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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) May 24, 1999
-------------
CARAUSTAR INDUSTRIES, INC.
--------------------------
(Exact Name of Registrant as Specified in its Charter)
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North Carolina 0-20646 58-1388387
- ---------------------------------------- ----------------------- ------------------------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of Incorporation)
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3100 Washington Street
Austell, Georgia 30106
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(Address of Principal Executive Offices)
(Zip Code)
(770) 948-3101
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
----------------------------------------------------------------------
(Former name or address, if changed from last report)
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Item 7. Exhibits.
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The following exhibits are filed as part of this report.
Exhibit 1.1 - Underwriting Agreement, dated as of May 26, 1999.
Exhibit 4.2 - Form of First Supplemental Indenture.
Exhibit 4.3 - Form of Global Note (included in Exhibit 4.2).
Exhibit 10.1 - Amended and Restated Rights Agreement, dated as of May
24, 1999.
Exhibit 10.2 - Amendment No. 1 to the Company's 1996 Director Equity
Plan.
Exhibit 12.1 - Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 28, 1999
CARAUSTAR INDUSTRIES, INC.
By: /s/ H. Lee Thrash, III
------------------------
H. Lee Thrash, III
Vice President and
Chief Financial Officer
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Exhibit Index
The following exhibits are filed as part of this report.
Exhibit 1.1 - Underwriting Agreement, dated as of May 26, 1999.
Exhibit 4.2 - Form of First Supplemental Indenture.
Exhibit 4.3 - Form of Global Note (included in Exhibit 4.2).
Exhibit 10.1 - Amended and Restated Rights Agreement, dated as of May
24, 1999.
Exhibit 10.2 - Amendment No. 1 to the Company's 1996 Director Equity
Plan.
Exhibit 12.1 - Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges.
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EXHIBIT 1.1
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CARAUSTAR INDUSTRIES, INC.
(a North Carolina corporation)
UNDERWRITING AGREEMENT
May 26, 1999
=====================================================================
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TABLE OF CONTENTS
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Page
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SECTION 1. Representations and Warranties..................................................................3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY.....................................................3
(b) OFFICER'S CERTIFICATES...........................................................................13
SECTION 2. Sale and Delivery to Underwriters; Closing.....................................................13
(a) UNDERWRITTEN SECURITIES..........................................................................13
(b) OPTION UNDERWRITTEN SECURITIES...................................................................14
(c) PAYMENT..........................................................................................14
(d) DENOMINATIONS; REGISTRATION......................................................................15
SECTION 3. Covenants of the Company.......................................................................15
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS...................................15
(b) FILING OF AMENDMENTS.............................................................................15
(c) DELIVERY OF REGISTRATION STATEMENTS..............................................................16
(d) DELIVERY OF PROSPECTUSES.........................................................................16
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS........................................................16
(f) BLUE SKY QUALIFICATIONS..........................................................................17
(g) EARNINGS STATEMENT...............................................................................17
(h) REPORTS TO SECURITYHOLDERS.......................................................................17
(i) USE OF PROCEEDS..................................................................................17
(j) LISTING..........................................................................................17
(k) RESTRICTION ON SALE OF SECURITIES................................................................17
(l) REPORTING REQUIREMENTS...........................................................................18
SECTION 4. Payment of Expenses............................................................................18
(a) EXPENSES.........................................................................................18
(b) TERMINATION OF AGREEMENT.........................................................................18
SECTION 5. Conditions of Underwriters' Obligations........................................................19
(a) EFFECTIVENESS OF REGISTRATION STATEMENT..........................................................19
(b) OPINION OF COUNSEL FOR COMPANY...................................................................19
(c) OPINION OF COUNSEL FOR UNDERWRITERS..............................................................19
(d) OFFICERS' CERTIFICATE............................................................................20
(e) ACCOUNTANT'S COMFORT LETTER......................................................................20
(f) BRING-DOWN COMFORT LETTER........................................................................20
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(g) RATINGS..........................................................................................20
(h) APPROVAL OF LISTING..............................................................................21
(i) NO OBJECTION.....................................................................................21
(j) LOCK-UP ARRANGEMENTS.............................................................................21
(k) OVER-ALLOTMENT OPTION............................................................................21
(l) ADDITIONAL DOCUMENTS.............................................................................22
(m) TERMINATION OF TERMS AGREEMENT...................................................................22
SECTION 6. Indemnification................................................................................22
(a) INDEMNIFICATION OF UNDERWRITERS..................................................................22
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS...............................................23
(c) ACTIONS AGAINST PARTIES; NOTIFICATION............................................................23
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE...............................................24
SECTION 7. Contribution...................................................................................25
SECTION 8. Representations, Warranties and Agreements To Survive Delivery.................................26
SECTION 9. Termination....................................................................................26
(a) UNDERWRITING AGREEMENT...........................................................................26
(b) TERMINATION; GENERAL.............................................................................27
(c) LIABILITIES......................................................................................27
SECTION 10. Default by One or More of the Underwriters....................................................27
SECTION 11. Notices.......................................................................................28
SECTION 12. Parties.......................................................................................29
SECTION 13. Governing Law and Time........................................................................29
SECTION 14. Effect of Headings............................................................................29
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CARAUSTAR INDUSTRIES, INC.
