<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to_______
Commission file number 1-7834
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-1682767
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification
Number)
Park 80 East 07663-5291
Saddle Brook, New Jersey (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (201) 791-7600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
There were 42,600,246 shares of the registrant's common stock, par
value $0.01 per share, outstanding as of July 31, 1997.
</PAGE>
<PAGE>
<TABLE>
PART I
FINANCIAL INFORMATION
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Three Months and Six Months Ended June 30, 1997 and 1996
(In thousands of dollars except per share data)
(Unaudited)
<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $211,607 $193,116 $414,466 $379,046
Cost of sales 131,831 120,455 259,256 237,644
Gross profit 79,776 72,661 155,210 141,402
Marketing, administrative and
development expenses 43,160 40,137 84,910 78,992
Operating profit 36,616 32,524 70,300 62,410
Other income (expense):
Interest income 166 380 354 630
Interest expense (1,962) (3,828) (4,158) (7,339)
Other, net 932 (29) 1,346 (390)
Other income (expense), net (864) (3,477) (2,458) (7,099)
Earnings before income taxes 35,752 29,047 67,842 55,311
Income taxes 14,081 11,474 26,730 21,848
Net earnings $ 21,671 $ 17,573 $ 41,112 $ 33,463
Net earnings per common share $ 0.51 $ 0.42 $ 0.97 $ 0.79
Weighted average number of
shares outstanding (000) 42,609 42,446 42,601 42,431
See accompanying notes to consolidated financial statements.
</TABLE>
2
</PAGE>
<PAGE>
<TABLE>
SEALED AIR CORPORATION
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
(In thousands of dollars except share data)
(Unaudited)
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,276 $ 2,985
Accounts receivable, less allowance for
doubtful accounts of $5,857 in 1997 and
$5,623 in 1996. 132,714 124,204
Other receivables 6,922 8,258
Inventories 59,876 57,231
Prepaid expenses 2,573 1,095
Deferred taxes 12,899 13,193
Total current assets 216,260 206,966
Property and equipment:
Land and buildings 79,888 81,629
Machinery and equipment 198,577 199,275
Leasehold improvements 7,975 8,409
Furniture and fixtures 11,071 12,029
Construction in progress 9,707 6,139
307,218 307,481
Less accumulated depreciation and amortization 138,870 132,919
Property and equipment, net 168,348 174,562
Patents, patent applications and rights, less
accumulated amortization of $15,847 in 1997
and $15,139 in 1996 10,690 11,998
Excess of cost over fair value of net assets
acquired, less accumulated amortization of
$15,992 in 1997 and $12,966 in 1996 42,748 47,840
Other assets 25,014 25,753
$463,060 $467,119
See accompanying notes to consolidated financial statements.
</TABLE>
3
</PAGE>
<PAGE>
<TABLE>
SEALED AIR CORPORATION
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 (Continued)
(In thousands of dollars except share data)
(Unaudited)
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
installments of long-term debt $ 26,564 $ 15,565
Accounts payable 45,332 46,934
Accrued interest 595 323
Other accrued liabilities 67,393 69,526
Income taxes payable 11,732 15,708
Total current liabilities 151,616 148,056
Long-term debt, less current
installments 51,437 99,900
Deferred income taxes 18,730 19,863
Other non-current liabilities 14,238 12,651
Total liabilities 236,021 280,470
Shareholders' equity:
Preferred stock, no par value. Authorized
1,000,000 shares, none issued in 1997 and 1996 - -
Common stock, $.01 par value. Authorized
125,000,000 shares in 1997 and 60,000,000
shares in 1996, issued 42,781,604 shares
in 1997 and 42,747,704 shares in 1996 428 427
Additional paid-in capital 172,112 167,801
Retained earnings 57,133 16,021
Accumulated translation adjustment 2,551 8,615
232,224 192,864
Less deferred compensation and cost ($181
in 1997 and $227 in 1996) of 181,358 shares
in 1997 and 226,758 in 1996 of common stock
held as treasury stock 5,185 6,215
Shareholders' equity 227,039 186,649
$463,060 $467,119
See accompanying notes to consolidated financial statements.
