of New Jersey, shall be binding on the Borrower and shall not
result in any liability of the Bank to the Borrower.
4.6 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Bank shall
promptly notify the Borrower of the date and amount thereof. The
responsibility of the Bank to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in
addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter
of Credit.
4.7 Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent
with the provisions of this Article IV, the provisions of this
Article IV shall apply.
V. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Advance. The
obligation of the Bank to make the initial Advance hereunder or to
issue the initial Letter of Credit (whichever is earlier) is
subject to the following conditions precedent:
(a) The Bank shall have received each and every one of
the following on or before the day of such Advance or the issuance
of such Letter of Credit (as the case may be) in form and substance
satisfactory to the Bank:
(i) An originally executed copy of this Agreement
and the Note;
(ii) A copy of the certificate of incorporation and
bylaws of the Borrower, in each case, certified as a true copy by
the Secretary or an Assistant Secretary of the Borrower;
(iii) A good standing certificate with respect to the
Borrower issued as of a recent date by the Secretary of State of
the State of Delaware and the Secretary of State or other
appropriate State official of each of the States set forth on
Schedule I attached hereto;
(iv) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true signatures
of the officers of the Borrower authorized to sign this Agreement
and the Note;
(v) A copy of the resolutions approved by the Board
of Directors of the Borrower authorizing the execution, delivery
and performance by the Borrower of each of the Loan Documents,
certified as a true copy by the Secretary or an Assistant Secretary
of the Borrower;
(vi) A certificate of the Borrower, dated as of such
date, to the effect that (a) each of the representations and
warranties of the Borrower set forth herein are true, correct and
complete with the same effect as though such representations and
warranties were made on and as of such date and (b) no Default or
Event of Default then exists and is continuing;
(vii) An opinion of counsel to the Borrower substan-
tially in the form set forth in Exhibit B attached hereto;
(viii) A search report issued or prepared by a state
official or private search firm acceptable to the Bank as of a
recent date setting forth a list (and complete copies thereof) of
(i) all UCC-1 financing statements in which the Borrower is named
as debtor which are then on file or of record and (ii) all federal
and state tax liens imposed upon or asserted against the Borrower
or its properties or assets, in each case, as may be found in the
files and records of the Secretary of State of the State of
Delaware and the Secretary of State or other appropriate state
official of each of the States set forth on Schedule I attached
hereto;
(ix) a Certificate, duly executed and delivered by
an authorized officer of Bankers Trust, the Borrower and certain of
its Subsidiaries, dated as of such date, substantially in the form
of Exhibit C attached hereto;
(x) Such other approvals, opinions, certificates or
documents as the Bank may reasonably request; and
(b) No event, action or proceeding shall have occurred
(and the Bank shall not have become aware of facts or conditions
not previously known) since December 31, 1993 which, in the opinion
of the Bank, could reasonably be expected to materially adversely
affect (i) the operations, business, property, assets, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole or (ii) the rights and remedies of
the Bank, or the ability of the Borrower to perform its
obligations, under any of the Loan Documents.
5.2 Conditions Precedent to Additional Advances. The
Bank shall have no obligation to make any additional Advance
subsequent to the initial Advance or to issue any additional Letter
of Credit subsequent to the initial Letter of Credit unless the
following conditions precedent have been either satisfied or waived
by the Bank prior to or concurrently with the making of such
Advance or the issuance of such Letter of Credit:
(a) The Loan Documents shall be in full force and effect
and no Default or Event of Default shall exist and be continuing;
and
(b) Each of the representations and warranties made by
the Borrower in or pursuant to the Loan Documents shall be true and
correct in all material respects on and as of such date as if made
on and as of such date.
Each borrowing by, and Letter of Credit issued on behalf
of, the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan and/or Letter
of Credit that the conditions contained in this Section 5.2 have
been satisfied.
VI. REPRESENTATIONS AND WARRANTIES
6. In order to induce the Bank to enter into this
Agreement and, among other things, make the Advances and issue the
Letters of Credit, the Borrower hereby represents, warrants and
agrees that:
6.1 Organization; Power; Qualification. The Borrower
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) has the full
power and authority to own and operate its properties and assets
and to carry on the business now conducted by it and (iii) is
qualified or authorized to do business and in good standing in all
jurisdictions wherein the character of the property owned or the
nature of the business conducted by the Borrower makes such
qualification or authorization necessary, except such jurisdictions
in which the lack of qualification or authorization does not
materially adversely effect the business, results of operations or
financial condition of the Borrower.
6.2 Authorization of Agreement. The Borrower has full
power and authority to execute, deliver and perform any action or
step which may be necessary to carry out the terms of the Loan
Documents; each Loan Document to which the Borrower is a party has
been duly executed and delivered by the Borrower and is the legal,
valid and binding obligation of the Borrower enforceable in
accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, or other laws
relating to or affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
6.3 No Legal Bar. The execution, delivery and
performance of the Loan Documents will not (i) violate any
provision of any existing law, statute, rule, regulation or
ordinance (ii) conflict with, result in a breach of or constitute
a default under (a) the certificate of incorporation or by-laws of
the Borrower or (b) any order, judgment, award or decree of any
court, governmental authority, bureau or agency known to the
Borrower, or (c) any mortgage, indenture, lease, contract or other
agreement or undertaking to which the Borrower is a party and which
is material to its business or operations or by which the Borrower
or any of its material properties or assets may be bound, or (iii)
result in the creation or imposition of any lien or other
encumbrance upon or with respect to any property or asset now owned
by the Borrower other than in favor of the Bank.
6.4 Consent. No consent, license, permit, approval or
authorization of, exemption by, notice to, report to, or
registration, filing or declaration with any Person is required in
connection with the execution, delivery, performance or validity of
the Loan Documents or the transactions contemplated thereby.
6.5 Compliance With Law. Neither the Borrower nor any
of its Subsidiaries is in violation of any applicable law, rule,
regulation, statute, ordinance, or any order, judgment, award or
decree of any court, governmental authority, bureau or agency, the
violation of which would reasonably be expected to have a material
adverse affect on the business, assets, liabilities, financial
condition or results of operations of the Borrower and its
Subsidiaries taken as a whole.
6.6 Environmental Matters. The Borrower and each of its
Subsidiaries have substantially complied with, and on the date
hereof are in substantial compliance with, all applicable
environmental laws, rules and regulations and the requirements of
any material permits issued thereunder, and there are no pending
or, to the best knowledge of the Borrower after due inquiry,
threatened claims involving environmental matters against the
Borrower or any of its Subsidiaries or any real property owned or
operated by the Borrower or any of its Subsidiaries that
individually or in the aggregate could reasonably be expected to
materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
Neither the Borrower nor any of its Subsidiaries has at any time
generated, used, treated or stored any hazardous materials or
hazardous wastes (as such terms are defined in federal or state
environmental legislation or regulation) on, or transported the
same to or from, any real property owned or operated by the
Borrower or any of its Subsidiaries where such generation, use,
treatment or storage has violated or could reasonably be expected
to violate any environmental law, rule or regulation in a manner
which could reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
6.7 Properties. The Borrower and each of its
Subsidiaries have good title to all properties owned by them which
are properly classified as "current assets" in accordance with
GAAP, including all current assets reflected in the balance sheets
of the Borrower as referred to in Section 6.12 (except as sold or
otherwise disposed of since the date of such balance sheet), free
and clear of all Liens, other than Liens otherwise permitted by
Section 8.1.
6.8 No Default. Neither the Borrower nor any of its
Subsidiaries is in default in any material respect in the payment
or performance of any of its obligations or in the performance of
any mortgage, indenture, lease, contract or other agreement or
undertaking to which it is a party or by which it or any of its
properties or assets may be bound, which default may materially
adversely affect the business or operations of the Borrower and its
Subsidiaries taken as a whole, and no Default or Event of Default
has occurred and is continuing. Neither the Borrower nor any of
its Subsidiaries is in default under any order, award or decree of
any court, arbitrator, or governmental authority binding upon or
affecting it or by which any of its properties or assets may be
bound or affected, and no such order, award or decree, if any,
materially adversely affects the ability of the Borrower to carry
on its business as presently conducted or to perform its
obligations under the Loan Documents.
6.9 No Litigation. No litigation, investigation or
proceeding of or before any court, arbitrator or governmental
authority is currently pending, nor, to the knowledge of the
Borrower, threatened, against the Borrower or any of its
Subsidiaries or any of their respective properties and revenues,
which, if adversely determined, would materially adversely affect
the ability of the Borrower to carry on its business as presently
conducted or to perform its obligations under the Loan Documents.
6.10 No Burdensome Restrictions. Neither the Borrower
nor any of its Subsidiaries is a party to nor is bound by any
contract or agreement or instrument nor subject to any restriction
materially and adversely affecting the business, results of
operations or financial condition of the Borrower and its
Subsidiaries taken as a whole.
6.11 Tax Returns and Payments. All federal, state and
other tax returns of the Borrower and its Subsidiaries required by
law to be filed have been duly filed, and all federal, state and
other taxes, assessments and governmental charges or levies upon
the Borrower and its Subsidiaries or any of their respective
properties, income, profits or assets which are due and payable
have been paid, except such tax returns the nonfiling of which, and
such taxes the non-payment of which, would not have a material
adverse effect upon the business, assets, liabilities, financial
condition or results of operations of the Borrower and its
Subsidiaries taken as a whole and except for such taxes and
assessments which the Borrower is disputing in good faith and for
which the Borrower has established adequate reserves on its books
for the payment of such disputed taxes or assessments in accordance
with GAAP.
6.12 Financial Statements. The Borrower has furnished to
the Bank copies of (i) the consolidated balance sheets of the
Borrower and its Subsidiaries as of December 31, 1992 and December
31, 1993 and the related consolidated statements of income,
shareholders' equity (deficit) and cash flows for the fiscal years
then ended, certified (in the case of the December 31, 1992
statements) by KPMG Peat Marwick, certified public accountants, and
(ii) the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as of September 30, 1993 and the related unaudited
consolidated statements of income, shareholders' equity (deficit)
and cash flows for the nine months then ended, certified by the
chief financial officer of the Borrower. Such financial statements
present fairly the consolidated financial condition and results of
operations of the Borrower and its Subsidiaries as of the dates and
for the periods indicated (subject, with respect to the unaudited
statements, to audit and normal year-end adjustments), and such
year-end balance sheets, and, to the best of the Borrower's
knowledge, such unaudited interim balance sheet (in each case,
together with the notes thereto) show all known direct liabilities
and all known contingent liabilities of a material nature of the
Borrower and its Subsidiaries in accordance with GAAP as of the
dates and for the periods indicated.
6.13 No Adverse Changes. Since December 31, 1993, no
material adverse change has occurred in the business, assets,
liabilities, financial condition or results of operations of the
Borrower and its Subsidiaries taken as a whole.
6.14 ERISA. (a) The Borrower and each of its
Subsidiaries is in compliance in all material respects with the
applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and all regulations issued
thereunder.
(b) No "employee benefit plan", as defined in Section 3
of ERISA, maintained by Borrower or any of its Subsidiaries, as
from time to time in effect (the "Plans"), nor any trusts created
thereunder, nor any trustee or administrator thereof, has engaged
in a "prohibited transaction," as defined in Section 4975 of the
Internal Revenue Code of 1986, as amended, which could subject the
Borrower, any Subsidiary, any Plan or any such trust, or any
trustee or administrator thereof, or any party dealing with any
Plan or any such trust to the tax or penalty on prohibited
transactions imposed by said Section 4975. Neither any of the
Plans nor any such trusts have been terminated, nor has there been
any "reportable event," as defined in Section 4043 of ERISA, or any
"accumulated funding deficiency" (as defined therein) with respect
thereto. Neither the Borrower nor any of its Subsidiaries has
incurred any liability to the Pension Benefit Guaranty Corporation.
6.15 Federal Reserve Regulations. Neither the Borrower
nor any of its Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for
the purpose of purchasing or carrying any margin stock (within the
meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System). No part of any of the Advances hereunder
shall be used to purchase or carry any such margin stock or to
extend credit to others for the purpose of purchasing or carrying
any such margin stock.
6.16 Subsidiaries. None of the Borrower's Domestic
Subsidiaries are Significant Subsidiaries.
6.17 Solvency. On and as of the date hereof and the date
of each Advance or issuance of Letters of Credit hereunder, and
after giving effect to all Obligations which may be created
hereunder, (i) the sum of the assets, at a fair valuation, of the
Borrower and its Subsidiaries taken as a whole will exceed their
debts, (ii) the Borrower and its Subsidiaries taken as a whole have
not incurred and do not intend to, or believe that they will, incur
debts beyond their ability to pay such debts as such debts mature,
and (iii) the Borrower and its Subsidiaries taken as a whole will
have sufficient capital and assets with which to conduct their
businesses. For purposes of this Section, the term "debt" means
any liability on a claim, and the term "claim" means a right to
payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured.