(a North Carolina corporation)
Debt Securities
UNDERWRITING AGREEMENT
May 26, 1999
To the Representative of the
several Underwriters named in the
Terms Agreement
hereinafter described
Ladies and Gentlemen:
Caraustar Industries, Inc., a North Carolina corporation (the
"Company"), proposes to issue and sell up to $300,000,000 aggregate initial
public offering price of its debt securities (the "Debt Securities"), from time
to time, in or pursuant to one or more offerings on terms to be determined at
the time of sale.
The Debt Securities will be issued in one or more series under an
indenture, dated as of June 1, 1999 (the "Indenture"), between the Company and
The Bank of New York, as trustee (the "Trustee"). Each series of Debt Securities
may vary, as applicable, as to title, aggregate principal amount, rank, interest
rate or formula and timing of payments thereof, stated maturity date, redemption
and/or payment provisions, sinking fund requirements, guarantors and any other
variable terms established by or pursuant to the applicable Indenture. As used
herein, "Securities" shall mean the Debt Securities initially issuable by the
Company.
Whenever the Company determines to make an offering of Securities, the
Company will enter into an agreement (each, a "Terms Agreement") providing for
the sale of such Securities to, and the purchase and offering thereof by, the
underwriters named in the applicable Terms Agreement (the "Underwriters," which
term shall include any Underwriter substituted pursuant to Section 10 hereof),
for whom the firm (or firms) designated as representative of the Underwriters of
such Underwritten Securities in the Terms Agreement relating thereto will act as
representative (the "Representative"). The Terms Agreement relating to the
offering of Securities shall specify the aggregate principal amount, as the case
may be, of Securities to be initially issued (the "Initial Underwritten
Securities"), the name of each Underwriter participating in such offering
(subject to substitution as provided in Section 10 hereof) and the name of any
Underwriter(s) acting as co-manager in connection with such offering, the
aggregate principal amount, as the case may be, of Initial Underwritten
Securities which each such Underwriter severally agrees to purchase, whether
such offering is on a fixed or variable price basis and, if on
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a fixed price basis, the initial offering price, the price at which the Initial
Underwritten Securities are to be purchased by the Underwriters, the form, time,
date and place of delivery and payment of the Initial Underwritten Securities
and any other material variable terms of the Initial Underwritten Securities. In
addition, if applicable, such Terms Agreement shall specify whether the Company
has agreed to grant to the Underwriters an option to purchase additional
Securities to cover over-allotments, if any, and the number or aggregate
principal amount, as the case may be, of Securities subject to such option (the
"Option Underwritten Securities"). As used herein, the term "Underwritten
Securities" shall include the Initial Underwritten Securities and all or any
portion of any Option Underwritten Securities. The Terms Agreement, which shall
be substantially in the form of EXHIBIT A hereto, may take the form of an
exchange of any standard form of written telecommunication between the Company
and the Representative, acting for itself and, if applicable, as representative
of any other Underwriters. Each offering of Underwritten Securities will be
governed by this Underwriting Agreement, as supplemented by the applicable Terms
Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-65555) for the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), and the offering thereof from time to time in accordance with Rule
415 of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"), and the Company has filed such post-effective amendments
thereto as may be required prior to the execution of the applicable Terms
Agreement. Such registration statement (as so amended, if applicable) has been
declared effective by the Commission and each Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such
registration statement (as so amended, if applicable), including the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the
1933 Act regulations (the "Rule 430A Information") or Rule 434(d) of the 1933
Act Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement;" and the final prospectus and the final prospectus
supplement relating to the offering of the Underwritten Securities, in the form
first furnished to the Underwriters by the Company for use in connection with
the offering of the Underwritten Securities, are collectively referred to herein
as the "Prospectus;" PROVIDED, HOWEVER, that all references to the "Registration
Statement" and the "Prospectus" shall also be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Terms Agreement; PROVIDED FURTHER, that if the Company files a registration
statement with the Commission pursuant to Rule 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then, after such filing,
all references to "Registration Statement" shall also be deemed to include the
Rule 462(b) Registration Statement; and PROVIDED FURTHER, that if the Company
elects to rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall also be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as
the case may be, in the form first furnished to the Underwriters by the Company
in reliance upon Rule 434 of the 1933 Act Regulations, and all references in
this Underwriting Agreement to the date of the Prospectus shall mean the date of
the Term Sheet. A
