<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 12, 1995
GAYLORD CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-9915 36-3472452
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
500 Lake Cook Road, Suite 400, Deerfield, IL 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 405-5500
<PAGE>
Item 5. Other Events
Adoption of Stockholder Rights Plan
On June 12, 1995, the Board of Directors of Gaylord Container
Corporation (the "Company") authorized the issuance of one preferred share
purchase right (a "Right") for each outstanding share of Class A common stock,
par value $.0001 per share, and Class B common stock, par value $.0001 per
share, (collectively, the "Common Stock") of the Company, including the
Common Stock held in the trust (the "Trust Shares") established pursuant to
the Trust Agreement, dated as of November 2, 1992, between the Company and
Harris Trust and Savings Bank, as trustee, that are deliverable upon exercise of
the warrants (the "Warrants") issued under the Warrant Agreement, dated as of
November 2, 1992, between the Company and Harris Trust and Savings Bank, as
warrant agent. The distribution is payable to the stockholders of record at
the close of business on July 5, 1995, (the "Record Date"), and a Right will be
attached to all Common Stock that becomes outstanding after the Record Date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Preferred Stock, Series A,
par value $.01 per share, of the Company (the "Preferred Stock") at a price of
$50 per one one-hundredth of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, dated as of June 12, 1995, (the "Rights Agreement") between
the Company and Harris Trust and Savings Bank, as rights agent (the "Rights
Agent").
Rights will be evidenced by Common Stock certificates and not by
separate certificates until the earlier to occur of (i) the expiration of the
Company's redemption rights following the date of public disclosure (the "Stock
Acquisition Date") that a person or group other than certain exempt persons
(an "Acquiring Person"), together with persons affiliated or associated with
such Acquiring Person (other than those that are exempt persons), has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more (or in the case of Mid-America Group, Ltd., and its affiliates and
associates, 25% or more) of (a) the outstanding Common Stock, excluding the
Trust Shares and Warrants or (b) the outstanding Common Stock, including the
Warrants which for this purpose are treated as Common Stock or (ii) the tenth
business day after the date of commencement or public disclosure of an intention
to commence a tender offer or exchange offer by a person other than an exempt
person if, upon consummation of the offer, such person would be an Acquiring
Person (the earlier of the dates described in (i) and (ii) above is the
"Distribution Date"). Until the Distribution Date, the Rights will be
transferred with, and only with, the Common Stock, and new Common Stock
certificates issued after the Record Date upon transfer or new issuance of
shares of Common Stock will contain a notation incorporating the Rights
Agreement by reference. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date, and such separate Right Certificates alone will evidence
the Rights.
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The Rights will first become exercisable after the Distribution
Date. The Rights will expire at the close of business on June 30, 2005 (the
"Expiration Date"), unless earlier redeemed or exchanged by the Company as
described below.
The Purchase Price payable and the number of shares of Preferred Stock
or other securities, cash or other property issuable upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights, options or warrants to subscribe for
Preferred Stock or securities convertible into Preferred Stock at less than
the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends out of earnings or
retained earnings) or of subscription rights or warrants (other than those
referred to above). In addition, the Purchase Price payable and the number of
shares of Preferred Stock purchasable upon exercise of a Right are subject to
adjustment in the event that the Company should (i) declare or pay any dividend
on the Common Stock payable in shares of Common Stock or (ii) effect a
subdivision or combination of the Common Stock into a different number of shares
of Common Stock.
After a person becomes an Acquiring Person, if the Company is
involved in a merger or other business combination transaction where the
Company is not the surviving corporation or where Common Stock is changed or
exchanged, or if the Company is involved in a transaction or transactions
wherein 50% or more of its consolidated assets or earning power are sold,
proper provision must be made so that each holder of a Right (other than such
Acquiring Person and certain related persons or transferees) will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company or the Company, as the case may be, which at the time of
such transaction would have a market value of two times the exercise price of
the Right.
After a person becomes an Acquiring Person, proper provision must
be made so that each holder of a Right, other than Rights that are or were
beneficially owned by the Acquiring Person and certain related persons and
transferees (which will thereafter be void), will thereafter have the right to
receive upon exercise that number of shares of Common Stock having at the time
of such transaction a market value of two times the exercise price of the
Right. In addition, after the Stock Acquisition Date, a majority of the
Company's Continuing Directors may cause the Company to exchange all or part
of the Rights (excluding voided Rights) for shares of Common Stock on a
one-for-one basis, as described in the Rights Agreement.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
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At any time prior to the earlier of the Stock Acquisition Date or
the Expiration Date, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.0001 per Right (the
"Redemption Price") subject to adjustment, payable, at the election of the
Company, in cash or shares (including fractional shares) of Class A common
stock or such other consideration as the Board of Directors may determine.
Immediately upon action of the Board of Directors ordering redemption or
exchange of the Rights, the ability of holders to exercise the Rights will
terminate and the only rights of such holders will be to receive the
Redemption Price.
At any time prior to the Stock Acquisition Date, a majority of the
Continuing Directors of the Company may amend or supplement the Rights
Agreement without the approval of the Rights Agent or any holder of the
Rights, except for an amendment or supplement which would change the
Redemption Price, the Expiration Date of the Rights or the Purchase Price.
Thereafter, a majority of the Continuing Directors of the Company may amend or
supplement the Rights Agreement without such approval only to cure ambiguities
in the Rights Agreement or in a way that would not adversely effect the
rights of holders of the Rights. Immediately upon the action of the Board of
Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment equal to the greater of $25 per share
or 100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment equal to the greater of $100 per share or 100
times the payment made per share of Common Stock. Each share of Preferred Stock
will have 100 votes per share, voting together with the Common Stock. In the
event of any merger, consolidation or other transaction in which Common Stock is
exchanged, each share of Preferred Stock will be entitled to receive 100 times
the amount received per share of Common Stock. These rights are protected by
customary anti-dilution provisions.
The Rights have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group other than an exempt person
that attempts to acquire the Company on terms not approved by the Board,
except pursuant to an offer conditioned on a substantial number of Rights
being acquired. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors prior to the time a
person becomes an Acquiring Person, because until such time the Rights may
generally be redeemed by the Company at $.0001 per Right.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
Capitalized terms used in this summary and not defined herein have the meaning
set forth in the Rights Agreement.
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AMENDED AND RESTATED BY-LAWS
On June 12, 1995, the Board of Directors of the Company adopted
the amended and restated by-laws attached as Exhibit 3.1, which is hereby
incorported in this Current Report on Form 8-K by reference.
Item 7. Financial Statement and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
3.1 Amended and Restated By-laws of the Company as adopted on
June 12, 1995.
4.1 Rights Agreement, dated as June 12, 1995, between
Gaylord Container Corporation and Harris Trust and
Savings Bank, as Rights Agent, including the form
of Certificate of Designation, Preferences and
Rights of Junior Participating Preferred Stock,
Series A attached thereto as Exhibit A, the form
of Rights Certificate attached thereto as Exhibit
B and the Summary of Rights attached thereto as
Exhibit C.
99.1 Press Release, dated June 12, 1995, issued by the
Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GAYLORD CONTAINER CORPORATION
Dated: June 30, 1995 By: /s/ Jeffrey B. Park
---------------------------------
Jeffrey B. Park
Vice President - Corporate Controller
---------------------------
GAYLORD CONTAINER CORPORATION
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
RIGHTS AGREEMENT
Dated as of June 12, 1995
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Table of Contents
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . 9
Section 3. Issuance of Rights Certificates . . . . . . . . . . 9
Section 4. Form of Rights Certificates . . . . . . . . . . . .10
Section 5. Execution, Countersignature and Registration. . . .11
Section 6. Transfer, Division, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates . . . . . . . . . . .12
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . . . 13
Section 8. Cancellation and Destruction of Rights
Certificates . . . . . . . . . . . . . . . . . . . 15
Section 9. Reservation and Availability of Preferred Stock . .15
Section 10. Preferred Stock Record Date . . . . . . . . . . . .16
Section 11. Adjustments to Purchase Price, Number of Shares
or Number of Rights . . . . . . . . . . . . . . . .17
Section 12. Certification of Adjustments. . . . . . . . . . . .24
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . .25
Section 14. Fractional Rights and Fractional Shares . . . . . .27
Section 15. Rights of Action. . . . . . . . . . . . . . . . . .28
Section 16. Agreement of Rights Holders Concerning Transfer
and Ownership of Rights . . . . . . . . . . . . . .29
Section 17. Rights Holder Not Deemed a Stockholder. . . . . . .29
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Section 18. Concerning the Rights Agent . . . . . . . . . . . .30
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . . . 30
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . .31
Section 21. Change of Rights Agent. . . . . . . . . . . . . . .32
Section 22. Issuance of New Rights Certificates . . . . . . . .33
Section 23. Redemption and Termination. . . . . . . . . . . . .33
Section 24. Notice of Certain Events. . . . . . . . . . . . . .34
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . .35
Section 26. Supplements and Amendments. . . . . . . . . . . . .35
Section 27. Successors. . . . . . . . . . . . . . . . . . . . .36
Section 28. Benefits of this Agreement; Determinations and
Actions by the Board of Directors . . . . . . . . .36
Section 29. Severability. . . . . . . . . . . . . . . . . . . .37
Section 30. Governing Law . . . . . . . . . . . . . . . . . . .37
Section 31. Counterparts. . . . . . . . . . . . . . . . . . . .37
Section 32. Descriptive Headings. . . . . . . . . . . . . . . .37
Section 33. Grammatical Construction. . . . . . . . . . . . . .38
Exhibit A -- Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
ii
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RIGHTS AGREEMENT
----------------
Rights Agreement dated as of June 12, 1995, between Gaylord Container
Corporation, a Delaware corporation (the "Company"), and Harris Trust and
Savings Bank, an Illinois banking corporation (the "Rights Agent").
RECITALS
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The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (the "Right") for
each share of Common Stock (as defined in Section 1) outstanding on the Record
Date (as defined in Section 1) and has authorized the issuance of one Right
for each share of Common Stock issued between the Record Date and the
Distribution Date (as defined in Section 1), and, in certain cases following
the Distribution Date. Each Right represents, as of the Record Date, the
right to purchase one one-hundredth of a share of Preferred Stock (as defined
in Section 1) upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
-------------------
the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with
all Affiliates and Associates of such Person, is (or has previously been, at
any time after the date of this Agreement, whether or not such Person(s)
continues to be) the Beneficial Owner of 15% or more of either (i) the Common
Stock then outstanding, without taking into account any Trust Shares or
Warrants for purposes of determining the Beneficial Ownership of such
Person(s) (in the numerator) and the amount of outstanding Common Stock (in
the denominator), or (ii) the total of the Common Stock and Warrants then
outstanding (treating each outstanding Warrant as one share of Common Stock),
without taking into account the Trust Shares for purposes of determining the
Beneficial Ownership of such Person(s) (in the numerator) and the amount of
outstanding Common Stock (in the denominator), but including (in both the
numerator and the denominator) the then outstanding Warrants (treating each
outstanding Warrant as one share of Common Stock). For purposes of the
determination of Beneficial Ownership of Common Stock set forth above, a
Person is the Beneficial Owner of Common Stock obtainable upon exercise,
conversion, or exchange of any warrants (other than the Warrants), options, or
other securities of the Company that such Person beneficially owns (ignoring
any restrictions on exercise and assuming that each such warrant, option or
other security is exercisable for Common Stock).
A Person does not become an "Acquiring Person" solely as the result
of (x) an acquisition of Common Stock and/or Warrants by the Company which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person
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(as determined above) to 15% or more of the Common Stock and/or Warrants then
outstanding as determined above, or (y) such Person becoming the Beneficial
Owner of 15% or more of the Common Stock and/or Warrants then outstanding (as
determined above) solely as a result of an Exempt Event; provided, however, that
if a Person becomes the Beneficial Owner of 15% or more of the Common Stock
and/or Warrants then outstanding as determined above solely by reason of such a
share acquisition by the Company or the occurrence of such an Exempt Event and
such Person shall, after becoming the Beneficial Owner of such Common Stock
and/or Warrants, become the Beneficial Owner of any additional shares of Common
Stock and/or Warrants by any means whatsoever (other than as a result of the
subsequent occurrence of an Exempt Event, a stock dividend or a subdivision of
the Common Stock into a larger number of shares or a similar transaction),
then such Person shall be deemed to be an "Acquiring Person." In any case,
an Exempt Person, so long as such Person remains an Exempt Person, is not an
Acquiring Person and an acquisition of Common Stock by an Exempt Person is not
a Triggering Event, so long as such acquisition is an Exempt Event.
(b) "Affiliate" of a Person has the meaning given to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement; provided that, for purposes of this
Agreement, the term "Affiliate" shall not include any Person that is an Exempt
Person.
(c) "Associate" of a Person has the meaning given to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement; provided that, for purposes of this
Agreement, the term "Associate" shall not include any Person that is an Exempt
Person.
(d) Except as provided below, a Person is the "Beneficial Owner"
of, and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether or not
then exercisable or effective) to acquire pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a
Person will not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any Affiliate or Associate of such Person until
such tendered securities are accepted for purchase or exchange; and
provided further, that prior to the occurrence of a Triggering Event, a
Person will not be deemed the Beneficial Owner of, or to beneficially own,
securities obtainable upon exercise of the Rights;
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(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security pursuant to this clause (iii) if
the agreement, arrangement or understanding to vote, or to direct the
voting of, such security (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and applicable rules
and regulations thereunder and (B) is not also then reportable under Item 6
(or any comparable or successor item) of Schedule 13D under the Exchange
Act (or any comparable or successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of (as determined pursuant to Rule 13d-3
under the Exchange Act or any successor provision); or
(v) which are beneficially owned, directly or indirectly, by
any other Person or any Affiliate or Associate of such other Person with
whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in subparagraph (iii) of this Section 1(d)) or disposing of
any securities of the Company.