6.18 Use of Proceeds. The initial Advance hereunder
shall be applied to the payment in full of all amounts outstanding
under the Prior Credit Agreements and each Advance thereafter shall
be used by the Borrower for working capital and general corporate
purposes.
6.19 Certain Regulations. Neither the Borrower nor any
of its Subsidiaries is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, nor a "holding
company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of
a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, nor otherwise subject to
any foreign or domestic, federal, state, local or municipal law,
statute, regulation, ordinance or executive order which limits its
ability to incur Indebtedness.
6.20 Intellectual Property. Each of the Borrower and its
Subsidiaries owns or licenses all material patents, trademarks,
service marks, tradenames, copyrights, licenses, franchises and
formulas, or rights with respect to the foregoing, or each has
obtained assignments of all licenses and other rights of whatever
nature necessary for the conduct of its business as now and
contemplated to be conducted, in each case, to the Borrower's
knowledge, without any conflict with or infringement of the rights
of others which, or the failure to obtain which, as the case may
be, is likely to result in a material adverse effect on the
business, operations, property, assets, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
6.21 Permanent Subordinated Debentures. The Borrower is
not in violation of, and is in full compliance with, all of the
terms and provisions of the Permanent Subordinated Debentures, all
of which terms and provisions are valid, binding and enforceable in
accordance with their respective terms, and all Loans and
Obligations hereunder constitute "Senior Indebtedness" as defined
therein.
6.22 Accuracy and Completeness of Information. No
document furnished or statement made in writing to the Bank by the
Borrower in connection with the negotiation, preparation or
execution of this Agreement or any of the other Loan Documents
contains any untrue statement of a material fact or omits to state
any such material fact necessary in order to make the statements
contained therein not misleading.
VII. AFFIRMATIVE COVENANTS
7. The Borrower covenants and agrees that until all the
Obligations have been satisfied and paid in full and the Bank has
no further obligation to make any Advance or issue, or pay any draw
under, any Letter of Credit hereunder, the Borrower will comply
with the following covenants:
7.1 Preservation of Existence. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve and maintain in full force and effect
its corporate existence and all contracts, rights, licenses,
permits, franchises, patents, trademarks and trade names, all of
the foregoing to the extent the same are, in its reasonable
judgment, necessary or material to the proper conduct of its
business and shall qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in
which the character of the property owned or the nature of the
business conducted by it makes such qualification or authorization
necessary, except such jurisdictions in which the lack of
qualification or authorization does not materially adversely affect
the business, results of operation or financial condition of the
Borrower and its Subsidiaries taken as a whole.
7.2 Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws,
ordinances, governmental rules and regulations to which it or its
properties or assets is, or might become subject (unless the same
shall be contested in good faith and by appropriate proceedings and
such contest shall operate to stay any such non-compliance), the
noncompliance with which would materially interfere with the
performance of the Borrower's obligations under the Loan Documents
or with the proper conduct of its business.
7.3 Accounting Methods; Inspections. The Borrower will
maintain a system of accounting established and administered in all
material respects in accordance with GAAP and will keep adequate
records and books of account in which complete entries will be made
in all material respects in accordance with GAAP. The Borrower
will permit officers and representatives of the Bank to visit and
inspect any of the properties or assets of the Borrower or any of
its Subsidiaries and to examine and make extracts of the books of
account of the Company or any of its Subsidiaries at all reasonable
times and to such reasonable extent as the Bank may reasonably
request.
7.4 Maintenance of Property; Insurance. The Borrower
will, and will cause each of its Subsidiaries to, keep all material
property necessary in its business in good working order and
condition, subject to ordinary wear and tear and routine
maintenance. The Borrower will, and will cause each of its
Subsidiaries to, maintain with reputable insurance companies, to
the same extent and in such amounts and manner as do companies
engaged in similar lines of business under similar circumstances,
insurance on its business, fixed assets, inventory and other
properties, workers' compensation or similar insurance as required
by law and adequate public liability insurance against claims for
personal injury or death or property damage occurring upon, in,
about or in connection with the use of any property owned, occupied
or controlled by it.
7.5 Payment of Taxes. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any of its properties or assets
before the same shall become delinquent; provided, however, that
none of the foregoing need be paid while being contested in good
faith and by appropriate proceedings, so long as adequate book
reserves have been established in accordance with GAAP with respect
thereto and the Borrower's or such Subsidiary's title to, and its
right to use, its properties are not materially adversely affected
thereby.
7.6 Information Covenants. The Borrower will furnish
the following information to the Bank:
(a) Monthly Reports. Within 30 days after the end of
each fiscal month other than the last such month of any fiscal
quarter of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such month and the
related consolidated statements of income and sources and uses of
cash for such month and for the elapsed portion of the fiscal year
ended with the last day of such month, in each case setting forth
comparative figures for the corresponding month in the prior fiscal
year (except that the statement of sources and uses of cash need
only be presented on a current year-to-date basis).
(b) Quarterly Financial Statements. As soon as
practicable and, in any case, within 45 days after the close of
each of the first three quarterly accounting periods in each fiscal
year of the Borrower, a consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such quarterly period and the
related consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for such period and for the elapsed
portion of the fiscal year ended with the last day of such
quarterly period, setting forth in comparative form the figures for
the corresponding periods of the previous fiscal year, which
financial statements shall be certified by the chief financial
officer of the Borrower as presenting fairly, in accordance with
GAAP consistently applied throughout the period involved, the
financial condition of the Borrower and its Subsidiaries as at the
end of such period and the results of operations and changes in
cash flows for such period and for the elapsed portion of the
fiscal year ended with the last day of such period, in each case on
the basis presented and subject only to normal year-end auditing
adjustments.
(c) Annual Statements; No-Default Certificate. As soon
as practicable and, in any case, within 90 days after the end of
each fiscal year of the Borrower, a consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year
and the related consolidated statements of income, shareholders'
equity and cash flows of the Borrower and its Subsidiaries for such
fiscal year, setting forth in comparative form the figures as at
the end of and for the previous fiscal year, certified by KPMG Peat
Marwick or other independent certified public accountants of
recognized national standing, whose certificate shall state that
such consolidated financial statements have been prepared in
accordance with GAAP consistently applied and that the examination
of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards, and accordingly, included such tests of the accounting
records and such other auditing procedures as were considered
necessary. Together with such financial statements, the Borrower
shall deliver a certificate of such accountants (a) stating that in
making the examination necessary for the certification of such
consolidated financial statements they have obtained no knowledge
of any Default, or if they shall have obtained knowledge of any
such Default, disclosing each such Default and its nature, when it
occurred and whether it is continuing and (b) which shall have
attached the calculations made which are required to establish
whether or not the Borrower was, as of the date of such statements,
in compliance with the financial covenants contained in Sections
8.6, 8.7 and 8.8 of this Agreement.
(d) Certificate. At the time the financial
statements are furnished pursuant to subsections (b) and (c) above,
the Borrower shall also furnish a certificate of the chief
executive officer or chief financial officer of the Borrower
setting forth as at the end of such quarterly period or fiscal
year, as the case may be, the calculations required to establish
whether or not the Borrower was in compliance with the financial
covenants contained in Sections 8.6, 8.7 and 8.8 of this Agreement
as of the end of such quarterly period or fiscal year, as the case
may be, and stating that no event has occurred which constitutes a
Default or an Event of Default under any of the Loan Documents or,
if such an event has occurred, disclosing each such event or
failure and its nature, when it occurred, whether it is continuing
and the steps being taken by the Borrower with respect to such
event or failure.
(e) Copies of Other Reports. As soon as
practicable, copies of all such financial statements and reports
(including proxy statements) as the Borrower shall send to its
stockholders and of all registration statements filed with respect
to any material public offering of securities (other than
registration statements relating solely to stock option plans
available to employees or to other employee benefit plans) and all
regular, special or periodic reports (including reports on Form 8-
K) which the Borrower shall file, or may be required to file, with
the Securities and Exchange Commission;
(f) Notice of Litigation and Other Matters. Prompt
notice of:
(i) the commencement of any proceeding or
investigation by or before any governmental body and any action and
proceeding in any court or before any arbitrator against or in any
other way relating adversely to the Borrower or any of its
Subsidiaries or any of their respective properties, assets or
businesses, which is required to be disclosed in any Form 10-K, 10-
Q or 8-K under the federal securities laws;
(ii) any written notice received from any
administrative official or agency relating to any order or ruling
which would materially and adversely affect the operations of the
Borrower and its Subsidiaries taken as a whole;
(iii) any amendment of the certificate of
incorporation or by-laws of the Borrower which materially adversely
affects its ability to perform its Obligations under any of the
Loan Documents; and
(iv) any Default or Event of Default by the
Borrower hereunder or any default under the Permanent Subordinated
Debentures or any other Indebtedness for money borrowed (which
exceeds $5,000,000 in the aggregate) to which the Borrower is a
party or by which any of its properties may be bound.
(g) ERISA.
(i) As soon as possible, and in any event within 30
days after any executive officer of the Borrower knows or has
reason to know that any material reportable event (as defined in
Section 4043 of ERISA) with respect to any Plan has occurred, a
statement of the chief financial officer setting forth details as
to such reportable event and the action that the Borrower proposes
to take with respect thereto, together with a copy of the notice of
such reportable event given to the Pension Benefit Guaranty
Corporation; and
(ii) Promptly after receipt thereof, a copy of any
notice the Borrower may receive from the Pension Benefit Guaranty
Corporation relating to the intention of said Corporation to
terminate any Plan or to appoint a trustee to administer any Plan.
(h) Other Information. From time to time, such other
information or documents, including without limitation, all
"management letters" received from any certified public
accountants, as the Bank may reasonably request.
7.7 Accuracy and Completeness of Information. The
Borrower covenants that all written information, reports,
statements and other papers and data furnished to the Bank by the
Borrower pursuant to any provision or term of any of the Loan
Documents shall be, at the time the same is so furnished, complete
and correct in all material respects.
VIII. NEGATIVE COVENANTS
8. The Borrower covenants and agrees that until all the
Obligations have been satisfied and paid in full and the Bank has
no further obligation to make any Advance or issue, or pay any draw
under, any Letter of Credit hereunder, the Borrower will comply
with the following covenants:
8.1 Liens. The Borrower shall not, nor shall it permit
any of its Domestic Subsidiaries to, create, assume or incur or
cause to be created, assumed or incurred, or permit to exist, any
Liens on any properties or assets which are properly classified as
"current assets" under GAAP, other than:
(a) Liens in favor of the Bank;
(b) Liens upon (i) any current assets acquired (whether
by purchase, merger or otherwise) after the date hereof (and not
theretofore owned by the Borrower or any of its Subsidiaries) or
(ii) any current assets now owned or hereafter acquired securing
the purchase price thereof or created or incurred simultaneously
with, or within 180 days after, such acquisition or existing at the
time of such acquisition (whether or not assumed) if (x) such Liens
shall be limited to the current assets so acquired, (y) the amount
of the obligations or indebtedness secured by such Liens shall not
be increased after the date of the acquisition of such current
assets, and (z) the aggregate amount of the obligations or
indebtedness secured by such Lien shall not exceed the lower of the
cost or fair value (as reasonably determined by the Borrower) of
the current assets at the time of the acquisition thereof;
(c) Liens (1) for taxes, assessments or governmental
charges or levies not yet delinquent or thereafter payable without
penalty or interest or which are being contested in good faith and
by appropriate proceedings promptly initiated and diligently
conducted and for which reserves have been established in
accordance with GAAP with respect thereto and as to which
foreclosure, distraint, sale or other similar proceedings shall not
have been commenced, and (2) of carriers, warehousemen, mechanics
and materialmen incurred in the ordinary course of business for
sums not yet due or which are being contested in good faith and by
appropriate proceedings promptly initiated and diligently conducted
and for which reserves have been established in accordance with
GAAP with respect thereto;
(d) (1) Liens incurred or deposits made in the ordinary
course of business in connection with workmen's compensation,
unemployment insurance, social security and other like laws, or (2)
cash deposits made or other Liens incurred in the ordinary course
of business to secure the performance of letters of credit, bids,
tenders, public or statutory obligations, surety, customs, appeal
and performance bonds and other similar obligations not incurred in
connection with the borrowing of money or the obtaining of advances
or the payment of the deferred purchase price of property;
(e) judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed, the claims
secured thereby are being actively contested in good faith by
appropriate proceedings, adequate book reserves have been
established in accordance with GAAP with respect thereto and no
Default or Event of Default arises or is created as a result
thereof;
(f) junior and subordinated Liens in form and substance
satisfactory to the Bank executed in favor of the holders of the
Permanent Subordinated Debentures as required by the indenture or
indentures governing the Permanent Subordinated Debentures;and
(g) rights of set-off or other similar statutory Liens
granted to banks or other financial institutions with respect to
monies, deposits or other funds held by, in, or on behalf of, such
banks or financial institutions.
