<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GAYLORD CONTAINER CORPORATION
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(Name of Registrant as Specified in Its Charter)
GAYLORD CONTAINER CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
[Gaylord Company logo here]
500 LAKE COOK ROAD
SUITE 400
DEERFIELD, ILLINOIS 60015
JULY 7, 1995
Dear Gaylord Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Gaylord Container Corporation to be held at 10:00 a.m., Chicago Time, on Friday,
July 21, 1995 at 520 Lake Cook Road, Deerfield, Illinois 60015.
The notice of meeting, proxy statement and proxy card are included with
this letter. The formal business of the meeting is described in the notice of
meeting.
Whether or not you plan to attend the meeting, please complete and return
the enclosed proxy card to assure that your shares will be represented at the
meeting. If you attend the meeting, you may, of course, withdraw your proxy
should you wish to vote in person.
Sincerely,
Marvin A. Pomerantz
Chairman and Chief Executive Officer
<PAGE> 3
[Gaylord logo]
GAYLORD CONTAINER CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
JULY 21, 1995
You are cordially invited to attend the special meeting of stockholders of
Gaylord Container Corporation, a Delaware corporation (the "Company"), which
will be held on Friday, July 21, 1995 at 10:00 a.m. Chicago time at 520 Lake
Cook Road, Deerfield, Illinois 60015, to consider and act upon the following
proposals (and any such other matters as may properly come before the meeting):
1. A proposal to approve an amendment to the Company's current Restated
Certificate of Incorporation to include a requirement that any
stockholder action be taken only at a meeting of the stockholders.
2. A proposal to approve an amendment to the Company's current Restated
Certificate of Incorporation to include a requirement that special
meetings of stockholders may be called only by the Chairman of the Board
of Directors of the Company or by an affirmative vote of the majority of
the members of the Board of Directors then in office.
3. A proposal to approve an amendment to the Company's current Restated
Certificate of Incorporation to include a provision which increases the
stockholder vote required for amendment of the Bylaws of the Company
from a majority vote to two-thirds of the outstanding shares of capital
stock of the Company entitled to vote.
4. A proposal to approve an amendment to the Company's current Restated
Certificate of Incorporation to include a provision pursuant to which
the Company will be governed by Section 203 of the General Corporation
Law of the State of Delaware ("DGCL.")
5. A proposal to approve an amendment to the Company's current Restated
Certificate of Incorporation to include a provision which increases the
stockholder vote required for amendment of the above-referenced
provisions of the Company's Certificate of Incorporation from a majority
vote to two-thirds of the outstanding shares of capital stock of the
Company entitled to vote.
6. A proposal to approve an amendment to the Company's current Restated
Certificate of Incorporation to delete a provision no longer required
since the conclusion in 1992 of the Company's financial restructuring.
7. A proposal to delete Article VIII from the Company's Bylaws pursuant to
which the Company elected not to be governed by DGCL sec. 203.
The Board of Directors has fixed the close of business on July 5, 1995 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the Special Meeting or any adjournment or adjournments thereof. A list
of such stockholders will be available for examination by any stockholder for
any purpose germane to the Special Meeting during normal business hours at the
Company's corporate headquarters, 500 Lake Cook Road, Suite 400, Deerfield,
Illinois 60015, during the ten day period preceding the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS
OF THE SIZE OF YOUR HOLDINGS. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE
URGE YOU TO MARK, DATE AND SIGN THE ENCLOSED PROXY. YOUR PROXY IS REVOCABLE AT
ANY TIME BEFORE IT IS VOTED OR BY DELIVERY OF A LATER-DATED PROXY. IF YOU ARE
PRESENT AT THE MEETING YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU SO
DESIRE.
By Order Of The Board Of Directors
David F. Tanaka
Secretary
Deerfield, Illinois
July 7, 1995
<PAGE> 4
GAYLORD CONTAINER CORPORATION
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
JULY 21, 1995
TIME AND LOCATION OF SPECIAL MEETING
A Special Meeting of the stockholders (the "Special Meeting") of Gaylord
Container Corporation, a Delaware corporation (the "Company"), will be held at
10:00 a.m. Chicago time on Friday, July 21, 1995 at 520 Lake Cook Road,
Deerfield, Illinois 60015.
PURPOSE AND SOLICITATION OF PROXIES
This proxy statement (the "Proxy Statement") and the enclosed proxy card
are being mailed on or about July 7, 1995 to the holders of common stock of the
Company in connection with the solicitation of proxies on behalf of the Board of
Directors of the Company (the "Board of Directors" or "Board") for use at the
Special Meeting and at any adjournment or adjournments thereof.
The purpose of this solicitation, among other things, is to obtain the
requisite stockholder approval of the Board's proposed Amended and Restated
Certificate of Incorporation which, if filed with the Secretary of State of the
State of Delaware, would include a number of new provisions and modifications to
the Company's current Restated Certificate of Incorporation which the Board
believes are appropriate for a publicly traded company. These proposed
provisions and modifications are presented in this Proxy Statement as seven
proposals.
VOTING AND REVOCATION OF PROXIES; RECORD DATE
Only stockholders of record at the close of business on July 5, 1995 (the
"Record Date") will be entitled to notice of, and to vote at, the Special
Meeting. At the Special Meeting, the Company's stockholders will be asked to
vote in favor of Proposal 1 to adopt an amendment to the current Restated
Certificate of Incorporation to require that all stockholder action be taken at
a stockholder meeting and not by written consent, Proposal 2 to adopt an
amendment to the current Restated Certificate of Incorporation to require that
special meetings of stockholders may be called only by the Chairman of the Board
or the Board of Directors, Proposal 3 to adopt an amendment to the current
Restated Certificate of Incorporation to require a 66 2/3% affirmative vote of
the stockholders to amend the Company's Bylaws, Proposal 4 to adopt an amendment
to the current Restated Certificate of Incorporation pursuant to which the
Company will be governed by Section 203 of the General Corporation Law of the
State of Delaware ("DGCL"), Proposal 5 to adopt an amendment to the current
Restated Certificate of Incorporation to require a 66 2/3% affirmative vote of
the stockholders to alter, amend or repeal certain provisions of the Amended and
Restated Certificate of Incorporation, Proposal 6 to adopt an amendment to the
current Restated Certificate of Incorporation to delete provisions no longer
required since the conclusion in 1992 of the Company's financial restructuring,
and Proposal 7 to adopt an amendment to the Company's Bylaws. These proposals
contain provisions commonly found in the charters of publicly traded companies
which are designed to protect the Company's stockholders
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from unfair takeover bids and coercive takeover tactics. The details of each of
these proposals are described below.
Proxies properly executed and returned in a timely manner will be voted at
the Special Meeting in accordance with the directions noted thereon. If no
direction is indicated, proxies will be voted in favor of each of the proposals
and in the discretion of the proxyholders on all other business as may properly
be brought before the Special Meeting and any adjournment or adjournments
thereof. Any stockholder submitting a proxy has the power to revoke it at any
time before it is voted, either in person at the Special Meeting, by written
notice to the Company's Corporate Secretary before the Special Meeting or by
delivery of a properly executed later-dated proxy to the Company's Corporate
Secretary.
Pursuant to Delaware law, abstentions are treated as present and entitled
to vote and thus have the effect of a vote against a matter. Shares registered
in the names of brokers or other "street name" nominees for which proxies are
voted on some but not all matters will be considered to be voted only as to
those matters actually voted, and will not be considered for any purpose as to
the matters with respect to which a beneficial holder has not provided voting
instructions (commonly referred to as "broker non-votes").
OUTSTANDING SHARES AND VOTING RIGHTS
The Company has two classes of outstanding common stock, Class A Common
Stock ("Class A Common") and Class B Common Stock ("Class B Common") (together,
"Common Stock"). Except as otherwise required by the Company's Restated
Certificate of Incorporation or by law, the holders of Class A Common and Class
B Common vote together as a single class on all matters submitted to the
stockholders and are entitled to one vote per share and ten votes per share,
respectively.
In addition, in connection with the completion in November 1992 of the
Company's financial restructuring, the Company issued warrants (the "Warrants")
to obtain Class A Common and simultaneously issued the shares of Class A Common
obtainable upon the exercise of the Warrants to a warrant trustee (the "Warrant
Trustee") which holds such shares (the "Trust Stock") in trust for the benefit
of the holders of the Warrants, pending any exercise, or for the benefit of the
Company, pending any redemption or exchange of the Warrants.
In connection with this proxy solicitation, under the terms of the Trust
Agreement with the Warrant Trustee, the Warrant Trustee will vote, and has
appointed the Company's Corporate Secretary as its proxy to vote, all shares of
Trust Stock then held by the Warrant Trustee in proportion to all other votes by
holders of the Company's Common Stock (accounting for the disparate voting power
between the two classes of Common Stock, if applicable).
Only stockholders of record at the close of business on the Record Date
will be entitled to vote on each of the proposals and any such other matters
properly brought before the Special Meeting. The affirmative vote of a majority
of the combined voting power of all of the outstanding shares of the Common
Stock will be required for adoption of each of Proposals 1 through 6 (each
concerning a proposed amendment to the Restated Certificate of Incorporation),
and the affirmative vote of a majority of the combined voting power of the
Common Stock represented, in person or by proxy, at the Special Meeting, will be
required for adoption of Proposal 7 (concerning the proposed amendment to the
Company's Bylaws). (The proposed revisions to the Restated Certificate of
Incorporation described as Proposals 1 through 6 below and the proposed
amendment to the Bylaws described as Proposal 7 below are collectively referred
to as the "Proposed Amendments.") The Company believes that its officers,
directors and holders of its Class B Common, all of whom the Company expects to
vote for each of the proposals, have sufficient votes to approve each of
Proposals 1 through 7. The stockholders will have no appraisal or similar rights
in connection with any of these proposals.
