<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT AS UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 AS AMENDED AND RESTATED
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
For Quarter Ended December 31, 1993 Commission file number 1-9915
GAYLORD CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-3472452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
500 Lake Cook Road, Suite 400
Deerfield, Illinois 60015
Telephone: (708) 405-5500
(Address, including zip code, and telephone number, including
area code, of registrant's principal offices)
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 whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes X No
As of February 3, 1994, the registrant had outstanding 47,642,688 shares
(including 31,845,533 shares held in trust for the benefit of the warrant
holders) of its $0.0001 par value Class A Common Stock, 31,845,533
redeemable exchangeable warrants and 5,951,427 shares of its $0.0001 par
value Class B Common Stock. One share of Class B Common Stock is
convertible into one share of Class A Common Stock at the option of the
holder thereof.
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<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBERS
<S> <C>
Item 1. Financial Statements. 1 - 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 6 - 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 10
Item 2. Changes in Securities. 10
Item 3. Defaults Upon Senior Securities. 10
Item 4. Submission of Matters to a Vote of Security Holders. 10
Item 5. Other Information. 10
Item 6. Exhibits and Reports on Form 8-K. 11
SIGNATURES 12
</TABLE>
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS,
DECEMBER 31, 1993 AND SEPTEMBER 30, 1993 (In millions)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1993 1993
--------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 9.8 $ 27.6
Trade receivables (less allowances of
$4.6 million and $4.5 million, respectively) 102.6 103.2
Inventories (Note 3) 66.1 61.2
Other current assets 6.4 7.4
--------- ----------
Total current assets 184.9 199.4
--------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment at cost 892.2 887.3
Less accumulated depreciation 289.8 276.2
--------- ----------
Property - Net 602.4 611.1
--------- ----------
OTHER ASSETS 45.3 49.6
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TOTAL $ 832.6 $ 860.1
--------- ----------
--------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 2) $ 5.7 $ 5.7
Trade payables 39.0 43.7
Accrued and other liabilities 43.6 50.1
--------- ----------
Total current liabilities 88.3 99.5
--------- ----------
LONG-TERM DEBT (Note 2) 678.7 670.1
OTHER LONG-TERM LIABILITIES 30.7 32.6
DEFERRED INCOME TAXES 4.3 4.3
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Class A common stock - par value, $.0001 per share;
authorized 125,000,000 shares; issued 47,709,389
shares and 47,510,789 shares, respectively, and
outstanding 47,623,689 shares and 47,425,089
shares, respectively - -
Class B common stock - par value, $.0001 per share;
authorized 15,000,000 shares; issued and
outstanding 5,951,427 shares - -
Capital in excess of par value 169.4 169.4
Retained deficit (127.9) (104.9)
Common stock in treasury - at cost; 85,700 shares (0.8) (0.8)
Recognition of minimum pension liability (10.1) (10.1)
--------- ----------
Total stockholders' equity 30.6 53.6
--------- ----------
TOTAL $ 832.6 $ 860.1
--------- ----------
--------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
1
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1993 AND 1992 (In millions, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
1993 1992
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<S> <C> <C>
NET SALES $ 183.9 $ 176.8
COST OF GOODS SOLD 167.2 151.0
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GROSS MARGIN 16.7 25.8
SELLING AND ADMINISTRATIVE COSTS (20.1) (18.8)
DEBT RESTRUCTURING EXPENSES (Note 2) - (8.6)
------- -------
OPERATING LOSS (3.4) (1.6)
INTEREST EXPENSE - Net (Note 2) (19.5) (12.0)
OTHER EXPENSE - Net (0.1) (0.1)
------- -------
LOSS BEFORE INCOME TAXES, EXTRAORDINARY
ITEM AND ACCOUNTING CHANGE (23.0) (13.7)
INCOME TAXES - -
------- -------
LOSS BEFORE EXTRAORDINARY ITEM AND
ACCOUNTING CHANGE (23.0) (13.7)
EXTRAORDINARY GAIN (Note 2) - 201.5
ACCOUNTING CHANGE (Note 1) - (1.3)
------- -------
NET INCOME (LOSS) (23.0) $ 186.5
-------
-------
RETAINED DEFICIT:
BEGINNING OF PERIOD (104.9)
-------
END OF PERIOD $(127.9)
-------
-------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
LOSS BEFORE EXTRAORDINARY ITEM AND
ACCOUNTING CHANGE $ (0.43) $ (0.35)
EXTRAORDINARY GAIN - 5.14
ACCOUNTING CHANGE - (0.03)
------- -------
NET INCOME (LOSS) $ (0.43) $ 4.76
------- -------
------- -------
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 53.5 39.2
------- -------
------- -------
</TABLE>
See notes to condensed consolidated financial statements.
2
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1993 AND 1992 (In millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
1993 1992
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<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Loss before extraordinary item and
accounting change $(23.0) $(13.7)
Adjustments to reconcile loss before extraordinary
item and accounting change to net cash from
operating activities:
Depreciation and amortization 15.3 14.3
Non-cash interest expense 9.8 2.2
Change in current assets and liabilities (15.9) (12.0)
Other - net 0.7 2.3
-------- --------
Net cash used for operations (13.1) (6.9)
-------- --------
CASH FLOWS FROM INVESTMENTS:
Capital expenditures (5.1) (3.7)
Capitalized interest (0.1) (0.2)
Acquisition restructuring expenditures (0.8) (0.3)
Other investments - net 2.8 0.1
-------- --------
Net cash used for investments (3.2) (4.1)
-------- --------
CASH FLOWS FROM FINANCING:
Revolver borrowings - net - 2.0
Senior debt - repayments (1.3) (1.1)
Restructuring closing (Note 2) - (53.1)
Other financing - net (0.2) 0.1
-------- --------
Net cash used for financing (1.5) (52.1)
-------- --------
Net decrease in cash and equivalents (17.8) (63.1)
Cash and equivalents, beginning of period 27.6 64.5
-------- --------
Cash and equivalents, end of period $ 9.8 $ 1.4
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for:
Interest expense $ 14.9 $ 6.8
Income taxes - -
</TABLE>
See notes to condensed consolidated financial statements.
3
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all normal and recurring
adjustments and accruals necessary to present fairly the financial position
as of December 31, 1993 and the results of operations and cash flows for the
three months ended December 31, 1993 and 1992, including all the accounts of
Gaylord Container Corporation (including its subsidiaries, the Company),
and are in conformity with Securities and Exchange Commission (the
Commission) Rule 10-01 of Regulation S-X. In addition to the normal and
recurring adjustments and accruals, for the three months ended December 31,
1992, the Company recognized "Debt Restructuring Expenses" of $8.6 million
and an "Extraordinary Gain" of $201.5 million related to a comprehensive
debt restructuring (see Note 2) and a charge of $1.3 million for an
"Accounting Change" as described below. The financial statements should
be read in conjunction with the audited consolidated financial statements
and the notes thereto on Form 10-K for the fiscal year ended September 30,
1993.
On October 1, 1992, the Company adopted Financial Accounting Standard
No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and elected to immediately recognize its accumulated benefit
obligation under collective bargaining agreements at four of its facilities.
As a result, the Company recorded a charge to earnings of $1.3 million for
the effect of the "Accounting Change."