</TABLE>
4
</PAGE>
<PAGE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements (abbreviated) of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
(In thousands of dollars)
(Unaudited)
<CAPTION>
1997 1996
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 41,112 $ 33,463
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 22,340 19,264
Deferred credits - income taxes and other (823) (81)
Other, net (5,164) (1,541)
Cash provided (used) by changes in:
Receivables (7,140) (9,142)
Inventories (2,645) 794
Prepaid expenses (1,478) (1,388)
Accounts payable (1,624) (1,407)
Accrued interest 272 155
Other accrued liabilities 1,652 9,413
Income taxes payable (3,976) 72
Net cash provided by operating activities 42,526 49,602
Cash Flows From Investing Activities:
Capital expenditures for property and equipment (10,301) (6,302)
Proceeds from sales of property and equipment 126 530
Net cash utilized in purchase of subsidiaries - (20,653)
Net cash used in investing activities (10,175) (26,425)
Cash Flows From Financing Activities:
Proceeds from long-term debt 12,238 75,063
Payments of long-term debt (51,840) (85,890)
Net proceeds (payments) on notes payable 5,652 (2,845)
Net cash used by financing activities (33,950) (13,672)
Effect of exchange rate changes on cash and cash
equivalents (110) (69)
Cash and Cash Equivalents:
(Decrease) increase during the period (1,709) 9,436
Balance, beginning of period 2,985 7,661
Balance, end of period $ 1,276 $ 17,097
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest $ 3,841 $ 6,816
Income taxes $ 30,706 $ 21,776
See accompanying notes to consolidated financial statements.
</TABLE>
5
</PAGE>
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997 and 1996
(Unaudited)
(1) Principles of Consolidation
The consolidated financial statements include the accounts of Sealed Air
Corporation and its subsidiaries (the "Company"). All significant
intercompany transactions and balances have been eliminated in
consolidation. In management's opinion, all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of the
results of operations for the quarter ended June 30, 1997 have been made.
Where appropriate, financial statement amounts for prior periods have been
reclassified to conform with their 1997 presentation.
(2) Income Taxes
An explanation of the difference between the effective income tax rate and
statutory U.S. federal income tax rate expressed as a percentage of
earnings before income taxes for the six months ended June 30, 1997 and
1996 follows:
1997 1996
Statutory U.S. federal income tax rate 35.0% 35.0%
Provision for foreign withholding taxes and
additional U.S. taxes on the accumulated
earnings of foreign subsidiaries 0.3 0.5
Tax effect of U.S. expenses not subject to
tax benefit 0.6 0.4
State income taxes, net of U.S. federal
income tax benefit 4.0 4.3
Taxes on foreign earnings at other than the
statutory U.S. federal income tax rate 0.2 (0.3)
Other miscellaneous items (0.7) (0.4)
Effective income tax rate 39.4% 39.5%
(3) Earnings Per Share
Earnings per common share are computed on the basis of the weighted average
number of shares of common stock outstanding during the year, including shares
issued for contingent stock awards and non-cash compensation.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which is required to be adopted on December 31,
1997. Such statement is not expected to have a significant impact on the
Company's consolidated financial statements.
6
</PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
The Company's net sales increased 10% in the second quarter and 9% in the
first six months of 1997 compared to the second quarter and first six months
of 1996. The increase in net sales primarily reflects increased unit volume
in the Company's major classes of products and added net sales from
businesses acquired during 1996. Foreign currency translation had a
modestly negative effect on the increase in net sales in the 1997 periods.
Net sales from domestic operations increased 6% in the second quarter and 7%
in the first six months of 1997 compared to the 1996 periods primarily due to
increased unit volume. Net sales from foreign operations increased 16% in the
second quarter and 14% in the first six months of 1997 compared to the 1996
periods primarily due to increased unit volume and added net sales from
businesses acquired during 1996.
Net sales of engineered products, primarily Instapak(R) products and
specialty polyethylene foams, increased 9% in the second quarter and first
six months of 1997 primarily due to increased unit volume.