Mid-America Group, Ltd. ("MAG") beneficially owns more than 81%, and the
Company's executive officers and directors, as a group, may be deemed to
beneficially own or control more than 92%, of the outstanding Class B Common,
which ownership gives MAG sufficient voting power acting alone to approve each
of the proposals described herein and to approve or disapprove any other
business that may properly be presented at the Special Meeting. Detailed
information with respect to the beneficial ownership of each class
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of the Company's Common Stock and Warrants is attached as Annex I to this Proxy
Statement and incorporated herein by reference. As of the close of business on
the Record Date, there were outstanding 48,792,367 shares of Class A Common
(including 31,845,533 shares of Trust Stock) and 5,250,082 shares of Class B
Common.
BACKGROUND AND REASONS FOR THE PROPOSED AMENDMENTS
BACKGROUND. Under the Company's current Restated Certificate of
Incorporation, the Company's dual class common stock capitalization may expire
on July 31, 1995. Part 4C of Article Four of the Restated Certificate of
Incorporation provides for the automatic conversion of Class B Common (10 votes
per share) into Class A Common (1 vote per share) on July 31, 1995 unless the
closing sale price of Class A Common is $15.25 per share or higher on at least
20 trading days during any 30 consecutive trading days occurring on or prior to
July 31, 1995. Recent trading activity of the Class A Common suggests that the
automatic conversion of the Class B Common into Class A Common on July 31, 1995
will occur.
Because of the existence of the high vote Class B Common, the Board
previously has not considered adopting many of the protections against abusive
takeover tactics that publicly traded companies without a dual class common
stock capital structure typically have in place. Given the potential conversion
of Class B Common into Class A Common, the Company believes that the best
interests of stockholders would be served if appropriate defenses to coercive
tender offers or other coercive efforts to gain control of the Company were put
in place. The failure to implement such protective devices would leave the Board
with little or no ability to protect the Company's stockholders in a coercive
takeover situation or against a merger, consolidation or sale of assets of the
Company which are not the result of negotiation and which may be opposed by a
substantial minority of the outstanding shares of the Common Stock.
The Board of Directors met on May 25, 1995 to address these concerns and to
consider the advantages and disadvantages of adopting various stockholder
protective devices which have been adopted by publicly traded companies. The
Board concluded that implementation of a "rights plan" would best protect the
interests of the stockholders and the Company. On June 12, 1995, the Board of
Directors unanimously adopted the Shareholder Rights Plan (the "Rights Plan").
Pursuant to the Rights Plan, Preferred Stock Purchase Rights (the "Rights") will
be distributed as a dividend on outstanding shares of Common Stock. One Right
will be distributed to stockholders of record as of July 5, 1995 for each share
of Common Stock held on such date. The effect of the Rights Plan (so long as the
Rights Plan remains in place) is to encourage potential acquirors to negotiate
with the Board prior to acquiring a large block of the Common Stock and permit
the Board to ensure fair treatment for the Company's stockholders in the event
of a coercive offer for the Common Stock. The Board of Directors did not adopt
the Rights Plan in reaction to any known effort to acquire the Company's stock.
The Board recognizes that certain provisions of the Company's current
Restated Certificate of Incorporation and Bylaws, unless amended, could permit
the Rights Plan to be circumvented by the taking of corporate action by certain
stockholders (including the replacement of the Board of Directors and the
redemption of the Rights Plan) without prior notice to all stockholders or the
opportunity to participate in the consideration thereof. Accordingly, the Board
is seeking stockholder approval of (i) an Amended and Restated Certificate of
Incorporation and (ii) an amendment to one provision of the Company's current
Bylaws. The principal purpose of the Proposed Amendments is to enhance the
effectiveness of the Rights Plan such that its provisions cannot be easily
circumvented in a coercive takeover situation. The Proposed Amendments contain
protective provisions that are common for a publicly traded company without a
dual class common stock capital structure. The Board is not recommending the
Proposed Amendments in reaction to any known effort to acquire the Company's
stock.
The principal function of the Rights Plan and the Proposed Amendments, as a
whole, is to give the Board of Directors an opportunity and sufficient time to
evaluate an acquisition offer and determine if it reflects the full value of the
Company and is fair to all stockholders, and if not, to reject the offer or to
seek an alternative that meets such criteria. Even in the case of an all-cash
offer to all stockholders, the Rights Plan and the
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Proposed Amendments collectively serve the further function of providing
leverage for the Board to facilitate a bidding process and to negotiate for a
better price for the stockholders.
SUMMARY OF THE RIGHTS PLAN. The Rights contain provisions designed to
protect stockholders in the event of an unsolicited attempt to acquire the
Company, including a gradual accumulation of shares in the open market, a
partial or two-tiered tender offer that does not treat all stockholders equally,
and other takeover tactics which the Board of Directors believes may be abusive
and not in the best interests of all of the stockholders. The Board believes
that these tactics tend to unfairly pressure stockholders, coerce them to
relinquish their investment without giving them any meaningful choice and
deprive them of the full value of their shares. Among other things, in the event
of an unsolicited proposal, implementation of the Rights Plan should increase
the Board's ability to effectively represent the interests of the Company's
stockholders, evaluate such an offer and exercise its good faith business
judgment to take appropriate steps to protect and advance stockholder interests.
Under the Rights Plan, the Rights may be redeemed by the Company at any
time prior to the date on which the acquisition by any person (including any
group) of either (i) 15% or more of the Common Stock (other than the Trust
Stock) or (ii) 15% or more of the Common Stock and the Warrants, on a combined
basis, is publicly disclosed. The redemption price is $.0001 per Right, subject
to adjustment to reflect any stock split, stock dividend or similar transaction.
The Company may, at its option, pay the redemption price in cash or shares of
Class A Common (including any fractional share thereof) based on the current
market price of the Class A Common at the time of redemption. The Rights Plan
will not interfere with any tender offer, merger or other business combination
approved by the Board and should not affect any prospective offeror willing to
negotiate in good faith with the Board of Directors. Additionally, the Rights
Plan does not inhibit any stockholder from utilizing the proxy mechanism to
promote a change in the management or direction of the Company.
ANTI-TAKEOVER EFFECTS OF THE RIGHTS PLAN AND THE
PROPOSED AMENDMENTS
While the Board believes that the Proposed Amendments should be adopted for
the reasons set forth in this Proxy Statement, the Board is aware that the
Proposed Amendments may have anti-takeover effects. Although the Rights Plan and
the Proposed Amendments are designed as protective measures for the Company's
stockholders, the Board of Directors would continue to have the power to reject
any offer including those that may be at a premium above prevailing market
prices. Therefore, the Rights Plan and the Proposed Amendments might have the
effect of preventing stockholders from realizing an opportunity to sell their
shares of Common Stock at higher than market prices by deterring unfriendly
tender offers or other efforts to gain control of the Company. In addition, the
Rights Plan and the Proposed Amendments may have the practical effect of
entrenching the Board of Directors and management. These provisions also,
however, tend to assure continuity of management and policies and encourage
those seeking control of the Company to negotiate with management, and the Board
believes that the interests of the Company's stockholders will best be served by
a transaction that results from negotiations based upon careful consideration of
the proposed terms, such as the availability of the benefits of the transaction
to all stockholders, the price to be paid to stockholders (including minority
stockholders), the form of consideration paid and tax effects of the
transaction.
The Board of Directors has carefully considered the potential adverse
effects of the Proposed Amendments and has concluded that such adverse effects
are substantially outweighed by the benefits the Rights Plan and the Proposed
Amendments, as a whole, would afford the Company and its stockholders. The
Proposed Amendments are necessary to enable the stockholders to reap the
greatest benefits from the Rights Plan and vice versa. Accordingly, the Board
adopted the Rights Plan and urges you to approve the Proposed Amendments, as
described in this Proxy Statement.
In connection with its consideration of the Proposed Amendments, the Board
also considered the implementation of a staggered board of directors, but
decided not to pursue such a proposal at this time. The
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Board has no current intention to propose other anti-takeover measures in future
solicitations, although the Board may determine to pursue one or more of such
measures at a later date.
THE PROPOSED AMENDMENTS
PROPOSED AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
The proposed Amended and Restated Certificate of Incorporation in the form
attached as Annex II (the "Amended and Restated Certificate of Incorporation")
to this Proxy Statement contains the text of each of Proposals 1 through 6.
Annex II is marked to show clearly the changes proposed to be effected by
adoption of all of these proposals. These proposed amendments to the Company's
current Restated Certificate of Incorporation are designed to prevent
circumvention of the desired protection afforded by the Rights Plan. Neither the
Company's current Restated Certificate of Incorporation nor the Amended and
Restated Certificate of Incorporation provides for cumulative voting by the
stockholders.
The Board of Directors has unanimously adopted a resolution proposing the
Amended and Restated Certificate of Incorporation. The Amended and Restated
Certificate of Incorporation will not be effective unless and until it is filed
with the Secretary of State of Delaware, and the Board has reserved the right,
pursuant to DGCL sec. 242(c), to abandon any one or all of the Proposed
Amendments to the Restated Certificate of Incorporation even if such proposals
are authorized by the stockholders. However, at this time, the Board knows of no
reason why it would abandon any of such Proposed Amendments, and the Board
intends to file the Amended and Restated Certificate of Incorporation with the
Secretary of State of Delaware if the Amended and Restated Certificate of
Incorporation is authorized by a vote of the Company's stockholders.
Proposals 1 through 6 which have been recommended by the Board of Directors
are individually described below. These descriptions are qualified in their
entireties by reference to the Amended and Restated Certificate of Incorporation
attached hereto as Annex II. Pursuant to the terms of the Amended and Restated
Certificate of Incorporation, Proposals 1 through 5 will become effective only
if there is no Class B Common outstanding, even if approved by a vote of the
Company's stockholders.
PROPOSED AMENDMENT TO THE COMPANY'S BYLAWS
Under Delaware law, the Board of Directors generally has the ability to
amend the Company's Bylaws without stockholder approval. However, under DGCL
sec. 203, stockholder approval is required to delete a provision electing not to
be governed by DGCL sec. 203. On June 12, 1995, the Board of Directors
unanimously adopted a resolution approving an election by the Company to be
governed by DGCL sec. 203. Accordingly, the Board of Directors recommends
Proposal 7 pursuant to which the Bylaws will be amended to delete a provision
pursuant to which the Company previously elected not to be governed by DGCL sec.