8.2 Significant Subsidiaries. The Borrower shall not,
nor shall permit any of its Subsidiaries to, establish, create,
acquire or maintain any Significant Subsidiary unless the Borrower
shall cause, as it shall elect (i) such Significant Subsidiary to
execute and deliver to the Bank an unconditional guaranty of all
Obligations, which guaranty shall be in form and substance
satisfactory to the Bank in all respects or (ii) all of the capital
stock of such Significant Subsidiary to be pledged to the Bank (as
a first priority lien) in a manner satisfactory to the Bank in all
respects or (iii) this Agreement to be amended (in a manner
satisfactory to the Bank) so that the Available Commitment shall
not exceed at any time the sum of (a) 80% of the eligible accounts
receivable of the Borrower and its Domestic Subsidiaries on a
consolidated basis and (b) 50% of the eligible inventory of the
Borrower and its Domestic Subsidiaries on a consolidated basis, in
each case, as such eligibility shall be determined by the Bank in
accordance with its then prevailing practices and procedures.
8.3 Accounts Receivable. The Borrower shall not, nor
shall it permit any of its Domestic Subsidiaries to, grant any
extension of the time of payment of any of its accounts receivable,
or compromise, compound or settle the same for less than the full
amount thereof, or release, wholly or partly, any Person liable for
the payment thereof, or allow any credit or discount whatsoever
thereon, in each case, except (i) as otherwise arising in the
ordinary course of business, consistent with past practice, and
which, in the aggregate, will not have a material adverse effect
upon the business, assets, results of operation, condition
(financial or otherwise) or property of the Borrower and its
Subsidiaries taken as a whole and (ii) as may be required under the
terms of any liquidation or reorganization of any account debtor or
other Person liable thereon.
8.4 Permanent Subordinated Debentures. The Borrower
shall not repay, prepay, redeem or otherwise purchase or acquire
for value any of the Permanent Subordinated Debentures if, as a
result thereof, the outstanding principal amount of Permanent
Subordinated Debentures shall be less than $125,000,000.
8.5 Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into any
transaction or series of related transactions, with any Affiliate
of the Borrower or any of its Subsidiaries, other than on terms and
conditions substantially as favorable to the Borrower or such
Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm's-length transaction
with a Person other than an Affiliate; provided, however, that the
foregoing shall not apply to loans and advances incurred or made in
the ordinary course of business and consistent with past practice
or intercompany transactions between or among the Company and its
Subsidiaries in accordance with their respective ordinary course of
business.
8.6 Minimum Adjusted Net Worth. The Borrower will not
permit Adjusted Net Worth as of December 31, 1994 to be less than
$200,000,000.
8.7 Current Ratio. The Borrower will not permit the
ratio of Consolidated Current Assets to Consolidated Current
Liabilities as of the last day of any fiscal quarter to be less
than 1.1:1.
8.8 Interest Coverage Ratio. The Borrower will not
permit the ratio of EBITDA to Consolidated Cash Interest Expense
for any period of four consecutive fiscal quarters (taken as one
accounting period) to be less than 2.4:1.
IX. EVENTS OF DEFAULT
9. Each of the following shall constitute an Event of
Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule
or regulation of any governmental body.
9.1 The Borrower (i) fails to pay any principal amount
payable under the Note or hereunder on any date when due or (ii)
fails to make any payment of interest or any other fee or amount
payable under the Note or hereunder within 5 days from any day when
due.
9.2 If any warranty or representation made by the
Borrower contained herein or in any document furnished in
compliance with the provisions hereof is false or incorrect in any
material respect when made.
9.3 The Borrower shall default in the performance or
observance of any covenant or agreement set forth in Sections 8.3,
8.4, 8.6, 8.7 or 8.8 of this Agreement.
9.4 The Borrower shall default in the performance or
observance of any other covenant or agreement contained in this
Agreement or in the Note (which is not the subject of Section 9.1
or 9.3 above) and such default shall continue unremedied for 30
days after notice from the Bank of such default.
9.5 The Borrower or any of its Subsidiaries shall (i)
default in any payment with respect to any Indebtedness for money
borrowed which exceeds $5,000,000 in the aggregate (other than the
Note), beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created,
(ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur, the effect of which default or
other event is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, with or without the giving of notice if
required, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness shall be declared due and
payable prior to its stated maturity.
9.6 (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or the Borrower or any of its
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or
any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded
for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any
substantial part of its assets, which results in the entry of an
order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in
clauses (i), (ii) or (iii) above; or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become
due. Notwithstanding the foregoing, the provisions of Section 9.6
shall not apply to any Subsidiary which is not material to the
business, assets, operations, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
9.7 A final judgment shall be entered against the
Borrower or any of its Subsidiaries by any court for the payment of
money which, together with all other outstanding judgments against
the Borrower and its Subsidiaries exceeds $5,000,000 in the
aggregate on a consolidated basis, which judgment is not fully
covered by insurance, or a warrant of attachment or execution or
similar process shall be issued or levied against property of the
Borrower or any subsidiary which together with other such property
subject to other such process, exceeds in value $5,000,000 in the
aggregate on a consolidated basis and, if within 30 days after the
entry, issue or levy thereof, such judgment, warrant or process
shall not have been discharged or stayed pending appeal, or, if
within 30 days after the expiration of any such stay, such
judgment, warrant or process shall not have been discharged.
9.8 (i) A reportable event (as defined in Section
4043(b) of Title IV of ERISA) shall have occurred with respect to
any Plan of the Borrower or any Subsidiary or any Plan of the
Borrower or any Subsidiary shall have been voluntarily terminated
as provided in Section 4041(a) of ERISA and the guaranteed,
nonfunded, nonforfeitable benefits (as such terms are defined in
Section 4022 of ERISA) of any such Plan that has been voluntarily
terminated or with respect to which a reportable event has
occurred, when included in the consolidated financial statements of
the Borrower on a pro forma basis as a current liability and as a
deduction from net worth, would cause the Borrower to be in
violation of any of the provisions hereof; (ii) A trustee shall be
appointed by a United States District Court to administer any Plan;
or (iii) the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any Plan.
X. REMEDIES
10.1 Upon the occurrence of an Event of Default set forth
in Section 9.6, the Bank shall have no obligation to make any
further Advance or issue any Letter of Credit, and all amounts
outstanding (with accrued interest thereon) and all other amounts
owing under the Note and this Agreement, including without
limitation, the undrawn amount of any Letter of Credit, shall
immediately become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived by the Borrower.
10.2 Upon the occurrence of any other Event of Default,
the Bank shall have no obligation to make any further Advance or
issue any Letter of Credit and the Bank may, by written notice to
the Borrower, declare all amounts outstanding (with accrued
interest thereon) and all other amounts owing to it under the Note
and this Agreement, including without limitation, the undrawn
amount of any Letter of Credit, to be due and payable forthwith,
whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrower.
10.3 If any Event of Default shall occur, the Bank may
exercise, in addition to all other rights and remedies granted to
it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, any and all
rights and remedies to which it may be entitled under applicable
law. Without limiting the generality of the foregoing, the Bank
may, without any requirement of notice, setoff any and all amounts
owing by the Borrower to it against any deposit or other account,
whether general or special, maintained in the Bank by the Borrower
or any other property of the Borrower which may now or hereafter be
in the Bank's possession or control (other than property contained
in any safe deposit box maintained in the Bank), and such right of
setoff shall be deemed to have been exercised immediately upon such
stated or accelerated maturity as aforesaid even though such setoff
is not noted on the Bank's records until a later time. The
Borrower further grants to the Bank a lien and security interest in
and to the foregoing as collateral security for the Obligations and
agrees that, with respect thereto, the Bank shall have all of the
rights and remedies of a secured party under the Uniform Commercial
Code as in effect in any applicable jurisdiction.
10.4 The Borrower agrees that it shall remain liable for
any deficiency if the proceeds of any sale or disposition of any
security for the Obligations is insufficient to pay all amounts to
which the Bank is entitled, the Borrower also being liable for the
reasonable fees of any attorneys employed by the Bank to collect
such deficiency. The Borrower expressly agrees that it shall not
be necessary or required for the Bank to file suit or proceed to
assert or obtain a claim against any party or foreclose against or
seek to realize upon any security now or hereafter existing for the
Obligations or exercise or assert any other right or remedy to
which the Bank may be entitled in connection with the Obligations
or any security or guarantee relating thereto, before or as a
condition of enforcing the liability of the Borrower hereunder.
10.5 The Borrower also agrees to pay all reasonable Bank
Costs incurred with respect to the collection of any of the
Obligations and the enforcement of any of the Bank's rights
hereunder.
10.6 The Borrower hereby waives presentment, demand,
protest or any notice of any kind in connection with this Agreement
and the Note except as otherwise expressly provided herein.
XI. INDEMNIFICATION
11.1 Indemnification. The Borrower agrees to pay,
reimburse, indemnify and hold harmless, the Bank, its directors,
officers, employees, agents and representatives from and against
any and all actions, costs, damages, disbursements, expenses
(including attorneys' fees), judgments, liabilities, losses,
obligations, penalties and suits of any kind or nature whatsoever
with respect to:
(i) the development, preparation, execution,
performance, enforcement, interpretation, amendment (other than any
amendment requested by the Bank), modification, waiver or consent
of any of the Loan Documents;
(ii) the Bank's exercise of any right or remedy
granted to it in any of the Loan Documents, the collection or
enforcement of any of the Obligations and the proof or allowability
of any claim arising under any of the Loan Documents, whether in
any bankruptcy or receivership proceeding or otherwise;
(iii) any claim of third parties, and the prosecution
or defense thereof, arising out of or in any way connected with any
of the Loan Documents; and
(iv) any and all recording and filing fees and
taxes, and any and all liabilities with respect thereto, or
resulting from any delay in paying stamp and other taxes, if any,
which may be payable or determined to be payable in connection with
the Loan Documents.
Notwithstanding the foregoing, the Bank shall not be
entitled to any indemnification (1) with respect to its own gross
negligence or willful misconduct, (2) in the event that it shall be
finally determined by a court of competent jurisdiction that the
Bank has breached this Agreement or acted improperly under this
Agreement or (3) in any suit brought directly (and not by
derivative action) by the Borrower against the Bank in which it
shall be finally determined that the Bank is liable to the
Borrower. The Bank agrees that the obligation of the Borrower to
pay the Bank's attorneys' fees in connection with the initial
preparation of the Loan Documents shall not exceed $7,500.
11.2 Claims for Indemnification. Whenever any claim for
indemnification arises hereunder, the Bank shall give prompt notice
thereof (the "Notice of Claim") to the Borrower. The Notice of
Claim shall specify the material facts known to the Bank giving
rise to such indemnification claim and the amount thereof (or the
estimated amount), but the failure by the Bank to give such Notice
of Claim in accordance herewith shall not preclude the exercise by
the Bank of any legal or equitable rights which it may otherwise
have against the Borrower. The Borrower shall be entitled to
defend or prosecute such claim at its expense and through counsel
of its own choosing (provided that such counsel is reasonably
satisfactory to the Bank) if it gives notice of its intention to do
so to the Bank within 60 days after receipt of the Notice of Claim;
provided, however, that if the named parties in any such action
(including any impleaded parties) include both the Bank and the
Borrower and either (i) the Bank and the Borrower mutually agree or
(ii) representation of both the Bank and the Borrower by the same
counsel is inappropriate due to actual or potential conflicts of
interests between them, the Bank shall have the right to select
separate counsel (reasonably acceptable to the Borrower) to assume
such legal defenses and to otherwise participate in the defense of
such action on behalf of the Bank. Upon receipt of notice from the
Borrower to the Bank of its election to assume the defense of any
such action and approval by the Bank of such counsel, the Borrower
will not be liable to the Bank under this Article IX for any legal
or other expenses incurred by the Bank in connection with the
defense thereof unless (i) the Bank shall have employed counsel in
connection with the assumption of legal defenses in accordance with
the proviso in the next preceding sentence (it being understood,
however, that the Borrower shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the expenses of more than one separate counsel
representing the Bank), (ii) the Borrower shall not have employed
counsel reasonably satisfactory to the Bank to represent the Bank
within a reasonable time after notice of commencement of the
action, or (iii) the Borrower has authorized the employment of
counsel for the Bank at the expense of the Borrower. If the
Borrower so elects to defend or prosecute such claim at its
expense, the Bank shall render reasonable assistance to the
Borrower in connection therewith, including affording the Borrower
and its representatives the right of access during normal business
hours to pertinent books, records and other information that may be
reasonably requested. If the Borrower elects not to defend or
prosecute such claim at its expense or the Bank is entitled to its
own legal counsel at the Borrower's expense as aforesaid, the
Borrower shall (a) render reasonable assistance to the Bank in
connection therewith, including affording the Bank and its
representatives the right of access during normal business hours to
pertinent books and records and other information that may be
reasonably requested, and (b) pay the reasonable fees and expenses
of counsel for the Bank promptly upon receipt of the billing
statements from such counsel. The Bank shall not make any
settlement of any claim which would give rise to liability on the
part of the Borrower hereunder without the written consent of the
Borrower.