2. RESTRUCTURING/REFINANCING
On September 11, 1992, the Company filed a voluntary petition for relief and
a plan of reorganization (the Prepackaged Plan) under Chapter 11 of the
United States Bankruptcy Code. On November 2, 1992, the Company consummated
the Prepackaged Plan.
Upon consummation of the Prepackaged Plan, the Company issued (i) $182.3
million aggregate principal amount of 13-1/2% Senior Subordinated Debentures
Due 2003 (the 13-1/2% Senior Subordinated Notes) plus $20.7 million of
accrued interest from January 1, 1992 through November 1, 1992, (ii) $195.4
million aggregate principal amount of 10-1/4% Senior Subordinated PIK Notes
Due 2001 (the 10-1/4% Senior Subordinated Notes) plus $16.8 million of
accrued interest from January 1, 1992 through November 1, 1992 (including
$10.6 million of interest paid in additional 10-1/4% Senior Subordinated
Notes), (iii) approximately 6 million shares of the Company's Class A Common
Stock, par value $.0001 per share (Class A Common Stock) and (iv) approxi-
mately 31.8 million redeemable exchangeable warrants (the Warrants) to
obtain one share of Class A Common Stock per Warrant, all in exchange for
$582.8 million aggregate principal amount of the Company's subordinated
debt plus approximately $134.5 million of accrued but unpaid interest
thereon. In addition, the Company repaid $26.2 million of principal
outstanding under its bank credit agreement.
Concurrent with the consummation of the Prepackaged Plan, the Company (i)
issued the number of shares of Class A Common Stock deliverable upon
exercise of the Warrants to a trustee, which will hold
such shares in trust, for the benefit of the holders of Warrants pending any
such exercise,
4
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(ii) filed with the Delaware Secretary of State the charter amendment which
amended the Company's Restated Certificate of Incorporation and (iii) closed
the post-restructuring credit agreement with its bank group.
The Company accounted for the consummation of the Prepackaged Plan in
accordance with the provisions of the American Institute of Certified Public
Accountants Statement of Position 90-7, "Financial Accounting by Entities in
Reorganization Under the Bankruptcy Code." The exchange of subordinated
debt for the 13-1/2% Senior Subordinated Notes and the 10-1/4% Senior
Subordinated Notes, shares of Class A Common Stock and Warrants resulted in a
forgiveness of debt. The forgiveness of debt resulted in an extraordinary
gain of $201.5 million, net of $1.2 million of income taxes. The deferred
tax provision was recorded at less than the statutory tax rate due to the
recognition of deferred tax benefits which the Company was previously unable
to utilize due to limitations on its ability to carry-forward tax net
operating losses sustained in prior years. A provision of $1.2 million for
certain state income taxes was required due to limitations on the use of
such net operating loss carryforwards for state income tax purposes.
Approximately $4.0 million of interest expense on the Senior Subordinated
Notes for the period October 1, 1992 through November 1, 1992 reduced the
amount of the extraordinary gain recognized by the Company and therefore
was not reported as interest expense.
On May 18, 1993, the Company issued (i) $225 million aggregate principal
amount of 11-1/2% Senior Notes Due 2001 (the Senior Notes) and (ii)
approximately $434.2 million aggregate principal amount (approximately
$300 million of gross proceeds) of 12-3/4% Senior Subordinated Discount
Debentures Due 2005 (the Subordinated Discount Debentures and together with
the Senior Notes, the Securities). Proceeds from the sale of the Securities
were used (i) to prepay $70 million outstanding under the term loan portion
of the Company's bank credit agreement, (ii) to redeem all outstanding
10-1/4% Senior Subordinated Notes ($208.2 million), plus accrued interest
thereon (approximately $9.8 million), (iii) to redeem all outstanding
13-1/2% Senior Subordinated Notes ($182.3 million), plus accrued interest
thereon (approximately $11.4 million), (iv) to pay fees and expenses of
approximately $19.7 million and (v) for general corporate purposes.
3. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1993 1993
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(In millions)
<S> <C> <C>
Inventories consist of:
Finished products $14.3 $13.3
In process 39.5 34.6
Raw materials 5.9 6.7
Supplies 9.4 9.4
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Total 69.1 64.0
LIFO valuation adjustment (3.0) (2.8)
------ ------
Total $66.1 $61.2
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</TABLE>
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
First Quarter of Fiscal 1994 Compared with First Quarter of Fiscal 1993.
Net sales for the first quarter of fiscal 1994 were $183.9 million,
approximately 4 percent higher than net sales of $176.8 million for
the first quarter of fiscal 1993. The operating loss for the current
quarter was $3.4 million compared with an operating loss of $1.6
million for the year-ago first quarter after $8.6 million of debt
restructuring expenses. The Company reported a net loss of $23.0 million,
or $0.43 per share, versus net income of $186.5 million, or $4.76 per share,
after recording an extraordinary gain of $201.5 million, or $5.14 per share,
in the prior-year quarter. In addition, net income in the first quarter of
fiscal 1993 was reduced by $1.3 million, or $0.03 per share, for an
"Accounting Change" as a result of the Company's adoption of Financial
Accounting Standard No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The earnings per share amounts were
calculated based on 53.5 million weighted average shares and 39.2 million
weighted average shares outstanding for the first quarters of fiscal
1994 and fiscal 1993, respectively.
A $25 per ton price increase for linerboard was implemented during the
first quarter of fiscal 1994. Generally, prices for the Company's products
increased in the first quarter of fiscal 1994 as compared with the fourth
quarter of fiscal 1993. Year-over-year, however, prices for the first
quarter of fiscal 1994 were substantially lower. Sales and earnings in the
first quarter of fiscal 1994 were adversely affected by lower average
selling prices for primary and converted products as compared to the
prior-year quarter. Lower average net selling prices in the first quarter
of fiscal 1994 reduced operating earnings by approximately $7 million versus
the year-ago quarter. Average selling prices for the Company's domestic
containerboard and unbleached kraft paper decreased approximately 7 percent
and 12 percent, respectively, in the first quarter of fiscal 1994 compared
with the prior-year quarter. In addition, average selling prices for the
Company's export containerboard decreased approximately 14 percent from the
prior-year quarter. Average selling prices for the Company's corrugated
products and grocery bags and sacks decreased approximately 4 percent and 15
percent, respectively, in the first quarter of fiscal 1994 compared with the
year-ago quarter. Average selling prices for the Company's multiwall bags
increased approximately 2 percent in the first quarter of fiscal 1994 versus
the year-ago quarter as a result of changes in product mix.
Sales and earnings for the first quarter of fiscal 1994 benefited from
increased mill production and higher shipments of corrugated products and
multiwall bags. Increased volume had a positive effect on operating
earnings of approximately $3 million. Containerboard production of 3,138
tons per day (TPD, calculated on the basis of the number of days in the
period) was relatively unchanged from 3,150 TPD in the comparable prior-year
quarter. This was despite 6 days of scheduled maintenance down time taken
at the Company's largest mill located in Bogalusa, Louisiana. Unbleached
kraft paper production increased 10 percent to 711 TPD from 645 TPD in the
first quarter of fiscal 1993.
Corrugated shipments of approximately 3.2 billion square feet were
approximately 19 percent higher than the prior-year quarter. Approximately
half of the increase in corrugated shipments was attributable to the
acquisition of a corrugated sheet feeder plant in March 1993. Multiwall bag
shipments of 12.1 thousand tons were approximately 5 percent higher than the
first quarter of fiscal 1993 primarily as a result of an increase in market
emphasis in certain
6
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product lines. Grocery bag and sack shipments increased to 33.8 thousand
tons, an increase of approximately 20 percent versus shipments of 28.2
thousand tons in the year-ago quarter. These increased shipments were
primarily a result of increased production of the Gaylord Handle Bag(R), a
grocery sack with paper handles.