Nothing in this Section 1(d) causes a Person engaged in business as
an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person is to be treated as the "Beneficial
Owner" of, or to "beneficially own," any securities owned by any other Person
that is an Exempt Person.
(e) "Business Combination" has the meaning set forth in Section 13
of this Agreement.
(f) "Business Day" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of Illinois are authorized or
obligated by law or executive order to close.
(g) "Class A Common Stock" means the Class A Common Stock, $.0001
par value per share, of the Company.
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(h) "Close of Business" on any given date means 5:00 p.m., Chicago,
Illinois time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Chicago, Illinois time, on the next
succeeding Business Day.
(i) "Common Stock" when used in any context applicable prior to a
Business Combination means collectively the Class A Common Stock, the Class B
Common Stock, par value $.0001 per share, of the Company (as the same may be
changed by reason of any combination, subdivision or reclassification of the
Common Stock) and any other shares of common stock issued by the Company from
time to time. "Common Stock" when used with reference to any Person (other than
the Company prior to a Business Combination) means shares of capital stock of
such Person (if such Person is a corporation) of any class or series, or units
of equity interests in such Person (if such Person is not a corporation) of
any class or series, the terms of which shares or units do not limit (as a
fixed amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such shares or units or the amount of
assets distributable on such shares or units upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such shares or units are subject to redemption at the option of such Person,
or any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that if at any
time there are more than one such class or series of capital stock of or
equity interests in such Person, "Common Stock" of such Person will include
all such classes and series substantially in the proportion of the total
number of shares or other units of each such class or series outstanding at
such time.
(j) "Continuing Director" means (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board of
Directors of the Company, who is not an Acquiring Person (as defined herein),
or an Affiliate or Associate of an Acquiring Person or a representative,
designee or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who was a member of the Board of Directors of the Company on
the date of this Agreement, and (ii) any Person who becomes a member of the
Board of Directors of the Company after the date of this Agreement, while such
Person is a member of the Board of Directors of the Company, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative, designee or nominee of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election, or election,
to the Board of Directors of the Company is recommended or approved by a
majority of the Continuing Directors.
(k) "Current Market Price" per share of Common Stock, Preferred
Stock or Equivalent Shares on any date is the average of the daily closing
prices per share of such Common Stock, Preferred Stock or Equivalent Shares
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date for the purpose of any computation under this
Agreement except computations made pursuant to Section 11(a)(iv), and for the
Trading Day immediately prior to such date for the purpose of any computation
under Section 11(a)(iv); provided, however, that in the event that the Current
Market Price per share of Common Stock, Preferred Stock or Equivalent Shares
is determined during a period following the announcement by the issuer of such
Common Stock, Preferred Stock or Equivalent Shares of (i) a dividend or
distribution on such Common Stock, Preferred Stock or Equivalent Shares other
than a regular quarterly cash dividend,
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or (ii) any subdivision, combination or reclassification of such Common Stock,
Preferred Stock or Equivalent Shares, and prior to the expiration of 30 Trading
Days after the "ex-dividend" date for such dividend or distribution or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the "Current Market Price" must be appropriately adjusted to
take into account such dividend, distribution, subdivision, combination or
reclassification. The closing price for each Trading Day shall be the last sale
price, regular way, on such day, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
American Stock Exchange or, if the Common Stock, Preferred Stock or Equivalent
Shares are not listed or admitted to trading on the American Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal United States national
securities exchange on which the Common Stock, Preferred Stock or Equivalent
Shares are listed or admitted to trading or, if the Common Stock, Preferred
Stock or Equivalent Shares are not listed or admitted to trading on any United
States national securities exchange, the last quoted sale price on such day
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or such
other system then in use. If on such day the Common Stock, Preferred Stock or
Equivalent Shares are not quoted by any such organization, the average of the
closing bid and asked prices on such day as furnished by a professional market
maker making a market in the Common Stock, Preferred Stock or Equivalent
Shares selected by a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors of the Company) shall be
used. If no such market maker is making a market, the fair market value of
such shares on such day as determined in good faith by a majority of the
Continuing Directors (or if no Continuing Directors are then in office, the
Board of Directors of the Company) or the Board of Directors of the issuer of
such Common Stock, Preferred Stock or Equivalent Shares must be used, which
determination must be described in a statement filed with the Rights Agent and
is binding and conclusive for all purposes. The term "Trading Day" means a
day on which the principal United States national securities exchange on which
the Common Stock, Preferred Stock or Equivalent Shares are listed or admitted
to trading is open for the transaction of business or, if the Common Stock,
Preferred Stock or Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, but are traded in the over-
the-counter market and reported by Nasdaq, then any day for which Nasdaq
reports the high bid and low asked prices in the over-the-counter market, or
if the Common Stock, Preferred Stock or Equivalent Shares are not traded in
the over-the-counter market and reported by Nasdaq, then a Business Day. If
the Common Stock, Preferred Stock or Equivalent Shares have not been so listed
or admitted to trading for 30 or more Trading Days or traded in the over-the-
counter market and reported by Nasdaq for 30 or more Trading Days, "Current
Market Price" per share means the fair market value per share as determined in
good faith by a majority of the Continuing Directors (or, if no Continuing
Directors are then in office, the Board of Directors of the Company), whose
determination must be described in a statement filed with the Rights Agent and
will be final, binding and conclusive for all purposes.
(l) "Distribution Date" means the earlier of (i) the day after the
Company's right to redeem the Rights pursuant to Section 23(a)(i) expires and
(ii) the tenth Business Day after
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commencement or public disclosure of an intention to commence (including,
without limitation, any such commencement or public disclosure which occurs on
or after the date of this Agreement and prior to the issuance of the Rights) a
tender offer or exchange offer by a Person if, after acquiring the maximum
number of securities sought pursuant to such offer, such Person, or any
Affiliate or Associate of such Person, would be an Acquiring Person.
(m) "Equivalent Shares" means any class or series of capital stock
of the Company, other than the Preferred Stock, which is entitled to
participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of any class or
series of Equivalent Shares for purposes of Section 11, the number of shares,
or fractions of a share, of such class or series of capital stock that is
entitled to the same dividend or distribution as a whole share of Preferred
Stock shall be deemed to be one share.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(o) "Exchange Date" means the time at which the Rights are
exchanged pursuant to Section 11(a)(iv).
(p) "Exempt Event" means (i) the acquisition of additional Common
Stock by an Exempt Person so long such Person does not cease to be an Exempt
Person under clause (q) below, or (ii) the acquisition by gift, inheritance or
in a transaction in which no consideration was exchanged from MAG of an amount
of Common Stock that would otherwise cause a Triggering Event, or (iii) with
respect to any Person, the acquisition by such Person of Beneficial Ownership
of Common Stock solely as a result of the occurrence of a Triggering Event and
the effect of such Triggering Event on the last proviso of clause (ii) of the
definition of Beneficial Owner.
(q) "Exempt Person" means (i) the Company, (ii) any Subsidiary of
the Company, (iii) MAG, so long as MAG does not become the Beneficial Owner of
25% or more of the Common Stock or 25% or more of the total of the Common
Stock and Warrants then outstanding (in each case, determined in accordance
with subsection (a) above), (iv) any Person that acquires Common Stock
pursuant to an event described in clause (ii) of the definition of Exempt
Event, so long as such Person does not become the Beneficial Owner of 25% or
more of the Common Stock or 25% or more of the total of the Common Stock and
Warrants then outstanding (in each case, determined in accordance with
subsection (a) above), (v) the Trust, (vi) any employee benefit plan of the
Company or of any Subsidiary of the Company, and (vii) any Person holding
Common Stock for any such employee benefit plan or for employees of the
Company or of any Subsidiary of the Company pursuant to the terms of any such
employee benefit plan.
(r) "Expiration Date" means the Close of Business on June 30, 2005.
(s) "MAG" means Mid-America Group, Ltd. and each of its Affiliates
and Associates.
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<PAGE>
(t) "Person" means any individual, firm, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity, and shall include any "group" as that term is used in Rule 13d-5(b)
under the Exchange Act (or any successor provision).
(u) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, Series A, $.01 par value per share, having the rights and
preferences set forth in the Certificate of Designation, Preferences and
Rights of Junior Participating Preferred Stock, Series A, attached hereto as
Exhibit A.
(v) "Principal Party" means (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or
results from the Business Combination or, if there is more than one such
Person, the Person the Common Stock of which has the greatest aggregate market
value, and (ii) in the case of any Business Combination described in clause
(iv) of the first sentence in Section 13(a), the Person that receives the
greatest portion of the assets or earning power transferred pursuant to such
Business Combination or, if each Person that is a party to such Business
Combination receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot reasonably be determined, whichever of such Persons is
the issuer of the Common Stock which has the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act and such Person is a
direct or indirect Subsidiary of one or more other Persons, then
(x) "Principal Party" refers to whichever of such other Persons has Common
Stock that is and has been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act; (y) if the Common Stocks of
two or more of such other Persons are and have been so registered, "Principal
Party" refers to whichever of such other Persons is the issuer of the Common
Stock which has the greatest aggregate market value; or (z) if the Common
Stock of none of such other Persons has been so registered, "Principal Party"
refers to whichever of such other Persons (other than an individual) is the
Person which has the equity securities with the greatest aggregate market
value. In case such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13
in the same ratio as their direct or indirect interests in such Person bear to
the total of such interests.
(w) "Purchase Price" with respect to each Right is initially $50
per one one-hundredth of a share of Preferred Stock, shall be subject to
adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America in cash or by
certified check or bank draft payable to the order of the Company.
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<PAGE>
(x) "Record Date" means the Close of Business on July 5, 1995,
subject to the consumation of an amendment of, or waiver under, the credit
agreement among the Company, Bankers Trust Company and Wells Fargo Bank,
National Association, dated November 17, 1986, as amended, sufficient to
permit the issuance of the Rights thereunder.
(y) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(z) "Redemption Price" has the meaning given to such term in
Section 23.
(aa) "Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.
(bb) "Stock Acquisition Date" means the first date (including,
without limitation, any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) of public disclosure by the
Company, an Acquiring Person or otherwise that an Acquiring Person has become
such.
(cc) "Subsidiary" has the meaning given to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on
the date of this Agreement.
(dd) "Summary of Rights" means a summary of the Rights, in
substantially the form attached hereto as Exhibit C.
(ee) "Triggering Event" means a Person becoming an Acquiring Person.
(ff) "Trust" means the trust established pursuant to the Trust
Agreement between Gaylord Container Corporation and Harris Trust and Savings
Bank as trustee (the "Trustee"), dated November 2, 1992.
(gg) "Trust Shares" means the shares of Class A Common Stock held in
the Trust.
(hh) "Warrants" means the warrants issued pursuant to the Warrant
Agreement.
(ii) "Warrant Agreement" means the Warrant Agreement between the
Company and Harris Trust and Savings Bank as warrant agent, dated November 2,
1992.
Section 2. Appointment of Rights Agent.
---------------------------
The Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
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<PAGE>
Section 3. Issuance of Rights Certificates.
-------------------------------
(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares
of Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued after the Record Date and prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date or the Expiration
Date (which certificates for Common Stock shall be deemed to also be
certificates evidencing the Rights), and not by separate certificates;
(ii) the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock, and the surrender for transfer of any certificate for such
shares of Common Stock shall also constitute the surrender for transfer of the
Rights associated with such shares. As soon as practicable after the Company
has notified the Rights Agent of the occurrence of the Distribution Date, the
Rights Agent shall mail, by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, one or more certificates evidencing the
Rights ("Rights Certificates"), in substantially the form of Exhibit B hereto,
evidencing one Right (as adjusted from time to time pursuant to this
Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to Section 11(o) of this
Agreement, at the time of distribution of the Rights Certificates, the Company
may make the necessary and appropriate adjustments (in accordance with
Section 14(a) of this Agreement) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights.
(b) As soon as practicable after the Record Date, the Company will
send a copy of the Summary of Rights by first-class, postage prepaid mail, to
each record holder of Common Stock as of the Close of Business on the Record
Date, as shown by the records of the Company, at the address of such holder
shown on such records.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date,
the Company shall, with respect to Common Stock so issued or sold pursuant to
(i) the exercise of stock options issued prior to the Distribution Date or
under any employee plan or arrangement created prior to the Distribution Date,
or (ii) upon the exercise, conversion or exchange of securities issued by the
Company prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no additional Rights will be issued with
respect to the exercise of Warrants because Rights will be issued in respect
of all Trust Shares (which are obtainable upon exercise of such Warrants) in
accordance with clause
(a) above, (y) no such Rights and Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a
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<PAGE>
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued and (z) no such Rights
and Rights Certificates shall be issued, if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Certificates issued after the Record Date representing shares of Common Stock
outstanding on the Record Date or shares of Common Stock issued after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date,
the Exchange Date and the Expiration Date shall have impressed, printed, or
written on, or otherwise affixed to them a legend substantially in the following
form:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Gaylord Container Corporation and Harris Trust and
Savings Bank, as Rights Agent, dated as of June 12, 1995
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of Gaylord Container
Corporation. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. Gaylord Container Corporation will mail
to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, Rights that were,
are or become beneficially owned by Acquiring Persons or
their Associates or Affiliates (as such terms are defined in
the Rights Agreement) may become null and void and the
holder of any of such Rights (including any subsequent
holder) shall not have any right to exercise such Rights.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment to be printed on the reverse thereof) shall be
in substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
this Agreement, the Rights Certificates, whenever issued, shall be dated as of
the Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of shares of Preferred Stock as shall be set forth
therein at the Purchase Price set forth therein, but the number of such
securities and the Purchase Price shall be subject to adjustment as provided
in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i) any
Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the earlier of
the Distribution Date and the Stock Acquisition Date,
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<PAGE>
by a Person known by the Company to be: (A) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person; (B) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee after the Acquiring Person
becomes such; or (C) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (x) a direct or
indirect transfer (whether or not for consideration) from the Acquiring Person
(or from an Associate or Affiliate of such Acquiring Person) to holders of
equity interests in such Acquiring Person (or to holders of equity interests
in an Associate or Affiliate of such Acquiring Person) or to any Person with
whom such Acquiring Person (or an Associate or Affiliate of such Acquiring
Person) has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (y) a direct or indirect transfer which a majority
of the Continuing Directors (or, if no Continuing Directors are then in
office, the Board of Directors of the Company) has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of Section 7(e) of this Agreement, or (ii) any Rights
Certificate issued pursuant to this Agreement upon transfer, exchange,
replacement or adjustment of any other Rights Certificate beneficially owned
by a Person referred to in this Section 4(b), shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
Section 5. Execution, Countersignature and Registration.