Net sales of surface protection and other cushioning products, primarily air
cellular products, other polyethylene foam products and protective and
durable mailers and bags, increased 14% in the second quarter and 13% in the
first six months of 1997 due primarily to added net sales from businesses
acquired during 1996 and increased unit volume.
Net sales of food packaging products decreased 1% in the second quarter and
3% in the first six months of 1997 primarily due to the absence in the 1997
periods of the net sales of certain food packaging products that were
transferred during 1996 to a small unconsolidated joint venture in
Australia. Excluding the effect of this joint venture, net sales of food
packaging products increased modestly as higher unit volume was partially
offset by lower average selling prices.
7
</PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Net sales of other products increased to $8,761,000 from $8,205,000 in the
second quarter of 1996 and to $16,076,000 from $13,968,000 in the first six
months of 1996 primarily due to increased unit volume in certain products.
Cost of sales increased 9% and marketing, administrative and development
expenses increased 8% in the second quarter and first six months of 1997
primarily reflecting the Company's higher level of net sales.
Operating profit increased 13% in the second quarter and first six months of
1997 primarily reflecting the Company's higher level of net sales and the
changes in costs and expenses discussed above.
Interest expense, which is the principal component of other income (expense),
net, decreased to $1,962,000 in the second quarter and $4,158,000 in the first
six months of 1997 compared to $3,828,000 and $7,339,000 in the second quarter
and first six months of 1996, respectively, primarily reflecting the decrease
in the Company's average outstanding indebtedness.
The Company's effective income tax rate was 39.4% in the second quarter and
first six months of 1997 and 39.5% in the 1996 periods.
Net earnings increased 23% to $21,671,000, or $0.51 per share, for the second
quarter and 23% to $41,112,000, or $0.97 per share, for the first six months
of 1997 compared with net earnings of $17,573,000, or $0.42 per share, and
$33,463,000, or $0.79 per share, for the second quarter and first six months
of 1996 primarily reflecting the Company's higher level of operating profit
and lower interest expense.
8
</PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash flows from operations
and amounts available under the Company's existing lines of credit. The
Company has met, and currently expects that it will continue to meet,
substantially all of its working capital and capital expenditure requirements
as well as its debt service requirements with funds provided by operations and
borrowings made either under its available lines of credit or otherwise.
Net cash provided by operating activities amounted to $42,526,000 in the first
six months of 1997 compared with $49,602,000 for the 1996 period primarily due
to changes in operating assets and liabilities which partially offset the
Company's increased net earnings and higher levels of depreciation and
amortization during the 1997 period. The changes in operating assets and
liabilities were primarily due to the higher level of operations and the
timing of cash receipts and payments.
Net cash used in investing activities amounted to $10,175,000 and $26,425,000
for the first six months of 1997 and 1996, respectively. Cash used for capital
expenditures amounted to $10,301,000 in the first six months of 1997 compared
with $6,302,000 in the 1996 period primarily due to the timing of capital
expenditures. The net cash used in the 1996 period also included cash used in
connection with acquisitions made in such period.
Net cash used in financing activities amounted to $33,950,000 in the first six
months of 1997 compared with $13,672,000 in the first six months of 1996. In
both periods, repayments of long-term debt more than offset borrowings
incurred in such periods.
At June 30, 1997, the Company had working capital of $64,644,000, or 14% of
total assets, compared with $58,910,000, or 13% of total assets, at December
31, 1996. The increase in working capital was due primarily to an increase in
accounts receivable and a decrease in income taxes payable, partially offset
by an increase in notes payable and current installments of long-term debt.
Accounts receivable increased during the first six months of 1997 due
9
</PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
primarily to the higher level of operations, and income taxes payable
decreased primarily due to the timing of payments. Notes payable and current
installments of long-term debt increased due primarily to the reasons
discussed below.
The Company's ratio of current assets to current liabilities (current ratio)
was 1.4 at June 30, 1997 and December 31, 1996. The Company's ratio of
current assets less inventory to current liabilities (quick ratio) was 1.0 at
June 30, 1997 and December 31, 1996.