203.
PROPOSAL 1
APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO REQUIRE THAT ALL STOCKHOLDER ACTION BE TAKEN AT A STOCKHOLDER
MEETING AND NOT BY WRITTEN CONSENT
The Board of Directors recommends that the Company's current Restated
Certificate of Incorporation be amended to add Article Eleven, subsection (i) of
which provides that actions required or permitted to be taken by the
stockholders must be effected at an annual or special meeting of stockholders
and may not be taken or effected without a meeting of the stockholders and
subsection (ii) of which provides that stockholders may not take any action by
written consent in lieu of a meeting of the stockholders. In addition, approval
of this Proposal 1 would require certain technical amendments to the current
Restated Certificate of Incorporation to correct references necessitated by the
renaming of the current Restated Certificate of Incorporation as the Amended and
Restated Certificate of Incorporation.
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Under DGCL sec. 228, unless otherwise provided in the Certificate of
Incorporation, any action required or permitted to be taken by stockholders of
the Company may be taken without a meeting, without prior notice and without a
stockholder vote if a written consent setting forth the action to be taken is
signed by the holders of shares of outstanding stock having the requisite number
of votes that would be necessary to authorize such action at a meeting of
stockholders at which all shares entitled to vote thereon were present and
voted. The Company's current Restated Certificate of Incorporation contains no
provision restricting or regulating stockholder action by written consent.
The adoption of this Proposed Amendment would eliminate the ability of the
Company's stockholders to act by written consent in lieu of a meeting. It is
intended to prevent solicitation of consents by stockholders seeking to effect
changes without giving all of the Company's stockholders entitled to vote on a
proposed action an adequate opportunity to participate at a meeting where such
proposed action is considered. This Proposed Amendment would prevent a potential
acquiror holding or controlling a large block of the Company's voting stock from
using the written consent procedure to take stockholder action unilaterally.
The Board of Directors does not believe that the elimination of stockholder
action by written consent will create a significant impediment to a tender offer
or other effort to take control of the Company. Nevertheless, the effect of this
proposal may be to make more difficult, or delay, certain actions by a person or
a group acquiring a substantial percentage of the Common Stock, even though such
actions might be desired by, or beneficial to, the holders of a majority of the
outstanding shares of the Common Stock.
This Proposed Amendment will ensure that all stockholders will have advance
notice of any attempted corporate action by stockholders, and that all
stockholders will have an equal opportunity to participate at the meeting of
stockholders where such action is being considered. It will enable the Company
to set a record date for any stockholder voting, and should reduce the
possibility of disputes or confusion regarding the validity of purported
stockholder action. This Proposed Amendment would encourage a potential acquiror
to negotiate directly with the Board of Directors.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the combined voting
power of all of the outstanding shares of the Company's Common Stock is required
to approve Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 1.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO REQUIRE
THAT SPECIAL MEETINGS OF STOCKHOLDERS MAY BE CALLED ONLY BY THE CHAIRMAN OF THE
BOARD OR BOARD OF DIRECTORS
The Board of Directors recommends that the Company's current Restated
Certificate of Incorporation be amended to add Article Eleven, subsection (iii)
of which provides that special meetings of stockholders may be called only by
the Chairman of the Board of Directors or pursuant to a resolution adopted by
the affirmative vote of a majority of the members of the Board of Directors then
in office. In addition, approval of this Proposal 2 would require certain
technical amendments to the current Restated Certificate of Incorporation to
correct references necessitated by the renaming of the current Restated
Certificate of Incorporation as the Amended and Restated Certificate of
Incorporation.
DGCL sec. 211(d) provides that special meetings may called by the Board or
by such persons authorized by the Company's Certificate of Incorporation or
Bylaws. Under the Company's current Bylaws, special meetings of the stockholders
may be called by the Chairman of the Board of Directors, the Secretary if
directed by the Board of Directors or at the request of stockholders owning a
majority of the outstanding shares of Common Stock entitled to vote at the
meeting.
This Proposed Amendment would limit the ability to call special stockholder
meetings to the Chairman of the Board or the Board of Directors only, and would
eliminate the ability of one or more stockholders to call a special stockholder
meeting. This Proposed Amendment would prevent persons acquiring a majority of
the
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outstanding shares from calling a special meeting for the purpose of removing
directors or making other proposals that would disrupt the continuity, stability
and policies of the Board. This change would not effect in any way the conduct
of annual meetings of stockholders held pursuant to Delaware law.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the combined voting
power of all of the outstanding shares of the Company's Common Stock is required
to approve Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 2.
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO REQUIRE
A 66 2/3% AFFIRMATIVE VOTE OF THE STOCKHOLDERS TO AMEND THE COMPANY'S BYLAWS
The Board of Directors recommends that Article Seven of the Company's
current Restated Certificate of Incorporation be amended to provide that the
Company's stockholders be permitted to alter, amend or repeal the Company's
Bylaws only with the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Company entitled to vote. In
addition, approval of this Proposal 3 would require certain technical amendments
to the current Restated Certificate of Incorporation to correct references
necessitated by the renaming of the current Restated Certificate of
Incorporation as the Amended and Restated Certificate of Incorporation.
DGCL sec. 109 grants the power to adopt, amend or repeal the Company's
Bylaws to the stockholders provided that the Certificate of Incorporation may
give concurrent power to the Board of Directors. Thus, although Article Seven of
the Company's current Restated Certificate of Incorporation expressly authorizes
the Board to alter, amend or repeal the Bylaws, under Delaware law, the
stockholders currently can also adopt, amend or repeal the Bylaws by a majority
vote. The Amended and Restated Certificate of Incorporation would increase the
stockholder vote required to alter, amend or repeal the Company's Bylaws from a
majority vote to a two-thirds affirmative vote.
The requirement of an increased stockholder vote is designed to prevent a
person who has obtained control of a majority, but less than 66 2/3%, of the
voting stock of the Company from avoiding the requirements of the Bylaws by
simply repealing them. Thus, this proposed supermajority vote requirement
enhances the effectiveness of the Rights Plan by increasing the stockholder
support required to amend the Bylaws in ways that might favor a coercive
takeover or similar situation. This Proposed Amendment may work to protect
against future amendments to the Bylaws that might make it easier for an entity
interested in acquiring the Company to control the Board.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the combined voting
power of all of the outstanding shares of the Company's Common Stock is required
to approve Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 3.
PROPOSAL 4
APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION PURSUANT
TO WHICH THE COMPANY WILL BE GOVERNED BY DGCL SEC. 203
The Board of Directors recommends that the Company's current Restated
Certificate of Incorporation be amended to add Article Twelve pursuant to which
the Company will be governed by the provisions of DGCL sec. 203. In addition,
approval of this Proposal 4 would require certain technical amendments to the
current Restated Certificate of Incorporation to correct references necessitated
by the renaming of the current Restated Certificate of Incorporation as the
Amended and Restated Certificate of Incorporation.
7
<PAGE> 11
The Board similarly is recommending approval of the deletion of Article
VIII from the Company's Bylaws pursuant to which the Company previously elected
not to be governed by DGCL sec. 203. This proposal is described in detail below
(see PROPOSAL 7 -- Approval of An Amendment To The Company's Bylaws), which
discussion is incorporated by reference in this Proposal 4.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the combined voting
power of all of the outstanding shares of the Company's Common Stock is required
to approve Proposal 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 4.
PROPOSAL 5
APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO REQUIRE
A 66 2/3% AFFIRMATIVE VOTE OF THE STOCKHOLDERS TO ALTER,
AMEND OR REPEAL CERTAIN PROVISIONS OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
The Board of Directors recommends that Article Ten of the Company's current
Restated Certificate of Incorporation be amended to provide that Article Seven
(concerning stockholder approval required to amend the Company's Certificate of
Incorporation), Article Ten (concerning stockholder approval required to amend
the Company's Bylaws) and Article Eleven (concerning stockholder action and the
calling of special meetings of the stockholders) of the Amended and Restated
Certificate of Incorporation may not be altered, amended or repealed and no
provision inconsistent with such Articles may be adopted without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of the
capital stock of the Company entitled to vote. In addition, approval of this
Proposal 5 would require certain technical amendments to the current Restated
Certificate of Incorporation to correct references necessitated by the renaming
of the current Restated Certificate of Incorporation as the Amended and Restated
Certificate of Incorporation.
Under DGCL sec. 242(b), amendments to a company's certificate of
incorporation require the approval of the holders of a majority of the
outstanding stock entitled to vote thereon, but the law also permits a company
to include provisions in its certificate of incorporation which require a
greater vote than the vote otherwise required by law for any corporate action.
With respect to such supermajority provisions, DGCL sec. 242(b)(4) requires that
any alteration, amendment or repeal thereof be approved by an equally large
stockholder vote.
The requirement of an increased stockholder vote increases the
effectiveness of the Rights Plan by preventing a person holding or controlling a
majority, but less than 66 2/3%, of the voting stock of the Company from,
directly or indirectly, circumventing its requirements. Similarly, this
provision strengthens and supports the other Proposed Amendments, such as the
proposed prohibition on stockholder action without a stockholder meeting and the
proposed limitation on the ability of stockholders to call special meetings, by
increasing the amount of stockholder support necessary to repeal such provisions
once adopted. In addition, this provision itself cannot be altered or repealed
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of the capital stock of the Company entitled to vote. This
Proposed Amendment may work to protect against future amendments to the Amended
and Restated Certificate of Incorporation that might make it easier for an
entity interested in acquiring the Company or gaining control of the Company.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the combined voting
power of all of the outstanding shares of the Company's Common Stock is required
to approve Proposal 5.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 5.
8
<PAGE> 12
PROPOSAL 6
APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO DELETE PROVISIONS FORMERLY REQUIRED UNDER THE BANKRUPTCY CODE
The Board of Directors recommends that Article Four of the Restated
Certificate of Incorporation be amended to delete the section thereof entitled
"Certain Restrictions on Issuances of Capital Stock." In addition, approval of
this Proposal 6 would require certain technical amendments to the current
Restated Certificate of Incorporation to correct references necessitated by the
renaming of the Company's current Restated Certificate of Incorporation as the
Amended and Restated Certificate of Incorporation.