--------------------------------------------
(a) Each Rights Certificate shall be executed on behalf of the
Company by the Company's Chairman of the Board, President, Executive Vice
President or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile thereof which
shall be attested by the Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed a
Rights Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person
who signed such Rights Certificate had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the Company by
any Person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
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<PAGE>
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced by each Rights
Certificate, and the certificate number and the date of issuance of each
Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
- ----------------------------------------------------------------------
(a) Subject to the provisions of Section 14, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the Redemption Date, the Exchange Date and the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, divided, combined or exchanged at the
principal corporate office of the Rights Agent. Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. As a
condition to such transfer, division, combination or exchange, the Company may
require payment by the surrendering holder of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection therewith.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have duly completed and executed
the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or such former or proposed Beneficial Owner) thereof or such Beneficial
Owner's Affiliates or Associates as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make and deliver a new Rights
Certificate of like tenor to the Rights Agent for delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
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<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
------------------------------------------------------
Rights.
------
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as
provided in this Agreement, to purchase, for the Purchase Price, at any time
after the Distribution Date and prior to the earliest of the Expiration Date,
the Exchange Date and the Redemption Date, one one-hundredth (1/100) of a
share of Preferred Stock, subject to adjustment from time to time as provided
in Sections 11 and 13.
(b) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement)
in whole or in part (except that no fraction of a Right may be exercised) at
any time on or after the Distribution Date and prior to the earliest of the
Expiration Date, the Exchange Date and the Redemption Date, by surrendering
the Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal corporate
trust office of the Rights Agent, together with payment of the Purchase Price
for each one one-hundredth of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) as to which the Rights are
exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each one one-hundredth of a share of
Preferred Stock (or, following a Triggering Event or a Business Combination,
other securities, cash or other assets, as the case may be) to be purchased
and an amount in cash, certified bank check or bank draft payable to the order
of the Company equal to any applicable transfer tax required to be paid by the
surrendering holder pursuant to Section 9(d), the Rights Agent shall, subject
to the provisions of this Agreement, thereupon promptly (i)(A) requisition
from any transfer agent for the Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-hundredths of a share of Preferred Stock (or other
securities, as the case may be) to be purchased (and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests),
or (B) if the Company shall have elected to deposit the total number of shares
of Preferred Stock (or other securities, as the case may be) issuable upon
exercise of the Rights with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one one-
hundredths of a share of Preferred Stock (or other securities, as the case may
be) as are to be purchased (in which case certificates for the Preferred Stock
(or other securities, as the case may be) represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the Company
shall direct the depositary agent to comply with such request; (ii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iii) if appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 of this Agreement and, promptly after receipt thereof, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make
all arrangements necessary so that such other
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<PAGE>
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such
Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 6 and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date or the Stock Acquisition Date by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a direct or
indirect transferee of an Acquiring Person (or of an Associate or Affiliate of
such Acquiring Person) who becomes or becomes entitled to be a transferee
after the Acquiring Person becomes such, or (iii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a direct or indirect transfer (whether or not
for consideration) from the Acquiring Person (or from an Associate or
Affiliate of such Acquiring Person) to holders of equity interests in such
Acquiring Person (or to holders of equity interests in any Associate or
Affiliate of such Acquiring Person) or to any Person with whom the Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors of the Company) determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall, immediately upon the occurrence of a Triggering Event and
without any further action, be null and void and no holder of such Rights
shall have any rights whatsoever with respect to such Rights whether under
this Agreement or otherwise, provided, however, that, in the case of
transferees under clause (ii) or clause (iii) above, any Rights beneficially
owned by such transferee shall be null and void only if and to the extent such
Rights were formerly beneficially owned by a Person who was, at the time such
Person beneficially owned such Rights, or who later became, an Acquiring
Person or an Affiliate or Associate of such Acquiring Person. The Company
shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) are complied with, but shall have no liability
to any holder of a Rights Certificate or to any other Person as a result of
the Company's failure to make, or any delay in making (including any such
failure or delay by the Continuing Directors and/or the Board of Directors of
the Company) any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered
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<PAGE>
for such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former or proposed Beneficial Owner) thereof or the
Affiliates or Associates of such Beneficial Owner (or former or proposed
Beneficial Owner) as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of exercise, transfer,
division, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available at all times out of its authorized and unissued
shares of Preferred Stock or its authorized and issued shares of Preferred
Stock held in its treasury (and, following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares of Common Stock and/or
other securities held in its treasury) free from preemptive rights or any
right of first refusal, a sufficient number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and/or
other securities) to permit the exercise in full of all Rights from time to
time outstanding.
(b) The Company further covenants and agrees, so long as the
Preferred Stock (and, following the occurrence of a Triggering Event, shares
of Common Stock and/or other securities) issuable upon the exercise of Rights
may be listed on any United States national securities exchange, to use its
best efforts to cause, from and after the time that the Rights become
exercisable, all such shares and/or other securities reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business
Combination, shares of Common Stock and/or other securities) delivered upon
the exercise of Rights shall, at the time of delivery of the certificates for
such shares and/or such other securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on
the transfer or ownership thereof, of any kind or nature whatsoever.
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<PAGE>
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to (i) pay any transfer
tax which may be payable in respect of any transfer involved in the issuance
or delivery of any Rights Certificates or the issuance or delivery of any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) to a Person other than, or in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or (ii) transfer or deliver any Rights Certificate or
issue or deliver any certificates for shares of Preferred Stock (or Common
Stock and/or other securities as the case may be) upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) as soon as
practicable following a Triggering Event (provided the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) of this Agreement), or as soon as is
required by law following the Distribution Date, as the case may be, to
prepare and file a registration statement on an appropriate form under the
Securities Act with respect to the securities purchasable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as soon
as practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company shall also use its best efforts to take such
action as may be necessary or appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercise of the Rights. The Company may temporarily suspend, for a period of
time not to exceed 90 days after the date of a Triggering Event described in
clause (i) of the first sentence of this paragraph of Section 9, the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall make a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a registration statement has
been declared effective.
Section 10. Preferred Stock Record Date.
---------------------------
Each Person in whose name any certificate for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Stock (or Common Stock and/or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be)
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transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or
--------------------------------------------------
Number of Rights.
----------------
The Purchase Price, the number and kind of securities, cash and other property
obtainable upon exercise of each Right and the number of Rights outstanding
shall be subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time on or after
the date of this Agreement (A) pay a dividend or make a distribution on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by a
stock split or otherwise) the outstanding Preferred Stock into a larger number
of shares, (C) combine (by a reverse stock split or otherwise) the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any securities
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the surviving corporation), then in each such event the Purchase
Price and the Redemption Price set forth in Section 23, as each is in effect
at the time of the record date for such dividend or distribution, or of the
effective date of such subdivision, combination or reclassification, shall be
proportionately adjusted by multiplying the Purchase Price and such Redemption
Price by a fraction the numerator of which shall be the total number of shares
of Preferred Stock outstanding immediately prior to the occurrence of such
event and the denominator of which shall be the total number of shares of
Preferred Stock outstanding immediately following the occurrence of such
event. If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering Event, proper
provision shall be made so that each holder of a Right, except as otherwise
provided in this Agreement, shall thereafter have the right to receive, and
the Company shall issue, upon exercise thereof at the then-current Purchase
Price required to be paid in order to exercise a Right in accordance with the
terms of this Agreement, in lieu of the number of one one-hundredths of a
share of Preferred Stock or other securities receivable upon exercise of a
Right prior to the occurrence of the Triggering Event, such number of shares
of Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the number of one-hundredths of
a share of Preferred Stock or other securities for which a Right was then
exercisable (without giving effect to such Triggering Event) and (y) dividing
that product by 50% of the Current Market Price per share of Common Stock on the
date of the occurrence of the Triggering Event (such number of shares being
referred to as the "Adjustment Shares"); provided, however, that if the
transaction or event that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13 of this Agreement, then only the
provisions of Section 13 of this Agreement shall apply and no adjustment shall
be made pursuant to this Section 11(a)(ii). Upon the occurrence of such
Triggering Event, the Purchase Price required to be paid in order to exercise a
Right shall be unchanged, and
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the Purchase Price shall be appropriately adjusted to reflect, and shall
thereafter mean, the amount required to be paid per share of Common Stock upon
exercise of a Right.
(iii) In lieu of issuing shares of Common Stock in accordance
with Section 11(a)(ii), the Company may, if a majority of the Continuing
Directors (or if no Continuing Directors are then in office, the Board of
Directors of the Company) determine that such action is necessary or
appropriate and not contrary to the interests of holders of Rights (and, in
the event that the number of shares of Common Stock which are authorized by
the Company's certificate of incorporation, but which are not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights, are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company shall) take one or more of the following
actions: (A) reduce the Purchase Price required to be paid in order to
exercise a Right by any amount (the "Reduction Amount"), in which event the
number of Adjustment Shares and/or the amount of any Substitute Consideration
(as hereinafter defined) issuable in respect of each Right (the Adjustment
Shares, if any, and the Substitute Consideration, if any, issuable in respect
of a Right are herein collectively referred to as the "Total Consideration")
shall be reduced so that the aggregate value of the Total Consideration
issuable in respect of each Right is equal to the Current Value (as
hereinafter defined) less the Reduction Amount (herein the "Adjusted Current
Value"), and/or (B) make adequate provision with respect to each Right to
substitute for all or part of the Adjustment Shares otherwise obtainable upon
exercise of a Right: (1) cash, (2) other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which a majority of the Continuing Directors (or if no Continuing Directors
are then in office, the Board of Directors of the Company) have determined to
have the same value as shares of Common Stock (such shares or units of
preferred stock being referred to as "Common Stock Equivalents")), (3) debt
securities of the Company, (4) other assets, or (5) any combination of the
foregoing (collectively, "Substitute Consideration"), having an aggregate
value which, when added to the value of the Adjustment Shares (if any) in
respect of which no substitution is being made, is equal to the Adjusted
Current Value. If a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors) determine to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other assets pursuant to this Section
11(a)(iii), the value of such securities and/or assets shall be determined by
a majority of the Continuing Directors (or if no
Continuing Directors are then in office, the Board of Directors of the
Company) based upon the advice of a nationally recognized investment banking
firm selected by a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors of the Company). If the
Company is required to make adequate provision to deliver value pursuant to
the first sentence of this Section 11(a)(iii) and the Company shall not have
made such adequate provision to deliver value within ninety (90) days
following the first occurrence of a Triggering Event (the "Substitution
Period"), then notwithstanding any provision of Section 11(a)(ii) or this
Section 11(a)(iii) to the contrary, the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of
the Purchase Price, shares of Common Stock (to the extent available) and then,
if necessary, cash, which shares and/or cash have an aggregate value equal to
the excess of the Current Value over the Purchase Price. If both Common Stock
and cash are to be delivered pursuant to the preceding sentence, amounts of
both Common Stock and cash shall be delivered upon surrender of each Right in
a ratio of Common Stock to cash that bears the same ratio as the
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total value of all Common Stock to be delivered (as determined pursuant to this
Section 11(a)(iii)) bears to the total value of all cash to be delivered;
provided, however, that the Company may adjust such ratio to avoid issuing any
fractional shares of Common Stock so long as the method of adjustment is
applied consistently to each holder of Rights entitled to receive value
thereon pursuant to this Section 11(a)(iii). To the extent that the Company
determines that some action is to be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Company (x) shall provide, subject
to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights but
in no event to a time later than the expiration of the Substitution Period.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Upon any change in the Adjustment Shares
obtainable upon exercise of a Right pursuant to this Section 11(a)(iii), the
Purchase Price shall thereafter mean the amount, if any, required to be paid
upon exercise of a Right for the Adjustment Shares, if any, and the Substitute
Consideration, if any, then issuable or deliverable upon exercise of a Right,
and a majority of the Continuing Directors (or if no Continuing Directors are
then in office, the Board of Directors of the Company) shall make any
necessary provisions to ensure that the provisions of Section 11(e) shall
thereafter apply as appropriate to the Total Consideration. For purposes of
this Section 11(a)(iii), (A) "Current Value" shall be the product derived by
multiplying (x) the number of Adjustment Shares issuable in respect of each
Right determined under Section 11(a)(ii), by (y) the Current Market Price per
share of Common Stock on the date of the Triggering Event, and (B) the value
of each share of Common Stock and each share or unit of any "Common Stock
Equivalent" shall be deemed conclusively to be equal to the Current Market
Price per share of the Common Stock on the date of the Triggering Event.
(iv) A majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors of the Company) may, at
their option, at any time and from time to time after the first occurrence of
a Triggering Event, cause the Company to exchange, for all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof), shares of
Class A Common Stock or Common Stock Equivalents at an exchange ratio of one
share of Class A Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of
this Agreement (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Any partial exchange shall be effected on a pro rata basis
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
Immediately upon the action of a majority of the Continuing Directors
(or if no Continuing Directors are then in office, the Board of Directors of
the Company) ordering the exchange of any Rights pursuant to this Section
11(a)(iv) and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Class A Common
Stock and/or Common Stock Equivalents equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange and in addition, the Company shall
promptly mail a notice of any such exchange to all of the holders of
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<PAGE>
such Rights in accordance with Section 25 of this Agreement; provided, however,
that the failure to give, any delay in giving or any defect in, such notice
shall not affect the validity of such exchange. Each such notice of exchange
will state the method by which the exchange of the Class A Common Stock or
Common Stock Equivalents for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. In the event
that the number of shares of Class A Common Stock which is authorized but not
outstanding or reserved for issuance for a purpose other than exercise of the
Rights is not sufficient to permit any exchange of Rights as contemplated in
accordance with this Section 11(a)(iv), the Board of Directors of the Company
shall take all such action within its power as may be necessary to authorize
additional shares of Class A Common Stock for issuance upon exchange of the
Rights. The Company shall not be required to issue fractions of shares of
Class A Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents.