The Company's outstanding debt balances consist primarily of various foreign
loans and borrowings under lines of credit. Long-term debt, less current
installments, decreased to $51,437,000 at June 30, 1997 from $99,900,000 at
December 31, 1996 reflecting the repayment of indebtedness. Notes payable and
current installments of long-term debt increased to $26,564,000 at June 30,
1997 from $15,565,000 at December 31, 1996 primarily due to the timing of
working capital borrowings and scheduled debt maturities. At June 30, 1997,
the Company's available lines of credit amounted to approximately $254,942,000
of which approximately $223,554,000 were unused. Such lines of credit, which
include an unsecured $200 million revolving credit facility with Bankers Trust
Company, as agent for a syndicate of banks (the "BT Credit Agreement"), permit
the Company and certain of its subsidiaries to borrow for working capital and
other corporate purposes.
The BT Credit Agreement, which expires on June 30, 2001, provides for changes
in borrowing margins based on financial criteria and imposes certain
limitations on the operations of the Company and its subsidiaries. These
limitations include restrictions on the incurrence of additional indebtedness,
the creation of liens, the making of investments, dispositions of property or
assets, certain transactions with affiliates, and the payment by the Company
of cash dividends to its stockholders, as well as financial covenants relating
to interest coverage and debt leverage. The Company was in compliance with
these requirements as of June 30, 1997.
10
</PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Certain of the Company's foreign loans and lines of credit, including the BT
Credit Agreement, bear interest at floating rates. The Company utilizes
interest rate swaps, currency swaps, and other derivative financial
instruments to manage its exposure to fluctuations in interest rates and
foreign exchange rates. The Company does not purchase, hold or sell
derivative financial instruments for trading purposes.
The Company's shareholders' equity increased to $227,039,000 at June 30, 1997
from $186,649,000 at December 31, 1996 primarily as a result of the Company's
net earnings for the first six months of 1997.
11
</PAGE>
<PAGE>
PART II
OTHER INFORMATION
Item 2. Changes in Securities
In January 1997, Sealed Air Corporation (the "Corporation")
issued 72,900 shares of Common Stock to the Profit-Sharing Plan of the
Corporation as part of its 1996 contribution to the Profit-Sharing Plan.
The issuance of such shares to the Profit-Sharing Plan was not
registered under the Securities Act of 1933, as amended, (the "1933
Act"), because such transaction did not involve an "offer" or "sale" of
securities under Section 2(3) of the 1933 Act.
Item 4. Submission of Matters to a Vote of Security Holders
On May 16, 1997, the Corporation held its annual meeting of
stockholders, at which the stockholders elected the whole Board of
Directors for the ensuing year, approved an amendment of the certificate
of incorporation of the Corporation to increase the authorized number of
shares of Common Stock, and ratified the appointment of KPMG Peat
Marwick LLP as the Corporation's independent public accountants for
1997.
A total of 39,010,055 shares of common stock were voted in
person or by proxy at the annual meeting, representing approximately 91%
of the shares entitled to vote at such meeting. There were no broker
non-votes. The votes cast on the matters before the meeting were as
follows:
Nominees for Election Number of Votes
to Board of Directors: In Favor Withheld
John K. Castle 38,838,000 172,055
Lawrence R. Codey 38,844,807 165,248
T.J. Dermot Dunphy 38,808,238 201,817
Charles F. Farrell, Jr 38,830,630 179,425
David Freeman 33,990,327 5,019,728
Alan H. Miller 38,838,218 171,837
Robert L. San Soucie 38,824,423 185,632
Number of Votes
Approval of proposed For 36,638,769
amendment of the certificate Against 2,297,100
of incorporation Abstentions 74,186
Ratification of KPMG For 38,907,594
Peat Marwick LLP as Against 32,274
independent auditors Abstentions 70,187
12
</PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
3.1 Amendment to the Corporation's Certificate of Incorporation
effective May 16,1997.
3.2 Unofficial Composite Certificate of Incorporation of the
Corporation as currently in effect.
27 Financial Data Schedule.
(b) Reports on Form 8-K
The Corporation did not file any reports on Form 8-K during
the quarter ended June 30, 1997.