XII. MISCELLANEOUS
12.1 Notice. All notices and other communications given
to or made upon any party hereto in connection with this Agreement
shall, except as otherwise expressly herein provided, be in writing
(including telex, telecopy or telegraphic communication) and mailed
(by first class, United States mail, postage prepaid), telexed,
telecopied, telegraphed or hand delivered to the respective
parties, as follows:
Bank: United Jersey Bank
25 E. Salem Street
Hackensack, New Jersey 07062
Att: Lawrence F. Zema
- with a copy to -
Wolff & Samson
5 Becker Farm Road
Roseland, New Jersey 07068
Att: Morris Bienenfeld, Esq.
Borrower: Sealed Air Corporation
Park 80 East
Saddle Brook, New Jersey 07662
Att: Robert M. Grace, Jr., Esq.
or to such changed address as may be fixed by notice. All such
notices and other communications shall, except as otherwise
expressly herein provided, be effective when received by the party
to whom properly addressed, the written receipt by any employee of
any such party constituting sufficient evidence of such receipt, in
the case of telex or telecopy, when received, and in the case of
telegraph, when delivered to the telegraph company, charge prepaid.
12.2 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
12.3 Survival of Agreements. All agreements, repre-
sentations and warranties made herein, and in any certificates
delivered pursuant hereto shall survive the execution and delivery
of this Agreement and the Note and the making of any Advances.
12.4 Amendment. No modification, amendment or waiver of
any provision of this Agreement or the Note, nor consent to any
departure by the Borrower shall in any event be effective unless
the same shall be in writing and signed by the party granting such
modification, amendment or waiver, and then such waiver or consent
shall be effective only in the specific instance and for the
purpose for which given.
12.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Bank,
all future holders of the Note and their respective successors and
assigns, except that (i) the Borrower may not assign or transfer
any of its rights under this Agreement without the prior written
consent of the Bank and (ii) the Bank may not assign or transfer
any of its rights under this Agreement without the prior written
consent of the Borrower which shall not be unreasonably withheld or
delayed, provided, however, that the Bank shall be free to grant,
sell or transfer one or more participating interests or
participation rights in, to and under the Note and its rights
hereunder without notice to, or the consent of, the Borrower.
12.6 Severability. In case any one or more of the
provisions contained in this Agreement or the Note should be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired
thereby.
12.7 Counterparts. This Agreement may be executed by the
parties hereto on any number of separate counterparts and all such
counterparts taken together shall constitute one and the same
instrument.
12.8 Governing Law; No Third Party Rights. This
Agreement and the Note and the rights and obligations of the
parties hereunder and thereunder shall be governed by and construed
and interpreted in accordance with the law of the State of New
Jersey. This Agreement is solely for the benefit of the parties
hereto and their respective successors and assigns, and no other
person shall have any right, benefit, priority or interest in,
under or because of the existence of, this Agreement.
12.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS
AGREEMENT WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
ATTEST: SEALED AIR CORPORATION
By: ROBERT M. GRACE, JR. By: WILLIAM V. HICKEY
Name: Robert M. Grace, Jr. Name: William V. Hickey
Title: Secretary Title: Senior Vice President-
Finance
UNITED JERSEY BANK
By: LAWRENCE F. ZEMA
Name: Lawrence F. Zema
Title: Vice President<PAGE>
EXHIBIT A: Form of Revolving Credit Note
EXHIBIT B: Form of Counsel Opinion
SCHEDULE I: List of States
EXHIBIT 13
PORTIONS OF SEALED AIR CORPORATION
1993 ANNUAL REPORT TO STOCKHOLDERS
THAT ARE INCORPORATED BY REFERENCE
<TABLE>
Selected Financial Data
(In thousands of dollars except per share data)
<CAPTION>
1993 1992 1991(1) 1990 1989
<S> <C> <C> <C> <C> <C>
Consolidated Earnings Statement Data
Net sales by class of product:
Engineered products $180,508 $176,541 $165,926 $160,548 $145,253
Surface protection and other
cushioning products 209,909 206,447 199,800 188,108 172,925
Food packaging products 51,023 52,727 49,207 44,247 42,168
Other products 10,254 10,343 20,195 20,365 24,694
Total 451,694 446,058 435,128 413,268 385,040
Cost of sales 282,147 278,427 271,006 262,694 250,483
Marketing, administrative and
development expenses 95,434 95,441 94,642 83,130 76,897
Operating profit 74,113 72,190 69,480 67,444 57,660
Other income (expense), net (28,652) (33,372) (38,014) (42,970) (33,514)
Earnings before income taxes 45,461 38,818 31,466 24,474 24,146
Income taxes 19,547 18,050 15,291 13,094 16,856
Earnings before cumulative effect of
accounting change 25,914 20,768 16,175 11,380 7,290
Cumulative effect of accounting change(3) 1,459 - - - -
Net earnings $ 27,373 $ 20,768 $ 16,175 $ 11,380 $ 7,290
Earnings per share before cumulative
effect of accounting change $ 1.32 $ 1.08 $ .88 $ .65 $ .44
Earnings per share from cumulative
effect of accounting change(3) .08 - - - -
Earnings per common share(2) $ 1.40 $ 1.08 $ .88 $ .65 $ .44
Cash dividends per common share(2) - - - - $ 20.08
____________________________________________________________________________________________
Consolidated Balance Sheet Data
Working capital $ 33,828 $ 29,417 $ 18,495 $ 22,320 $ 34,119
Total assets 279,818 268,264 274,877 225,473 229,071
Long-term debt, less
current installments 190,058 225,278 253,746 259,082 301,558
Shareholders' equity (deficit) (29,419) (66,311) (94,626) (131,558) (160,466)
<FN>
(1)Includes the operations of Sentinel Holdings, Inc. from the date of its acquisition in August
1991.
(2)Per common share data has been restated for periods prior to 1992 to reflect the two-for-one
stock split in the nature of a 100% stock dividend distributed on September 18, 1992 to
shareholders of record at the close of business on September 4, 1992.
(3)Reflects cumulative effect of the implementation as of January 1, 1993 of Financial
Accounting Standard No. 109, "Accounting for Income Taxes" (see notes 1 and 7 to the Consolidated
Financial Statements).
</TABLE>
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Net Sales
Net sales increased 1% in 1993 compared with 1992 and 3% in 1992
compared with 1991. The modest increase in net sales in both years
primarily reflects the worldwide recessionary business environment
during these periods as well as the other factors discussed below.
The increase in net sales in 1993 resulted primarily from
increased unit volume in certain of the Company's products and the
additional sales of Shurtuff(R) durable mailers, a product line acquired
in August 1993 (the "Shurtuff(R) acquisition"). These higher net sales
were partially offset by the unfavorable effect of foreign currency
translation and, to a lesser extent, lower average selling prices in
certain product lines. The increase in net sales would have been
higher by approximately 3% in 1993 had foreign exchange rates for 1993
been at their 1992 levels.
The increase in net sales in 1992 resulted primarily from the
additional sales of products added as a result of the Company's August
1991 acquisition of Sentinel Holdings, Inc. ("Sentinel") as well as
increased unit volume in the Company's major classes of products and
changes in product mix in certain product lines. These higher net
sales were partially offset by the absence in 1992 of sales of Canadian
pool products, which had been included in the Company's class of other
products, the absence in 1992 of sales of PolyMask(R) products, which
were transferred to a joint venture in September 1991, and, to a lesser
extent, lower average selling prices for certain products. The Company
sold its Canadian pool products business in December 1991.
Net sales from domestic operations increased 4% in 1993 compared
with 1992 and 6% in 1992 compared with 1991 while net sales from
foreign operations decreased 7% in 1993 compared with 1992 and 6% in
1992 compared with 1991. The domestic net sales increase in 1993
resulted primarily from increases in unit volume of the Company's
principal engineered products, air cellular products and the additional
sales of Shurtuff(R) durable mailer products, which increases were
partially offset by lower net sales of food packaging products, and, to
a lesser extent, other products. The increase in 1992 domestic net
sales was primarily due to increased unit volume of products added as a
result of the Sentinel acquisition. Although the Company's foreign
operations had higher unit volumes in both 1993 and 1992 despite weak
economies in Europe and Japan, the unfavorable effect of foreign
currency translation in 1993 and the absence of the Company's Canadian
pool products business in 1992 combined in each of these years with
lower average selling prices in certain product lines to more than
offset such increased unit volume. Excluding the unfavorable effect of
foreign currency translation, net sales from foreign operations would
have increased modestly in 1993.
Net sales of engineered products, which consist primarily of
Instapak(R) products and thick polyethylene foams, increased 2% in 1993
compared with 1992 and 6% in 1992 compared with 1991 primarily due to
increased unit sales of thick polyethylene foams added as a result of
the Sentinel acquisition.
Net sales of surface protection and other cushioning products,
primarily air cellular products, thin polyethylene foam products and
protective and durable mailers, increased 2% in 1993 compared with 1992
and 3% in 1992 compared with 1991 primarily due to increased unit
volume of certain products, including in 1993 additional sales of
Shurtuff(R) products and in 1992 additional sales of products acquired in
the Sentinel acquisition.
Net sales of food packaging products, which consist primarily of
Dri-Loc(R) pads, decreased 3% in 1993 compared with 1992 but increased 7%
in 1992 compared with 1991. In each of 1993 and 1992, this class of
products experienced higher unit volume. While such net sales
benefited from favorable changes in product mix in 1992 for certain
product applications, in 1993 further changes in product mix to
products with lower average selling prices more than offset the higher
1993 unit volume.
Net sales of other products decreased marginally in 1993 compared
with 1992. Net sales of other products decreased 49% in 1992 compared
with 1991 primarily due to the sale in December 1991 of the Company's
Canadian pool products business. This disposition was not material to
the Company's consolidated financial statements.
Costs and Expenses
Cost of sales increased 1% in 1993 compared with 1992 and 3% in
1992 compared with 1991 primarily due to the higher level of net sales
in each period and, in 1993, to certain manufacturing consolidation
expenses which were partially offset by certain lower raw material
costs. Cost of sales as a percentage of net sales remained
substantially unchanged in 1993, 1992 and 1991.
Marketing, administrative and development expenses remained
substantially unchanged in 1993 compared with 1992 and increased 1% in
1992 compared with 1991. The increase in 1992 resulted from the
inclusion of certain expenses related to Sentinel, including expenses
related to the integration of Sentinel's operations into the Company.
Marketing, administrative and development expenses declined as a
percentage of net sales each year from 1991 to 1993 primarily
reflecting certain efficiencies arising from the integration of
Sentinel's operations into the Company and cost control measures.
Operating Profit
Operating profit increased 3% in 1993 compared with 1992 and 4% in
1992 compared with 1991 primarily due in each year to the Company's
higher net sales and the relative changes in the Company's costs and
expenses as a percentage of net sales discussed above. Domestic
operating profits increased 10% in 1993 compared with 1992 and 15% in
1992 compared with 1991.
Foreign operating profit decreased 18% in 1993 compared with 1992
primarily reflecting the unfavorable effect of foreign currency
translation and the level of costs and expenses related to sales.
Foreign operating profit decreased 19% in 1992 compared with 1991
primarily reflecting the effects of higher costs and expenses, lower
net sales and the absence of the Company's Canadian pool products
business.
Other Income (Expense), Net
Other income (expense), net decreased to $28,652,000 in 1993
compared with $33,372,000 in 1992 and $38,014,000 in 1991. Interest
expense, which is the principal component of this item, decreased to
$28,828,000 in 1993 from $31,080,000 in 1992 and $35,259,000 in 1991
due primarily to lower average outstanding borrowings and, to a lesser
extent, lower average interest rates in each year.
Other income (expense), net in 1991 included costs associated with
the disposition of certain minor product lines, including certain of
the Company's recreation and energy conservation products, and certain
expenses related to Sentinel.