In lieu of such fractional shares of Class A Common Stock or Common Stock
Equivalents, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Class A Common
Stock or Common Stock Equivalents would otherwise be issuable an amount in
cash equal to the product derived by multiplying (x) the subject fraction, by
(y) the last sale price of the Company's Class A Common Stock on the fifth
Trading Day following the public announcement of the exchange by the Company,
or, in case no such sale takes place on such day, the average of the closing
bid and asked prices on such day, in either case on a when issued basis
(taking into account the exchange), as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the American Stock Exchange (or, if the Company's Class A Common
Stock is not so listed or traded, then as determined in the manner provided
under the definition of "Current Market Price," adjusted to take into account
the exchange). For the purposes of this Section 11(a)(iv) the value of any
Common Stock Equivalent on any date shall be the same as the value of the
Common Stock, as determined pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them to subscribe for or purchase
Preferred Stock or Equivalent Shares (or securities convertible into Preferred
Stock or Equivalent Shares) at a price per share of Preferred Stock or
Equivalent Shares (or, in the case of a convertible security, having a
conversion price per share of Preferred Stock or Equivalent Shares) less than
the Current Market Price per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of
Preferred Stock and Equivalent Shares (if any) outstanding on such record
date, plus the number of shares of Preferred Stock or Equivalent Shares, as
the case may be, which the aggregate exercise and/or conversion price for the
total number of shares of Preferred Stock or Equivalent Shares, as the case
may be, which are obtainable upon exercise and/or conversion of such rights,
options, warrants or convertible securities would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of
Preferred Stock and Equivalent Shares (if any) outstanding on such record
date, plus the number of additional shares of Preferred Stock or Equivalent
Shares, as the case may be, which may be obtained upon exercise and/or
conversion of such rights, options, warrants or convertible securities. In
case such
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subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by a majority of the Continuing Directors (or, if no
Continuing Directors are then in office, by the Board of Directors of the
Company), whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. Preferred Stock and
Equivalent Shares owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not issued following such adjustment, the Purchase Price shall be readjusted to
be the Purchase Price which would have been in effect if such record date had
not been fixed.
(c) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to holders of
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options or warrants referred to in Section 11(b)), cash
(other than a regular periodic cash dividend at an annual rate not in excess
of: (x) 125% of the annual rate of the regular cash dividend paid on the
Preferred Stock during the immediately preceding fiscal year (or, if the
Preferred Stock was not outstanding during such preceding fiscal year, then
125% of the annual rate of the regular cash dividend paid on the Common Stock
during such year), or (y) in the event that a regular cash dividend was not
paid on the Preferred Stock (or Common Stock) during such preceding fiscal
year, 5% of the Current Market Value of the Preferred Stock on the date such
regular cash dividend was first declared), property, evidences of
indebtedness, or assets, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Current Market Price per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by a majority of the Continuing
Directors (or if no Continuing Directors are then in office, by the Board of
Directors of the Company) whose determination shall be described in a statement
filed with the Rights Agent) of such securities, cash, property, evidences of
indebtedness or assets to be so distributed in respect of one share of Preferred
Stock, and the denominator of which shall be such Current Market Price per share
of Preferred Stock on such record date. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not made following such adjustment, the Purchase Price shall be
readjusted to be the Purchase Price which would have been in effect if such
record date had not been fixed.
(d) Except as provided below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(d) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent, to the
nearest one-thousandth of a share of Common Stock, or to the nearest one-
millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(d), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the Expiration
Date.
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(e) If, as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a) of this Agreement, the holder of any Right thereafter
exercised shall become entitled to receive any securities of the Company other
than shares of Preferred Stock, thereafter the Purchase Price and the number
of such other securities so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of
Preferred Stock contained in this Section 11 and the provisions of Sections 7,
9, 10, 12, 13, 14 and 24 with respect to the shares of Preferred Stock shall
apply on like terms to any such other securities.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other securities, cash or other property purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment
as provided in this Agreement.
(g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(a)(i), 11(b) and 11(c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a share of Preferred Stock (calculated to
the nearest one one-millionth of a share of Preferred Stock) obtained by
(i) multiplying the number of one one-hundredth of a share of Preferred Stock
covered by a Right immediately prior to adjustment pursuant to this Section
11(g) by the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(h) The Company may elect, on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised, to adjust the number of Rights, in
lieu of an adjustment in the number of one one-hundredths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
outstanding prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one hundred-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to such adjustment
by the Purchase Price in effect immediately after such adjustment. The
Company shall make a public announcement of its election to adjust the number
of Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least 10 days after the
date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(h)
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date a new Rights
Certificate evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the
option of the
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Company, shall cause to be distributed to such holders of record, in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment and upon surrender thereof (if required by the
Company), new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for in this Agreement (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price
or the number or kind of shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth of a share of Preferred Stock and the
number of shares of Preferred Stock which were expressed in the initial Rights
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of one
one-hundredth of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredth shares of such Preferred Stock at such
adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of
Preferred Stock and other securities, cash or property of the Company, if any,
issuable upon such exercise over and above the shares of Preferred Stock and
other securities, cash or property of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or other securities,
cash or property upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be advisable
in order that any combination or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the Current Market Price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable or exercisable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock,
shall not be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not
(i) consolidate with, (ii) merge with or into, or (iii) directly or indirectly
sell, lease, or otherwise transfer or dispose of (in
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one transaction or a series of related transactions) assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer or disposition the stockholders (or equity holders) of the
Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation,
merger, sale, lease, transfer or disposition unless prior thereto the Company
and such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Stock
Acquisition Date it will not, except as permitted by Section 11(a)(iv), 26 or
29(b) of this Agreement, take (or permit any Subsidiary to take) any action if
at the time such action is taken it is reasonably foreseeable that such action
will, directly or indirectly, diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, if
the Company shall at any time prior to the Distribution Date (i) pay a
dividend or distribution on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, and the Purchase Price under, and the number of one one-hundredths of a
share of Preferred Stock issuable in respect of, the Rights, shall be
proportionately adjusted, so that following such event one Right (with the
Purchase Price and the number of one one-hundredths of a share proportionately
adjusted thereunder) shall thereafter be associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date. For example, if the Company effects a two-for-one stock
split at a time when each Right (if it becomes exercisable) would entitle the
holder to purchase one one-hundredth of a share of Preferred Stock for a
Purchase Price of $"Z", then following such stock split each previous Right
would be split into two current Rights and thereafter each current Right, upon
becoming exercisable, would (subject to further adjustment) entitle the holder
to purchase one two-hundredth of a share of Preferred Stock at a Purchase
Price of 1/2 x $"Z".
Section 12. Certification of Adjustments.
----------------------------
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock a
copy of such certificate, and (c) mail a brief summary thereof to each holder of
a Rights Certificate (or, if no Rights Certificates have been issued, to each
holder of a certificate representing shares of Common Stock)
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in accordance with Section 25. Notwithstanding the foregoing sentence, the
failure of the Company to give such notice shall not affect the validity of or
the force or effect of or the requirement for such adjustment. Any adjustment
to be made pursuant to Sections 11 and 13 of this Agreement shall be effective
as of the date of the event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(m) and Section 11(n) of this Agreement) in a transaction in which
the Company is not the continuing, resulting or surviving corporation of such
merger or consolidation, (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m) and Section 11(n) of
this Agreement) shall, directly or indirectly, consolidate with the Company, or
shall merge with and into the Company, in a transaction in which the Company is
the continuing, resulting or surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or
part of the Common Stock shall be changed (including, without limitation, any
conversion into or exchange for securities of the Company or of any other
Person, cash or any other property), (iii) the Company shall, directly or
indirectly, effect a share exchange in which all or part of the Common Stock
shall be changed (including, without limitation, any conversion into or
exchange for securities of any other Person, cash or any other property, other
than any conversion occurring pursuant to the Charter), or (iv) the Company
shall, directly or indirectly, sell, lease, exchange, mortgage, pledge or
otherwise transfer or dispose of (or one or more of its Subsidiaries shall
directly or indirectly sell, lease, exchange, mortgage, pledge or otherwise
transfer or dispose of), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or any of its Subsidiaries in one or more
transactions each and all of which comply with Section 11(m) and Section 11(n)
of this Agreement).
In the event of a Business Combination, proper provision shall be
made so that each holder of a Right (except as otherwise provided in this
Agreement) shall thereafter have the right to receive, upon the exercise
thereof at the Purchase Price immediately prior to the first occurrence of a
Triggering Event multiplied by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event (without giving effect to the
Triggering Event) in accordance with the terms of this Agreement, such number
of shares of Common Stock of the Principal Party as shall be equal to the
result obtained by (x) multiplying the Purchase Price immediately prior to the
first occurrence of a Triggering Event by the number of one one-hundredths of
a share of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of a Triggering Event (without giving effect to the
Triggering Event), and (y) dividing that product by 50% of the Current Market
Price per share of the Common Stock of such Principal Party immediately prior
to the consummation of such Business Combination. All shares of Common Stock
of any Person for which any Right may be exercised after consummation of a
Business Combination as provided in this Section 13(a) shall, when issued
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upon exercise thereof in accordance with this Agreement, be duly and validly
authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of
first refusal or any other restrictions or limitations on the transfer or
ownership thereof of any kind or nature whatsoever.
(b) After consummation of any Business Combination, (i) the
Principal Party shall be liable for, and shall assume, by virtue of such
Business Combination and without the necessity of any further act, all the
obligations and duties of the Company pursuant to this Agreement, (ii) the
term "Company" as used in this Agreement shall thereafter be deemed to refer
to such Principal Party, and (iii) such Principal Party shall take all steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9) in connection with such
Business Combination as necessary to ensure that the provisions of this
Agreement shall thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Common Stock thereafter deliverable upon the
exercise of the Rights.
(c) The Company shall not consummate any Business Combination
unless prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved
for issuance (other than shares reserved for issuance pursuant to this
Agreement to the holders of Rights) to permit the exercise in full of the
Rights in accordance with this Section 13, (ii) the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the fulfillment of the Principal Party's obligations
and the terms as set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable on or after the date of such
Business Combination, the Principal Party, at its own expense, shall
(A) prepare and file, if necessary, a registration statement on an appropriate
form under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights, (B) use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing and remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date, (C) deliver to
holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act,
(D) use its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the state securities or "blue
sky" laws of such jurisdictions as may be necessary or appropriate, (E) use
its best efforts to list the Rights and the securities purchasable upon
exercise of the Rights on a United States national securities exchange, and
(F) obtain waivers of any rights of first refusal or preemptive rights in
respect of the Common Stock of the Principal Party subject to purchase upon
exercise of outstanding Rights, (iii) the Company and the Principal Party
shall have furnished to the Rights Agent an opinion of independent counsel
stating that such supplemental agreement is a legal, valid and binding
agreement of the Principal Party enforceable against the Principal Party in
accordance with its terms, and (iv) the Company and the Principal Party shall
have filed with the Rights Agent a certificate of a nationally recognized firm
of independent accountants setting forth the number of shares of Common Stock
of such issuer which may be purchased upon the exercise of each Right after
the consummation of such Business Combination.
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<PAGE>
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall
be consummated at any time after the occurrence of a Triggering Event, the
Rights which have not theretofore been exercised shall thereafter be exercisable
for the consideration and in the manner described in Section 13(a). Following
a Business Combination, the provisions of Section 11(a)(ii) of this Agreement
shall be of no effect.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a
share) or other securities, cash or other property for which a Right is
exercisable or the number of Rights outstanding or associated with each share of
Common Stock or any similar or other adjustment shall be made or be effective if
such adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 13, unless the terms of this
Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended
to be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the
event the nature of the organization of any Principal Party shall preclude or
limit the acquisition of Common Stock of such Principal Party upon exercise of
the Rights as required by Section 13(a) as a result of a Business Combination,
it shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractional Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, the Company may at its option pay to the registered
holders of the Rights Certificates with respect to which such fractional
Rights would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of a Right for the Trading Day immediately prior to the date on
which such fractional Rights otherwise would have been issuable. The closing
price for any Trading Day shall be the last sale price on such day, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on such day, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the American Stock
Exchange or, if the Rights are not listed or admitted to trading on the
American Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal United
States national securities exchange on which the Rights are listed or admitted
to trading or, if the
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<PAGE>
Rights are not listed or admitted to trading on any United States national
securities exchange, the last quoted sale price on such day or, if not so
quoted, the average of the high bid and low asked prices on such day in the
over-the-counter market, as reported by Nasdaq or such other system then in use
or, if on such day the Rights are not quoted by any such system, the average of
the closing bid and asked prices on such day as furnished by a professional
market maker making a market in the Rights selected by a majority of the
Continuing Directors (or if no Continuing Directors are then in office, the
Board of Directors of the Company). If on such day no such market maker is
making a market in the Rights, the current market value of the Rights on such
day shall be determined in good faith by a majority of the Continuing Directors
(or if no Continuing Directors are then in office, the Board of Directors of the
Company), whose determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the Preferred Stock. In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company may at its option
(i) issue scrip or warrants in registered form (either represented by a
certificate or uncertificated) or in bearer form (represented by a
certificate) which shall entitle the holder to receive a full one one-
hundredth of a share of Preferred Stock upon the surrender of such scrip or
warrants aggregating a full one one-hundredth of a share of Preferred Stock,
or (ii) pay to the registered holders of Rights Certificates at the time such
Rights Certificates are exercised as provided in this Agreement an amount in
cash equal to the same fraction of the current market value of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of a share of Preferred Stock shall be the closing price of a share of
Preferred Stock (as determined pursuant to the second sentence of the
definition of "Current Market Price" in Section 1) for the Trading Day
immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of shares
of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents.