13
</PAGE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SEALED AIR CORPORATION
Date: August 8, 1997 By s/Horst Tebbe
Horst Tebbe
Vice President - Finance &
Chief Financial Officer
(Authorized Executive Officer
and Principal Financial
Officer)
14
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the consolidated
statements of earnings for the six months ended June 30, 1997 and the
consolidated balance sheet at June 30, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000088204
<NAME> SEALED AIR CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,276,000
<SECURITIES> 0
<RECEIVABLES> 138,571,000
<ALLOWANCES> 5,857,000
<INVENTORY> 59,876,000
<CURRENT-ASSETS> 216,260,000
<PP&E> 307,218,000
<DEPRECIATION> 138,870,000
<TOTAL-ASSETS> 463,060,000
<CURRENT-LIABILITIES> 151,616,000
<BONDS> 0
0
0
<COMMON> 428,000
<OTHER-SE> 226,611,000
<TOTAL-LIABILITY-AND-EQUITY> 463,060,000
<SALES> 414,466,000
<TOTAL-REVENUES> 414,466,000
<CGS> 259,256,000
<TOTAL-COSTS> 259,256,000
<OTHER-EXPENSES> 84,910,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,158,000
<INCOME-PRETAX> 67,842,000
<INCOME-TAX> 26,730,000
<INCOME-CONTINUING> 41,112,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,112,000
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
SEALED AIR CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State
of Delaware (the "Corporation"), DOES HEREBY CERTIFY THAT:
FIRST: At a meeting of the Board of Directors of the Corporation
resolutions were duly adopted setting forth a proposed amendment
to the Certificate of Incorporation of the Corporation, declaring
such amendment to be advisable and directing that such amendment
be considered at the next annual meeting of the stockholders of
the Corporation. The resolution setting forth such proposed
amendment is as follows:
RESOLVED that this Board of Directors declares advisable the
amendment of the first sentence of Article Fourth of the
Certificate of Incorporation of the Corporation so that, as
amended, said sentence shall read in its entirety as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one hundred twenty-
six million (126,000,000), one hundred twenty-five million
(125,000,000) of which shall be common stock with a par value of
One Cent ($.01) per share, amounting in the aggregate to One
Million Two Hundred Fifty Thousand Dollars ($1,250,000), and one
million (1,000,000) of which shall be preferred stock without par
value."
SECOND: Thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of the
Corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of such amendment.
THIRD: Such amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate
to be signed by William V. Hickey, its President, and attested by
H. Katherine White, its Secretary, this 16th day of May, 1997.
SEALED AIR CORPORATION
By William V. Hickey
President
[SEAL]
ATTEST:
H. Katherine White
Secretary
EXHIBIT 3.2
UNOFFICIAL COMPOSITE
CERTIFICATE OF INCORPORATION
OF
SEALED AIR CORPORATION
(as amended through May 16, 1997)
FIRST: The name of the corporation is Sealed Air Corporation.
SECOND: The registered office of the corporation in the State of
Delaware is to be located at Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. Its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is one hundred twenty-six million (126,000,000),
one hundred twenty-five million (125,000,000) of which shall be common stock
with a par value of One Cent ($.01) per share, amounting in the aggregate to
One Million Two Hundred Fifty Thousand Dollars ($1,250,000), and one million
(1,000,000) of which shall be preferred stock without par value.
The preferred stock may be issued from time to time in one or more
series. The powers, designations, preferences and other rights and
qualifications, limitations or restrictions of the preferred stock of each
series shall be such as are stated and expressed in this Article Fourth and,
to the extent not stated and expressed herein, shall be such as may be fixed
by the board of directors (authority so to do being hereby expressly granted)
and stated and expressed in a resolution or resolutions adopted by the board
of directors providing for the initial issue of preferred stock of such
series. Such resolution or resolutions shall (a) fix the dividend rights of
holders of shares of such series, (b) fix the terms on which stock of such
series may be redeemed if the shares of such series are to be redeemable, (c)
fix the rights of the holders of stock of such series upon dissolution or any
distribution of assets, (d) fix the terms or amount of the sinking fund, if
any, to be provided for the purchase or redemption of stock of such series,
(e) fix the terms upon which the stock of such series may be converted into or
exchanged for stock of any other class or classes or of any one or more series
of preferred stock if the shares of such series are to be convertible or
exchangeable, (f) fix the voting rights, if any, of the shares of such series
and (g) fix such other powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof desired to be so fixed.