This section of Article Four of the Company's current Restated Certificate
of Incorporation was originally adopted when the Company's current Restated
Certificate of Incorporation was approved and filed in connection with the
confirmation of the Company's Plan of Reorganization ("Plan") pursuant to the
federal bankruptcy laws. Such section (i) prohibits the issuance of nonvoting
equity securities and (ii) upon the issuance of certain preferred equity
securities, mandates the election of directors to represent holders of such
preferred equity securities in the event of default in the payment of dividends
on such preferred class of equity securities. Section 1123(a)(6) of the United
States Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"),
requires that a plan (as such term is defined under Chapter 11 of the Bankruptcy
Code) filed by a company contemplates the inclusion of such section in such
company's certificate of incorporation. The Board currently does not contemplate
issuance of additional equity securities. However, this section is no longer
required since the conclusion in 1992 of the Company's financial restructuring
and consummation of the Company's Plan. Accordingly, the Board recommends that
this section of the Company's current Restated Certificate of Incorporation be
deleted because it is no longer required to be included under applicable law.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the combined voting
power of all of the outstanding shares of the Company's Common Stock is required
to approve Proposal 6.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 6.
PROPOSAL 7
APPROVAL OF AN AMENDMENT TO THE COMPANY'S BYLAWS TO DELETE A PROVISION PURSUANT
TO WHICH THE COMPANY ELECTED NOT TO BE GOVERNED BY DGCL SEC. 203
The Board of Directors recommends the deletion of Article VIII of the
Bylaws pursuant to which the Company elected not to be governed by DGCL sec.
203.
DGCL sec. 203 is a "business combination" statute. The effect of deleting
Article VIII of the Bylaws and making the Company, a publicly held Delaware
corporation, subject to DGCL sec. 203 is to prohibit the Company from engaging
in various "business combination" transactions with any "interested stockholder"
for a period of three years after the date of the transaction in which the
person became an "interested stockholder," unless (i) the transaction is
approved by the Board of Directors prior to the date the "interested
stockholder" obtained such status, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an "interested stockholder," the
"interested stockholder" owned at least 85% of the voting stock of the Company
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by (a) persons
who are directors and also officers and (b) employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) on or subsequent to the date of the transaction in which the person
became an "interested stockholder" the "business combination" is approved by the
Board of Directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock which is not owned by the "interested stockholder."
A "business combination" includes mergers, asset sales and other transactions
resulting in financial benefit to a stockholder. An "interested stockholder" is
a person who, together with affiliates and associates, owns (or within three
years, did own) 15% or more of a corporation's voting stock.
9
<PAGE> 13
Application of DGCL sec. 203 to the Company should encourage persons
interested in acquiring the Company to negotiate in advance with the Board of
Directors since the higher stockholder voting requirements imposed would not be
invoked if such person, prior to acquiring 15% of the Company's voting stock,
obtains the approval of the Board of Directors for such stock acquisition or for
the proposed business combination transaction (unless such person acquires 85%
or more of the Company's voting stock in such transaction excluding certain
shares as described above). In the event of a proposed acquisition of the
Company, the Board believes that the interests of the Company's stockholders
will best be served by a transaction that results from negotiations based upon
careful consideration of the proposed terms, such as the availability of the
benefits of the transaction to all stockholders, the price to be paid to
stockholders (including minority stockholders), the form of consideration paid
and tax effects of the transaction.
In addition, DGCL sec. 203 should tend to prevent certain of the potential
inequities of business combinations which are part of a "two-tier" transaction.
Any merger, consolidation or similar transaction following a partial tender
offer not approved by the Board under DGCL sec. 203 would have to be approved by
the holders of at least two-thirds of the remaining shares of Common Stock
unless, under DGCL sec. 203, the acquiror obtained 85% or more of the Company's
voting stock in such partial tender offer.
REQUIRED VOTE
The affirmative vote of a majority of the holders of the combined voting
power of the Company's Common Stock represented, in person or by proxy, at the
Special Meeting is required to approve Proposal 7.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF PROPOSAL 7.
MISCELLANEOUS
DGCL sec. 242(c) authorizes the Board of Directors to abandon any one or
all of Proposals 1 through 6 at any time prior to the filing of such proposed
amendments to the Company's Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware, notwithstanding authorization of
the proposals by the Company's stockholders. The Board of Directors may consider
abandoning any one or all of such proposals at any time before or after the
Special Meeting if it determines, in its sole discretion, that such action is
advisable or in the best interests of the Company. At this time, the Board does
not know of any reason why it would abandon any of such proposals.
STOCKHOLDER PROPOSALS
Any proposals by stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Company no later than August 30,
1995.
You are again urged to attend the Special Meeting. Proxies will be
solicited by the Board through the use of the mails. Proxies may also be
solicited by directors, officers and a small number of other employees of the
Company personally or by mail, telephone, telegraph or otherwise, but such
persons will not be separately compensated for such services. Brokerage firms,
banks, fiduciaries, voting trustees or other nominees will be requested to
forward the soliciting materials to beneficial owners of stock held of record by
them. The entire cost of the Board's solicitation will be borne by the Company.
By Order of the Board of Directors
David F. Tanaka
Secretary
10
<PAGE> 14
ANNEX I
INFORMATION WITH RESPECT TO STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of each class of the Company's Common Stock and warrants to
obtain Class A Common as of June 9, 1995 by (i) each stockholder known by the
Company to own beneficially more than 5 percent of such outstanding class of
Common Stock (ii) each director and named executive officer of the Company and
(iii) all officers and directors of the Company as a group. The numbers and
percentages of Class A Common include Trust Stock held by the Warrant Trustee
but do not include the outstanding Class B Common which is convertible into
Class A Common. To the knowledge of the Company, each stockholder has sole
voting and investment power as to the shares owned unless otherwise noted. The
address of all directors and executive officers is the address of the Company.
<TABLE>
<CAPTION>
WARRANTS TO OBTAIN CLASS
CLASS A COMMON STOCK CLASS B COMMON STOCK A COMMON STOCK
----------------------- ----------------------- -------------------------
PERCENT PERCENT PERCENT
NUMBER OF CLASS NUMBER OF CLASS NUMBER OF CLASS
OF SHARES OUTSTANDING* OF SHARES OUTSTANDING* OF WARRANTS OUTSTANDING*
--------- ------------ --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Marvin A. Pomerantz
and MAG(1).................... 215,000 -- 4,279,942 81.3% 0 --
4700 Westown Parkway
West Des Moines, IA 50625
Warren J. Hayford(2)............ 1,314,550 2.7% 514,518 9.8% 0 --
Frank E. Babb................... 5,000 -- 0 -- 3,000 --
Norman H. Brown Jr. ............ 0 -- 0 -- 10,000 --
Harve A. Ferrill................ 10,000 -- 0 -- 0 --
John E. Goodenow(3)............. 45,000 -- 0 -- 0 --
David B. Hawkins(4)............. 26,200 -- 0 -- 0 --
John Hawkinson(4)(5)............ 54,245 -- 0 -- 13,857 --
Richard S. Levitt(4)(6)......... 74,200 -- 0 -- 0 --
Ralph L. MacDonald Jr. ......... 20,000 -- 0 -- 0 --
Thomas H. Stoner................ 3,000 -- 0 -- 0 --
Dale E. Stahl................... 211,648 -- 0 -- 25,000 --
Daniel P. Casey(7).............. 113,200 -- 59,411 1.1% 25,000 --
Lawrence G. Rogna(8)............ 77,500 -- 0 -- 15,800 --
All officers and directors as a
group (26 persons)(9)......... 2,655,513 5.5% 4,853,871 92.2% 441,407 1.4%
</TABLE>
- ---------------
* Percentages less than 1 percent have been omitted.
(1) MAG is owned by Mr. Pomerantz, his wife and trusts for the benefit of their
children. Mr. Pomerantz does not own directly any of these shares except for
5,000 shares of Class A Common held in his own name. Mr. Pomerantz disclaims
beneficial ownership of shares held by MAG and attributable to his wife and
the trusts.
(2) The shares shown as beneficially owned by Mr. Hayford include 72,143 shares
of Class A Common and 12,143 shares of Class B Common owned directly by
trusts for the benefit of his grandchildren, 1,853 shares of Class A Common
and 216,643 shares of Class B Common owned directly by his wife and 50,000
shares of Class A Common owned by a charitable family foundation. Mr.
Hayford disclaims beneficial ownership of shares held by the trusts, his
wife and the foundation.
(3) The shares shown as beneficially owned by Mr. Goodenow include 2,000 shares
owned directly by his wife and 34,000 shares owned directly by Goodenow
Bancorporation, a family owned corporation. Mr. Goodenow disclaims
beneficial ownership of such shares.
(4) Messrs. Hawkins, Hawkinson, and Levitt each own options to purchase 24,200
shares of the Company's Class A Common, which options were granted pursuant
to the Company's Outside Director Stock Option
I-1
<PAGE> 15
Plan. Although none of such options have been exercised, the shares of Class A
Common shown as beneficially owned by each of them include 100 percent of such
options, all of which are currently exercisable.
(5) The shares shown as beneficially owned by Mr. Hawkinson include 2,000 shares
owned directly by his wife and 758 shares and 3,857 warrants owned by a
trust for the benefit of his wife. Mr. Hawkinson disclaims beneficial
ownership of such shares and warrants.
(6) The shares shown as beneficially owned by Mr. Levitt include 50,000 shares
owned by a trust for the benefit of his wife. Mr. Levitt disclaims
beneficial ownership of such shares.
(7) The shares shown as beneficially owned by Mr. Casey include 9,360 and 16,000
shares of Class A Common owned by his wife and children, respectively. Mr.
Casey disclaims beneficial ownership of such shares.
(8) The warrants shown as beneficially owned by Mr. Rogna include 2,800 owned by
his wife. Mr. Rogna disclaims beneficial ownership of such warrants.