In lieu of such fractional shares of Common Stock or Common Stock
Equivalents, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock or
Common Stock Equivalents would otherwise be issuable an amount in cash equal
to the product derived by multiplying (x) the subject fraction, by (y) Current
Market Price of the Company's Common Stock.
(d) The holder of a Right by his acceptance thereof expressly
waives any right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as otherwise provided in this Agreement).
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Section 15. Rights of Action.
----------------
Except as otherwise provided, all rights of action in respect of this Agreement
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, any registered holders of associated Common
Stock); and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, any share of associated Common Stock), without the consent of
the Rights Agent or of the holder of any other Right, may, on his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
rights pursuant to this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
---------------------------------------------------
Ownership of Rights.
-------------------
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the associated Common Stock
certificate made by anyone other than the Company, the transfer agent for the
Common Stock or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. Rights Holder Not Deemed a Stockholder.
--------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to vote or to
receive dividends or distributions or shall be deemed for any purpose the holder
of Preferred Stock or any other securities, cash or other property which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained in this Agreement or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company, including, without limitation, any
right (i) to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, (ii) to give or withhold consent to
any corporate action, (iii) to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 24), (iv) to receive
dividends, distributions or subscription rights, (v) to institute, as a holder
of Preferred Stock or other securities issuable on exercise of the Rights
represented by any Rights Certificate, any derivative action on behalf of the
Company, or otherwise, until and only to the extent that the Right
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<PAGE>
or Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent.
---------------------------
The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith, willful misconduct or breach
of this Agreement on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document reasonably believed by it
to be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
-----
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all
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<PAGE>
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the President, any Executive Vice President, any Vice President,
the Chief Financial Officer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of
this Agreement (except the due execution and delivery of this Agreement by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for any
change or adjustment in the terms of the Rights (including the manner, method
or amount thereof) provided for in Sections 3, 11, 13 or 23 or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any change or adjustment is required); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock,
Common Stock or other securities to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any
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shares of Preferred Stock, Common Stock or other securities will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performance by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board and Chief Executive Officer, the President, any Vice
President, the Secretary or the Chief Financial Officer of the Company, and to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though the Rights
Agent were not serving as such under this Agreement. Nothing in this
Agreement shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. Notwithstanding any
other provision of this Agreement, in no event shall the resignation or
removal of a Rights Agent be effective until a successor Rights Agent shall
have been appointed and have accepted such appointment. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or
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incapacity by the resigning or incapacitated Rights Agent or by any holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of Illinois (or of any other state of the United States so long as
such corporation is authorized to conduct a corporate trust or banking business
in the State of Illinois) in good standing, which is authorized under such laws
to exercise corporate trust powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for such purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights
Certificates to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing new Rights in such form as may be approved by a majority
of the Continuing Directors (or if no Continuing Directors are then in office,
by the Board of Directors of the Company) to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of securities, cash
or other property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement.
Section 23. Redemption and Termination.
--------------------------
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the Stock Acquisition Date and (ii) the
Expiration Date, redeem all but not less than all of the then-outstanding
Rights at a redemption price of $.0001 per Right (the "Redemption Price")
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement. The Company may, at
its option, pay the Redemption Price in cash, shares (including fractional
shares) of Class A Common Stock (based on the Current Market Price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) At the time and date of effectiveness set forth in any
resolution of the Board of Directors of the Company ordering the redemption of
the Rights, without any further action and without any further notice, the right
to exercise the Rights will terminate and the only right thereafter
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of the holders of Rights shall be to receive the Redemption Price; provided,
however, that such resolution of the Board of Directors of the Company may be
revoked, rescinded or otherwise modified at any time prior to the time and
date of effectiveness set forth in such resolution, in which event the right to
exercise will not terminate at the time and date originally set for such
termination by the Board of Directors of the Company. As soon as practicable
after the action of the Board of Directors of the Company ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and to the holders of the then-outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the issuance of Rights
Certificates, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner provided in this Agreement
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. In any case, failure to give such notice by
mail, or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights. In the
case of a redemption permitted under this Section 23, the Company may, at its
option, discharge all of its obligations with respect to the Rights by
(i) issuing a press release announcing the manner of redemption of the Rights
and (ii) mailing payment of the Redemption Price to the registered holders of
the Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the issuance of the Rights Certificates, on the
registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23, and
other than in connection with the purchase of shares of Common Stock prior to
the earlier of the Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events.
------------------------
In case the Company, on or after the Distribution Date, shall propose to (a) pay
any dividend payable in stock of any class to the holders of its Preferred Stock
or to make any other distribution to the holders of its Preferred Stock (other
than a regular periodic cash dividend at an annual rate not in excess of 125% of
the annualized rate of the cash dividend paid on the Preferred Stock during the
immediately preceding fiscal year), or (b) offer to the holders of its Preferred
Stock rights, options, or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify any record date for the purposes of
such stock dividend or distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution, or
-34-
<PAGE>
winding up is to take place and if such holders will or may participate therein,
the date of participation therein by the holders of Common Stock and/or
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at least 20
days prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein, if any, by the holders of Preferred Stock, whichever
shall be the earlier. The failure to give notice as required by this Section
24 or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, in accordance with Section 25,
notice of the occurrence of such Triggering Event or Business Combination,
which shall specify the Triggering Event or Business Combination and include a
description of the consequences of such event to holders of Rights under
Section 11(a)(ii) or 13.
Section 25. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Gaylord Container Corporation
500 Lake Cook Road, Suite 400
Deerfield, IL 60015
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
311 West Monroe, 14th Floor
Chicago, IL 60606
Attention: Account Officer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
-35-
<PAGE>
Section 26. Supplements and Amendments.
--------------------------
(a) At any time prior to the Stock Acquisition Date, a majority of
the Continuing Directors (or, if no Continuing Directors are then in office,
the Board of Directors of the Company) may, except as provided in Section 26(c),
and the Rights Agent shall, if so directed, supplement or amend any provision of
this Agreement without the approval of any holders of Rights.
(b) From and after the Stock Acquisition Date, a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors of the Company) may, except as provided in Section 26(c),
and the Rights Agent shall, if so directed, amend this Agreement without the
approval of any holders of Rights Certificates (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained in this Agreement which
may be defective or inconsistent with any other provision of this Agreement,
or (iii) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
(c) No supplement or amendment to this Agreement shall be made
which changes the Purchase Price, the number of shares of Preferred Stock,
other securities, cash or other property for which a Right is then exercisable
or the Redemption Price or provides for an earlier Expiration Date.
(d) Immediately upon the action of a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors) providing for any amendment or supplement pursuant to this
Section 26, and without any further action and without notice, such amendment
or supplement shall be deemed effective. Promptly following the adoption of
any amendment or supplement pursuant to this Section 26, the Company shall
deliver to the Rights Agent a copy, certified by the Secretary or any
Assistant Secretary of the Company, of resolutions of a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors of the Company) adopting such amendment or supplement.
Upon such delivery, the amendment or supplement shall be administered by the
Rights Agent as part of this Agreement in accordance with the terms of this
Agreement, as so amended or supplemented.
Section 27. Successors.
----------
All the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Benefits of this Agreement; Determinations and Actions
------------------------------------------------------
by the Board of Directors.
-------------------------
Nothing in this Agreement shall be construed to give to any Person other than
the Company, the Rights Agent and the registered holders of Rights any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights.
-36-
<PAGE>
For purposes of this Agreement but subject to the terms of this
Agreement, any calculation of the number of shares of Common Stock outstanding
at any particular time shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act (or any successor provision); provided, however, that any such calculation
made for purposes of determining the particular percentage of outstanding
shares of Common Stock of which any Person is the Beneficial Owner shall also
include any such other securities not then actually issued and outstanding
which such Person would be deemed to be the Beneficial Owner of, or to
"beneficially own," pursuant to Section 1(d) of this Agreement. The Board of
Directors of the Company (or, where specifically provided for herein, a
majority of the Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Continuing Directors, the Board of Directors of
the Company or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights, to
exchange or not exchange the Rights for Common Stock or other securities of
the Company, or to amend or supplement this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company (or, where specifically
provided for herein, a majority of the Continuing Directors) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other Persons, and (y) not subject the Board
of Directors of the Company or the Continuing Directors to any liability to
the holders of the Rights.
Section 29. Severability.
------------
(a) If any term, provision, covenant or restriction of this
Agreement or the application thereof to any Person or to any circumstance is
held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) If legal counsel to the Company delivers to the Company a
written opinion to the effect that, as a result of changes in federal law or
Delaware law, any term, provision, covenant or restriction of this Agreement
may be invalid, void, or unenforceable, then, notwithstanding any other
provision of this Agreement, the Company and the Rights Agent may amend this
Agreement to modify, revise or delete such term, provision, covenant or
restriction to the extent necessary to comply with such law as so changed.
Section 30. Governing Law.
-------------
This Agreement and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the internal laws of such
state applicable to contracts to be made and performed entirely within such
State.
-37-
<PAGE>
Section 31. Counterparts.
------------
This Agreement may be executed in counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and both such counterparts
shall together constitute but one and the same instrument.
Section 32. Descriptive Headings.
--------------------
Descriptive headings of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
Section 33. Grammatical Construction.
------------------------
Throughout this Agreement, where such meanings would be appropriate, (a) any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms (e.g., references to "he" shall also include "she" and "it" and
references to "who" and "whom" shall also include "which"), and (b) the plural
form of nouns and pronouns shall include the singular and vice-versa (e.g.,
references to "Continuing Directors" shall also mean "Continuing Director" if
there be only one Continuing Director at the relevant time).
* * * * *
-38-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
GAYLORD CONTAINER CORPORATION
By /s/ Jeffrey B. Park
------------------------
Jeffrey B. Park
Title: Vice President - Corporate Controller
HARRIS TRUST AND SAVINGS BANK
By /s/ Ken Penn
---------------------------
Ken Penn
Title: Assistant Vice President
-39-
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
GAYLORD CONTAINER CORPORATION
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
We, Marvin A. Pomerantz, Chairman of the Board of Directors and Chief
Executive Officer, and David F. Tanaka, Vice President, General Counsel and
Corporate Secretary, of Gaylord Container Corporation, a corporation organized
and existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation, the Board of
Directors on June 12, 1995, adopted the following resolution creating a series
of 600,000 shares of Preferred Stock designated as Junior Participating
Preferred Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board by
ARTICLE IV of the Restated Certificate of Incorporation, a series of Preferred
Stock of the Corporation be, and it hereby is, created, and that the
designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are
as follows:
Section 1. Designation and Amount.
----------------------
The shares of such series shall be designated as "Junior Participating Preferred
Stock, Series A" (the "Series A Preferred Stock") and the number of shares
constituting such series shall be 600,000.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock and of any other junior
stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the
<PAGE>
fifteenth day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $25.00 or (b) the Adjustment Number (as
defined below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the
Corporation shall at any time after June 12, 1995 (i) declare or pay
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock into a greater number of shares
or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $25.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series A Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date.
-2-
<PAGE>
Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than
30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights.
-------------
The holders of shares of Series A Preferred Stock shall have the following
voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to a number of votes equal to the Adjustment Number
(as adjusted from time to time pursuant to Section 2A hereof) on all
matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by-laws, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") that shall
extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly
period on all shares of Series A Preferred Stock then outstanding
shall have been declared and paid or set apart for payment. During
each default period, (1) the number of Directors shall be increased
by two, effective as of the time of election of such Directors as
herein provided, and (2) the holders of Series A Preferred Stock and
the holders of other Preferred Stock upon which these or like voting
rights have been conferred and are exercisable (the "Voting Preferred
Stock") with dividends in arrears equal to six quarterly dividends
thereon, voting as a class, irrespective of series, shall have the
right to elect such two Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section
3(C) or at any annual meeting of stockholders, and thereafter at
annual meetings of stockholders, provided that such voting right
shall not be exercised unless the holders of at least one-third in
number of the shares of Voting Preferred Stock outstanding shall be
present in person or by proxy. The
-3-
<PAGE>
absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Voting Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting
of the holders of Voting Preferred Stock, which meeting shall
thereupon be called by the Chairman of the Board, the President, an
Executive Vice President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at
which holders of Voting Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder of record of
Voting Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 10 days and
not later than 60 days after such order or request or, in default of
the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors
voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class or classes
of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the
holders of a particular class or classes of stock shall include
Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Voting Preferred Stock as a
class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Voting Preferred Stock as a class shall
terminate and (z) the number of Directors shall be such number as may
be provided for in the Certificate of Incorporation or By-Laws
irrespective of any increase made pursuant to the provisions of
paragraph (C) of this Section 3 (such number being subject, however,
to change thereafter in any manner provided by law or in the
Certificate of Incorporation or By-Laws). Any vacancies in the Board
of Directors
-4-
<PAGE>
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
-5-
<PAGE>
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares.
-----------------
Any shares of Series A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of preferred stock and may be reissued as
part of a new series of preferred stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received the greater of (i) $100 per share,
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, and (ii) an aggregate
amount per share, equal to the Adjustment Number (as adjusted from time to
time pursuant to Section 2A hereof) times the aggregate amount to be
distributed per share to holders of Common Stock, or (B) to the holders of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
--------------------------
In case the Corporation shall enter into any consolidation, merger, combination
or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series A Preferred Stock then outstanding shall at
the same time be similarly exchanged or changed in an amount per share equal to
the Adjustment Number (as adjusted from time to time pursuant to Section 2A
hereof) times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
Section 8. No Redemption.