Except to the extent otherwise provided in the resolution or
resolutions of the board of directors providing for the initial issue of
shares of a particular series or expressly required by law, holders of shares
of preferred stock of any series shall be entitled to one vote for each share
thereof so held, shall vote share for share with the holders of the common
stock without distinction as to class and shall not be entitled to vote
separately as a class or series of a class. The number of shares of preferred
stock authorized to be issued may be increased or decreased from time to time
by the affirmative vote of the holders of a majority of the stock of the
corporation entitled to vote, and the holders of the preferred stock shall not
be entitled to vote separately as a class or series of a class on any such
increase or decrease.
All shares of any one series of preferred stock shall be identical
with each other in all respects except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall
accumulate, and all series of preferred stock shall rank equally and be
identical in all respects except as specified in the respective resolutions of
the board of directors providing for the initial issue thereof.
Subject to the prior and superior rights of the preferred stock as
set forth in any resolution or resolutions of the board of directors providing
for the initial issuance of any particular series of preferred stock, such
dividends (payable in cash, stock or otherwise) as may be determined by the
board of directors may be declared and paid on the common stock from time to
time out of any funds legally available therefor and the preferred stock shall
not be entitled to participate in any such dividend.
FIFTH: The name of the incorporator is Edward Beuchert and his
mailing address is Room 1410, 25 Broad Street, New York, New York 10004.
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The private property of the stockholders shall not be
subject to the payment of the corporate debts to any extent whatever except as
otherwise provided by law.
EIGHTH: In furtherance, and not in limitation of the powers
conferred by statute, the board of directors is expressly authorized:
A. To make, alter or repeal the by-laws of the corporation;
B. To authorize and cause to be executed mortgages and
liens, with or without limit as to amount, upon the real and
personal property of the corporation;
C. To authorize the guaranty by the corporation of
securities, evidences of indebtedness and obligation of other
persons, corporations and business entities;
D. By resolution adopted by a majority of the whole board,
to designate one or more committees, each committee to consist of
two or more of the directors of the corporation, which, to the
extent provided in the resolution, shall have and may exercise the
powers of the board of directors in the management of the business
and affairs of the corporation and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the board
of directors. The board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. The members
of any such committee present at any meeting and not disqualified
from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the board of directors to
act at the meeting in the place of any absent or disqualified
member.
All corporate powers of the corporation shall be exercised by the board of
directors except as otherwise provided herein or by law.
NINTH: Any property of the corporation less than all of its
assets including goodwill and its corporate franchise, deemed by the board of
directors to be not essential to the conduct of the business of the
corporation, may be sold, leased, exchanged or otherwise disposed of by
authority of the board of directors. All of the property and assets of the
corporation including its goodwill and its corporate franchises, may be sold,
leased or exchanged upon such terms and conditions and for such consideration
(which may be in whole or in part shares of stock and/or other securities of
any other corporation or corporations) as the board of directors shall deem
expedient and for the best interests of the corporation, when and as
authorized by the affirmative vote of the holders of a majority of the stock
issued and outstanding having voting power given at a stockholders' meeting
duly called for that purpose upon at least 20 days' notice containing notice
of the proposed sale, lease or exchange, or when authorized by the written
consent of the holders of a majority of the voting stock issued and
outstanding.