Taxes
The Company's effective income tax rate was 43.0%, 46.5% and 48.6%
in 1993, 1992 and 1991, respectively. The Company's effective tax rate
was higher than the statutory tax rates in each year primarily due to
foreign withholding taxes on the repatriation of accumulated earnings
from the Company's foreign subsidiaries and additional United States
income taxes on such accumulated foreign earnings resulting from the
Company's 1989 special cash dividend and its related financing. The
Company's effective tax rate declined to 43.0% in 1993 from 46.5% in
1992 as the effect of the 1% increase in the U.S. Statutory Federal Tax
Rate in 1993 was more than offset by other lower tax provisions
required, including primarily a lower foreign tax component of total
income tax expense. The Company anticipates that its effective income
tax rate will continue to decline in 1994 but that it will remain above
U.S. statutory tax rates.
As of January 1, 1993, the Company implemented Financial
Accounting Standards Board ("FASB") Statement No. 109, "Accounting for
Income Taxes" ("FAS 109"). Under FAS 109, deferred tax assets and
liabilities are established or modified based on enacted tax laws or
tax rates. For periods prior to January 1, 1993, the Company accounted
for income taxes as prescribed by Accounting Principles Board Opinion
No. 11 ("APB 11") under which previously established deferred tax
assets and liabilities were not adjusted when tax laws or tax rates
were changed. As a result of implementing FAS 109, the Company
adjusted its deferred tax assets and liabilities to conform with
current enacted tax rates and made certain other adjustments required
by FAS 109. The cumulative effect of this accounting change resulted
in a credit to earnings of $1,459,000, or $0.08 per share, in the first
quarter of 1993.
Earnings
Excluding the cumulative effect of the accounting change related
to the implementation of FAS 109, earnings increased 25% in 1993
compared with 1992 and 28% in 1992 compared with 1991.
Liquidity and Capital Resources
Long-term debt, less current installments declined to $190,058,000
at December 31, 1993 from $225,278,000 at December 31, 1992 due
primarily to the repayment of outstanding indebtedness in 1993.
Current installments of long-term debt decreased to $10,061,000 at
December 31, 1993 from $15,213,000 at December 31, 1992 reflecting the
timing of scheduled maturities.
At December 31, 1993, the Company's long-term debt consisted
primarily of $170,000,000 of 12-5/8% Senior Subordinated Notes due July
1, 1999 (the "Senior Subordinated Notes") and the remaining outstanding
balance of the indebtedness contemplated by one of two senior secured
credit agreements with Bankers Trust Company, as agent for a syndicate
of banks (as amended, the "1989 Credit Agreement"). The principal
amount outstanding under the second such credit agreement was prepaid
in full in 1993.
In March 1994, the Company refinanced the remaining balance under
the 1989 Credit Agreement out of working capital and a $7,000,000
drawing under a $35,000,000 unsecured revolving credit agreement
entered into with United Jersey Bank (the "Revolving Credit
Agreement"), which Revolving Credit Agreement provides for the payment
of interest at rates lower than those provided for in the 1989 Credit
Agreement.
The Company's obligations under the Revolving Credit Agreement and
certain other loans bear interest at floating rates. The Revolving
Credit Agreement provides for reductions in interest rate margins if
certain financial criteria are met. During 1991, the Company was a
party to certain interest rate swap transactions that had the effect of
reducing the net interest expense in 1993 and 1992 on a portion of the
Senior Subordinated Notes and that will reduce the net interest expense
on such Senior Subordinated Notes through 1994.
Interest on the Senior Subordinated Notes is payable each January
1 and July 1, and such Notes mature on July 1, 1999. The Company has
the right to redeem the Senior Subordinated Notes in whole or in part
at any time at a redemption price of 106.313% of their principal
amount, which redemption price declines on July 1, 1994 to 104.734% and
each July 1 thereafter until it reaches 100% of such principal amount
beginning on July 1, 1997. The Company may not redeem the Senior
Subordinated Notes prior to July 1, 1994 from or in anticipation of
monies borrowed having an effective interest cost less than the Senior
Subordinated Notes. The Company is considering refinancing the Senior
Subordinated Notes when it is no longer subject to this restriction.
No prepayments of the Senior Subordinated Notes are required prior
to their maturity on July 1, 1999; provided, however, that the holders
of the Senior Subordinated Notes have the right to require the Company
to redeem such Notes at a premium in the event of a change of control
(as defined) of the Company.
The Company expects that the payment of principal and interest on
its indebtedness will remain a significant use of the Company's funds
for the foreseeable future. The Company expects to continue to make
the principal and interest payments on its outstanding indebtedness as
well as to meet its working capital and capital expenditure
requirements primarily with funds provided by operations and borrowings
under its available lines of credit. As of December 31, 1993, such
lines of credit amounted to approximately $56,600,000 of which
approximately $51,000,000 were unused. The ability of the Company to
make payments of principal and interest on its indebtedness, and to
comply with the financial covenants (discussed below) to which it is
subject in connection with such indebtedness, is dependent on the
Company's future performance and business growth, which are subject to
financial, economic, competitive and other factors affecting the
Company, many of which may be beyond the Company's control.
The Senior Subordinated Notes impose certain limitations on the
operations of the Company and its subsidiaries that include
restrictions on the incurrence of additional indebtedness, the creation
of liens, the making of investments, dispositions of property or
assets, certain transactions with affiliates, and the payment by the
Company of cash dividends to its stockholders.
The Revolving Credit Agreement also imposes certain limitations on
the operations of the Company as well as certain financial covenants
including requirements as to interest coverage, current ratio, and
adjusted net worth.
The Company's deficit in shareholders' equity, which resulted from
the payment of a special cash dividend of $40 per share to the
Company's stockholders in 1989 ($20 per share after giving effect to a
two-for-one stock split distributed in September 1992), declined to
$29,419,000 at December 31, 1993 from $66,311,000 at December 31, 1992
primarily as a result of the Company's net earnings for 1993 and the
value of shares of common stock issued for non-cash compensation and
for acquisitions.
Cash flows from operating activities were $53,100,000 in 1993,
$46,526,000 in 1992, and $44,909,000 in 1991. The increase in 1993 and
1992 was due primarily to increased earnings in each period, which were
partially offset in each period by changes in operating assets and
liabilities. In 1993, increases in accounts receivable and inventory
more than offset increases in accrued liabilities and accounts payable.
Cash flows used in investing activities were $23,438,000 in 1993,
$10,147,000 in 1992, and $15,710,000 in 1991. Such cash was used
primarily to fund capital expenditures. The fluctuation between years
was primarily due to the timing of capital expenditures.
Cash flows used in financing activities were $36,206,000 in 1992,
$30,288,000 in 1992, and $25,778,000 in 1991. Such cash, derived
primarily from the continuing operations of the Company, was used
primarily to prepay the long term debt under the Bankers Trust Credit
Agreements.
At December 31, 1993 the Company had working capital of
$33,828,000, or 12% of total assets, compared to working capital of
$29,417,000, or 11% of total assets, at December 31, 1992. The
increase in working capital was due primarily to an increase in current
deferred income taxes resulting from the implementation of FAS 109 and
increases in accounts receivable and inventories.
The Company's ratio of current assets to current liabilities
(current ratio) was 1.4 at December 31, 1993 and 1.3 at December 31,
1992. The Company's ratio of current assets less inventory to current
liabilities (quick ratio) was 1.0 at both December 31, 1993 and
December 31, 1992. The increase in the current ratio in 1993 resulted
primarily from the increase in working capital discussed above.
Impact of Inflation
Inflation did not have a material impact on the Company's
consolidated financial statements in the 1991 to 1993 period.
Other Matters
In December 1991, the FASB issued Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("FAS 106")
which became effective for fiscal years beginning after December 15,
1992. The Company generally does not provide such postretirement
benefits. Therefore, the implementation of FAS 106 did not have a
material effect on the Company's consolidated financial statements.
In 1992 and 1993, the FASB issued Statement No. 112, "Employers'
Accounting for Post-employment Benefits", and Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities",
which are effective for fiscal years beginning after December 15, 1993.
Such statements are not expected to have a material effect on the
Company's consolidated financial statements.
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
Years Ended December 31, 1993, 1992 and 1991
(In thousands of dollars except per share data)
<CAPTION>
1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Net sales $451,694 $446,058 $435,128
Cost of sales 282,147 278,427 271,006
Gross profit 169,547 167,631 164,122
Marketing, administrative and
development expenses 95,434 95,441 94,642
Operating profit 74,113 72,190 69,480
Other income (expense):
Interest income 1,145 1,010 1,311
Interest expense (28,828) (31,080) (35,259)
Other, net (969) (3,302) (4,066)
Other income (expense), net (28,652) (33,372) (38,014)
Earnings before income taxes 45,461 38,818 31,466
Income taxes 19,547 18,050 15,291
Earnings before cumulative effect of
accounting change 25,914 20,768 16,175
Cumulative effect of accounting change 1,459 - -
Net earnings $ 27,373 $ 20,768 $ 16,175
Earnings per share before cumulative effect
of accounting change $ 1.32 $ 1.08 $ .88
Earnings per share from cumulative effect
of accounting change .08 - -
Earnings per common share $ 1.40 $ 1.08 $ .88
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1993 and 1992
(In thousands of dollars except share data)
<CAPTION>
1993 1992
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 19,392 $ 26,042
Accounts receivable, less allowance for doubtful
accounts of $2,675 in 1993 and $2,665 in 1992 66,966 64,557
Other receivables 2,598 3,291
Inventories 32,035 28,323
Prepaid expenses 1,278 614
Deferred income taxes 5,892 -
Total current assets 128,161 122,827
Property and equipment:
Land and buildings 58,658 50,086
Machinery and equipment 121,782 113,749
Leasehold improvements 4,202 5,523
Furniture and fixtures 10,180 10,680
Construction in progress 7,386 5,094
202,208 185,132
Less accumulated depreciation and amortization 81,458 72,970
Property and equipment, net 120,750 112,162
Patents, patent applications and rights, less accumulated
amortization of $10,357 in 1993 and $8,977 in 1992 8,348 7,635
Excess of cost over fair value of net assets acquired, less
accumulated amortization of $3,988 in 1993 and
$4,049 in 1992 8,190 9,624
Deferred financing and other costs, less accumulated
amortization of $16,262 in 1993 and $13,654 in 1992 1,611 4,223
Other assets 12,758 11,793
$279,818 $268,264
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
1993 1992
<S> <C> <C>
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Notes payable $ 5,557 $ 3,511
Current installments of long-term debt 10,061 15,213
Accounts payable 22,908 21,353
Accrued wages, salaries and related costs 17,368 13,650
Accrued interest 11,127 11,646
Other accrued liabilities 16,272 17,600
Income taxes payable 11,040 10,437
Total current liabilities 94,333 93,410
Long-term debt, less current installments 190,058 225,278
Deferred income taxes 14,960 5,444
Deferred credits and other liabilities 9,886 10,443
Total liabilities 309,237 334,575
Commitments and contingent liabilities (note 8)
Shareholders' equity (deficit):
Common stock, $.01 par value. Authorized: 35,000,000
shares in 1993 and 1992; Issued: 19,924,661
shares in 1993 and 19,343,238 shares in 1992 199 194
Additional paid-in capital 108,361 95,551
Retained earnings (deficit) (137,676) (165,049)
Accumulated translation adjustment 5,063 6,723
(24,053) (62,581)
Less deferred compensation and cost of treasury stock 5,366 3,730
Shareholders' equity (deficit) (29,419) (66,311)
$279,818 $268,264
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity (Deficit)
Years Ended December 31, 1993, 1992 and 1991
(In thousands of dollars)
<CAPTION>
Additional Retained Accumulated
Common Paid-in Earnings Translation Deferred Treasury
Stock Capital (Deficit) Adjustment Compensation Stock
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 $ 88 $ 66,160 $(201,992) $ 8,626 $ (4,178) $ (262)
Net earnings - - 16,175 - - -
Proceeds from awards of contingent stock, net 1 112 - - - -
Excess of fair value over proceeds from awards
of contingent stock, net - 3,763 - - (3,763) -
Amortization - - - - 2,899 -
Non-cash compensation 3 5,287 - - - -
Shares issued in acquisitions 4 13,285 - - - -
Foreign currency translation - - - (824) - -
Balance, December 31, 1991 96 88,607 (185,817) 7,802 (5,052) (262)
Net earnings - - 20,768 - - -
Two-for-one stock split 96 (96) - - - -
Proceeds from awards of contingent stock, net 1 101 - - - -
Excess of fair value over proceeds from awards
of contingent stock, net - 1,218 - - (1,218) -
Amortization - - - - 2,802 -
Tax benefit in excess of amortization on
stock awards - 405 - - - -
Non-cash compensation 1 3,786 - - - -
Shares issued in acquisitions - 1,530 - - - -
Foreign currency translation - - - (1,079) - -
Balance, December 31, 1992 194 95,551 (165,049) 6,723 (3,468) (262)
Net earnings - - 27,373 - - -
Proceeds from awards of contingent stock, net 2 199 - - - -
Excess of fair value over proceeds from awards
of contingent stock, net - 4,591 - - (4,591) -
Amortization - - - - 2,929 -
Tax benefit in excess of amortization on
stock awards - 542 - - - -
Contingent stock forfeited - (10) - - 10 (1)
Non-cash compensation 1 1,807 - - - -
Shares issued in acquisitions 2 5,681 - - - 17
Foreign currency translation - - - (1,660) - -
Balance, December 31, 1993 $ 199 $ 108,361 $(137,676) $ 5,063 $ (5,120) $ (246)
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 1993, 1992 and 1991
(In thousands of dollars)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 27,373 $ 20,768 $ 16,175
Adjustments to net earnings to reconcile to
net cash provided by operating activities:
Cumulative adjustment for effect of accounting change (1,459) - -
Depreciation and amortization of property and equipment 14,334 13,770 11,468
Other depreciation and amortization 10,210 9,837 11,412
Deferred tax provision (benefit) 2,886 810 (3,054)
Net losses (gains) on disposals of property and equipment 408 247 335
Non-cash compensation 2,293 1,836 2,494
Other, net (2,172) (760) (4,572)
Change in operating assets and liabilities:
Receivables (1,716) 201 (72)
Inventories (2,466) 99 (757)
Prepaid expenses (664) 1,620 470
Accounts payable 1,555 (515) 169
Accrued interest (519) (152) (129)
Other accrued liabilities 1,892 (3,166) 10,043
Income taxes payable 1,145 1,931 927
Net cash provided by operating activities 53,100 46,526 44,909
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (22,474) (11,226) (15,945)
Advance to subsidiary prior to acquisition - - (5,000)
Proceeds from joint venture - 1,000 3,500
Proceeds from sales of property and equipment 203 79 817
Net cash attributable to (purchases) sales of businesses (1,167) - 918
Net cash used in investing activities (23,438) (10,147) (15,710)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 5,501 - 7,263
Principal payments on long-term debt (43,753) (24,326) (33,875)
Net proceeds (payments) on notes payable 2,046 (5,962) (2,266)
Proceeds from financial instruments - - 3,100
Net cash used in financing activities (36,206) (30,288) (25,778)
Effect of exchange rate changes on cash and cash equivalents (106) (207) (419)
CASH AND CASH EQUIVALENTS:
(Decrease) increase during the period (6,650) 5,884 3,002
Balance, beginning of period 26,042 20,158 17,156
Balance, end of period $ 19,392 $ 26,042 $ 20,158
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 26,735 $ 28,577 $ 31,047
Income taxes $ 16,058 $ 15,714 $ 17,868
See accompanying notes to consolidated financial statements.
</TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of Sealed
Air Corporation and its subsidiaries (the "Company"). All significant
intercompany transactions and balances have been eliminated in
consolidation. Certain of the Company's non-U.S. subsidiaries are
included in the consolidated financial statements on a calendar year
basis while the remaining non-U.S. subsidiaries are included on the
basis of a fiscal year ended November 30. During 1993, the Company's
U.K. subsidiary, Sealed Air Limited, changed its fiscal year to the
calendar year. This change did not have a material effect on the
Company's consolidated financial statements.
Where appropriate, prior years' financial statement amounts have been
reclassified to conform with their 1993 presentation.
Foreign Currency
The financial statements of foreign subsidiaries have been translated
into United States dollars in accordance with the Financial Accounting
Standards Board ("FASB") Statement No. 52, "Foreign Currency
Translation." Under Statement No. 52, all balance sheet accounts are
translated at year-end exchange rates, and statement of operations
items are translated at applicable month-end exchange rates. Resulting
translation adjustments are made directly to a separate component of
shareholders' equity (deficit).
Earnings before income taxes include aggregate exchange losses of
$86,000 and $819,000 for the years ended December 31, 1993 and 1992,
respectively, and exchange gains of $634,000 for the year ended
December 31, 1991.
Accounting and Reporting Changes
In December 1990, the FASB issued Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," which
became effective for fiscal years beginning after December 15, 1992.
The Company has implemented Statement No. 106 but, since the Company
generally does not provide such postretirement benefits, the effect on
the consolidated financial statements was not material.
Effective January 1, 1993, the Company adopted FASB Statement No. 109
("FAS 109"), "Accounting for Income Taxes." For periods prior to
January 1, 1993, the Company accounted for income taxes as prescribed
by Accounting Principles Board Opinion No. 11 ("APB 11"). The Company
has adopted the liability method in accordance with FAS 109 without
restating prior periods, resulting in a $1,459,000 credit to earnings
in 1993 arising from the cumulative effect of this change in accounting
principle.
Cash and Cash Equivalents
The Company's policy is to invest cash in excess of short-term
operating and debt service requirements in income-producing investments
held at banks and other financial institutions. Included in cash and
cash equivalents are temporary cash investments with original
maturities of three months or less of $4,347,000 and $24,823,000 at
December 31, 1993 and 1992, respectively, which consisted of money
market, repurchase agreement and commercial paper amounts stated at
cost, which approximates market because of the short maturity of these
instruments.
Financial Instruments
The Company is a party to various financial instruments with
off-balance-sheet risk. These financial instruments include interest
rate and foreign currency swap agreements, foreign exchange contracts
and foreign currency option contracts. Such financial instruments
serve to limit, fix or offset certain interest rate or foreign currency
exposures on the Company's borrowings or trade activities. The Company
would be exposed to credit risk in the event of non-performance by the
counterparties to such financial instruments. However, the Company
anticipates that the counterparties, who are major financial
institutions, will meet their obligations under the various financial
instruments.
Foreign exchange contracts and foreign currency option contracts
outstanding at December 31, 1993 and 1992 have been reflected at their
fair market values in the consolidated financial statements. The
effects of such contracts are not material to the consolidated
financial statements.
Accounts Receivable and Accounts Payable
The carrying amount of accounts receivable, net of the allowance for
doubtful accounts, and accounts payable approximates fair value due to
their short-term maturity.
Inventories
Inventories are stated at the lower of cost or market. The majority of
U.S. inventories are valued using the last-in, first-out ("LIFO")
method; other U.S. inventories, principally parts used in packaging
systems, are valued using the first-in, first-out ("FIFO") method.
Inventories of foreign operations are valued using primarily the FIFO
method. Had the FIFO method (which approximates current cost) been
used for all inventory at December 31, 1993, inventories would have
been higher by $1,158,000 ($2,280,000 and $1,414,000 in 1992 and 1991,
respectively). The cost elements of work in process and finished goods
inventories are raw materials, direct labor and manufacturing overhead.
Because the cost of certain inventories is determined on the LIFO
method, it is not practical to present separately the components of
inventories (raw material, work in process and finished goods).
Property and Equipment
Property and equipment are stated at acquisition cost. Property and
equipment no longer in use or surplus to the Company's needs are
carried at the lower of cost or fair value. Depreciation of buildings
and equipment is provided over the estimated useful lives (generally
periods ranging up to 40 years and 10 years, respectively) of the
related assets. Amortization of leasehold improvements is provided
over the lesser of the term of the lease or the asset's useful life.
The Company uses primarily the straight-line method of depreciation for
financial reporting purposes and accelerated methods of depreciation
for income tax purposes.
Intangibles and Other Assets
Patents, patent applications and rights are stated at acquisition cost.
Amortization of patents is recorded using the straight-line method over
the legal lives of the patents, generally for periods ranging up to 17
years. The excess of cost over fair value of net assets acquired is
amortized over periods ranging up to 40 years. Other intangible
assets, including non-competition agreements, included in other assets
are amortized over the life of such agreements. The carrying value of
intangible assets is periodically reviewed by the Company and
impairments are recognized when the expected future operating cash
flows derived from such intangible assets is less than their carrying
value.
Deferred financing costs, which were incurred by the Company in
connection with the Special Dividend (note 2) and by Sentinel Holdings,
Inc. prior to its acquisition by the Company, are charged to operations
as additional interest expense over the life of the underlying
indebtedness using the interest method adjusted to give effect to any
early repayments.
Employee Benefit Plans
The Company has a noncontributory profit-sharing plan covering most
U.S. employees except those employees covered by collective bargaining
agreements, none of which provide for participation in the plan.
Contributions to this plan, which are made at the discretion of the
Board of Directors, may be made in cash, shares of the Company's common
stock, or in a combination of cash and shares of the Company's common
stock. The Company also has a thrift and section 401(k) plan in which
most U.S. employees of the Company are eligible to participate except
those employees who are covered by certain collective bargaining
agreements that do not provide for participation in the plan. Under
this plan, the Company matches 50% of each employee's contributions to
a maximum Company contribution of 3% of the employee's compensation.
Forfeitures of nonvested interests in each of these plans remain in the
respective plans for the benefit of the remaining participants. The
Company also has pension or profit-sharing plans for employees of
certain foreign subsidiaries and certain U.S. employees who are
covered by collective bargaining agreements. Company contributions to
its profit-sharing, thrift and pension plans, net of forfeitures, are
charged to operations and amounted to $6,734,000 in 1993 ($5,870,000
and $6,348,000 in 1992 and 1991, respectively).
The Company provides various other benefit programs to active employees
including group medical, insurance and other welfare benefits. The
costs of these benefit programs are charged to operations as incurred.
Eligibility to participate in these programs generally ceases upon
retirement or other separation from service except to the extent
otherwise required by applicable law.
In November 1992, the FASB issued Statement No. 112, "Employers'
Accounting for Postemployment Benefits" ("FAS 112"), which is effective
for fiscal years beginning after December 15, 1993. Adoption of FAS
112 is not expected to have a material effect on the Company's
consolidated financial statements.
Research and Development Costs
Research and development costs are charged to operations as incurred
and amounted to $9,168,000 in 1993 ($9,414,000 and $9,876,000 in 1992
and 1991, respectively).
Income Taxes
The Company and its domestic subsidiaries file a consolidated U.S.
federal income tax return. The Company's non-U.S. subsidiaries file
income tax returns in their respective local jurisdictions.
As of January 1, 1993, the Company adopted FAS 109 which prescribed the
liability method of accounting for income taxes. Prior to January 1,
1993 the Company accounted for income taxes as prescribed by APB 11
under which deferred taxes were recorded based on the current period's
tax rates and laws and were not adjusted for subsequent changes in tax
rates or laws. Under the liability method, deferred taxes are
determined based on the difference between the financial statement and
tax basis of assets and liabilities using enacted tax rates in effect
in the years in which the differences are expected to reverse.
Deferred tax assets are recorded when it is more likely than not that
such tax benefits will be realized (note 7).
Earnings Per Common Share
Earnings per common share are computed on the basis of the weighted
average number of shares of common stock outstanding during the year.
The weighted average number of common shares outstanding in 1993 was
19,584,000 (19,208,000 and 18,474,000 in 1992 and 1991, respectively,
after giving retroactive effect to the 1992 stock split (note 6)).
Note 2 Special Dividend Transaction
In 1989, the Company paid a special cash dividend (the "Special
Dividend") of $40 per share to holders of record of the Company's
common stock at the close of business on May 8, 1989 ($20 per share
after giving retroactive effect to the 1992 stock split (note 6)). In
order to finance a portion of the Special Dividend and pay related fees
and expenses, the Company incurred senior indebtedness as contemplated
by the term-loan portion of a senior secured credit facility and issued
$170,000,000 aggregate principal amount of senior subordinated notes
(note 5). The Company's deficit in shareholders' equity, which
resulted from the payment of the Special Dividend, decreased to
$29,419,000 at December 31, 1993 from $66,311,000 at December 31, 1992.
Note 3 Acquisitions, Joint Ventures and Divestitures
On August 15, 1991, the Company acquired Sentinel Holdings, Inc.
("Sentinel"), a manufacturer of protective packaging and other
products, for 277,019 newly issued shares of the Company's common stock
valued at $35-7/8 per share, and the assumption of Sentinel's
indebtedness, including primarily a $30,000,000 term loan. In
addition, the Company advanced $5,000,000 to Sentinel prior to the
acquisition. The net assets of Sentinel acquired included property and
equipment of approximately $26,500,000, intangible assets of
approximately $12,000,000, including non-compete agreements, patents,
deferred financing costs and the excess of cost over the fair value of
net assets acquired, working capital of approximately $4,200,000 and
other net assets of approximately $2,200,000. Such acquisition was
accounted for as a purchase, and accordingly the consolidated financial
statements include the results of Sentinel from the date of
acquisition.
In August 1993, the Company acquired the assets of the Shurtuff
Division of Shuford Mills, Inc., a manufacturer of durable protective
mailers, in exchange for cash and newly issued shares of the Company's
common stock. In July 1993, the Company acquired the assets of
Polypride, Inc., a manufacturer of multi-web air cellular materials, in
exchange for cash and treasury shares of the Company's common stock.