Gross margin as a percentage of net sales for the first quarter of
fiscal 1994 decreased to 9.1 percent from 14.6 percent in the prior-year
quarter. The margin decline was primarily due to lower primary and converted
product selling prices. In addition, gross margin was adversely affected by
higher manufacturing costs primarily due to higher fiber costs at the
Bogalusa mill as unseasonably wet weather forced the mill to transport wood
chips from a greater distance than usual, higher mill energy costs due to
increased prices and higher pension costs associated with the use of a lower
discount rate. Selling and administrative costs for the first quarter of
fiscal 1994 increased $1.3 million from the prior-year quarter primarily as
a result of costs associated with a new compensation plan for executive
officers.
Operating earnings for the first quarter of fiscal 1993 were adversely
affected by $8.6 million of debt restructuring expenses related to the
Company's comprehensive debt restructuring completed in that quarter.
Consummation of the Company's prepackaged plan resulted in an extraordinary
gain of $201.5 million, in the first quarter of fiscal 1993.
Net interest expense increased from the prior-year quarter by $7.5
million to $19.5 million in the first quarter of fiscal 1994. The increase
in interest expense in the first quarter of fiscal 1994 was primarily due to
the Company's debt refinancing in the third quarter of fiscal 1993 which
resulted in higher average debt levels and higher weighted average interest
rates. In addition, consummation of the prepackaged plan in the first
quarter of fiscal 1993 resulted in abnormally low interest expense.
Approximately $4.0 million of interest expense on certain subordinated debt
for the period October 1, 1992 through November 1, 1992 reduced the amount
of the extraordinary gain recognized by the Company and therefore was not
reported as interest expense.
LIQUIDITY AND CAPITAL RESOURCES
General
The Company has historically financed its operations through cash
provided by operations, borrowings under its bank credit agreement and the
issuance of debt and equity securities. The Company's principal uses of
cash are to pay operating expenses, fund capital expenditures and service
debt.
Net cash used for operations for the first quarter of fiscal 1994 was $13.1
million, as compared with $6.9 million for the first quarter of fiscal 1993.
The unfavorable comparison to the year-ago quarter was primarily due to
lower earnings from operations and increased interest payments.
Capital expenditures of $5.1 million in the first quarter of fiscal
1994 increased $1.4 million from the prior-year quarter. The Company has
recently developed a five-year capital plan that provides for spending of
approximately $50 million per year. The plan targets approximately 55
percent of the spending to enhance the capacity, flexibility and cost
effectiveness of the Company's converting facilities. Should industry
pricing conditions not improve as anticipated, however, the Company will
have the ability to defer certain capital projects. The Company plans to
finance this
7
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five-year capital plan through cash provided by operations, borrowings
under its bank credit agreement and trade receivables facility, and debt
obligations secured by certain of the assets acquired.
On September 24, 1993, the Company sold substantially all of its
accounts receivable to a wholly owned special purpose subsidiary, Gaylord
Receivables Corporation (GRC). GRC transferred the accounts receivable to a
special purpose trust in exchange for certain trust certificates
representing ownership interests in the accounts receivable. Concurrently,
GRC and a group of banks established a $70 million trade receivables-backed
revolving credit facility (the Trade Receivables Facility) collateralized by
one series of such trust certificates.
Consummation of Prepackaged Plan
On September 11, 1992, the Company filed a voluntary petition for relief and
a plan of reorganization (the Prepackaged Plan) under Chapter 11 of the
United States Bankruptcy Code. On November 2, 1992, the Company consummated
the Prepackaged Plan.
Upon consummation of the Prepackaged Plan, the Company issued (i)
$182.3 million aggregate principal amount of 13-1/2% Senior Subordinated
Debentures Due 2003 plus accrued interest from January 1, 1992 through
November 1, 1992, (ii) $195.4 million aggregate principal amount of 10-1/4%
Senior Subordinated PIK Notes Due 2001 plus accrued interest from January 1,
1992 through November 1, 1992, (iii) approximately 6 million shares of Class
A Common Stock, par value $.0001 per share (Class A Common Stock) and (iv)
approximately 31.8 million redeemable exchangeable warrants (the Warrants)
to obtain one share of Class A Common Stock per Warrant, all in exchange for
$582.8 million aggregate principal amount of the Company's old subordinated
debt plus approximately $134.5 million of accrued but unpaid interest
thereon. On May 18, 1993, the Company refinanced the debt which was issued
in the Prepackaged Plan.
Concurrent with the consummation of the Prepackaged Plan, the Company
(i) issued the number of shares of Class A Common Stock deliverable upon
exercise of the Warrants to a trustee, which will hold such shares in trust,
for the benefit of the holders of Warrants pending any such exercise, (ii)
amended the Company's Restated Certificate of Incorporation and (iii) closed
the post-restructuring credit agreement with its bank group.
LIQUIDITY
As of December 31, 1993, the Company had cash and equivalents of $9.8
million, a decrease of $17.8 million from September 30, 1993. The reduction
in cash and equivalents was primarily as a result of lower earnings from
operations and increased investments in working capital. Total debt
increased by $8.6 million from $675.8 million at September 30, 1993 to
$684.4 million at December 31, 1993. The increase in total debt was
primarily the result of the accretion of discount subordinated debt issued
in May 1993. As of December 31, 1993, the Company had approximately $56
million of credit available under its bank revolving credit facility. In
addition, the Company had approximately $59 million of credit available
under its Trade Receivables Facility. The Company is required to use Trade
Receivables Facility borrowing proceeds in excess of approximately $53
million to prepay quarterly installments due under the term loan facility of
the bank credit agreement, in order of maturity.
A $25 per ton price increase for linerboard was implemented during the
first quarter of fiscal 1994, and an increase in corrugated container prices
is being implemented. In December 1993, the Company negotiated an amendment
to its bank credit agreement which modified certain financial and operating
covenants to provide additional financial flexibility. In January 1994, the
Company announced
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<PAGE> 11
a $30 per ton increase in linerboard prices effective February 28 and
expects to announce price increases for converted products; however,
there can be no assurance that such price increases can be realized or
that the timing of such price increases will not be delayed.
The Company believes that cash provided by operations and borrowings
available under the Trade Receivables Facility and the bank revolving credit
facility will provide it with adequate liquidity to meet its debt service
obligations and other liquidity requirements over the next 12 to 24 months.
Failure to achieve a spring 1994 price increase or failure to achieve
significantly higher product prices in fiscal 1995, however, could require
additional modifications to certain of the financial covenants in the bank
credit agreement. Failure to obtain such covenant modifications, if
necessary, or an erosion of product prices could have a material adverse
effect on the Company's liquidity and its ability to meet its debt service
obligations.