TENTH: A director or officer of the corporation shall not be
disqualified by his office from dealing or contracting with the corporation
either as a vendor, purchaser or otherwise, nor shall any transaction or
contract of the corporation be void or voidable by reason of the fact that any
director or officer or any firm of which any director or officer is a member
or any corporation of which any director or officer is a stockholder, officer
or director, is in any way interested in such transaction or contract,
provided that such transaction or contract is or shall be authorized, ratified
or approved either (1) by a vote of a majority of a quorum of the board of
directors or of a committee thereof, without counting in such majority any
director so interested (although any director so interested may be included in
such quorum), or (2) by a majority of a quorum of the stockholders entitled to
vote at any meeting. No director or officer shall be liable to account to the
corporation for any profits realized from any such transaction or contract
authorized, ratified or approved as aforesaid by reason of the fact that he,
or any firm of which he is a member or any corporation of which he is a
stockholder, officer or director, was interested in such transaction or
contract. Nothing herein contained shall create liability in the events above
described or prevent the authorization, ratification or approval of such
contracts in any other manner permitted by law.
ELEVENTH: No person shall be liable to the corporation for any
loss or damage suffered by it on account of any action taken or omitted to be
taken by him as a director or officer of the corporation in good faith, if
such person (i) exercised or used the same degree of diligence, care and skill
as an ordinarily prudent man would have exercised or used under the
circumstances in the conduct of his own affairs, or (ii) took, or omitted to
take, such action in reliance upon advice of counsel for the corporation, or
upon statements made or information furnished by officers or employees of the
corporation which he had reasonable grounds to believe to be true, or upon a
financial statement of the corporation prepared by an officer or employee of
the corporation in charge of its accounts or certified by a public accountant
or firm of public accountants.
TWELFTH: Any contract, transaction or act of the corporation or
of the board of directors which shall be approved or ratified by a majority of
a quorum of the stockholders entitled to vote at any meeting shall be as valid
and binding as though approved or ratified by every stockholder of the
corporation; but any failure of the stockholders to approve or ratify such
contract, transaction or act, when and if submitted, shall not be deemed in
any way to invalidate the same or to deprive the corporation, its directors or
officers of their right to proceed with such contract, transaction or act.
THIRTEENTH: Every person who was or is a party or is threatened
to be made a party to or is involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or a person of whom he is the
legal representative is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise, shall be indemnified and held harmless by the
corporation to the fullest extent legally permissible under the General
Corporation Law of the State of Delaware against all expenses, liability and
loss (including attorney's fees, judgments, fines and amounts paid or to be
paid in settlement) 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 or representatives may have or hereafter acquire and,
without limiting the generality of such statement, they shall be entitled to
their respective rights of indemnification under any by-law, agreement, vote
of stockholders, provision of law or otherwise, as well as their rights under
this Article.
The Board of Directors may adopt by-laws from time to time with
respect to indemnification to provide at all times the fullest indemnification
permitted by the General Corporation Law of the State of Delaware and 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 or officer 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.
FOURTEENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in
a summary way of this corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8
of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as
the case may be, to be summoned in such manner as the said court directs. If
a majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of
this corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or
on all the stockholders or class of stockholders, of this corporation, as the
case may be, and also on this corporation.
FIFTEENTH: Meetings of stockholders and directors may be held
within or without the State of Delaware, as the by-laws may provide. The
books of account of the corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the board of directors or in
the by-laws of the corporation. Elections of directors need not be by written
ballot unless the by-laws of the corporation shall so provide.
SIXTEENTH: Whenever the vote of stockholders at a meeting thereof
is required or permitted to be taken for or in connection with any corporate
action, the meeting and vote of stockholders may be dispensed with if a
written consent to such corporate action is signed by the holders of 51% of
the stock who would have been entitled to vote upon such corporate action if a
meeting were held; provided that in no case shall a written consent be by the
holders of stock having less than the minimum percentage of the vote required
herein or by statute for the proposed corporate action, and provided that
prompt notice must be given to all stockholders of the taking of corporate
action without a meeting and by less than unanimous written consent.
SEVENTEENTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
EIGHTEENTH: A director of the corporation shall not be liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from
liability or the limitation thereof is not permitted under the Delaware
General Corporation Law as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph of this
Article EIGHTEENTH shall not adversely affect any right or protection of a
director of the corporation existing hereunder with respect to any act or
omission occurring prior to or at the time of such repeal or modification.
IN WITNESS WHEREOF the undersigned, being the incorporator
hereinbefore named, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, does make this certificate
February 13, 1969.
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