(9) The number and percentage of shares of Class A Common owned by the persons
named in the table and all officers and directors as a group include the
668,236 shares that such persons and group may obtain upon the exercise of
stock options exercisable currently or within 60 days of June 9, 1995.
I-2
<PAGE> 16
ANNEX II
Marked to show changes to the current Restated
Certificate of Incorporation as follows:
additions are underlined and
deletions are struck-through.
(Underline begins) AMENDED AND (Underline ends) RESTATED
CERTIFICATE OF INCORPORATION
OF
GAYLORD CONTAINER CORPORATION
(ORIGINALLY INCORPORATED AUGUST 1, 1986)
ARTICLE ONE
The name of the Corporation is Gaylord Container Corporation.
ARTICLE TWO
The address of the Corporation's registered office in the State of Delaware
is The Corporation Trust Center, 1209 Orange Street, Wilmington, County of New
Castle 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law").
ARTICLE FOUR
The total number of shares which the Corporation shall have authority to
issue is 165,000,000 shares, consisting of:
(1) 25,000,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock");
(2) 125,000,000 shares of Class A Common Stock, par value $.0001 per share
(hereinafter referred to as the "Class A Common"); and
(3) 15,000,000 shares of Class B Common Stock, par value $.0001 per share
(hereinafter referred to as the "Class B Common").
(Strike-through copy begins here.)
CERTAIN RESTRICTIONS ON ISSUANCES OF CAPITAL STOCK
Notwithstanding any other provision of this Article Four, the Corporation
will not issue any nonvoting equity securities, within the meaning of Section
1123(a)(6) of the United States Bankruptcy Code, 11 U.S.C., or any successor
statute thereto.
Notwithstanding any other provision of this Article Four, in the event that
the Corporation issues any class of equity securities having a preference over
another class of equity securities with respect to dividends, the terms of such
class of equity securities will include adequate provisions for the election of
directors representing such preferred class in the event of default in the
payment of such dividends, within the meaning of Section 1123(a)(6) of the
United States Bankruptcy Code, 11 U.S.C., or any successor statute thereto.
(Strike-through copy ends here.)
THE PREFERRED STOCK
The Corporation's board of directors (the "Board of Directors") is
authorized, subject to the limitations prescribed by law and the provisions of
this (Underline begins) Amended and (Underline ends) Restated Certificate of
Incorporation, to provide for the issuance of shares of the Preferred Stock in
one or more series, to establish from time to time the number of shares to be
included in each such series and to fix the designations, voting powers,
preferences rights and qualifications, limitations or restrictions of the
shares of the Preferred Stock of each such series. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares
II-1
<PAGE> 17
thereof then outstanding) by the affirmative vote of the holders of a majority
of the Common Stock, without a vote of the holders of the Preferred Stock, or of
any series thereof, unless a vote of any such holders is required pursuant to
the certificate or certificates establishing the series of Preferred Stock.
COMMON STOCK
Except as otherwise provided herein, all shares of Class A Common and Class
B Common will be identical and will entitle the holders thereof to the same
rights and privileges. As used herein, the term "Common Stock" means,
collectively, the Class A Common and the Class B Common.
Part 1. Voting Rights.
(i) So long as any share of Class B Common is outstanding, the holders
of Class A Common and Class B Common will vote together as a single class
with respect to all matters to be voted on by the Corporation's
stockholders, except as provided in subparagraphs (ii), (iii) or (iv) below
or as required by law. In connection with the vote by the Corporation's
stockholders on each such matter, the holders of Class A Common will be
entitled to one vote per share and the holders of Class B Common will be
entitled to 10 votes per share, except as provided in subparagraphs (iii)
and (iv) below.
(ii) The number of directors comprising the Board of Directors will be
determined from time to time in the manner specified in the Corporation's
bylaws, subject to this subparagraph (ii). So long as any share of Class B
Common is outstanding, (A) the holders of Class A Common, voting separately
as a class and excluding the holders of Class B Common (but not with
respect to the shares of Class A Common held by such holders), shall be
entitled to elect a number (rounded to the next highest whole number in the
case of a fraction) of such directors equal to one-fourth (1/4) of the
total number of directors constituting the entire Board of Directors of the
Corporation (the "Class A Directors"), provided that the holders of Class A
Common will be entitled to elect three (3) such directors to serve on the
Board of Directors during the period commencing on the later to occur of
the filing of (Strike-through copy begins) this (Strike-through copy ends)
(Underline begins) the (Underline ends) Restated Certificate of
Incorporation and the date of initial issuance of the Warrants (as defined
herein) pursuant to the Warrant Agreement (as defined herein) and ending
immediately prior to July 31, 1996 or, if earlier, such time as no Warrants
are outstanding and no Debentures (as defined herein) are outstanding (the
"Special Class A Director Termination Date"), and (B) the holders of Class
B Common, voting separately as a class and excluding the holders of Class A
Common (but not with respect to the shares of Class B Common held by such
holders), shall be entitled to elect all other directors; provided that,
subject to the following proviso, after the close of business on any day on
which, but only at such times as, the number of outstanding shares of Class
B Common constitutes less than 12.5% of the total number of outstanding
shares of Common Stock, the holders of Class B Common and the holders of
Class A Common, voting together as a single class with the holders of Class
B Common entitled to ten votes per share of Class B Common held and the
holders of Class A Common entitled to one vote per share of Class A Common
held, shall be entitled to elect all such other directors; provided,
further, that the immediately preceding proviso will cease to apply, and
the holders of Class B Common voting as a single class excluding the
holders of Class A Common (but not with respect to the shares of Class B
Common held by such holders) shall be entitled to elect all such other
directors, during any period commencing at the close of business on the day
on which the number of outstanding shares of Class B Common constitutes
12.5% or more of the total outstanding shares of Common Stock and ending at
the close of business on a subsequent day, if any, on which the number of
outstanding shares of Class B Common constitutes less than 12.5% of the
total number of outstanding shares of Common Stock; and provided, further,
that until the Special Class A Director Termination Date, the number of
directors to be elected pursuant to this clause (B) will be eight (8). For
purposes of this subparagraph (ii), a Warrant will not be deemed to be
outstanding at such time as it is either exercisable in accordance with its
terms or deemed not to be outstanding in accordance with the Warrant
Agreement. Also for purposes of this subparagraph (ii), Debentures will be
deemed not outstanding if delivered to the Trustee (within the meaning of
the applicable Indenture) for cancellation, if the Corporation is
Discharged (within the meaning of the applicable Indenture) from its
obligations with respect thereto or if the Corporation has
II-2
<PAGE> 18
satisfied the conditions set forth in clauses (i) through (v) of Section
7.1(b) of the applicable Indenture with respect thereto.
(iii) Upon election of the three Special Class A Directors (as defined
herein) by the holders of Class A Common upon or after the filing of
(Strike-through copy begins) this (Strike-through copy ends)
(Underline begins) the (Underline ends) Restated Certificate of
Incorporation, the term of office of each such director shall be from
the date of such election to the Special Class A Director Termination
Date; provided that the term of office of each Class A Director elected
upon or after the Special Class A Director Termination Date shall be for a
period until the Corporation's next annual meeting of stockholders and
such director's successor has been duly elected and qualified or until
such director's earlier death, disability, resignation or removal. Any
vacancy occurring on the Board of Directors on account of the death,
disability, resignation or other termination of a Special Class A Director
prior to the Special Class A Director Termination Date may be filled only
by the affirmative vote of a majority of the remaining Special Class A
Directors, except that in the event that there are no remaining Special
Class A Directors or in the event of an election pursuant to Section
223(c) of the Delaware General Corporation Law to fill any such
vacancies, each such vacancy may be filled only by a vote of the holders
of Class A Common voting as a separate class, and the term of any director
so elected to fill a vacancy shall be until the Special Class A Director
Termination Date or until such Special Class A Director's earlier death,
disability, resignation or removal.
(iv) Notwithstanding any provision hereof to the contrary, in any vote
by holders of Common Stock with respect to confirmation of a plan of
reorganization of the Corporation pursuant to a bankruptcy proceeding under
the United States Bankruptcy Code (or any successor statute thereto), the
holders of Class A Common will be entitled to one vote per share of Class A
Common held and the holders of Class B Common will be entitled to one vote
per share of Class B Common held.
Part 2. Dividends.
When and as dividends are declared on any Common Stock, whether payable in
cash, property or securities of the Corporation, the holders of Class A Common
and the holders of Class B Common will be entitled to share equally, share for
share, in such dividends, provided that if dividends are declared which are
payable in shares of Class A Common or Class B Common, dividends will be
declared which are payable at the same rate on each class of Common Stock, and
the dividends payable to holders of Class A Common will be paid in shares of
Class A Common and the dividends payable to holders of Class B Common will be
paid in shares of Class B Common, provided that, upon the written request of the
holders of a majority of the Class B Common then outstanding, the dividends
payable in shares of Common Stock to all holders of Class B Common (including
holders not making such request) in connection with any such dividend will be
paid in shares of Class A Common.
Part 3. Stock Splits and Combinations.
If the Corporation in any manner subdivides or combines the outstanding
shares of one class of Common Stock, the outstanding shares of the other class
of Common Stock will be proportionately subdivided or combined, provided that,
upon the written request of the holders of a majority of the Class B Common then
outstanding, the shares of Common Stock to be issued to all holders of Class B
Common (including holders not making such request) in connection with such
subdivision will be shares of Class A Common.
Part 4. Conversion.
4A. Voluntary Conversion of Class B Common. Each record holder of Class B
Common is entitled at any time and from time to time to convert any or all of
the shares of such holder's Class B Common into an equal number of shares of
Class A Common.