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"preliminary prospectus" shall be deemed to refer to any prospectus used before
the registration statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used
after such effectiveness and prior to the execution and delivery of the
applicable Terms Agreement. For purposes of this Underwriting Agreement, all
references to (i) the Registration Statement, Prospectus, Term Sheet or
preliminary prospectus or to any amendment or supplement to any of the foregoing
shall be deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"), (ii) the
Indenture shall be deemed to include, as applicable, any indenture supplemental
thereto, and (iii) the Representative shall be deemed to include, as applicable,
all such Representatives if there shall be more than one Representative.
All references in this Underwriting Agreement to financial statements
and schedules and other information which is "contained," "included," "referred
to" or "stated" (or other references of like import) in the Registration
Statement, Prospectus or preliminary prospectus shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be; and all references in this
Underwriting Agreement to amendments or supplements to the Registration
Statement, Prospectus or preliminary prospectus shall be deemed to mean and
include the filing of any document under the 1934 Act which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to the Representative, as of the date hereof, and to
each Underwriter named in the applicable Terms Agreement, as of the date
thereof, as of the Closing Time (as defined below) and, if applicable, as of
each Date of Delivery (as defined below) (in each case, a "Representation
Date"), as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with. In addition, the Indenture has been duly
qualified under the 1939 Act. At the respective times the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at each Representation Date, the
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Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rules and regulations of the Commission under the 1939 Act
(the "1939 Act Regulations") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. At
the date of the Prospectus, at the Closing Time and at each Date of Delivery, if
any, the Prospectus and any amendments and supplements thereto did not and will
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the Company elects
to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with
the requirements of Rule 434. Notwithstanding the foregoing, the representations
and warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the Representative expressly for use in the Registration
Statement or Prospectus. Each preliminary prospectus and the prospectus filed as
part of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for use
in connection with the offering of Underwritten Securities will, at the time of
such delivery, be identical to any electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the Prospectus
(including the filing of the Company's most recent Annual Report on Form 10-K
with the Commission (the "Annual Report on Form 10-K")), at the time they were
or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations") and, when
read together with the other information in the Prospectus, at the date of the
Prospectus, at the Closing Time and at each Date of Delivery, if any, did not
and will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules thereto included in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements of the Company
included in the Registration Statement and the Prospectus, together with the
related schedules and notes, as well as those financial statements, schedules
and notes of any other entity included therein, present fairly the financial
position of the Company and its consolidated Subsidiaries (as defined
4
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below), or such other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the Company and
its consolidated Subsidiaries, or such other entity, as the case may be, for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the Prospectus,
if any, present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus. In addition, any pro forma financial
statements of the Company and its Subsidiaries and the related notes thereto
included in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition (financial or otherwise), earnings, assets,
properties, operations, business affairs or business prospects of the Company
and its Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its Subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its Subsidiaries considered as one enterprise, and (C) except
for regular dividends on the Company's common stock or preferred stock, in
amounts per share that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of North Carolina and has corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Underwriting Agreement and the applicable Terms
Agreement. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each Subsidiary of the Company
(each, a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly
5
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existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect. Except as otherwise stated in the Registration
Statement and the Prospectus, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and is validly issued, fully paid
and non-assessable and is owned by the Company, directly or through
Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital stock of
any Subsidiary was issued in violation of preemptive or other similar rights of
any securityholder of such Subsidiary.