9
<PAGE> 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any legal proceedings other than
litigation incidental to normal business activities. The outcome of
such litigation is not expected to have a material adverse effect on
the Company.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On February 2, 1994, the Company held its annual meeting of
stockholders at which the following issues were put to a vote by the
Company's Class A and Class B stockholders voting together as a
single class and entitled to 1 vote per share and 10 votes per
share, respectively:
The Company's Class B Directors were elected by the following vote:
<TABLE>
<S> <C> <C>
For Withheld
Vernon E. Faulconer 104,816,852 50,005
John E. Goodenow 104,816,852 50,005
David B. Hawkins 104,816,852 50,005
John Hawkinson 104,816,564 50,293
Warren J. Hayford 104,816,852 50,005
Richard S. Levitt 104,816,852 50,005
Marvin A. Pomerantz 104,816,119 50,738
Thomas H. Stoner 104,816,852 50,005
</TABLE>
The adoption of the Shareholder Value Plan was approved by a
vote of 104,507,163 for; 334,570 against; 25,124 abstain.
The appointment of Deloitte & Touche to continue to serve as
the Company's independent auditors in fiscal 1994 was ratified
by a vote of 104,815,269 for; 34,864 against; 16,724 abstain.
Item 5. Other Information.
Not applicable.
10
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PART II. OTHER INFORMATION (CONCLUDED)
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
4.1 Series 1993-1 A-RI Supplemental Issuance Agreement dated
as of September 24, 1993 by and between the Registrant,
Gaylord Receivables Corporation and Manufacturers and
Traders Trust Company as trustee.
b) Not applicable.
11
<PAGE> 14
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.
GAYLORD CONTAINER CORPORATION
<TABLE>
<S> <C> <C>
Date: February 3, 1994 /s/ Marvin A. Pomerantz
Marvin A. Pomerantz
Chairman and Chief Executive Officer
Date: February 3, 1994 /s/ Jeffrey B. Park
Jeffrey B. Park
Vice President-Controller
(Principal Accounting Officer)
</TABLE>
12
<PAGE> 1
EX 4.1
GAYLORD RECEIVABLES CORPORATION
Transferor
GAYLORD CONTAINER CORPORATION
Initial Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY
Trustee
_________________________________________
SERIES 1993-1 A-RI
SUPPLEMENTAL ISSUANCE AGREEMENT
dated as of September 24, 1993
to
POOLING AND SERVICING AGREEMENT
dated as of September 24, 1993
_________________________________________
$70,000,000
GAYLORD RECEIVABLES MASTER TRUST
SERIES 1993-1 A-RI CERTIFICATE
<PAGE> 2
SERIES 1993-1 A-RI
SUPPLEMENTAL ISSUANCE AGREEMENT
THIS SERIES 1993-1 A-RI SUPPLEMENTAL ISSUANCE AGREEMENT,
dated as of September 24, 1993 (this "Agreement"), is made by and
among GAYLORD RECEIVABLES CORPORATION, a Delaware corporation, as
Transferor ("GRC"), GAYLORD CONTAINER CORPORATION, a Delaware
corporation (in its individual capacity, "Gaylord"), as initial
Servicer (in such capacity, together with any successor in such
capacity, the "Servicer"), and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, as Trustee (in such
capacity, together with any successor in such capacity, the
"Trustee").
Pursuant to the Pooling and Servicing Agreement, dated as of
September 24, 1993 (as it may be amended, supplemented or
otherwise modified from time to time and as supplemented hereby,
the "Pooling and Servicing Agreement"), among GRC, the Servicer
and the Trustee, GRC may from time to time direct the Trustee to
cause the Trust to issue one or more series of Class A-RI
Certificates representing certain beneficial interests in the
Trust. Certain terms applicable to any such series are to be set
forth in a Supplemental Issuance Agreement.
Pursuant to this Agreement, GRC and the Trustee shall hereby
create a series of Class A-RI Certificates and specify certain
terms thereof herein.
ARTICLE I
DEFINITIONS; INCORPORATION OF TERMS OF
POOLING AND SERVICING AGREEMENT
SECTION 1.01 Definitions. (a) Capitalized terms that are
used herein but are not defined have the meanings that Appendix A
to the Pooling and Servicing Agreement ascribes to such terms.
(b) Whenever used in this Agreement, the following words
and phrases shall have the following meanings:
"Certificate Issuance Date" means September 24, 1993.
"Collateral Agent" has the meaning ascribed thereto in the
Revolving Credit Agreement.
"Facility Agent" has the meaning ascribed thereto in the
Revolving Credit Agreement.
"First Scheduled Principal Payment Date" has the meaning set
forth in Section 4.02.
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"Lender" has the meaning ascribed thereto in the Revolving
Credit Agreement.
"Payment Date" means each date specified in the Revolving
Credit Agreement on which interest on the Revolving Loans or any
fees, costs, expenses, indemnities or other amounts (excluding
repayments of principal) payable under the Revolving Credit
Agreement are required to be paid.
"Pay-Out Period Commencement Date" means, with respect to
the Series 1993-1 A-RI Certificate, the earliest to occur, prior
to the Liquidation Commencement Date, of
(a) the Scheduled Pay-Out Commencement Date,
(b) if (i) the Scheduled Pay-Out Commencement Date has
not occurred and (ii) a Liquidation Event or an Unmatured
Liquidation Event has not occurred and continued, the
Settlement Date specified in a written notice given by GRC
to the Trustee and by the Trustee to the Collateral Agent,
as the holder of the Series 1993-1 A-RI Certificate (as more
fully described in Section 2.02), pursuant to Section
4.03(i) of the Pooling and Servicing Agreement as the date
on which a full or partial prepayment will commence with
respect to the Series 1993-1 A-RI Certificate, and
(c) if a Liquidation Event has occurred and continued,
the day that is ten Business Days after the date on which
the Collateral Agent, at the direction of the Required
Lenders (as defined in the Revolving Credit Agreement),
votes in favor of causing the commencement of the
Liquidation Period as a result of such Liquidation Event,
but the Liquidation Commencement Date does not occur because
the Required Investors do not vote in favor of causing the
commencement of the Liquidation Period.
"Revolving Commitment" has the meaning ascribed thereto in
the Revolving Credit Agreement.
"Revolving Credit Agreement" means that certain Revolving
Credit Agreement, dated as of September 24, 1993, among GRC,
various financial institutions parties thereto, Harris Trust and
Savings Bank as Facility Agent and as Collateral Agent, as the
same may be amended, supplemented, amended and restated or
otherwise modified from time to time.
"Revolving Loans" means loans made pursuant to the Revolving
Credit Agreement.
"Revolving Notes" has the meaning ascribed thereto in the
Revolving Credit Agreement.
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"Revolving Percentage" has the meaning ascribed thereto in
the Revolving Credit Agreement.
"Scheduled Pay-Out Commencement Date" means July 1, 1998, as
such date may be extended from time to time with the consent of
the Collateral Agent, in its capacity as the holder of the Series
1993-1 A-RI Certificate (pursuant to Section 2.02), as such
extension is more fully described in Section 4.03.
"Security Agreement" has the meaning ascribed thereto in the
Revolving Credit Agreement.
"Series 1993-1 A-RI Certificate" means the Series 1993-1
A-RI Certificate substantially in the form of Exhibit A hereto.
"Supplemental Interest Payments" has the meaning set forth
in Section 4.01.
(c) As long as the Series 1993-1 A-RI Certificate is issued
and outstanding, the term "Amendment Approval Documents," when
used in the Revolving Credit Agreement, the Security Agreement or
any of the Revolving Notes or in any Transaction Document shall
include the Revolving Credit Agreement and the Security
Agreement.