4B. Automatic Conversion of Class B Common Upon Transfer. Except in
connection with an Exempt Transfer, upon the sale, assignment, conveyance,
pledge or other transfer (a "transfer") of any shares of
II-3
<PAGE> 19
Class B Common, all shares of Class B Common being so transferred will be
converted automatically into an equal number of shares of Class A Common. As
used herein, the term "Exempt Transfer" means:
(i) any bona fide pledge of Class B Common to a bank or other
financial institution, provided that no foreclosure occurs;
(ii) any transfer of Class B Common (a) by will or pursuant to the
applicable laws of descent and distribution, (b) to the spouse, ancestors
or lineal descendants (whether natural or adopted) of the transferring
holder of Class B Common, (c) to any corporation, partnership or trust in
which the transferring holder and other persons referred to in clause (b)
are the holders of all of the outstanding capital stock other than
directors' qualifying shares (in the case of a transfer to a corporation),
the sole partners (in the case of a transfer to a partnership), and the
sole beneficiaries (in the case of a transfer to a trust), provided that in
the event that the transferring holder and such other persons cease at any
time to be the sole holders of such capital stock, the sole partners or the
sole beneficiaries, as the case may be, the shares of Class B Common then
held by such corporation, partnership or trust shall be automatically
converted into an equal number of shares of Class A Common or (d) to any
Person who (1) is a holder of Class B Common on the date of the filing of
(Strike-through copy begins) this (Strike-through copy ends) (Underline
begins) the (Underline ends) Restated Certificate of Incorporation or on
the date of such transfer (except pursuant to a pledge thereof) or (2)
would be a permitted transferee of any Person described in (1) foregoing
in an Exempt Transfer described in (b) or (c) foregoing or (iii) below; or
(iii) any transfer of Class B Common by a corporation, partnership or
trust (which in each case is then eligible to hold Class B Common without
automatic conversion to Class A Common pursuant to (ii)(c) above) to one or
more of its stockholders (other than stockholders holding only directors'
qualifying shares), partners or beneficiaries, as the case may be, provided
that, (a) in the case of a transfer by any corporation which has a class of
equity securities registered under the Securities Exchange Act of 1934, as
amended, at the time of such transfer, the transferee owns of record at
least 10% of the equity securities so registered at the time of such
transfer and (b) in the case of Mid-America Group, Ltd. only Permitted
Transfers shall be Exempt Transfers.
4C. Automatic Conversion of Class B Common Upon Certain Other Events. All
outstanding shares of Class B Common will be converted automatically into an
equal number of shares of Class A Common upon the first to occur of:
(i) July 31, 1995, but only if the Closing Price (as defined herein)
of the Class A Common has not equalled or exceeded $15.25 per share
(adjusted proportionately for stock splits, stock combinations,
reorganizations, reclassifications of shares, stock dividends and similar
transactions affecting the Class A Common after the date of the filing of
this Restated Certificate of Incorporation) on a total of twenty or more
Trading Days (as defined herein) (excluding for such purposes any Trading
Day on which the Corporation has purchased shares of Class A Common Stock
in the over-the-counter market, on the NASDAQ system, or on the exchange on
which such stock is then listed) if any, during any thirty consecutive
Trading Days occurring on or prior to July 31, 1995; or
(ii) the close of business on the day on which the holders of a
majority of the shares of Class B Common then outstanding have delivered
written notice to the Corporation's secretary electing that all outstanding
shares of Class B Common be converted into an equal number of shares of
Class A Common.
4D. Conversion Procedure.
(i) Each conversion of shares of Class B Common into shares of Class A
Common pursuant to paragraph 4A will be effected by the surrender of the
certificate or certificates representing the shares to be converted at the
principal office of the Corporation at any time during normal business
hours, together with a written notice by the holder of such shares to be
converted stating that such holder desires to convert the shares, or a
stated number of the shares, represented by such certificate or
certificates into Class A Common. Any conversion pursuant to paragraph 4B
or 4C will be deemed to be effective immediately upon the occurrence of the
event giving rise to such conversion. Any holder of certificates
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<PAGE> 20
representing shares of Class B Common which are automatically converted
into Class A Common pursuant to paragraph 4B or 4C may surrender pursuant
to subparagraph (ii) below the certificates representing such shares after
the occurrence of the event giving rise to such conversion in exchange for
a new certificate representing shares of Class A Common into which such
Class B Common was converted.
(ii) Promptly after the surrender of certificates representing shares
of Class B Common being converted pursuant to paragraph 4A, 4B or 4C (and,
in the case of a conversion pursuant to paragraph 4A, the receipt of
written notice specifying the number of shares being converted), the
Corporation will issue and deliver in accordance with the surrendering
holder's instructions (a) the certificate or certificates for the Class A
Common issuable upon such conversion and (b) in the case of a conversion
pursuant to paragraphs 4A or 4B, a certificate representing any Class B
Common which was represented by the certificate or certificates delivered
to the Corporation in connection with such conversion but which was not
converted.
(iii) The issuance of certificates for Class A Common upon conversion
of Class B Common will be made without charge to the holder of such shares
for any issuance tax in respect thereof (unless such holder of the Class B
Common being converted directs the Corporation to issue such certificate or
certificates to any person other than such holder, in which case such
holder will pay any transfer tax arising out of the issuance of such
certificate), or other costs incurred by the Corporation in connection with
such conversion and the related issuance of Class A Common.
(iv) Upon the conversion of any Class B Common, such shares will be
canceled and will not be reissued.
Part 5. No Additional Issuance.
The Corporation will not issue any additional shares of Class B Common
without the consent of the holders of a majority of the then outstanding shares
of Class B Common Stock and without the approval of the Majority Directors (as
defined below), other than issuances of Class B Common with respect to the then
outstanding shares of Class B Common by way of stock dividend or stock split.
Part 6. Efforts Regarding Listing/Quotation.
If the shares of Class A Common cease to be eligible to be listed on a
United States securities exchange or quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ System"), the
Corporation will use reasonable efforts to have the Class A Common listed (or
continued to be listed) on a United States securities exchange or qualified for
trading on the NASDAQ System.
WARRANTS
The Corporation may issue certain Redeemable Exchangeable Warrants (the
"Warrants") pursuant to the Warrant Agreement. No Warrant shall entitle the
holder thereof to vote at a meeting of stockholders of the Corporation or to
vote for any purpose, except as required by law (provided that this sentence
will not limit the rights of the holders of the Warrants pursuant to Section 16A
of the Warrant Agreement).
So long as any of the Warrants are outstanding and not exercisable (in each
case as determined in accordance with the Warrant Agreement), but only until the
Special Class A Director Termination Date, if earlier:
1. The Corporation shall not effect a Change of Control Event unless (a) if
approval thereof by the Board of Directors is required pursuant to the Delaware
General Corporation Law, pursuant hereto or pursuant to the Corporation's
bylaws, such Change of Control Event is approved by the Majority Directors and
(b) distributions, if any, made pursuant to or in connection with such Change of
Control Event in respect of or in exchange for any shares of Class A Common or
Class B Common are made (i) pro rata to holders thereof according to the number
of shares of Class A Common and Class B Common held by such holders or (ii)
pursuant to offers to the holders thereof which are made pro rata according to
the number of shares of Class A Common and Class B Common held by such holders.
For purposes of the foregoing, the holder of an
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<PAGE> 21
option, security or other right exercisable or exchangeable for or convertible
into shares of Class A Common may, at the discretion of the Board of Directors,
be regarded as a holder of the shares of Class A Common obtainable upon
exercise, conversion or exchange thereof;
2. The Corporation shall not, except upon exercise, distribution on or
conversion of or in exchange for securities of the Corporation or other rights
either outstanding on the date of filing of (Strike-through copy begins) this
(Strike-through copy ends) (Underline begins) the (underline ends) Restated
Certificate of Incorporation, issued in connection with the financial
restructuring of the Corporation pursuant to which the Warrants were initially
issued or issued thereafter in a manner consistent with the terms of this
provision, or except pursuant to employee or director plans which are either
in effect on the date hereof, permitted pursuant to the terms of the Indentures
or approved by the Majority Directors, issue (a) shares of Common Stock for
consideration per share (or voting securities other than Common Stock for
consideration per unit possessing one vote in the election of directors) less
than the Exchange Price at such time (it being understood that the
consideration per share in an underwritten public offering will include the
aggregate amount of any underwriter's commission and discount per share), (b)
any securities convertible into shares of Common Stock with a conversion price
(or voting securities other than Common Stock for consideration per unit
possessing one vote in the election of directors) less than the Exchange Price
at the time of issuance of such securities, or (c) any shares of capital stock
with greater than one vote per share (or which may, upon the occurrence of an
event, have greater than one vote per share), unless in the case of any of (a),
(b) or (c) foregoing with the approval of the Majority Directors;
3. The Corporation shall not amend the terms of Article Four of this
(Underline begins) Amended and (Underline ends) Restated Certificate of
Incorporation in a manner adverse to the interests of the holders of the
Warrants without the prior consent of holders of a majority of the Warrants
which are then outstanding and not exercisable in accordance with the
terms of the Warrant Agreement, provided that nothing herein shall restrict the
Corporation from at any time changing, and no consent of the holders of the
Warrants will be required in connection with any change at any time of, the
number of authorized shares of any class of capital stock of the Corporation
(Strike-through copy begins here)
, and provided that nothing herein shall restrict the Corporation
from at any time amending or deleting, and no consent of the holders of the
Warrants will be required in connection with amending or deleting, any provision
included above under CERTAIN RESTRICTIONS ON ISSUANCES OF CAPITAL STOCK
(Strike-through copy ends here)
; and
4. The Board of Directors shall not authorize the commencement of any
proceeding with respect to the Corporation under Chapter 7 or Chapter 11 of the
United States Bankruptcy Code or any successor thereto without the prior
approval of either (a) the Majority Directors or (b) all directors then serving
on the Board of Directors other than the Special Class A Directors.