-------------
The shares of Series A Preferred Stock shall not be redeemable.
Section 9. Amendment.
---------
The Amended and Restated Certificate of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of two-thirds of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.
-6-
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this 30th day of
June, 1995.
/s/ Marvin A. Pomerantz
----------------------------------
Marvin A. Pomerantz
Chairman of the Board of Directors
and Chief Executive Officer
ATTEST:
/s/ David F. Tanaka
------------------------
David F. Tanaka
Secretary
<PAGE>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- __________Rights
NOT EXERCISABLE AFTER JUNE 30, 2005 OR EARLIER IF NOTICE OF REDEMPTION
OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE,
AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]
Rights Certificate
GAYLORD CONTAINER CORPORATION
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of June 12, 1995 (the "Rights Agreement")
between Gaylord Container Corporation, a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, an Illinois banking corporation
(the "Agent"), unless notice of redemption shall have been previously given by
the Company, to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Chicago, Illinois time) on June 30, 2005, at the principal corporate trust
office of the Rights Agent, or at the office of its successor as Rights Agent,
one one-hundredth of a fully paid nonassessable share of the Junior
Participating Preferred Stock, Series A, par value $.01 per share, of the
Company (the "Preferred Stock"), at a purchase price (the "Purchase Price") of
$____ per one one-hundredth share, upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
Purchase Price may be paid in cash or by certified bank check or bank draft
payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Preferred Stock or other securities, cash or other
property which may be purchased upon the exercise of the Rights evidenced by
this Rights Certificate are subject to modification and adjustment upon the
happening of certain events.
<PAGE>
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, or (ii) a direct or indirect transferee of
an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person),
such Rights may become null and void, in which event the holder of any such
Right (including any subsequent holder) shall not have any right with respect
to such Right.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them
in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of
the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock or other property as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered
entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.0001 per Right subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Class A Common Stock or such other
consideration as the Board of Directors may determine, at any time prior to
the earlier of (i) 12:00 a.m. (midnight, Chicago time) on the Stock
Acquisition Date, and (ii) the Expiration Date, or, (b) may be exchanged after
the Stock Acquisition Date by the Board of Directors of the Company at its
option in whole or in part for shares of the Company's Common Stock or other
Company securities.
No fractional shares of Preferred Stock (other than fractions that
are integral multiples of one one-hundredth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depository
receipts) are required to be issued upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof the Company may elect to (i) evidence
fractional shares by depositary receipts, (ii) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or in
bearer form (represented by a certificate) which shall entitle the holder to
receive a full share upon the surrender of such scrip or warrants aggregating
a full share, or (iii) make a cash payment, as provided in the Rights
Agreement.
-2-
<PAGE>
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or of any other securities, cash or property which may at
any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or this Certificate be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company,
including, without limitation, any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or to
institute, as a holder of Preferred Stock or other securities issuable on the
exercise of the Rights represented by this Certificate, any derivative action,
or otherwise, until and only to the extent the Right or Rights evidenced by
this Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
* * * * *
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______ __, ____.
GAYLORD CONTAINER CORPORATION
ATTEST:
By____________________________
Title:
- --------------------------
Secretary
Countersigned:
By __________________________
Authorized Signature
-3-
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ___________________________________
hereby sells, assigns and transfers unto__________________________________
__________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ Attorney, to transfer the said Rights and a
Rights Certificate evidencing such Rights on the books of Gaylord Container
Corporation, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that
such Rights Certificate be registered in the name of and mailed to (complete
only if a Rights Certificate evidencing any remaining balance of Rights is to
be registered in a name other than the undersigned):
Social security or other identifying
number of transferee: ________________________
_____________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate or any Rights evidenced hereby __are
__are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned __did __did not acquire any of the Rights evidenced by this
Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ___________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in
the case of an assignment or other transfer of this Rights Certificate or any
Rights evidenced hereby, will affix a legend to that effect on any Rights
Certificate issued in whole or partial exchange for this Rights Certificate.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: GAYLORD CONTAINER CORPORATION
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock or other securities, cash or other property
issuable upon the exercise of such Rights and requests that certificates for
such shares or other securities be issued in the name of, and such cash or
other property be paid to:
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate __are __are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned __did __did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated: __________________________ ___________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an assignment or other transfer of this Rights
Certificate or any Rights evidenced hereby, will affix a legend to that effect
on any Rights Certificate issued in whole or partial exchange for this Rights
Certificate.
<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On June 12, 1995, the Board of Directors of Gaylord Container
Corporation (the "Company") authorized the issuance of one preferred share
purchase right (a "Right") for each outstanding share of Class A common stock,
par value $.0001 per share, and Class B common stock, par value $.0001 per
share, (collectively, the "Common Stock") of the Company, including the
Common Stock held in the trust (the "Trust Shares") established pursuant to
the Trust Agreement, dated as of November 2, 1992, between the Company and
Harris Trust and Savings Bank, as trustee, that are deliverable upon exercise of
the warrants (the "Warrants") issued under the Warrant Agreement, dated as of
November 2, 1992, between the Company and Harris Trust and Savings Bank, as
warrant agent. The distribution is payable to the stockholders of record at
the close of business on July 5, 1995, (the "Record Date"), and a Right will be
attached to all Common Stock that becomes outstanding after the Record Date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Preferred Stock, Series A,
par value $.01 per share, of the Company (the "Preferred Stock") at a price of
$50 per one one-hundredth of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, dated as of June 12, 1995, (the "Rights Agreement") between
the Company and Harris Trust and Savings Bank, as rights agent (the "Rights
Agent").
Rights will be evidenced by Common Stock certificates and not by
separate certificates until the earlier to occur of (i) the expiration of the
Company's redemption rights following the date of public disclosure (the "Stock
Acquisition Date") that a person or group other than certain exempt persons
(an "Acquiring Person"), together with persons affiliated or associated with
such Acquiring Person (other than those that are exempt persons), has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more (or in the case of Mid-America Group, Ltd., and its affiliates and
associates, 25% or more) of (a) the outstanding Common Stock, excluding the
Trust Shares and Warrants or (b) the outstanding Common Stock, including the
Warrants which for this purpose are treated as Common Stock or (ii) the tenth
business day after the date of commencement or public disclosure of an intention
to commence a tender offer or exchange offer by a person other than an exempt
person if, upon consummation of the offer, such person would be an Acquiring
Person (the earlier of the dates described in (i) and (ii) above is the
"Distribution Date"). Until the Distribution Date, the Rights will be
transferred with, and only with, the Common Stock, and new Common Stock certi-
ficates issued after the Record Date upon transfer or new issuance of shares of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence
the Rights.
<PAGE>
The Rights will first become exercisable after the Distribution Date.
The Rights will expire at the close of business on June 30, 2005 (the
"Expiration Date"), unless earlier redeemed or exchanged by the Company as
described below.
The Purchase Price payable and the number of shares of Preferred Stock
or other securities, cash or other property issuable upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights, options or warrants to subscribe for
Preferred Stock or securities convertible into Preferred Stock at less than
the current market price of the Preferred Stock or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained earnings)
or of subscription rights or warrants (other than those referred to above). In
addition, the Purchase Price payable and the number of shares of Preferred Stock
purchasable upon exercise of a Right are subject to adjustment in the event that
the Company should (i) declare or pay any dividend on the Common Stock payable
in shares of Common Stock or (ii) effect a subdivision or combination of the
Common Stock into a different number of shares of Common Stock.
After a person becomes an Acquiring Person, if the Company is
involved in a merger or other business combination transaction where the
Company is not the surviving corporation or where Common Stock is changed or
exchanged, or if the Company is involved in a transaction or transactions
wherein 50% or more of its consolidated assets or earning power are sold,
proper provision must be made so that each holder of a Right (other than such
Acquiring Person and certain related persons or transferees) will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company or the Company, as the case may be, which at the time of
such transaction would have a market value of two times the exercise price of
the Right.
After a person becomes an Acquiring Person, proper provision must be
made so that each holder of a Right, other than Rights that are or were
beneficially owned by the Acquiring Person and certain related persons and
transferees (which will thereafter be void), will thereafter have the right to
receive upon exercise that number of shares of Common Stock having at the time
of such transaction a market value of two times the exercise price of the
Right. In addition, after the Stock Acquisition Date, a majority of the
Company's Continuing Directors may cause the Company to exchange all or part
of the Rights (excluding voided Rights) for shares of Common Stock on a
one-for-one basis, as described in the Rights Agreement.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
-2-
<PAGE>
At any time prior to the earlier of the Stock Acquisition Date or the
Expiration Date, the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.0001 per Right (the "Redemption
Price") subject to adjustment, payable, at the election of the Company, in
cash or shares (including fractional shares) of Class A common stock or such
other consideration as the Board of Directors may determine. Immediately upon
action of the Board of Directors ordering redemption or exchange of the
Rights, the ability of holders to exercise the Rights will terminate and the
only rights of such holders will be to receive the Redemption Price.
At any time prior to the Stock Acquisition Date, a majority of the
Continuing Directors of the Company may amend or supplement the Rights
Agreement without the approval of the Rights Agent or any holder of the
Rights, except for an amendment or supplement which would change the
Redemption Price, the Expiration Date of the Rights or the Purchase Price.
Thereafter, a majority of the Continuing Directors of the Company may amend or
supplement the Rights Agreement without such approval only to cure ambiguities
in the Rights Agreement or in a way that would not adversely effect the
rights of holders of the Rights. Immediately upon the action of the Board of
Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment equal to the greater of $25 per share
or 100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment equal to the greater of $100 per share or 100
times the payment made per share of Common Stock. Each share of Preferred Stock
will have 100 votes per share, voting together with the Common Stock. In the
event of any merger, consolidation or other transaction in which Common Stock is
exchanged, each share of Preferred Stock will be entitled to receive 100 times
the amount received per share of Common Stock. These rights are protected by
customary anti-dilution provisions.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group other than an exempt person that
attempts to acquire the Company on terms not approved by the Board, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time a person
becomes an Acquiring Person, because until such time the Rights may generally
be redeemed by the Company at $.0001 per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement.
Capitalized terms used in this summary and not defined herein have the meaning
set forth in the Rights Agreement.
-3-
NEWS RELEASE
Release: IMMEDIATE
Contact: Kathryn Chieger
Phone: 708-405-5645
GAYLORD BOARD ADOPTS RIGHTS PLAN
---------------------------------------------------
SPECIAL STOCKHOLDERS MEETING BEING CALLED
--------------------------------------------------
COMPANY NEGOTIATING AMENDED BANK AGREEMENT
DEERFIELD, Ill., June 12, 1995 -- Gaylord Container Corporation (AMEX:
GCR) announced today that its Board of Directors adopted a shareholder rights
plan that provides for the distribution of one Preferred Share Purchase Right
on each share of the company s outstanding Class A and Class B common stock.
The rights are expected to be issued to stockholders of record on July 5, 1995
and to expire on June 30, 2005.
Commenting on the Board s action, Gaylord Chairman and Chief Executive
Officer Marvin A. Pomerantz said, The plan is designed to protect the
interests of stockholders should an unsolicited attempt be made to acquire the
company at an unfair price. While we are currently unaware of any such
attempt, the Board wants to assure that stockholders are not subject to
coercive takeover tactics that might prevent them from maximizing the value of
their investment. The intent is to assure that all stockholders are treated
equally and to provide the Board the opportunity and the time to negotiate
with a potential buyer or to seek other alternatives.
(more)
<PAGE>
Gaylord Container Corporation
June 12, 1995
Page 2 of 3
Under the terms of the plan, each right will entitle stockholders to buy
one one-hundreth of a share of a new series of junior participating preferred
stock for $50 per share. Generally, the rights will be exercisable in the
event that a person or group acquires, or announces a tender offer for, 15
percent or more of the company s common stock. Before a 15 percent position
has been acquired, the company may exchange the rights for a fractional share
of common stock or may redeem the rights for $0.0001 each. The rights
distribution is a non-taxable event to stockholders.
SPECIAL STOCKHOLDERS MEETING
The company said it will file shortly a preliminary proxy statement and
a notice of a special meeting of stockholders with the Securities and Exchange
Commission covering proposed amendments to the company s certificate of
incorporation and by-laws. These include seeking stockholder approval of
provisions that would: require that any stockholder action be taken only at a
meeting of stockholders; require that special stockholder meetings may be
called only by the chairman or the board of directors; increase the
stockholder vote needed to amend certain provisions of the company s
certificate of incorporation or by-laws; and provide that the company be
governed by Section 203 of the General Corporation Law of the State of
Delaware. Pending review of the documents by the Securities and Exchange
Commission, the special meeting is scheduled to be held on July 28, 1995.
(more)
<PAGE>
Gaylord Container Corporation
June 12, 1995
Page 3 of 3
The company noted that its common stock capital structure currently
consists of approximately 48.8 million shares of Class A stock (entitled to
one vote per share) and approximately 5.3 million share of Class B stock
(entitled to 10 votes per share). Under the company s current certificate of
incorporation, the Class B shares will convert to Class A shares on July 31,
1995, unless the Class A common shares close at or above $15.25 per share for
20 days out of a 30 consecutive-day trading period. The purpose of the
proposed amendments is to provide safeguards that will enable the Board to
protect stockholders against unfair offers or coercive takeover tactics which
seek to circumvent the shareholder rights plan.
AMENDED BANK AGREEMENT
The company said that it is currently negotiating with its bank group to
increase the size of its revolving credit agreement by at least $100 million
and to extend the term of the facility. Further, the company is seeking
amendments to certain covenants to allow it more financial flexibility,
including providing it with the ability to make open market purchases of its
public debt securities.
The company has made de-leveraging a top priority. This amended credit
agreement would give us the flexibility to replace some of our public debt
with lower cost bank debt and thus reduce our overall debt service
requirements, Mr. Pomerantz noted.