(d) As long as the Series 1993-1 A-RI Certificate is issued
and outstanding, the term "Transaction Documents," when used in
the Revolving Credit Agreement, the Security Agreement or any of
the Revolving Notes or in any Transaction Document shall include
the Revolving Credit Agreement, the Security Agreement, the
Revolving Notes and all agreements, instruments and documents
executed and delivered or to be executed and delivered in
connection therewith.
SECTION 1.02 Incorporation of Terms and Conditions of
Pooling and Servicing Agreement. This Agreement hereby
incorporates by reference the terms and provisions of the Pooling
and Servicing Agreement (including, without limitation, the terms
and conditions that are applicable to all series of Class A-RI
Certificates) as if such terms and conditions were set forth in
full herein. As supplemented by this Agreement, the Pooling and
Servicing Agreement is hereby in all respects ratified and
confirmed and the Pooling and Servicing Agreement as so
supplemented by this Agreement shall be read, taken and construed
as one and the same agreement. In the event of any conflict
between the terms of this Agreement and the terms of the Pooling
and Servicing Agreement or Appendix A thereto, the terms of this
Agreement shall control.
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ARTICLE II
DESIGNATION; HOLDER OF
SERIES 1993-1 A-RI CERTIFICATE
SECTION 2.01 Designation. There is hereby created a series
of Class A-RI Certificates to be issued pursuant to the Pooling
and Servicing Agreement and this Agreement and to be known as the
"Series 1993-1 A-RI Certificate." Subject to the prior
satisfaction (or waiver) of the conditions set forth in Article
III, the Trustee shall authenticate and deliver the Series 1993-1
A-RI Certificate to GRC in the manner and at the times for
authentication and delivery of Class A-RI Certificates that are
specified in Article VI of the Pooling and Servicing Agreement.
SECTION 2.02 Collateral Agent as Holder. Upon the delivery
of the Series 1993-1 A-RI Certificate by the Trustee to GRC, GRC
shall deliver the Series 1993-1 A-RI Certificate to the
Collateral Agent. The parties hereto hereby acknowledge and
agree that the Collateral Agent, as agent for the Lenders, will
hold the Series 1993-1 A-RI Certificate as collateral for the
obligations of GRC that arise under or in connection with the
Revolving Credit Agreement, the Revolving Notes and the Security
Agreement. The Lenders shall, in accordance with the terms of
(and subject to the conditions in) the Revolving Credit
Agreement, provide their respective Revolving Percentages of
Revolving Loans to the Facility Agent for delivery to GRC. The
Collateral Agent, as the holder of the Series 1993-1 A-RI
Certificate, shall be deemed to have provided such funds to GRC
in respect of the Series 1993-1 A-RI Certificate pursuant to the
terms and subject to the conditions set forth in this Agreement
and the Pooling and Servicing Agreement upon GRC's receipt of
such funds from the Facility Agent (on behalf of the Lenders).
Notwithstanding the fact that GRC is the owner of the Series
1993-1 A-RI Certificate, the Collateral Agent shall exercise, at
the direction of the Lenders given pursuant to the Revolving
Credit Agreement, all rights with respect to the Series 1993-1
A-RI Certificate (including, without limitation, (i) the right to
receive all distributions made on the Series 1993-1 A-RI
Certificate pursuant to Article V of the Pooling and Servicing
Agreement and (ii) the right to vote on all matters on which the
Holder of the Series 1993-1 A-RI Certificate is entitled to vote
pursuant to the Pooling and Servicing Agreement) as if the
Collateral Agent were the legal and beneficial owner of the
Series 1993-1 A-RI Certificate. When exercising any such rights,
the Collateral Agent shall be deemed to be an Investor
Certificateholder for purposes of the Transaction Documents, it
being understood that the Collateral Agent holds the Series
1993-1 A-RI Certificate for the benefit of each of the Lenders,
the Facility Agent and itself as collateral security pursuant to
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the terms (and subject to the conditions) of the Revolving Credit
Agreement and the Security Agreement.
ARTICLE III
CONDITIONS TO ISSUANCE OF CERTIFICATE
SECTION 3.01 Conditions to Issuance. The Trustee will not
authenticate the Series 1993-1 A-RI Certificate to be issued
hereunder unless each of the following conditions has been
satisfied:
(a) The Trustee, as assignee of GRC pursuant to
Section 2.01 of the Pooling and Servicing Agreement, shall
have received the documentation described in Section 4.1 of
the Purchase Agreement and all of such documentation shall
comply with the requirements of such Section 4.1;
(b) The Trustee shall have received written
notification from S&P that ultimate payment of principal and
timely payment of interest on the Series 1993-1 A-RI
Certificate to the Collateral Agent for the benefit of the
Lenders shall be rated AAA by S&P;
(c) The Trustee or its agent shall have received, and
shall be holding in trust pursuant to the Pooling and
Servicing Agreement, the Trust Assets and all documents,
instruments and other assets required by the Pooling and
Servicing Agreement to be delivered to the Trustee with
respect thereto as of the First Issuance Date;
(d) GRC shall have (i) caused all required UCC
financing statements in respect of the Trust Assets to be
duly filed in the manner required by the laws of each
appropriate jurisdiction and performed all other actions
required by Sections 2.01, 3.03 and 3.10 of the Pooling and
Servicing Agreement to perfect the interest of the Trustee
(for the benefit of the Certificateholders) in the Trust
Assets and (ii) paid, or caused to be paid, all transfer
taxes, documentary stamp taxes and filing fees incurred in
connection therewith;
(e) The Trustee shall have received certified copies
of the certificate of incorporation and by-laws of GRC, and
of all documents evidencing corporate action taken by the
Seller and GRC approving the execution and delivery of the
Transaction Documents to which they are parties and the
consummation of the transactions contemplated thereby;
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(f) The Trustee shall have received (directly or as
assignee of GRC) signature and incumbency certificates
executed by the Authorized Officers of the Seller and GRC
certifying the identities and signatures of those officers
who executed the Transaction Documents to which they are
parties; and
(g) GRC shall have paid or shall have made
arrangements for payment of all taxes, fees and governmental
charges, if any, due in connection with the execution and
delivery of this Agreement and the Pooling and Servicing
Agreement, the issuance of the Certificates and the
assignment and pledge of the Trust Assets to the Trustee
under the Pooling and Servicing Agreement.
ARTICLE IV
PAYMENTS; MATURITY
SECTION 4.01 Payment of Interest. On and after the
Certificate Issuance Date, interest will be paid on the Series
1993-1 A-RI Certificate in an amount equal to the amount of
interest that is required to be paid from time to time on the
Revolving Loans pursuant to the Revolving Credit Agreement. In
addition, whenever fees, costs, expenses, indemnities or any
other amounts (excluding repayments of principal) are required to
be paid under the Revolving Credit Agreement (all of the
foregoing being herein collectively called the "Supplemental
Interest Payments"), additional interest will be paid on the
Series 1993-1 A-RI Certificate in an amount equal to the
aggregate amount of Supplemental Interest Payments that are then
required to be paid pursuant to the Revolving Credit Agreement.