DEFINITIONS
For purposes of this (Underline begins) Amended and (Underline ends)
Restated Certificate of Incorporation:
"Change of Control Event" means (i) a merger, consolidation or similar
transaction involving the Corporation if either (a) Persons who beneficially
held or controlled the Corporation's voting stock immediately prior to such
transaction do not beneficially hold or control immediately after such
transaction securities which possess in the aggregate the voting power to elect
a majority of the surviving entity's or transferee's directors or (b) after such
transaction, a Person or group of Persons (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) would
beneficially hold or control securities which possess in the aggregate the
voting power to elect a majority of the surviving entity's or transferee's
directors, provided that for such purposes securities or voting power
beneficially held or controlled by such person or group will not be deemed to
include securities or voting power beneficially held or controlled by any of the
following Persons: any Person who was a beneficial holder of Warrants upon
issuance thereof in the financial restructuring of the Corporation pursuant to
which the Warrants were initially issued, Grinnell College, MAG, any Control
Person, Messrs. Marvin A. Pomerantz and Warren J. Hayford and their respective
Immediate Family and any Person to which any of the foregoing would be permitted
to transfer shares of Class B Common Stock in an Exempt Transfer (within the
meaning of subparagraph (ii) or (iii) of Part 4B of the terms of the Common
Stock included in this Article Four, other than pursuant to clause (a) of such
subparagraph (ii)), (ii) a sale, transfer or other disposition of all or
substantially all of the property,
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<PAGE> 22
assets or business of the Corporation or (iii) the filing by the Corporation
with the Secretary of State of Delaware of a certificate of dissolution pursuant
to Section 275 of the General Corporation Law of Delaware or a similar filing by
a successor to the Corporation pursuant to the corporate law of its state of
incorporation if such successor's state of incorporation is a state other than
Delaware. For purposes hereof, a Person or group of Persons will be deemed to be
a beneficial owner or holder of securities if such Person or group is such a
beneficial owner thereof as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
"Closing Price" means the average of the closing prices of sales of Class A
Common on all domestic securities exchanges on which such Class A Common may at
the time be listed (and where such stock is traded on more than one such
exchange, closing prices on a Trading Day shall be weighted based on the volume
of sales of Class A Common on such exchanges on such Trading Day), or, on any
day on which there has been no sale on any such exchange, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, on any day on which the Class A Common is not so listed, the average of
the representative bid and asked prices quoted in the NASDAQ System as of the
close on such day, or, on any day on which the Class A Common is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domes-tic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization. If at any
time the Class A Common is neither listed on any national securities exchange
nor quoted in the NASDAQ System or the domestic over-the-counter market, the
"Closing Price" shall be the fair value thereof determined by the Majority
Directors, which determination shall be conclusive.
"Control Person" means the Executive, his spouse, any of his children or
grandchildren, any trust solely for the benefit of any of his children or
grandchildren, or any corporation, partnership or other entity or organization
but only so long as more than 50 percent of the voting power and equity interest
of such corporation, partnership or other entity or organization is held,
directly or indirectly, by the Executive, his spouse, any of his children or
grandchildren or any trust solely for the benefit of any of his spouse, himself,
his children or grandchildren or any combination of the foregoing.
"Debentures" means the Corporation's 13 1/2% Senior Subordinated Debentures
Due 2003 issued pursuant to an Indenture dated November 2, 1992 between the
Corporation and Ameritrust Texas National Association and the Corporation's
10 1/4% Senior Subordinated PIK Notes Due 2001 issued pursuant to an Indenture
dated November 2, 1992 between the Corporation and Ameritrust Texas National
Association
"Exchange Price" has the meaning given such term in the Warrant Agreement.
"Executive" means Marvin A. Pomerantz.
"Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, nephew, niece, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and
shall include adoptive relationships.
"Indentures" means the Indenture dated November 2, 1992 between the
Corporation and Ameritrust Texas National Association and the Indenture dated
November 2, 1992 between the Corporation and Ameritrust Texas National
Association pursuant to which the Debentures are issued.
"MAG" means Mid-America Group, Ltd., an Iowa corporation, but only so long
as, and only in the event that, a majority of the voting power to elect
directors of such corporation and a majority of the equity of such corporation
is held beneficially by Marvin A. Pomerantz, Rose Lee Pomerantz, one or more
members of the Immediate Family of the Executive, any Control Person and/or any
Person to whom Marvin A. Pomerantz, Rose Lee Pomerantz, one or more members of
Immediate Family of the Executive, any Control Person or Mid-America Group, Ltd.
would be permitted to transfer shares of Class B Common in an Exempt Transfer
(as defined in subparagraph (ii) or (iii) of Part 4B of the terms of the Common
Stock included in Article Four, other than pursuant to clause (a) of
subparagraph (ii) thereof).
"Majority Directors" means, with respect to any matter, (i) a majority of
all members present and voting with respect to such matter at a meeting of the
Board of Directors which has been called in accordance with
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<PAGE> 23
the laws of the state of incorporation of the Corporation and the bylaws of the
Corporation and (ii) until the Special Class A Director Termination Date, at
least two of the Special Class A Directors; provided that if one or more of the
Special Class A Directors declines to vote with respect to such matter or fails
to attend the meeting at which such vote is taken, and such meeting (a) occurs
after ten days notice of such meeting has been given to such Special Class A
Director(s) declining to vote or failing to attend such meeting and (b) has
otherwise been called in accordance with the laws of the state of incorporation
of the Corporation and the bylaws of the Corporation, the minimum number of
Special Class A Directors pursuant to (ii) foregoing will be one (1), unless
none of such Special Class A Directors votes with respect to such matter at such
meeting, in which event the minimum number of Special Class A Directors pursuant
to (ii) foregoing will be zero (0); provided, further, that any matter approved
pursuant to a written consent executed by all members of the Board of Directors
without a meeting will also be deemed to have been approved by the "Majority
Directors."
"Permanent Disability" means such physical or mental condition of the
Executive as is expected to continue beyond a period of six months and which
renders the Executive incapable of performing any substantial portion of the
services performed by the Executive on the date hereof, as confirmed by
competent medical evidence.
"Permitted Transfer" means any transfer of Common Stock (i) pursuant to the
terms of the Exchange Agreement dated as of June 25, 1992 among Mid-America
Group, Inc., Grinnell College, Warren J. Hayford and the Corporation, (ii) by
Mid-America Group, Ltd., a Control Person or an Estate Planning Transferee (as
defined in clause (iv) of this sentence) at any time after the death or
Permanent Disability of the Executive, (iii) by Mid-America Group, Ltd., a
Control Person or an Estate Planning Transferee at any time after the
termination by the Corporation of the Executive as Chief Executive Officer of
the Corporation or the involuntary removal of the Executive as Chairman of the
Board of Directors, (iv) by Mid-America Group, Ltd., a Control Person or an
Estate Planning Transferee to any Control Person or to any member or members of
the Immediate Family of the Executive or any trust solely for the benefit of any
such member or members in connection with estate planning by the Executive, his
spouse or any of his children (any such Immediate Family member transferee or
trust transferee being referred to herein as an "Estate Planning Transferee"),
provided that any such transferee (whether a Control Person or an Estate
Planning Transferee) agrees in writing, without qualification, not to transfer
such Common Stock prior to the Stock Retention Termination Date except pursuant
to a Permitted Transfer, (v) by Mid-America Group, Ltd. or a Control Person at
any time after the filing by or against Mid-America Group, Ltd. or such Control
Person, as the case may be, of a proceeding under any bankruptcy,
reorganization, insolvency or similar law, which proceeding is not dismissed or
stayed within 90 days of such filing (provided that such 90-day waiting period
shall terminate upon the entry in such proceeding of any order for relief), (vi)
by an Estate Planning Transferee at any time after the filing by or against such
Estate Planning Transferee of a proceeding under any bankruptcy, reorganization,
insolvency or similar law, which proceeding is not dismissed or stayed within 90
days of such filing (provided that such 90-day waiting period shall terminate
upon the entry in such proceeding of any order for relief), (vii) in connection
with any foreclosure of any lien relating to any Pledge, or in connection with
any foreclosure of any tax lien, upon shares of Common Stock beneficially owned
by Mid-America Group, Ltd. or a Control Person, provided that this clause (vii)
shall apply only to the shares of Common Stock which are the subject of such a
foreclosure, or (viii) in connection with any foreclosure of any lien relating
to any Pledge, or in connection with any foreclosure of any tax lien, upon
shares of Common Stock beneficially owned by an Estate Planning Transferee,
provided that this clause (viii) shall apply only to the shares of Common Stock
which are the subject of such a foreclosure. For purposes of this definition of
"Permitted Transfer," "Pledge" means any bona fide pledge of Common Stock to any
bank or other financial institution.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
or any other entity or organization.
(Underline begins) "Restated Certificate of Incorporation" means the
Company's Restated Certificate of Incorporation filed with the Secretary of
State of the State of Delaware on November 2, 1992. (Underline ends)
"Stock Retention Termination Date" means the earliest of (i) March 31, 1993
if the Restructuring Closing Date, as defined in the Warrant Agreement, shall
not have occurred prior to such date, (ii) July 31,
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<PAGE> 24
1996, (iii) the date on which all of the Warrants outstanding as determined
under the terms of the Warrant Agreement shall have become exercisable, and (iv)
the date on which the Warrants are no longer outstanding as determined under the
terms of the Warrant Agreement.
"Trading Day" means a day on which the principal national securities
exchange on which the Class A Common is listed or admitted to trading is open
for the transaction of business or, if the Class A Common is not listed or
admitted to trading on any national securities exchange, any day other than a
Saturday, a Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
"Special Class A Directors" means the Class A Directors serving on the
Board of Directors during the period commencing on the later to occur of the
filing of (Strike-through copy begins) this (Strike-through copy ends)
(Underline begins) the (Underline ends) Restated Certificate of Incorporation
and the date of initial issuance of Warrants pursuant to the Warrant Agreement
and ending immediately prior to the Special Class A Director Termination Date.
"Warrant Agreement" means the Warrant Agreement dated November 2, 1992
between the Corporation and Harris Trust and Savings Bank, an Illinois banking
corporation, as Warrant Agent.
ARTICLE FIVE
If no shares of Class B Common are then outstanding, the corporation shall
not merge or consolidate with or into any other corporation or corporations,
sell all or substantially all of its assets, liquidate, dissolve or wind up,
unless such merger, consolidation, sale, liquidation, dissolution or winding up
has been approved by the affirmative vote of the holders of 66 2/3% of the
outstanding Class A Common. Such vote shall be in addition to any other vote
required by law or this (Underline begins) Amended and (Underline ends)
Restated Certificate of Incorporation. Any amendment of this Article Five shall
require the affirmative vote of the holders of Common Stock, voting
together as a single class, representing at least 66 2/3% of the total number
of votes entitled to be cast by all holders of outstanding Common Stock or, if
no Class B Common Stock is then outstanding, by the holders of 66 2/3% of the
outstanding Class A Common. Such vote shall be in addition to any other vote
required by law or this (Underline begins) Amended and Restated (Underline
ends) Certificate of Incorporation.