In April 1992, the Company acquired Aire Sellado S.A. de C.V., the
Mexican licensee of the Company's air cellular technology, for newly
issued shares of the Company's common stock. In December 1991, the
Company's Canadian subsidiary sold its pool products business. In
September 1991, the Company entered into a joint venture with Minnesota
Mining and Manufacturing Company ("3M") under which 3M acquired a 50%
interest in the Company's coated films business and an option to
acquire the remaining 50% of such business. In May 1991, the Company
acquired L. H. Ridgeway, Inc., a manufacturer of protective packaging
materials, primarily Korrvu(R) suspension packaging, in exchange for
newly issued shares of the Company's common stock. These acquisitions
were accounted for as purchases, and these transactions were not
material to the Company's consolidated financial statements.
Note 4 Geographic Areas
Sealed Air Corporation is a multinational company primarily engaged in
the manufacture and sale of protective packaging materials and systems
to a diverse group of customers. The Company's operations are
conducted primarily in North America, Europe and the Far East, and its
products are distributed in these areas as well as other parts of the
world. Net sales for each major geographic area include transfers to
other geographic areas. Such transfers are made at prices intended to
provide reasonable and appropriate returns to the selling unit, and
applicable eliminations have been applied to the intergeographic
transactions.
Operating profit consists of net sales less operating expenses. Other
income (expense), net and income taxes have not been added or deducted
in the computation of operating profit for each geographic area.
Corporate expenses have been allocated to the geographic areas for
whose benefit the expenses were incurred.
Identifiable assets are those assets that are used in the Company's
operations in each geographic area.
Information by Major Geographic Area:
(In thousands of dollars)
Net Operating Identifiable
Sales Profit Assets
1993
United States $341,321 $ 59,059 $192,868
Europe 87,939 12,433 77,904
Other 34,893 2,621 22,891
Eliminations (12,459) - (13,845)
Consolidated $451,694 $ 74,113 $279,818
1992
United States $327,966 $ 53,886 $186,479
Europe 100,765 15,731 75,037
Other 30,919 2,573 20,135
Eliminations (13,592) - (13,387)
Consolidated $446,058 $ 72,190 $268,264
1991
United States $309,344 $ 47,007 $187,046
Europe 98,552 17,169 82,910
Other 41,637 5,304 19,778
Eliminations (14,405) - (14,857)
Consolidated $435,128 $ 69,480 $274,877
NOTE: Net sales shown for the United States, Europe and Other include
transfers to other geographic areas as follows: United States, 1993
- --$11,130,000; 1992 --$12,471,000; 1991 -- $12,792,000; Europe, 1993
- --$754,000; 1992 --$886,000; 1991 --$1,052,000; Other, 1993 --
$575,000; 1992 --$235,000; 1991 --$561,000.
Note 5 Long-Term Debt
A summary of long-term debt at December 31, 1993 and 1992 follows:
(In thousands of dollars) 1993 1992
Senior secured credit agreements $ 16,851 $ 54,463
Industrial development revenue bonds 2,797 3,516
Other foreign loans 9,948 11,949
12-5/8% Senior Subordinated Notes 170,000 170,000
Other 523 563
Total 200,119 240,491
Less current installments 10,061 15,213
Long-term debt, less current installments $190,058 $225,278
In 1989, the Company borrowed approximately $142,309,000 as
contemplated by the term-loan portion of a senior secured credit
agreement with Bankers Trust Company, as agent for a syndicate of banks
(as amended, the "1989 Credit Agreement"), to finance a portion of the
Special Dividend (note 2). In 1991, in connection with the Sentinel
acquisition (note 3), the Company assumed the indebtedness, including
$30,000,000 in term-loan indebtedness, of Sentinel outstanding under a
senior secured Credit Agreement with Bankers Trust Company, as agent
for a syndicate of banks (as amended, the "1991 Credit Agreement").
The principal amount outstanding under the 1991 Credit Agreement was
prepaid in full in 1993.
The outstanding principal amount under the 1989 Credit Agreement is due
in quarterly installments through December 1995. The 1989 Credit
Agreement is collateralized by a security interest in substantially all
of the U.S., British and Dutch assets of the Company, including the
capital stock of most of the Company's subsidiaries.
The rate of interest on borrowings under the 1989 Credit Agreement is,
at the Company's option, the Bankers Trust prime rate plus 3/4% or the
reserve-adjusted Eurodollar rate plus 1-3/4%. The balance of
$16,851,000 at December 31, 1993 consists of foreign borrowings that
have been swapped for non-U.S. dollar obligations of the same final
maturity. Such non-U.S. dollar obligations are denominated in Dutch
guilders and British pounds sterling and bear interest at floating
rates with a weighted average interest rate of 9.2% at December 31,
1993. Approximately $22,000,000 of the amount outstanding under the
senior secured credit agreements at December 31, 1992 was attributable
to foreign borrowings.
The Senior Subordinated Notes, which were issued in connection with the
financing of the Special Dividend, bear interest at a fixed rate of
12-5/8% per annum and mature on July 1, 1999. The Company has a right
to redeem the Senior Subordinated Notes in whole or in part at any time
at a redemption price of 106.313% of their principal amount, which
redemption price declines on July 1, 1994 and each July 1 thereafter
until it reaches 100% of such amount beginning on July 1, 1997. The
Company may not redeem the Senior Subordinated Notes prior to July 1,
1994 from or in anticipation of monies borrowed having an effective
interest cost less than the Senior Subordinated Notes. The holders of
the Senior Subordinated Notes have the right to require the Company to
redeem such Notes at a premium in the event of a change in control (as
defined) of the Company. The Senior Subordinated Notes are not subject
to any sinking fund requirements and are subordinated to all other
notes payable and long-term debt at December 31, 1993. During
1991, the Company was a party to certain interest rate swap
transactions that had the effect of reducing the net interest expense
in 1993, 1992 and 1991 on a portion of the Senior Subordinated Notes
and that will reduce the net interest expense on such portion of the
Senior Subordinated Notes through 1994.
The 1989 Credit Agreement and the Senior Subordinated Notes impose
certain limitations on the operations of the Company and its
subsidiaries that include restrictions on the incurrence of additional
indebtedness, the creation of liens, the making of investments,
dispositions of property or assets, certain transactions with
affiliates and the payment by the Company of cash dividends or certain
other distributions on its capital stock to its shareholders. In
addition, the 1989 Credit Agreement imposes certain financial covenants
including limitations on capital expenditures and requirements as to
minimum interest coverage, current ratio, earnings before interest,
taxes and certain non-cash charges, and adjusted net worth. The
Company was in compliance with these financial covenants as of December
31, 1993.
Industrial development revenue bonds are due in installments through
2006. Such bonds bear interest at fixed and floating rates. The
weighted average interest rate on these bonds was 5.2% at December 31,
1993. These bonds are collateralized by property and equipment with a
net book value of approximately $7,614,000 at December 31, 1993.
Other foreign loans, certain of which are secured by foreign assets,
are due in varying annual installments through 2006 with fixed and
variable interest rates with a weighted average interest rate of 7.9%
at December 31, 1993.
Under the 1989 Credit Agreement and other credit facilities, the
Company had available lines of credit at December 31, 1993 of
approximately $56,600,000 of which approximately $51,000,000 was
unused. The Company is obligated to pay a commitment fee of 1/2% per
annum of the daily average unused revolving credit commitment under the
1989 Credit Agreement. The Company is not subject to any material
compensating balance requirements in connection with its lines of
credit. At the Company's option, the revolving credit facility
under the 1989 Credit Agreement may also be used for the issuance of
letters of credit. The Company is required to pay a fee of 2-3/4% per
annum on the daily average stated amount of outstanding letters of
credit. There were letters of credit totalling $1,060,000 outstanding
at December 31, 1993.
In accordance with FASB Statement No. 107, the Company is required to
disclose the fair value of material financial instruments, including
those recorded as liabilities in its consolidated financial statements.
At December 31, 1993 the estimated fair values of the Company's
indebtedness under its senior secured credit agreement, industrial
development bonds, Senior Subordinated Notes and other foreign loans,
none of which, except for the Senior Subordinated Notes, are marketable
securities and all of which represent obligations of the Company that
are repayable by the Company in accordance with their terms, were
approximately $17,433,000, $2,801,000, $183,600,000 and $9,728,000,
respectively ($54,815,000, $3,408,000, $183,175,000 and $10,957,000,
respectively, at December 31, 1992). Such fair value estimates, except
for the Senior Subordinated Notes, were derived by evaluating the
nature and terms of each financial instrument, considering current
economic and market conditions, and examining the cost of similar debt
currently offered. The fair value estimate of the borrowings under the
senior secured credit agreement also includes the effect of interest
rate and foreign currency swap agreements related to such debt. The
fair value of the Senior Subordinated Notes was 108.0% at December 31,
1993 (107.75% at December 31, 1992) based on over-the-counter bid
prices published by Donaldson, Lufkin & Jenrette Securities
Corporation. These estimates are subjective and involve uncertainties
and matters of significant judgment and therefore cannot be determined
with precision. Changes in assumptions could significantly affect the
above estimates.
Scheduled annual maturities of long-term debt for the five years
subsequent to December 31, 1993 are as follows: 1994 -- $10,061,000;
1995 -- $5,024,000; 1996 --$9,479,000; 1997 -- $2,776,000 and 1998 --
$990,000.
Note 6 Shareholders' Equity (Deficit)
On May 15, 1992, the Company's shareholders approved an increase in the
authorized number of shares of common stock that the Company may issue
from 20,000,000 shares to 35,000,000 shares.
On July 23, 1992, the Company's Board of Directors declared a
two-for-one stock split in the nature of a 100% stock dividend ("1992
stock split") that was distributed on September 18, 1992 to the holders
of record of the Company's common stock at the close of business on
September 4, 1992. As a result, a transfer was made from additional
paid-in capital to common stock in an amount equal to the aggregate par
value of the shares of common stock issued pursuant to this stock
split. Share and per share data and share information in the
consolidated financial statements and notes thereto have been adjusted
to give retroactive effect to the 1992 stock split where appropriate.
<TABLE>
A summary of changes in issued and outstanding shares of common stock
and shares of treasury stock of the Company follows:
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
______________________________________________________________________________________________
Changes in common stock:
Number of shares issued, beginning of year 19,343,238 9,554,681 8,841,417
Two-for-one stock split - 9,671,619 -
Non-cash compensation 70,900 52,741 224,100
Awards of contingent stock 294,200 34,200 112,150
Shares issued in acquisitions 216,323 29,997 377,014
Number of shares issued, end of year 19,924,661 19,343,238 9,554,681
Changes in treasury stock:
Number of shares held, beginning of year 126,986 63,493 63,493
Two-for-one stock split - 63,493 -
Shares issued in acquisition (8,180) - -
Contingent stock forfeited 500 - -
Number of shares held, end of year 119,306 126,986 63,493
</TABLE>
Non-cash compensation in each year includes shares issued for a portion
of the Company's contribution to its profit-sharing plan for the
respective preceding year and shares issued to non-employee directors
in the form of awards under the restricted stock plan for non-employee
directors discussed below. In addition, in 1991, such compensation
included shares issued as non-cash bonuses for the preceding year paid
to certain employees, including executive officers, in the form of
awards under the Company's contingent stock plan. The aggregate amount
of non-cash compensation charged to operations amounted to $2,293,000,
$1,836,000 and $2,494,000 in 1993, 1992 and 1991, respectively.
The Company's contingent stock plan provides for the granting to
employees of awards to purchase common stock (during the succeeding
60-day period) for less than 100% of fair market value at the date of
award. Shares issued under the contingent stock plan ("contingent
stock") are restricted as to disposition by the holders for a period of
three years after issue. In the event of termination of employment
prior to lapse of the restriction, the shares are subject to an option
to repurchase by the Company at the price at which the stock was
issued. Such restriction will lapse prior to the expiration of the
three-year period if certain events occur which affect the existence or
control of the Company.
The excess of fair value over the award price of contingent stock is
charged to operations as compensation over the vesting periods of such
awards. In 1993, such charges amounted to $2,929,000 ($2,802,000 and
$2,889,000 in 1992 and 1991, respectively).
The aggregate fair value of contingent stock issued is credited to
common stock and additional paid-in capital accounts, and the
unamortized portion of the compensation is deducted from shareholders'
equity (deficit).
An additional 400,000 shares were authorized for future issuance under
the contingent stock plan in 1991. At December 31, 1993, 554,100
shares of common stock were reserved for issuance under such plan after
giving effect to adjustments provided for by the plan to reflect the
1992 stock split.