The rate of interest on the Series 1993-1 A-RI Certificate shall
be a variable rate which, when multiplied by the then Ratable
Principal Amount of the Series 1993-1 A-RI Certificate, will
result in an amount to be paid as interest that is equal to the
sum of (x) the amount of interest, plus (y) the aggregate amount
of Supplemental Interest Payments that, in the case of each of
the foregoing, are then required to be paid under the Revolving
Credit Agreement. Except as expressly provided otherwise in this
Agreement, interest on the Series 1993-1 A-RI Certificate in an
aggregate amount equal to the sum of all interest and all
Supplemental Interest Payments that are accrued and unpaid for
the period from the preceding Payment Date to (but excluding) the
then-current Payment Date shall be payable on each Payment Date
in the manner described in Article V of the Pooling and Servicing
Agreement for interest payments that are to be made with respect
to Class A-RI Certificates, and shall be paid to the Collateral
Agent without set-off or counterclaim.
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SECTION 4.02 Payment of Principal. Except as provided
otherwise in this Agreement, principal payments on the Series
1993-1 A-RI Certificate will commence on the Settlement Date (the
"First Scheduled Principal Payment Date") that occurs in the
month following the Scheduled Pay-Out Commencement Date, and will
be made on each Settlement Date that occurs thereafter until the
principal amount of the Series 1993-1 A-RI Certificate has been
paid in full; provided, however, that principal payments with
respect to the Series 1993-1 A-RI Certificate may commence prior
to the First Scheduled Principal Payment Date if (a) the
Liquidation Commencement Date has occurred on an earlier date, or
(b) a Pay-Out Period with respect to the Series 1993-1 A-RI
Certificate has occurred prior to the First Scheduled Principal
Payment Date as a result of the occurrence of one of the events
described in clause (b) or (c) of the definition of "Pay-Out
Period Commencement Date." Principal shall be payable on the
Series 1993-1 A-RI Certificate in the manner described in Article
V of the Pooling and Servicing Agreement for principal payments
to be made with respect to Class A-RI Certificates, and shall be
paid to the Collateral Agent without set-off or counterclaim.
SECTION 4.03 Maturity; Extension of Maturity. The stated
maturity date of the Series 1993-1 A-RI Certificate is 180 days
after the Commitment Termination Date (as defined in the
Revolving Credit Agreement). The stated maturity of the Series
1993-1 A-RI Certificate will be extended if the Scheduled Pay-Out
Commencement Date is extended as described hereinafter. During
the third month prior to the third anniversary of the Closing
Date (as defined in the Revolving Credit Agreement) and during
such month in each year that occurs thereafter prior to the
occurrence of the earlier of (x) the Scheduled Pay-Out
Commencement Date or (y) the Liquidation Commencement Date, GRC
may notify the Collateral Agent that GRC wishes to extend the
Scheduled Pay-Out Commencement Date by one additional year. If
the Scheduled Commitment Termination Date is extended pursuant to
Section 3.03 of the Revolving Credit Agreement, then the
Collateral Agent will agree to extend the Scheduled Pay-Out
Commencement Date for one additional year, and the stated
maturity of the Series 1993-1 A-RI Certificate shall also be
extended for an additional year.
ARTICLE V
CERTAIN MATTERS RELATING TO
SERIES 1993-1 A-RI CERTIFICATE
Section 5.01 Ratable Principal Amount; Class A-RI Initial
Invested Amount. The "Ratable Principal Amount" of the Series
1993-1 A-RI Certificate means the then aggregate outstanding
principal amount thereof. The Class A-RI Initial Invested Amount
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with respect to the Series 1993-1 A-RI Certificate is
$70,000,000.
Section 5.02 Stated Amount of Series 1993-1 A-RI
Certificate. (a) The Stated Amount of the Series 1993-1 A-RI
Certificate is $70,000,000 (the "Series 1993-1 A-RI Stated
Amount"). The outstanding Ratable Principal Amount of the Series
1993-1 A-RI Certificate shall at no time exceed the Series 1993-1
A-RI Stated Amount.
(b) If, at any time, the Revolving Commitment under the
Revolving Credit Agreement shall be increased, the Series 1993-1
A-RI Stated Amount shall be increased by a corresponding amount
until it equals the amount of the Revolving Commitment. If, at
any time, the Revolving Commitment under the Revolving Credit
Agreement shall be decreased, the Series 1993-1 A-RI Stated
Amount shall be decreased by a corresponding amount until it
equals the amount of the Revolving Commitment, as so reduced.
SECTION 5.03 Funding of Ratable Principal Amount. If GRC
wishes to allocate a positive Variable Amount or all or part of
the Class A-RF Amount to the Series 1993-1 A-RI Certificate in
order to cause the Ratable Principal Amount thereof to be funded
or to effect an increase in the Ratable Principal Amount thereof,
GRC will request the Lenders, in accordance with the procedures
set forth in (and subject to the limitations of) the Revolving
Credit Agreement, to make Revolving Loans to GRC. Without
limiting any provision of the Revolving Credit Agreement or any
other Transaction Document, the parties acknowledge and agree
that GRC shall not be entitled to request the Lenders, and the
Lenders shall not be required, to make Revolving Loans during any
grace period that has been extended by operation of the first
proviso to Section 9.01(a) of the Pooling and Servicing
Agreement. Such Revolving Loans, if and when made, shall be
deemed to be funds provided to GRC by the Collateral Agent, as
the holder of the Series 1993-1 A-RI Certificate (pursuant to
Section 2.02), in order to fund initially or to increase (as
applicable) the Ratable Principal Amount of the Series 1993-1
A-RI Certificate. Any such increase shall be in an amount not to
exceed the sum, if positive, of (a) the Variable Amount on the
day on which such increase takes effect (as described
hereinafter) and (b) the amount of the Class A-RF Certificate as
of the opening of business on such day. GRC shall request such a
funding or such an increase in the Ratable Principal Amount of
the Series 1993-1 A-RI Certificate by providing a Revolving
Notice of Borrowing (as defined in the Revolving Credit
Agreement) to the Facility Agent at the time and place, and in
the manner, provided for in Section 2.02 of the Revolving Credit
Agreement for delivery of Revolving Notices of Borrowing. GRC
may make such a request at any time prior to the earlier of (i)
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the Liquidation Commencement Date and (ii) the Pay-Out Period
Commencement Date.
If the conditions set forth in the Revolving Credit
Agreement to making the Revolving Loans requested by GRC shall
have been satisfied, the Lenders shall, in accordance with the
Revolving Credit Agreement, provide their respective Revolving
Percentages of such requested Revolving Loans to the Facility
Agent for delivery to GRC. The Collateral Agent, as the holder
of the Series 1993-1 A-RI Certificate (pursuant to Section 2.02),
shall be deemed to have provided such funds to GRC in order to
fund, or to effect an increase in, the Ratable Principal Amount
of the Series 1993-1 A-RI Certificate pursuant to the terms and
subject to the conditions set forth in this Agreement and the
Pooling and Servicing Agreement upon GRC's receipt of such funds
from the Facility Agent (on behalf of the Lenders). The
outstanding Ratable Principal Amount of the Series 1993-1 A-RI
Certificate shall be increased, on the Business Day on which GRC
receives immediately available funds from the Facility Agent on
behalf of the Lenders, by the amount of funds that GRC receives
on such day from the Facility Agent.
SECTION 5.04 Mandatory Reductions in Series 1993-1 A-RI
Certificate. (a) If, on any day, the amount funded under the
Series 1993-1 A-RI Certificate exceeds the Ratable Principal
Amount of the Series 1993-1 A-RI Certificate, GRC shall cause
funds in the amount of such excess to be paid to the Collateral
Agent, as the holder of the Series 1993-1 A-RI Certificate (as
provided in Section 2.02), pursuant to clause Third or Seventh
(as applicable) of Section 4.03(f) of the Pooling and Servicing
Agreement.