Gaylord Container Corporation is a major national manufacturer and
distributor of corrugated containers and sheets, containerboard, unbleached
kraft paper, multiwall bags and grocery bags and sacks.
# # #
AMENDED AND RESTATED BY-LAWS
OF
GAYLORD CONTAINER CORPORATION
A Delaware Corporation
As amended June 12, 1995
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office.
----------- ------------------
The registered office of the corporation in the State of
Delaware shall be located at the Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware, County of New
Castle. The name of the corporation's registered agent at
such address shall be The Corporation Trust Company. The
registered office and/or registered agent of the corporation
may be changed from time to time by action of the board of
directors.
Section 2. Other Offices.
----------- --------------
The corporation may also have offices at such other places,
both within and without the State of Delaware, as the board
of directors may from time to time determine or the business
of the corporation may require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings.
----------- ---------------------------
An annual meeting of the stockholders shall be held each
year within one hundred eighty (180) days after the close
of the fiscal year of the corporation for the purpose of
electing directors and conducting such other proper
business as may come before the meeting. The date and
time
<PAGE>
of the annual meeting shall be determined by the
Chairman of the corporation and if he does not act,
the board of directors shall determine the date of
such meeting. Special meetings of stockholders may be
held at such time, as shall be stated in the notice of
the meeting or in a duly executed waiver of notice
thereof. Special meetings of the stockholders may be
called by (a) the chairman of the board, or (b) the
secretary if directed by 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. At the annual meeting, stockholders
shall elect directors and transact such other business
as properly may be brought before the meeting pursuant
to Article II, Section 10 hereof.
Section 2. Place of Meetings.
----------- -----------------
The board of directors may designate any place, either
within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting
called by the board of directors. If no designation is
made, or if a special meeting be otherwise called, the place
of meeting shall be the principal executive office of the
corporation.
Section 3. Notice.
----------- -------
Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating
the place, date, time, and, in the case of special meetings,
the purpose or purposes, of such meeting, shall be given to
each stockholder entitled to vote at such meeting not less
than ten (10) nor more than sixty (60) days before the date
of the meeting. All such notices shall be delivered,
either personally or by mail, by or at the direction
of the board of directors, the chairman of the board,
the president or the secretary, and if mailed, such
notice shall be deemed to be delivered when deposited
in the United States mail, postage prepaid, addressed
to the stockholder at his, her or its address as the
same appears on the records of the corporation.
Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at
the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or
convened.
Section 4. Stockholders List.
----------- ------------------
The officer having charge of the stock ledger of the
corporation shall make, at least 10 days before every
meeting of the stockholders, a complete list of the
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<PAGE>
stockholders entitled to vote at such meeting arranged in
alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at
least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting
or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Quorum.
----------- ------
The holders of a majority of the outstanding shares of
capital stock entitled to vote (based on voting power),
present in person or represented by proxy, shall constitute
a quorum at all meetings of the stockholders, except as
otherwise provided by statute or by the certificate of
incorporation. If a quorum is not present, the
holders of a majority of the shares present in person
or represented by proxy at the meeting, and entitled
to vote at the meeting, may adjourn the meeting to
another time and/or place. When a specified item of
business requires a vote by a class or series (if the
corporation shall then have outstanding shares of more
than one class or series) voting as a class, the
holders of a majority of the shares of such class or
series, present in person or represented by proxy,
shall constitute a quorum (as to such class or series)
for the transaction of such item of business.
Section 6. Adjourned Meetings.
----------- ------------------
When a meeting is adjourned to another time and place,
notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which
the adjournment is taken. At the adjourned meeting the
corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is
for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 7. Vote Required.
----------- -------------
When a quorum is present, the affirmative vote of the
majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the
-3-
<PAGE>
subject matter shall be the act of the stockholders, unless
(i) by express provisions of an applicable law or of the
certificate of incorporation a different vote is required,
in which case such express provision shall govern and
control the decision of such question, or (ii) the
subject matter is the election of directors, in which
case Section 2 of Article III hereof shall govern and
control the approval of such subject matter.
Section 8. Voting Rights.
----------- -------------
Except as otherwise provided by the General Corporation Law
of the State of Delaware or by the certificate of
incorporation of the corporation or any amendments thereto
and subject to Section 3 of Article V hereof, every
stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of
common stock held by such stockholder.
Section 9. Proxies.
----------- -------
Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another
person or persons to act for him or her by proxy, but no
such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable
regardless of whether the interest with which it is
coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is
suspended when the person executing the proxy is
present at a meeting of stockholders and elects to
vote, except that when such proxy is coupled with an
interest and the fact of the interest appears on the
face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the
proxy, notwithstanding the presence of the person
executing the proxy. At each meeting of the stockholders,
and before any voting commences, all proxies filed at or
before the meeting shall be submitted to and examined by the
secretary or a person designated by the secretary, and no
shares may be represented or voted under a proxy that has
been found to be invalid or irregular.
Section 10. Business Brought Before a Meeting.
------------ ---------------------------------
At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought
before the meeting. To be
-4-
<PAGE>
properly brought before an annual meeting, business must be
(a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the board of
directors, (b) brought before the meeting by or at the
direction of the board of directors, or (c) otherwise
properly brought before the meeting by a stockholder. For
business to be properly brought before an annual
meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the
secretary of the corporation. To be timely, unless
otherwise provided pursuant to applicable law
(including, without limitation, federal securities
laws), a stockholder's notice must be delivered to or
mailed and received at the principal executive offices
of the corporation, not less than sixty (60) days nor
more than ninety (90) days prior to the meeting;
provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure
of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely
must be so received not later than the close of
business on the tenth (10) day following the date on
which such notice of the date of the annual meeting
was mailed or such public disclosure was made. A
stockholder's notice to the secretary shall set forth
as to each matter the stockholder proposes to bring
before the annual meeting (a) a brief description of
the business desired to be brought before the annual
meeting, (b) the name and address, as they appear on
the corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of
the corporation which are beneficially owned by the
stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding
anything in the by-laws to the contrary, no business
shall be conducted at an annual meeting except in
accordance with the procedures set forth in this
Section 10. The presiding officer of an annual
meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly
brought before the meeting and in accordance with the
provisions of this Section 10; and if he should so
determine, he shall so declare to the meeting and any
such business not properly brought before the meeting
shall not be transacted.
-5-
<PAGE>
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers.
------------ --------------
The business and affairs of the corporation shall be managed
by or under the direction of the board of directors. In
addition to such powers as are herein and in the certificate
of incorporation expressly conferred upon it, the board of
directors shall have and may exercise all the powers of the
corporation, subject to the provisions of the laws of
Delaware, the certificate of incorporation and these
by-laws.
Section 2. Number, Election and Term of Office.
------------ -----------------------------------
The number of directors which shall constitute the first
board shall be one (1). Thereafter, the number of directors
shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality
of the votes of the shares present in person or
represented by proxy at the meeting and entitled to
vote in the election of directors; provided that,
whenever the holders of any class or series of capital
stock of the corporation are entitled to elect one or
more directors pursuant to the provisions of the
certificate of incorporation of the corporation
(including, but not limited to, for purposes of these
by-laws, pursuant to any duly authorized certificate
of designation), such directors shall be elected by a
plurality of the votes of such class or series present
in person or represented by proxy at the meeting and
entitled to vote in the election of such directors.
The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided
in Section 4 of this Article III. Each director
elected shall hold office until the next annual
meeting of stockholders, a successor is duly elected
and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation.
----------- -----------------------
Any director may be removed at any time, with or without
cause, by the holders of a majority of the shares of stock
of the corporation then entitled to vote at an election of
directors; provided, however, that if the holders of
any class or series of capital stock are entitled by
the provisions of the corporation's certificate of
incorporation to elect one or more directors, such
director or directors so elected
-6-
<PAGE>
may be removed only by the vote of the holders of a majority
of the outstanding shares of that class or series entitled
to vote at an election of such director or directors.
Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies.
----------- ---------
Vacancies and newly created directorships resulting from any
increase in the total number of directors established by the
board pursuant to Section 2 of this Article III may be
filled by the affirmative vote of the majority of the total
number of directors then in office, though less than a
quorum, or by a sole remaining director. Any director
elected to fill a vacancy resulting from an increase
in the number of directors shall hold office for a
term that shall coincide with the remaining term of
the class of directors to which he is elected. A
director elected to fill a vacancy not resulting from
an increase in the number of directors shall have the
same remaining term as that of his predecessor. Each
director so chosen shall hold office until the next
annual meeting and a successor is duly elected and
qualified or until his or her earlier death, resigna-
tion or removal as herein provided. Whenever holders
of any class or classes of stock or series thereof are
entitled by the provisions of the certificate of
incorporation to elect one or more directors,
vacancies and newly created directorships of such
class or classes or series may only be filled by the
affirmative vote of the majority of the total number
of directors elected by such class or classes or
series thereof then in office, or by a sole remaining
director so elected.
Section 5. Nominations.
----------- -----------
(a) Only persons who are nominated in
accordance with the procedures set forth in these by-laws
shall be eligible to serve as directors. Nominations of
persons for election to the board of directors of the
corporation may be made at a meeting of stockholders (i) by
or at the direction of the board of directors or (ii) by
any stockholder of the corporation who was a stockholder of
record at the time of giving of notice provided for in this
by-law, who is entitled to vote for the election of
directors at the meeting and who shall have complied with
the notice procedures set forth below in Section 5(b).
(b) In order for a stockholder to nominate a
person for election to the board of directors of the
corporation at a meeting
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<PAGE>
of stockholders, such stockholder shall have delivered
timely notice of such stockholder's intent to make such
nomination in writing to the secretary of the corporation.
To be timely, unless otherwise provided by applicable law
(including, without limitation, federal securities laws), a
stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of the
corporation (i) in the case of an annual meeting, not
less than sixty (60) nor more than ninety (90) days prior to
the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date
of the annual meeting is changed by more than thirty (30)
days from such anniversary date, notice by the stockholder
to be timely must be so received not later than the close of
business on the tenth (10) day following the earlier of the
day on which notice of the date of the meeting was mailed or
public disclosure of the meeting was made, and (ii) in the
case of a special meeting at which directors are to be
elected, not later than the close of business on the tenth
(10) day following the earlier of the day on which notice of
the date of the meeting was mailed or public disclosure of
the meeting was made. Such stockholder's notice shall set
forth (i) as to each person whom the stockholder proposes to
nominate for election as a director at such meeting all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including such person's written consent to being
named in the proxy statement as a nominee and to serving as
a director if elected); (ii) as to the stockholder giving
the notice (A) the name and address, as they appear on the
corporation's books, of such stockholder and (B) the class
and number of shares of the corporation which are
beneficially owned by such stockholder and also which are
owned of record by such stockholder; and (iii) as to the
beneficial owner, if any, on whose behalf the nomination is
made, (A) the name and address of such person and (B) the
class and number of shares of the corporation which are
beneficially owned by such person. At the request of the
board of directors, any person nominated by the board of
directors for election as a director shall furnish to the
secretary of the corporation that information required to be
set forth in a stockholder's notice of nomination which
pertains to the nominee.
(c) The chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that a
nomination was
-8-
<PAGE>
not made in accordance with the procedures prescribed by
this Section 5, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded. A stockholder seeking to nominate a person to
serve as a director must also comply with all applicable
requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder with
respect to the matters set forth in this Section 5.
Section 6. Annual Meetings.
----------- ---------------
The annual meeting of the board of directors shall be held
without other notice than this by-law immediately after, and
at the same place as, the annual meeting of stockholders.
Section 7. Other Meetings and Notice.
----------- -------------------------
Regular meetings, other than the annual meeting, of the
board of directors may be held without notice at such time
and at such place as shall from time to time be determined
by resolution of the board. Special meetings of the board
of directors may be called by the chairman of the board
or, upon the written request of at least a majority of
the directors then in office, the secretary of the
corporation, on reasonable advance notice to each
director, either personally, by telephone, by mail, or
by telegraph.
Section 8. Chairman of the Board, Quorum, Required Vote and
------------ ------------------------------------------------
Adjournment.
-----------
The board of directors shall elect, by the affirmative vote
of the majority of the total number of directors then in
office, a chairman of the board, who shall preside at all
meetings of the stockholders and board of directors at which
he or she is present. If the chairman of the board is not
present at a meeting of the stockholders or the board
of directors, the president (if the president is a
director and is not also the chairman of the board)
shall preside at such meeting, and, if the president
is not present at such meeting or is not a member of
the board of directors, a majority of the directors
present at such meeting shall elect one of their
members to so preside. A majority of the total number
of directors then in office shall constitute a quorum
for the transaction of business. Unless by express
provision of an applicable law, the corporation's
certificate of incorporation or these by-laws a
different vote is required, the vote of a majority of
directors present at a meeting at which a quorum is
present shall be the act of the board of directors.
If a quorum shall not be present at any meeting of the
board of directors, the directors present thereat may
adjourn the meeting
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<PAGE>
from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Committees.
----------- -----------
The board of directors may, by resolution passed by the
majority of the total number of directors then in office,
designate one or more committees, each committee to consist
of one or more of the directors of the corporation, which to
the extent provided in such resolution or these by-laws
shall have, and may exercise, the powers of the board
of directors in the management and affairs of the
corporation, except as otherwise limited by law. The
board of directors may designate one or more directors
as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of
the committee. Such committee or committees shall
have such name or names as may be determined from time
to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
Section 10. Committee Rules.
------------ ---------------
Each committee of the board of directors may fix its own
rules of procedure and shall hold its meetings as provided
by such rules, except as may otherwise be provided by a
resolution of the board of directors designating such
committee. Unless otherwise provided in such a resolution,
the presence of at least a majority of the members of the
committee shall be necessary to constitute a quorum. Unless
otherwise provided in such a resolution, in the event
that a member and that member's alternate, if
alternates are designated by the board of directors as
provided in Section 9 of this Article III, of such
committee is or are absent or disqualified, the member
or members thereof present at any meeting and not
disqualified from voting, whether or not such member
or members constitute a quorum, may unanimously
appoint another member of the board of directors to
act at the meeting in place of any such absent or
disqualified member.