In 1991, the Company adopted a restricted stock plan for non-employee
directors, and 50,000 shares were authorized for future issuance under
this plan. This plan provides for initial grants of shares to newly
elected non-employee directors and annual grants of shares to
non-employee directors for less than 100% of fair value at date of
grant in lieu of cash payments for certain directors' fees. Shares
issued under this plan are restricted as to disposition by the holders
as long as such holders remain directors of the Company. The excess of
fair value over the granting price of shares issued under this plan is
charged to operations at the date of such grant. At December 31, 1993,
87,800 shares of common stock were reserved for issuance under such
plan after giving effect to adjustments provided for by the plan to
reflect the effect of the 1992 stock split.
The Company currently has the authority to issue 1,000,000 shares of
preferred stock, without par value, none of which were issued at
December 31, 1993.
Note 7 Income Taxes
The Company adopted FAS 109 effective January 1, 1993. FAS 109
provides a liability method under which deferred taxes are provided
based upon enacted tax rates and laws applicable to the periods in
which the taxes become payable. For periods prior to January 1, 1993,
the Company accounted for income taxes as prescribed by APB 11 under
which deferred taxes were recorded based on the current period's tax
rates and laws without adjustment for subsequent changes. The
cumulative effect of this change at January 1, 1993 was a reduction of
deferred tax liability and a corresponding credit to earnings of
$1,459,000, or $0.08 per share, in 1993.
<TABLE>
The components of earnings before income taxes and the cumulative
effect of this accounting change follow:
(In thousands of dollars)
<CAPTION>
1993 1992 1991
______________________________________________________________________________________________
<S> <C> <C> <C>
Domestic $ 32,721 $ 24,246 $ 12,679
Foreign 12,740 14,572 18,787
Earnings before income taxes $ 45,461 $ 38,818 $ 31,466
The components of the provision for income taxes follow:
(In thousands of dollars)
1993 1992 1991
______________________________________________________________________________________________
Current tax provision:
U.S. federal $ 9,816 $ 9,364 $ 8,700
U.S. state and local 2,210 2,525 1,541
Foreign 4,635 5,351 8,104
16,661 17,240 18,345
Deferred tax provision (benefit):
Domestic 3,090 400 (2,900)
Foreign (204) 410 (154)
2,886 810 (3,054)
Provision for income taxes $ 19,547 $ 18,050 $ 15,291
</TABLE>
The significant components of the Company's deferred
tax liabilities and assets at December 31, 1993 as
established in accordance with FAS 109 are as follows:
(In thousands of dollars)
1993
Deferred tax assets:
Facilities consolidation and integration $ 2,766
Accrued expenses 2,237
Deferred financing and other costs 1,000
Property and equipment 1,092
Deferred revenue 924
Other 3,045
Gross deferred tax assets 11,064
Deferred tax liabilities:
Property and equipment 14,071
Patents and other intangibles 2,611
Other 2,872
Gross deferred tax liabilities 19,554
Net deferred tax liability $ 8,490
Prior to the implementation of FAS 109, deferred income taxes arose
from differences in the timing of the recognition of revenue and
expenses for income tax purposes and for financial reporting purposes
without subsequent adjustment for changes in tax laws and regulations.
The major components of the deferred income tax provision (benefit)
relate to deferred revenue, amortization, depreciation and other items,
including the effects of the Special Dividend (note 2) and the Sentinel
acquisition (note 3), as follows:
<TABLE>
(In thousands of dollars)
<CAPTION>
1992 1991
<S> <C> <C>
Domestic:
Facilities consolidation and integration
expense $ (412) $ (1,294)
Deferred revenue 349 (1,250)
Amortization 438 (832)
Non-cash compensation (382) 674
Depreciation 496 322
Other (89) (520)
Domestic deferred tax provisions (benefit) 400 (2,900)
Foreign:
Depreciation 202 29
Other 208 (183)
Foreign deferred tax provision (benefit) 410 (154)
Deferred tax provision (benefit) $ 810 $ (3,054)
</TABLE>
The Company has determined that a valuation allowance for the deferred
tax assets is not required since the Company expects that it is more
likely than not that the deferred tax assets of $11,064,000 will be
realized based on the future reversals of existing deferred tax
liabilities and the continuation of earnings, which may be affected by
factors outside the Company's control.
Implementation of FAS 109 required certain adjustments to intangible
assets arising from acquisitions by the Company. As a result, the
Company has increased patents and other intangible assets as recorded
on its balance sheet at January 1, 1993 by approximately $2,000,000.
As a result of the Omnibus Budget Reconciliation Act of 1993 ("1993 Tax
Act"), the statutory U.S. federal tax rate to which the Company was
subject in 1993 increased from 34% to 35%. The Company has determined
that the effect of the 35% rate as applied to deferred tax assets and
liabilities established under FAS 109 is not material.
An explanation of the difference between the effective income tax rate
and the statutory U.S. federal income tax rate expressed as a
percentage of earnings before income taxes for the years ended December
31, 1993, 1992 and 1991 follows:
<TABLE>
<CAPTION>
1993 1992 1991
______________________________________________________________________________________________
<S> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0% 34.0% 34.0%
Provision for foreign withholding taxes
and additional U.S. taxes on
repatriated and accumulated earnings of
foreign subsidiaries 1.8 2.2 3.3
Tax effect of U.S. expenses not subject
to tax benefit 1.7 3.0 3.8
State income taxes, net of U.S. federal income tax benefit 4.2 4.3 3.2
Taxes on foreign earnings at other than the
statutory U.S. federal income tax rate (1.1) 0.7 2.9
Other miscellaneous items 1.4 2.3 1.4
Effective income tax rate 43.0% 46.5% 48.6%
</TABLE>
As a consequence of the Special Dividend discussed in note 2, the
Company's tax provision for 1993, 1992 and 1991 gives effect to foreign
withholding taxes on the repatriation of accumulated earnings from the
Company's foreign subsidiaries and additional U.S. taxes on such
accumulated earnings. The Company has provided U.S. and foreign income
taxes on the accumulated earnings of the Company's foreign subsidiaries
through December 31, 1993.
The Company's Dutch subsidiary is entitled to certain tax incentives to
manufacture certain product lines under agreements with local tax
authorities. The total amount of such incentives is dependent on the
profitability of such product lines over a period extending through
1999.
Note 8 Commitments and Contingent Liabilities
The Company is obligated under the terms of various leases covering
many of the facilities occupied by the Company. The Company accounts
for substantially all of its leases as operating leases. Net rental
expense for 1993 was $7,803,000 ($7,888,000 and $6,648,000 in 1992 and
1991, respectively). Estimated future minimum annual rental
commitments under noncancelable real property leases expiring through
2006 are as follows: 1994 -- $5,955,000; 1995 -- $5,022,000; 1996 --
$3,504,000; 1997 -- $3,383,000; 1998 -- $2,645,000; and subsequent
years - $5,582,000.
The Company is involved in various legal actions incidental to its
business as well as various environmental matters or proceedings, which
primarily include clean-up obligations (including superfund sites) as
well as other matters or claims that could result in additional
environmental proceedings. Company management believes, after
consulting with counsel, that the disposition of such litigation,
matters and proceedings will not have a material effect on the
Company's consolidated financial statements.
Note 9 Subsequent Event (Unaudited)
In March 1994, the Company refinanced the remaining balance under the
1989 Credit Agreement out of working capital and a $7,000,000 drawing
under a $35,000,000 unsecured Revolving Credit Agreement entered into
with United Jersey Bank, which Revolving Credit Agreement provides for
interest rates lower than those provided for in the 1989 Credit
Agreement.
Independent Auditors' Report
The Board of Directors and Shareholders
Sealed Air Corporation:
We have audited the accompanying consolidated balance sheets of Sealed
Air Corporation and subsidiaries as of December 31, 1993 and 1992 and
the related consolidated statements of earnings, shareholders' equity
(deficit) and cash flows for each of the years in the three-year period
ended December 31, 1993. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Sealed Air Corporation and subsidiaries as of December 31, 1993 and
1992, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1993 in
conformity with generally accepted accounting principles.
As discussed in notes 1 and 7 to the consolidated financial statements,
the Company changed its method of accounting for income taxes in 1993.
S/KPMG Peat Marwick
KPMG Peat Marwick
Short Hills, New Jersey
January 19, 1994
<TABLE>
Interim Financial Information (Unaudited)
(In thousands of dollars except per share data)
<CAPTION>
Quarter Net sales Gross Profit Net Earnings Earnings Per Share(1)
1993 1992 1993 1992 1993 1992 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First(2)$109,146 $109,993 $ 41,107 $ 41,463 $ 7,517 $ 4,992 $ .39 $ .26
Second 113,652 112,144 43,131 42,750 7,029 5,728 .36 .30
Third 110,215 110,185 41,419 41,107 5,827 4,677 .30 .24
Fourth 118,681 113,736 43,890 42,311 7,000 5,371 .35 .28
Year $451,694 $446,058 $169,547 $167,631 $ 27,373 $ 20,768 $ 1.40 $ 1.08
<FN>
(1) Adjusted for the effect of a two-for-one stock split in
the nature of a 100% stock dividend distributed in September, 1992.
(2) Included in 1993 First Quarter net earnings and earnings
per share is a cumulative credit adjustment of $1,459,000,
or $0.08 per share, resulting from the implementation of
Financial Accounting Standard No. 109.
</TABLE>
<TABLE>
<CAPTION>
Common Stock Information 1992* High Low
<S> <C> <C> <C>
The Company's Common Stock is listed
on the New York Stock Exchange
(trading symbol: SEE). First Quarter $28-7/16 $22-7/16
The adjacent table sets forth the Second Quarter $26-1/2 $21-7/8
high and low sales prices for the
Company's Common Stock for each quarter Third Quarter $26-1/8 $22-1/8
during the two-year period ended
December 31, 1993. Fourth Quarter $26 $20-1/2
The Company is currently subject to 1993
certain covenants in loan documents
that restrict the payment of cash First Quarter $26 $21
dividends. No dividends were paid
in 1993 or 1992. Second Quarter $25-7/8 $21-3/4
As of March 11, 1994 there were approximately Third Quarter $29-1/4 $23-1/8
1,230 holders of record of the Company's
Common Stock. Fourth Quarter $32 $27
*Stock prices for the periods prior to the
fourth quarter of 1992 have been adjusted
to reflect the effect of a two-for-one stock
split in the nature of a 100% stock dividend
distributed on September 18, 1992 to
stockholders of record at September 4, 1992.
</TABLE>
EXHIBIT 22
SUBSIDIARIES OF THE COMPANY
The following table sets forth the name and state or other
jurisdiction of incorporation of the Company's subsidiaries. Except as
otherwise indicated, each subsidiary is wholly-owned, directly or
indirectly, by the Company. Such subsidiaries do business under their
corporate names.
Aire Sellado, S.A. de C.V. Mexico
Cascades Sealed Air Inc.* Canada
Instapak France S.A. France
Instapak, Limited Nevada
Plastec Iberica, S.A. Spain
PolyMask Corporation* Delaware
Polypride, Inc. Delaware
Sealed Air N.V. Belgium
Sealed Air of Canada Limited Ontario, Canada
Sealed Air Limited England
Sealed Air S.A.** France
Sealed Air GmbH Germany
Sealed Air (Far East) Limited Hong Kong
Sealed Air S.p.A. Italy
Sealed Air (Korea) Limited Korea
Sealed Air (Malaysia) Sdn. Bhd. Malaysia
Sealed Air B.V. Netherlands
Sealed Air (Puerto Rico) Incorporated Delaware
Sealed Air (Singapore) Pte. Limited Singapore
Sealed Air Svenska AB Sweden
Sealed Air Taiwan Limited Taiwan
Sealed Air Trucking, Inc. Delaware
Static, Inc. Delaware
*The Company owns 50% of the outstanding shares.
**The Company indirectly owns a majority of the outstanding shares.
Certain subsidiaries are omitted from the above table. Such subsidiaries,
if considered in the aggergate as a single subsidiary, would not constitute a
significant subsidiary as of December 31, 1993.
EXHIBIT 24
Independent Auditors' Consent
The Board of Directors
Sealed Air Corporation:
We consent to incorporation by reference in the Registration
Statement No. 33-41734 on Form S-8, Registration Statement No.
33-47017 on Form S-3, Registration Statement No. 33-44529 on Form
S-3, Registration Statement No. 33-66716 on Form S-3 and
Registration Statement No. 33-68614 on Form S-3 of Sealed Air
Corporation of our reports dated January 19, 1994, relating to
the consolidated balance sheets of Sealed Air Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of earnings, shareholders' equity
(deficit), and cash flows and related schedules for each of the
years in the three-year period ended December 31, 1993 which
reports appear or are incorporated by reference in the December
31, 1993 annual report on Form 10-K of Sealed Air Corporation.
Our report on the aforementioned consolidated financial
statements refers to a change in the Company's method of
accounting for income taxes.
s/KPMG PEAT MARWICK
KPMG Peat Marwick
Short Hills, New Jersey
March 22, 1994