(viii) CAPITALIZATION. If the Prospectus contains a "Capitalization"
section, the authorized, issued and outstanding shares of capital stock of the
Company is, to the extent set forth in such section as of March 31, 1999, as set
forth in the column entitled "Actual" under such section (except for subsequent
issuances or repurchases thereof, if any, (A) contemplated under this
Underwriting Agreement, (B) pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus, (C) pursuant to the exercise of
convertible securities or options referred to in the Prospectus, or (D) which
are not material). The shares of capital stock of the Company have been duly
authorized and validly issued by the Company and are fully paid and
non-assessable; and none of such shares of capital stock was issued in violation
of preemptive or other similar rights of any securityholder of the Company.
(ix) AUTHORIZATION OF THIS UNDERWRITING AGREEMENT AND TERMS
AGREEMENT. This Underwriting Agreement has been, and the applicable Terms
Agreement as of the date thereof will have been, duly authorized, executed and
delivered by the Company.
(x) AUTHORIZATION OF DEBT SECURITIES. The Underwritten Securities
have been, or as of the date of such Terms Agreement will have been, duly
authorized by the Company for issuance and sale pursuant to this Underwriting
Agreement and such Terms Agreement. Such Underwritten Securities, when issued
and authenticated in the manner provided for in the applicable Indenture and
delivered against payment of the consideration therefor specified in such Terms
Agreement, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms. Such
Underwritten Securities will be in the form contemplated by, and each registered
holder thereof is entitled to the benefits of, the applicable Indenture.
(xi) AUTHORIZATION OF THE INDENTURE. The Indenture has been, or
prior to the issuance of the Debt Securities thereunder will have been, duly
authorized, executed and delivered by the Company and, upon such authorization,
execution and delivery, will constitute a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms.
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(xii) EMPLOYEE BENEFITS MATTERS. Each employee benefit plan of the
Company intended to be qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (or any successor code or statute) (the "Internal
Revenue Code") has heretofore been determined by the Internal Revenue Service to
so qualify, and each trust created thereunder has heretofore been determined by
the Internal Revenue Service to so qualify, and each trust created thereunder
has heretofore been determined by the Internal Revenue Service to be exempt from
tax under the provisions of Section 501(a) of the Internal Revenue Code, and
nothing has occurred since the date of the most recent determination that would
cause any such employee plan or trust to fail to qualify under Section 401(a) or
501(a) of the Internal Revenue Code. Both before and after giving effect to the
offering of the Debt Securities, no ERISA Events have occurred or are reasonably
expected to occur which, individually or in the aggregate, resulted in or might
reasonably be expected to result in a liability of the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates which would have a
Material Adverse Effect. Except as is required to be stated in the Prospectus
and as so stated therein, no defined benefit plan (or any other employee benefit
plan that is subject to Section 412 of the Internal Revenue Code) maintained by
the Company, its Subsidiaries and their respective ERISA Affiliates has incurred
any accumulated funding deficiency, as defined in Section 412 of the Internal
Revenue Code.
As used herein, the following terms shall have the respective
meaning ascribed to each below:
"Employee Pension Benefit Plan" means any "employee pension
benefit plan" as defined in Section 3(2) of ERISA (i) which is, or, at
any time within the five calendar years immediately preceding the date
hereof, was at any time, sponsored, maintained or contributed to by the
Company or its Subsidiaries or any of their respective ERISA Affiliates
or (ii) with respect to which any of the Company or its Subsidiaries
retains any liability, including any potential joint and several
liability as a result of an affiliation with an ERISA Affiliate or a
party that would be an ERISA Affiliate except for the fact the
affiliation ceased more than five calendar years prior to the date
hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder and any successor statute, regulations and
rulings.
"ERISA Affiliate" of any person, means (i) any corporation
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal
Revenue Code of which that person is, or was at any time within the
five calendar years immediately preceding the date hereof, a member;
(ii) any trade or business (whether or not incorporated) which is, or
was at any time within the five calendar years immediately preceding
the date hereof, a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Internal
Revenue Code of which that
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person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; and (iii) any member
of an affiliated service group within the meaning of Section 414(m) or
(o) of the Internal Revenue Code of which that person, any corporation
described in clause (i) above, or any trade business described in
clause (ii) above is, or was at any time within the five calendar years
immediately preceding the date hereof, a member.