(b) At any time when GRC is required to reduce the Ratable
Principal Amount of the Series 1993-1 A-RI Certificate pursuant
to Section 2.03(b) of the Revolving Credit Agreement and to make
a corresponding payment to the Facility Agent (to reimburse the
Facility Agent for a mistaken funding), GRC shall effect a
reduction in the Ratable Principal Amount of the Series 1993-1
A-RI Certificate pursuant to Section 4.03(c) of the Pooling and
Servicing Agreement by causing funds to be paid to the Collateral
Agent, as the holder of the Series 1993-1 A-RI Certificate (as
provided in Section 2.02), pursuant to clause Third or Seventh
(as applicable) of Section 4.03(f) of the Pooling and Servicing
Agreement in an amount equal to the amount of the reduction
calculated pursuant to Section 2.03(b) of the Revolving Credit
Agreement. If there is a shortfall in the amount of Collections
available for such purpose and GRC used the proceeds of such
funding to pay to Gaylord the Purchase Price for new Receivables
or amounts owed on the GRC Note, Gaylord shall immediately pay to
GRC an amount equal to such shortfall.
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(c) At any time when the Series 1993-1 A-RI Stated Amount
is reduced pursuant to Section 5.02(b), GRC shall,
contemporaneously therewith, effect a reduction in the Ratable
Principal Amount of the Series 1993-1 A-RI Certificate pursuant
to Section 4.03(c) of the Pooling and Servicing Agreement, to the
extent that such Ratable Principal Amount then exceeds the Series
1993-1 A-RI Stated Amount as so reduced, by causing funds to be
paid to the Collateral Agent, as the holder of the Series 1993-1
A-RI Certificate (as provided in Section 2.02), pursuant to
clause Third or Seventh (as applicable) of Section 4.03(f) of the
Pooling and Servicing Agreement until the Ratable Principal
Amount of the Series 1993-1 A-RI Certificate equals the then
aggregate outstanding principal amount of the Revolving Loans.
(d) Notwithstanding anything to the contrary in the Pooling
and Servicing Agreement, any reduction that GRC effects in the
Ratable Principal Amount of the Series 1993-1 A-RI Certificate by
means of an allocation that GRC directs the Servicer to make
pursuant to Section 4.03(c) of the Pooling and Servicing
Agreement, other than any such reduction that is described above
in Section 5.04(b), shall be in a minimum amount of $1,000,000
and in increments of $100,000 in excess thereof.
(e) The amount of interest to be paid to the Collateral
Agent, as the holder of the Series 1993-1 A-RI Certificate
(pursuant to Section 2.02), upon any reduction of all or part of
the outstanding Ratable Principal Amount of the Series 1993-1
A-RI Certificate shall include interest accrued on the amount of
such reduction to the date on which such reduction is to be made.
Section 5.05 Restrictions on Issuance of Certain Additional
Series of Investor Certificates. GRC and the Trustee hereby
agree that, at any time when the Series 1993-1 A-RI Certificate
is issued and outstanding, it will be the only issued and
outstanding Class A-RI Certificate.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
SECTION 6.02 Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.
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SECTION 6.03 Effect of Unenforceable Provisions. If any
provision hereof shall be invalid, illegal or unenforceable in
any jurisdiction, the remaining provisions shall continue to be
valid and enforceable and such provision shall continue to be
valid and enforceable in any other jurisdiction.
SECTION 6.04 Reporting Requirements. Notwithstanding any
provision in the Pooling and Servicing Agreement to the contrary,
the Trustee shall provide to the Collateral Agent, as the holder
of the Series 1993-1 A-RI Certificate (pursuant to Section 2.02),
copies of all reports, certificates, notices and other documents
that the Trustee receives from the Servicer, GRC or any GCC
Person pursuant to the Pooling and Servicing Agreement and the
other Transaction Documents except (a) documents relating to the
designation or termination of any Bank Accounts or Account Banks
pursuant to Section 3.03(c) of the Pooling and Servicing
Agreement, (b) file-stamped copies and receipts delivered to the
Trustee pursuant to Section 3.10(a) of the Pooling and Servicing
Agreement, (c) notices provided to the Trustee pursuant to
Section 4.04 of the Pooling and Servicing Agreement, (d) requests
from the Servicer that are delivered to the Trustee pursuant to
Section 6.07 of the Pooling and Servicing Agreement and (e)
documents relating to the names and addresses of Account Banks or
the account numbers of Bank Accounts that are delivered to the
Trustee pursuant to Section 7.01(k) of the Pooling and Servicing
Agreement. The Trustee shall deliver each such report,
certificate, notice or document (as applicable) that is required
to be delivered pursuant to the preceding sentence to the
Collateral Agent, as the holder of the Series 1993-1 A-RI
Certificate (pursuant to Section 2.02), promptly after the
Trustee receives such report, certificate, notice or document (as
applicable) and without any request being made therefor by the
Collateral Agent, in its capacity as such holder. In addition,
the Trustee shall deliver to the Collateral Agent, as the holder
of the Series 1993-1 A-RI Certificate, or S&P any or all of the
items described above in clauses (a) through (e) promptly after
the Collateral Agent or S&P (as applicable) requests any or all
such items (as the case may be) in writing. The Trustee shall
also give the Collateral Agent and S&P prompt notice of the
appointment of a Successor Servicer pursuant to Section 3.01(d)
of the Pooling and Servicing Agreement.
SECTION 6.05 Accuracy of Information Memorandum. GRC and
Gaylord hereby represent and warrant that, as of September 24,
1993, neither (a) the Confidential Information Memorandum
(excluding Section V thereof and Exhibit IV thereto), dated
September, 1993 (the "Memorandum") nor (b) that certain letter
dated September 16, 1993 from the Vice President and Treasurer of
Gaylord to the Lenders (as defined in the Revolving Credit
Agreement) supplementing certain disclosure contained in the
Memorandum, each of which relates to the transactions
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contemplated by the Revolving Credit Agreement and each of which
has been provided to the Lenders, contained any untrue statement
of a material fact or omitted to state material facts necessary
to make the statements therein not misleading, in each case in
light of the circumstances under which such statements were made.
SECTION 6.06 Liens on Transferred Assets. Gaylord agrees
that it shall not grant a lien to any Person on any of its assets
(including equipment and inventory) that may give rise to
Transferred Assets unless (i) such Person shall have entered into
an agreement with the Trustee that is substantially similar to
the Intercreditor Agreement, dated as of September 24, 1993,
between the Trustee and Bankers Trust Company, as agent for
certain lenders to Gaylord, or (ii) all of the Lenders shall have
consented to such lien in writing.
SECTION 6.07 Third-Party Beneficiaries. Each of the
parties hereto acknowledges and agrees that each of the Lenders
is a third party beneficiary of the representation and warranty
made by GRC and Gaylord in Section 6.05 and of the covenant of
Gaylord in Section 6.06. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly
provided otherwise in the first sentence of this Section 6.07,
nothing contained in this Agreement shall confer any rights upon
any Person which is not a party to, or a permitted assignee of a
party to, this Agreement or the Revolving Credit Agreement.
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IN WITNESS WHEREOF, GRC, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first
above written.