ARTICLE SIX
The Corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the bylaws of the Corporation. (Underline begins) If no shares of Class B
Common are then outstanding, any alteration, amendment or repeal of the bylaws
of the Corporation by the stockholders of the Corporation shall require the
affirmative vote of the holders of two-thirds of the then outstanding shares of
the capital stock of the Corporation entitled to vote on such alteration,
amendment or repeal. (Underline ends)
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
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 bylaws of the Corporation.
Elections of directors need not be by written ballot unless the bylaws of the
Corporation so provide.
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<PAGE> 25
ARTICLE NINE
Part 1. Limitation of Liability.
(i) To the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than permitted
prior thereto), no director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages arising from a breach
of fiduciary duty owed to the Corporation or its stockholders.
(ii) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
Part 2. Right to Indemnification.
Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved (including involvement as a witness) in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter, an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer or
in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in Part 3 hereof
with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Part 2 shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if and to the extent that the Delaware
General Corporation Law requires, an advancement of expenses incurred by an
indemnitee in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this Part 2
or otherwise.
Part 3. Right of Indemnitee to Bring Suit.
If a claim for indemnification (including the advancement of expenses)
under Part 2 is not paid in full by the Corporation within 45 days after a
written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of procuring or defending such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an
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advancement of expenses) it shall be a defense that the indemnitee has not met
the applicable standard of conduct set forth in the Delaware General Corporation
Law. In any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon a final adjudication that the indemnitee has not met
the applicable standard of conduct set forth in the Delaware General Corporation
Law. Neither the failure of the Corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of any such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article Nine or otherwise shall be on the
Corporation.
Part 4. Service for Subsidiaries.
Any person serving as a director, officer, employee or agent of another
corporation, partnership, joint venture or other enterprise, at least 50% of
whose equity interests are owned by the Corporation (hereinafter a
"subsidiary"), shall be conclusively presumed to be serving in such capacity at
the request of the Corporation.
Part 5. Reliance.
Persons who after the date of the adoption of this provision become or
remain directors or officers of the Corporation or who, while a director or
officer of the Corporation, become or remain a director, officer, employee or
agent of a subsidiary, shall be conclusively presumed to have relied on the
rights to indemnity, advancement of expenses and other rights contained in this
Article Nine in entering into or continuing such service. The rights to
indemnification and to the advancement of expenses conferred in this Article
Nine shall apply to claims made against an indemnitee arising out of acts or
omissions which occurred or occur both prior and subsequent to the adoption
hereof.
Part 6. Non-Exclusivity of Rights.
The rights to indemnification and to the advancement of expenses conferred
in this Article Nine shall not be exclusive of any other right which any person
may have or hereafter acquire under this (Underline begins) Amended and
(Underline ends) Restated Certificate of Incorporation or under any statute,
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Part 7. Insurance.
The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.
Part 8. Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses, to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article 9 with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
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ARTICLE TEN
Except as otherwise provided herein, the Corporation reserves the right to
amend, alter, change or repeal any provision contained in this (Underline
begins) Amended and (Underline ends) Restated 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. (Underline
begins) Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, if no shares of Class B Common
are then outstanding, ARTICLE SEVEN, this ARTICLE TEN, and ARTICLE ELEVEN of
this Amended and Restated Certificate of Incorporation shall not be altered,
amended or repealed and no provision inconsistent therewith shall be adopted
without the affirmative vote of the holders of at least two-thirds of the then
outstanding shares of the capital stock of the Corporation entitled to vote on
such alteration, amendment, repeal or adoption.
ARTICLE ELEVEN
Subject to the rights of the holders of any series of Preferred Stock, if
no shares of Class B Common are then outstanding, (i) any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
an annual or special meeting of stockholders of the Corporation and may not be
taken or effected without a meeting of the stockholders of the Corporation, (ii)
the stockholders of the Corporation may not take any action by consent in
writing in lieu of a meeting of the stockholders of the Corporation, and (iii)
special meetings of stockholders of the Corporation may be called only by the
chairman of the Board of Directors, or the Board of Directors pursuant to a
resolution adopted by the affirmative vote of the majority of the total number
of directors then in office.
ARTICLE TWELVE
The corporation expressly elects to be governed by Section 203 of the
General Corporation Law of the State of Delaware. (Underline ends)
* * * *
II-12
<PAGE> 28
GAYLORD CONTAINER CORPORATION/PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
SPECIAL MEETING OF STOCKHOLDERS JULY 21, 1995
The undersigned hereby appoints Marvin A. Pomerantz, Daniel P. Casey and David
F. Tanaka and each of them the undersigned's true and lawful attorneys and
proxies (with full power of substitution in each) to vote all Class A Common
Stock of Gaylord Container Corporation, standing in the undersigned's name, at
the Special Meeting of Stockholders of said Corporation to be held at 520 Lake
Cook Road, Deerfield, Illinois 60015, on July 21, 1995 at 10:00 a.m. Chicago
time, upon those matters as described in the Proxy Statement for the Meeting
and such other matters as may properly come before such meeting or any
adjournment or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NOT OTHERWISE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 THROUGH 7. (A
VOTE FOR THE FOLLOWING PROPOSALS DESCRIBED IN THE
PROXY STATEMENT FOR THE MEETING IS RECOMMENDED.)
IF ANY OTHER BUSINESS IS TRANSACTED AT THE SPECIAL
MEETING OF STOCKHOLDERS, THIS PROXY SHALL BE VOTED
IN ACCORDANCE WITH THE BEST JUDGMENT OF THE
APPOINTED ATTORNEYS AND PROXIES.
(Continued and to be signed and dated on the reverse side.)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
GAYLORD CONTAINER CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING ITEMS.
For Against Abstain For Against Abstain
1. Approval of an amendment to the / / / / / / 5. Approval of an amendment to the / / / / / /
Restated Certificate of Incorporation Restated Certificate of Incorporation
to require that all stockholder action to increase the stockholder vote
be taken at a stockholder meeting. required to amend the Certificate of
Incorporation.
For Against Abstain For Against Abstain
2. Approval of an amendment to the / / / / / / 6. Approval of an amendment to the / / / / / /
Restated Certificate of Incorporation Restated Certificate of Incorporation
to require that special meetings be to delete a provision no longer
called by the Chairman or the Board required under applicable law.
of Directors.
For Against Abstain For Against Abstain
3. Approval of an amendment to the / / / / / / 7. Approval of an amendment to the / / / / / /
Restated Certificate of Incorporation Bylaws.
to increase the stockholder vote
required to amend the Bylaws.
For Against Abstain
4. Approval of an amendment to the / / / / / /
Restated Certificate of Incorporation
electing to be governed by Section
203 of Delaware General Corporation
Law.
Please sign exactly as names appear on this
Proxy. Joint owners should each sign. Trustees,
executors, etc. should indicate the capacity in
which they are signing.
Dated:__________________________________ , 1995
_______________________________________________
(Signature of Stockholder)
_______________________________________________
(Signature of Stockholder)
</TABLE>
<PAGE> 29
GAYLORD CONTAINER CORPORATION/PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
SPECIAL MEETING OF STOCKHOLDERS JULY 21, 1995
The undersigned hereby appoints Marvin A. Pomerantz, Daniel P. Casey and David
F. Tanaka and each of them the undersigned's true and lawful attorneys and
proxies (with full power of substitution in each) to vote all Class B Common
Stock of Gaylord Container Corporation, standing in the undersigned's name, at
the Special Meeting of Stockholders of said Corporation to be held at 520 Lake
Cook Road, Deerfield, Illinois 60015, on July 21, 1995 at 10:00 a.m. Chicago
time, upon those matters as described in the Proxy Statement for the Meeting
and such other matters as may properly come before such meeting or any
adjournment or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NOT OTHERWISE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 THROUGH 7. (A
VOTE FOR THE FOLLOWING PROPOSALS DESCRIBED IN THE
PROXY STATEMENT FOR THE MEETING IS RECOMMENDED.)
IF ANY OTHER BUSINESS IS TRANSACTED AT THE SPECIAL
MEETING OF STOCKHOLDERS, THIS PROXY SHALL BE VOTED
IN ACCORDANCE WITH THE BEST JUDGMENT OF THE
APPOINTED ATTORNEYS AND PROXIES.
(Continued and to be signed and dated on the reverse side.)
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
GAYLORD CONTAINER CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING ITEMS.
For Against Abstain For Against Abstain
1. Approval of an amendment to the / / / / / / 5. Approval of an amendment to / / / / / /
Restated Certificate of the Restated Certificate of
Incorporation to require Incorporation to increase the
that all stockholder action stockholder vote required to
be taken at a stockholder amend the Certificate of
meeting. Incorporation.
For Against Abstain For Against Abstain
2. Approval of an amendment to the / / / / / / 6. Approval of an amendment / / / / / /
Restated Certificate of to the Restated Certificate
Incorporation to require that of Incorporation to delete a
special meetings be called provision no longer required
by the Chairman or the under applicable law.
Board of Directors.
For Against Abstain For Against Abstain
3. Approval of an amendment to / / / / / / 7. Approval of an amendment to / / / / / /
the Restated Certificate of the Bylaws.
Incorporation to increase
the stockholder vote
required to amend the Bylaws.
For Against Abstain
4. Approval of an amendment to the / / / / / /
Restated Certificate of
Incorporation electing to be
governed by Section 203 of
Delaware General Corporation
Law.
Please sign exactly as names appear on this
Proxy. Joint owners should each sign.
Trustees, executors, etc. should indicate
the capacity in which they are signing.
Dated: ___________________________ , 1995
___________________________________________
(Signature of Stockholder)
___________________________________________
(Signature of Stockholder)
</TABLE>