Section 11. Communications Equipment.
------------ ------------------------
Members of the board of directors or any committee thereof
may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other
communications equipment by means of which all persons
participating in the meeting can hear and speak with
each other, and participation in the meeting pursuant
to this Section 11 shall constitute presence in person
at the meeting.
-10-
<PAGE>
Section 12. Waiver of Notice and Presumption of Assent.
------------ ------------------------------------------
Any member of the board of directors or any committee
thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such
meeting except when such member attends for the
express purpose of objecting at the beginning of the
meeting to the transaction of any business because the
meeting is not lawfully called or convened. Such
member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be
entered in the minutes of the meeting or unless his or
her written dissent to such action shall be filed with
the person acting as the secretary of the meeting
before the adjournment thereof or shall be forwarded
by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting.
Such right to dissent shall not apply to any member
who voted in favor of such action.
Section 13. Action by Written Consent.
------------- -------------------------
Unless otherwise restricted by the certificate of
incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any
committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board or
committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number.
----------- ------
The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman of the
board, president, one or more vice-presidents, a secretary,
a treasurer and such other officers and assistant officers
as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same
person. In its discretion, the board of directors may
choose not to fill any office for any period as it may deem
advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office.
----------- ---------------------------
The officers of the corporation shall be elected annually by
the board of directors at its first meeting held after each
annual meeting of stockholders or
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<PAGE>
as soon thereafter as convenient. Vacancies may be filled
or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his
or her earlier death, resignation or removal as
hereinafter provided.
Section 3. Removal.
----------- -------
Any officer or agent elected by the board of directors may
be removed by the board of directors at its discretion, but
such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 4. Vacancies.
----------- ---------
Any vacancy occurring in any office because of death,
resignation, removal, disqualification or otherwise, may be
filled by the board of directors.
Section 5. Compensation.
----------- ------------
Compensation of all officers shall be fixed by the board of
directors, and no officer shall be prevented from receiving
such compensation by virtue of his or her also being a
director of the corporation.
Section 6. Chairman of the Board.
----------- ---------------------
The chairman of the board shall be the chief executive
officer of the corporation, and shall have the powers and
perform the duties incident to that position. Subject to
the powers of the board of directors, he or she shall be
in the general and active charge of the entire
business and affairs of the corporation, and shall be
its chief policy making officer. He or she shall
preside at all meetings of the board of directors and
stockholders and shall have such other powers and
perform such other duties as may be prescribed by the
board of directors or provided in these by-laws. The
chairman of the board is authorized to execute bonds,
mortgages and other contracts requiring a seal, under
the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed
and except where the signing and execution thereof
shall be expressly delegated by the board of directors
to some other officer or agent of the corporation.
Whenever the president is unable to serve, by reason
of sickness, absence or otherwise, the chairman of the
board shall perform all the duties and
responsibilities and exercise all the powers of the
president.
Section 7. The President.
----------- -------------
The president of the corporation shall be the chief
operating officer and shall, subject to the powers of the
board of directors and the chairman of the board,
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<PAGE>
have general and active management of the business, affairs
and property of the corporation, and control over its
officers, agents and employees; and shall see that all
orders and resolutions of the board of directors are carried
into effect. The president is authorized to execute bonds,
mortgages and other contracts requiring a seal, under
the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed
and except where the signing and execution thereof
shall be expressly delegated by the board of directors
to some other officer or agent of the corporation.
Whenever the chairman of the board is unable to serve,
by reason of sickness, absence or otherwise, the
president shall have the powers and perform the duties
of the chairman of the board. The president shall
have such other powers and perform such other duties
as may be prescribed by the chairman of the board or
the board of directors or as may be provided in these
by-laws.
Section 8. Vice-presidents.
----------- ---------------
The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of
directors or the chairman of the board, shall, in the
absence or disability of the president, act with all of the
powers and be subject to all the restrictions of the
president. The vice-presidents shall also perform
such other duties and have such other powers as the
board of directors, the chairman of the board, the
president or these by-laws may, from time to time,
prescribe. The vice-presidents may also be designated
as executive vice-presidents or senior vice-
presidents, as the board of directors may from time to
time prescribe.
Section 9. The Secretary and Assistant Secretaries.
----------- ---------------------------------------
The secretary shall attend all meetings of the board of
directors, all meetings of the committees thereof and
all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be
kept for that purpose or shall ensure that his or her
designee attends each such meeting to act in such
capacity. Under the chairman of the board's
supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-
laws or by law; shall have such powers and perform
such duties as the board of directors, the chairman of
the board, the president or these by-laws may, from
time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or
an assistant secretary, shall have authority to affix
the corporate seal to any instrument requiring it and
when so
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<PAGE>
affixed, it may be attested by his or her signature or by
the signature of such assistant secretary. The board of
directors may give general authority to any other officer to
affix the seal of the corporation and to attest the affixing
by his or her signature. The assistant secretary, or if
there be more than one, any of the assistant secretaries,
shall in the absence or disability of the secretary,
perform the duties and exercise the powers of the
secretary and shall perform such other duties and have
such other powers as the board of directors, the
president, or secretary may, from time to time,
prescribe.
Section 10. The Treasurer and Assistant Treasurer.
------------ -------------------------------------
The treasurer shall have the custody of the corporate
funds and securities; shall keep full and accurate all
books and accounts of the corporation as shall be
necessary or desirable in accordance with applicable
law or generally accepted accounting principles; shall
deposit all monies and other valuable effects in the
name and to the credit of the corporation as may be
ordered by the chairman of the board or the board of
directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly
authorized, taking proper vouchers for such
disbursements; and shall render to the chairman of the
board, the president and the board of directors, at
its regular meeting or when the board of directors so
requires, an account of the corporation; shall have
such powers and perform such duties as the board of
directors, the chairman of the board, the president or
these by-laws may, from time to time, prescribe. If
required by the board of directors, the treasurer
shall give the corporation a bond (which shall be
rendered every six years) in such sums and with such
surety or sureties as shall be satisfactory to the
board of directors for the faithful performance of the
duties of the office of treasurer and for the
restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of
all books, papers, vouchers, money, and other property
of whatever kind in the possession or under the
control of the Treasurer belonging to the corporation.
The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order
determined by the board of directors, shall in the
absence of disability of the treasurer, perform the
duties and exercise the powers of the treasurer and
shall perform such other duties and have such other
powers as the board of directors may from time to time
prescribe.
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<PAGE>
Section 11. Other Officers, Assistant Officers and Agents.
------------ ---------------------------------------------
Officers, assistant officers and agents, if any, other
than those whose duties are provided for in these by-
laws, shall have such authority and perform such
duties as may from time to time be prescribed by
resolution of the board of directors.
Section 12. Absence or Disability of Officers.
------------ ---------------------------------
In the case of the absence or disability of any officer of
the corporation and of any person hereby authorized to act
in such officer's place during such officer's absence
or disability, the board of directors may by
resolution delegate the powers and duties of such
officer to any other officer or to any director, or to
any other person selected by it.
ARTICLE V
---------
CERTIFICATES OF STOCK
---------------------
Section 1. Form.
----------- ----
Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the
corporation by the chairman of the board, the president or
a vice-president and the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by
such holder in the corporation. If such a certificate
is countersigned (1) by a transfer agent or an
assistant transfer agent other than the corporation or
its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such
chairman of the board, president, vice-president,
secretary, or assistant secretary may be facsimiles.
In case any officer or officers who have signed, or
whose facsimile signature or signatures have been used
on, any such certificate or certificates shall cease
to be such officer or officers of the corporation
whether because of death, resignation or otherwise
before such certificate or certificates have been
delivered by the corporation, such certificate or
certificates may nevertheless be issued and delivered
as though the person or persons who signed such
certificate or certificates or whose facsimile
signature or signatures have been used thereon had not
ceased to be such officer or officers of the
corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The
name of the person to whom the shares represented
thereby are issued, with the number of shares and date
of issue, shall be entered on the books of the
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<PAGE>
corporation. Shares of stock of the corporation shall
only be transferred on the books of the corporation by
the holder of record thereof or by such holder's
attorney duly authorized in writing, upon surrender to
the corporation of the certificate or certificates for
such shares endorsed by the appropriate person or
persons, with such evidence of the authenticity of
such endorsement, transfer, authorization, and other
matters as the corporation may reasonably require, and
accompanied by all necessary stock transfer stamps.
In that event, it shall be the duty of the corporation
to issue a new certificate to the person entitled
thereto, cancel the old certificate or certificates,
and record the transaction on its books. The board of
directors may appoint a bank or trust company
organized under the laws of the United States or any
state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of
any class or series of securities of the corporation.
Section 2. Lost Certificates.
----------- -----------------
The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to
have been lost, stolen, or destroyed, upon the making of an
affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or
certificates, the corporation may, in its discretion
and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed
certificate or certificates, or his or her legal
representative, to give the corporation a bond suffi-
cient to indemnify the corporation against any claim
that may be made against the corporation on account of
the loss, theft or destruction of any such certificate
or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings.
------------ ---------------------------------------------
In order that the corporation may determine the
stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof,
the board of directors may fix a record date, which
record date shall not precede the date upon which the
resolution fixing the record date is adopted by the
board of directors, and which record date shall not be
more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is
fixed by the board of directors, the record date for
determining stockholders entitled to notice of or to
vote at a
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<PAGE>
meeting of stockholders shall be the close of business on
the next day preceding the day on which notice is first
given. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for
the adjourned meeting.
Section 4. Fixing a Record Date for Other Purposes.
----------- ---------------------------------------
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other
distribution or allotment or any rights or the
stockholders entitled to exercise any rights in
respect of any change, conversion or exchange of
stock, or for the purposes of any other lawful action,
the board of directors may fix a record date, which
record date shall not precede the date upon which the
resolution fixing the record date is adopted, and
which record date shall be not more than sixty (60)
days prior to such action. If no record date is
fixed, the record date for determining stockholders
for any such purpose shall be at the close of business
on the day on which the board of directors adopts the
resolution relating thereto.
Section 5. Registered Stockholders.
----------- -----------------------
Prior to the surrender to the corporation of the certificate
or certificates for a share or shares of stock with a
request to record the transfer of such share or shares, the
corporation may treat the registered owner as the person
entitled to receive dividends, to vote, to receive
notifications, and otherwise to exercise all the
rights and powers of an owner. The corporation shall
not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of
any other person, whether or not it shall have express
or other notice thereof.
ARTICLE VI
----------
GENERAL PROVISIONS
------------------
Section 1. Dividends.
----------- ---------
Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any
regular or special meeting, in accordance with applicable
law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of
the certificate of
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<PAGE>
incorporation. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to
time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any
property of the corporation, or any other purpose and
the directors may modify or abolish any such reserve
in the manner in which it was created.
Section 2. Checks, Drafts or Orders.
----------- ------------------------
All checks, drafts, or other orders for the payment of money
by or to the corporation and all notes and other evidences
of indebtedness issued in the name of the corporation
shall be signed by such officer or officers, agent or
agents of the corporation, and in such manner, as
shall be determined by resolution of the board of
directors or a duly authorized committee thereof.
Section 3. Contracts.
----------- ---------
In addition to the powers otherwise granted to officers
pursuant to Article IV hereof, the board of directors may
authorize any officer or officers, or any agent or agents,
of the corporation to enter into any contract or to execute
and deliver any instrument in the name of and on behalf of
the corporation, and such authority may be general or
confined to specific instances.
Section 4. Loans.
----------- -----
The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiaries,
including any officer or employee who is a director of the
corporation or its subsidiaries, whenever, in the judgment
of the directors, such loan, guaranty or assistance may
reasonably be expected to benefit the corporation. The
loan, guaranty or other assistance may be with or without
interest, and may be unsecured, or secured in such manner as
the board of directors shall approve, including, without
limitation, a pledge of shares of stock of the
corporation. Nothing in this section contained shall
be deemed to deny, limit or restrict the powers of
guaranty or warranty of the corporation at common law
or under any statute.
Section 5. Fiscal Year.
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The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
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Section 6. Corporate Seal.
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The board of directors shall provide a corporate seal which
shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced
or otherwise.
Section 7. Voting Securities Owned By Corporation.
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Voting securities in any other corporation held by the
corporation shall be voted by the chairman of the
board, the president or a vice-president, unless the
board of directors specifically confers authority to
vote with respect thereto, which authority may be
general or confined to specific instances, upon some
other person or officer. Any person authorized to
vote securities shall have the power to appoint
proxies, with general power of substitution.
Section 8. Inspection of Books and Records.
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Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the
purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the
corporation's stock ledger, a list of its
stockholders, and its other books and records, and to
make copies or extracts therefrom. A proper purpose
shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance
where an attorney or other agent shall be the person
who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or
such other writing which authorizes the attorney or
other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the
corporation at its registered office in the State of
Delaware or at its principal executive offices. The
corporation shall have a reasonable amount of time to
respond to any such request.
Section 9. Section Headings.
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Section headings in these by-laws are for convenience of
reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
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Section 10. Inconsistent Provisions.
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In the event that any provision of these by-laws is or
becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the
State of Delaware or any other applicable law, the
provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall
otherwise be given full force and effect.
ARTICLE VII
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AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and
new by-laws adopted at any meeting of the board of directors
by the affirmative vote of the majority of the total number
of directors then in office. The fact that the power to
adopt, amend, alter, or repeal the by-laws has been
conferred upon the board of directors shall not divest the
stockholders of such powers as set forth in the certificate
of incorporation.
ARTICLE VIII
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The corporation expressly elects not to be governed by
Section 203 of the General Corporation Law of the State of
Delaware.