GAYLORD RECEIVABLES CORPORATION,
as Transferor
By:________________________________
Title:___________________________
Address: 1013 Centre Road
Wilmington, Delaware 19805
Attention: Vice-President and
Treasurer
Telephone: (302) 998-0595
Facsimile: (302) 998-2078
A copy of each notice shall be sent to:
Gaylord Receivables Corporation
500 Lake Cook Road
Suite 400
Deerfield, Illinois 60015
Attention: Vice President and
Treasurer
Telephone: (708) 405-5576
Facsimile: (708) 405-5628
and
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: William S. Kirsch
Stephen L. Ritchie
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GAYLORD CONTAINER CORPORATION,
individually and as Servicer
By:________________________________
Title:___________________________
Address: 500 Lake Cook Road
Suite 400
Deerfield, Illinois 60015
Attention: Vice-President and Treasurer
Telephone: (708) 405-5576
Facsimile: (708) 405-5628
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:________________________________
Title:___________________________
Address: One M&T Plaza
Buffalo, New York 14203
Attention: Corporate Trust Department
Telephone: (716) 842-5602
Facsimile: (716) 842-4474
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EXHIBIT A
SERIES 1993-1 A-RI CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES OR
"BLUE SKY" LAWS OF ANY STATE OR THE LAWS OF ANY FOREIGN COUNTRY.
THIS CERTIFICATE MAY NOT BE RESOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS SUCH RESALE, TRANSFER OR DISPOSITION IS (i) TO
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER,
WHICH PERSON IS AWARE THAT THE RESALE, TRANSFER OR OTHER
DISPOSITION IS BEING MADE IN RELIANCE ON RULE 144A AND TO WHOM
SUCH RESALE, TRANSFER OR DISPOSITION IS BEING MADE PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REQUIREMENTS OF APPLICABLE STATE
SECURITIES LAWS, OR (ii) ITSELF EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS. IN ADDITION TO THE RESTRICTIONS SET FORTH
ABOVE, EACH SUCH RESALE, TRANSFER OR DISPOSITION IS SUBJECT TO
CERTAIN ADDITIONAL REQUIREMENTS WHICH ARE SET FORTH IN THE
POOLING AND SERVICING AGREEMENT (AS DEFINED BELOW) AND WHICH MUST
BE COMPLIED WITH BY THE TRANSFEROR AND THE TRANSFEREE PRIOR TO
ANY SUCH RESALE, TRANSFER OR DISPOSITION.
GAYLORD RECEIVABLES MASTER TRUST
SERIES 1993-1 A-RI CERTIFICATE
Stated Amount: $70,000,000
THIS CERTIFIES THAT GAYLORD RECEIVABLES CORPORATION is the
registered owner of a nonassessable, fully-paid, fractional
undivided interest in the Gaylord Receivables Master Trust (the
"Trust"), which was created pursuant to the Pooling and Servicing
Agreement, dated as of September 24, 1993 (as the same may be
amended, supplemented, amended and restated or otherwise modified
from time to time, the "Pooling and Servicing Agreement"), by and
among Gaylord Receivables Corporation, a Delaware corporation, as
Transferor ("GRC"), Gaylord Container Corporation, as initial
Servicer (in such capacity, the "Servicer"), and Manufacturers
and Traders Trust Company, as trustee (together with its
successors and assigns in such capacity, the "Trustee"). This
Certificate is the duly authorized Series 1993-1 A-RI Certificate
designated and issued under the Series 1993-1 A-RI Supplemental
Issuance Agreement, dated as of September 24, 1993 (as the same
may be amended, supplemented, amended and restated or otherwise
modified from time to time, the "Series 1993-1 A-RI Supplemental
Issuance Agreement"), among GRC, the Servicer and the Trustee.
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To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Series
1993-1 A-RI Supplemental Issuance Agreement or Appendix A to the
Pooling and Servicing Agreement. This Certificate is subject to
the terms, provisions and conditions of, and is entitled to the
benefits afforded by, the Series 1993-1 A-RI Supplemental
Issuance Agreement and the Pooling and Servicing Agreement, to
which terms, provisions and conditions the holder of this
Certificate by virtue of the acceptance hereof assents and by
which such holder is bound.
This Certificate will be pledged by GRC to Harris Trust and
Savings Bank in its capacity as initial Collateral Agent
(together with any successors thereto in such capacity, the
"Collateral Agent") pursuant to that certain Security Agreement
dated as of September 24, 1993 by GRC in favor of the Collateral
Agent. So long as this Certificate is pledged to the Collateral
Agent, (i) all Distributions shall be paid to, and all rights
under this Certificate (including without limitation voting
rights) shall be exercised solely by, the Collateral Agent, and
(ii) GRC shall not be entitled to receive any such Distributions
or exercise any such rights.
The Ratable Principal Amount of this Certificate may vary
from time to time as is further set forth in the Pooling and
Servicing Agreement and the Supplemental Issuance Agreement.
This Certificate shall bear interest on and after the
Certificate Issuance Date as set forth in the Series 1993-1 A-RI
Supplemental Issuance Agreement.
The Pooling and Servicing Agreement may be amended and the
rights and obligations of the parties thereto and of the holder
of this Certificate modified as set forth in the Pooling and
Servicing Agreement.
Unless the certificate of authentication hereon shall have
been executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, this Certificate shall
not entitle the holder hereof to any benefit under the Pooling
and Servicing Agreement or under any other Transaction Document
or be valid for any purpose.
This Certificate does not represent an obligation of, or an
interest in, GRC, the Seller, the Servicer, the Trustee or any
Affiliate of any of them. This Certificate is limited in right
of payment to the Trust Assets.
As provided in the Pooling and Servicing Agreement, and
subject to the restrictions on sale, transfer and disposition set
forth therein and in the other Transaction Documents, upon
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surrender for registration of transfer of this Certificate at any
office or agency of the Transfer Agent and Registrar maintained
for such purpose, GRC shall execute and the Trustee shall
authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the
same class and series which are in authorized denominations of
like aggregate fractional interests in the Revolving Certificate
Interest, and which bears a number that is not contemporaneously
outstanding.
As provided in the Pooling and Servicing Agreement, and
subject to the restrictions on exchange set forth therein and in
the other Transaction Documents, at the option of the holder,
this Certificate may be exchanged for other Certificates of the
same class and series of authorized denominations of like
aggregate fractional interests in the Revolving Certificate
Interest and bearing numbers that are not contemporaneously
outstanding, upon surrender of this Certificate to be exchanged
at any such office or agency. If this Certificate is so
surrendered for exchange, GRC shall execute, and the Trustee
shall authenticate and deliver, the appropriate number of
Certificates of the same class and series.
If this Certificate is presented or surrendered for
registration of transfer or exchange, it shall be accompanied by
a written instrument of transfer in a form satisfactory to the
Trustee and the Transfer Agent and Registrar duly executed by the
holder hereof or his attorney-in-fact duly authorized in a
writing delivered to the Transfer Agent and Registrar.
This Certificate shall be construed in accordance with the
laws of the State of New York, without reference to its conflict
of laws principles, and all obligations, rights and remedies
under, or arising in connection with, this Certificate shall be
determined in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, GRC has caused this Certificate to be
executed by its officer thereunto duly authorized.
GAYLORD RECEIVABLES CORPORATION
By:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Series 1993-1 A-RI Certificate referred to in
the Series 1993-1 A-RI Supplemental Issuance Agreement.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
Title:_______________________
DATED: September 24, 1993
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