"ERISA Event" means (i) the withdrawal by the Company or any
of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from
any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (ii)
the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 406, 409, 502(i) or 502(l) of ERISA in
respect of any Employee Pension Benefit Plan; or (iii) receipt from the
Internal Revenue Service of notice of the failure of any Employee
Pension Benefit Plan intended to be qualified under Section 401(a) of
the Internal Revenue Code to qualify under Section 401(a) of the
Internal Revenue Code, or the failure of any trust forming part of any
Employee Pension Benefit Plan to qualify for exemption from taxation
under Section 501(a) of the Internal Revenue Code.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which any of the Company, its
Subsidiaries or any of their respective ERISA Affiliates is making or
accruing an obligation to make contributions, or has within any of the
preceding five years made or accrued an obligation to make
contributions.
(xiii) DESCRIPTION OF THE UNDERWRITTEN SECURITIES AND INDENTURE. The
Underwritten Securities being sold pursuant to the applicable Terms Agreement
and the Indenture, as of the date of the Prospectus, will conform in all
material respects to the statements relating thereto contained in the Prospectus
and will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xiv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
of its Subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
Subsidiary
8
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is subject (collectively, "Agreements and Instruments"), except for such
defaults that would not result in a Material Adverse Effect. The execution,
delivery and performance of this Underwriting Agreement, the applicable Terms
Agreement and the Indenture, and any other agreement or instrument entered into
or issued or to be entered into or issued by the Company in connection with the
transactions contemplated hereby or thereby or in the Registration Statement and
the Prospectus and the consummation of the transactions contemplated herein and
in the Registration Statement and the Prospectus (including the issuance and
sale of the Underwritten Securities and the use of the proceeds from the sale of
the Underwritten Securities as described under the caption "Use of Proceeds")
and compliance by the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, property or operations of the Company or
any of its Subsidiaries pursuant to, any Agreements and Instruments nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any of its Subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its Subsidiaries or any of their assets, properties or
operations except, in each case other than with respect to the charter or
by-laws of the Company or any of its Subsidiaries, for such conflicts, breaches,
defaults, Repayment Events, liens, charges, encumbrances, or violations that
would not result in a Material Adverse Effect. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its Subsidiaries.
(xv) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of the Company or any of its Subsidiaries exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvi) ABSENCE OF PROCEEDINGS. There is not pending or threatened any
action, suit, proceeding, inquiry or investigation before or brought by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company threatened, against or affecting the Company or any
of its Subsidiaries which is required to be disclosed in the Registration
Statement and the Prospectus (other than as stated therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated under this Underwriting Agreement, the applicable
Terms Agreement or the Indenture or the performance by the Company of its
obligations hereunder and thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any of its Subsidiaries is a
party or of which any of their respective assets, properties or operations is
the subject which are
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not described in the Registration Statement and the Prospectus, including
ordinary routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xvii) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
(xviii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or foreign,
is necessary or required for the performance by the Company of its obligations
under this Underwriting Agreement or the applicable Terms Agreement or in
connection with the transactions contemplated under this Underwriting Agreement,
such Terms Agreement or any applicable Indenture, except such as have been
already obtained or as may be required under state securities laws.
(xix) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
Subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and neither
the Company nor any of its Subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xx) POSSESSION OF LICENSES AND PERMITS. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, and the Company and its Subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to possess or comply would not, singly or
in the aggregate, result in a Material Adverse Effect. All of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not result in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
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(xxi) TITLE TO PROPERTY. The Company and its Subsidiaries have good
and marketable title to all real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind, except (A) as otherwise stated in the
Registration Statement and the Prospectus or (B) those which do not, singly or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its Subsidiaries. All of the leases and subleases material to
the business of the Company and its Subsidiaries considered as one enterprise,
and under which the Company or any of its Subsidiaries holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor any of its Subsidiaries has received any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its Subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
Subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.
(xxii) [Intentionally omitted.]
(xxiii) INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is, and upon the issuance and sale of the Underwritten Securities
as herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus will not be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xxiv) ENVIRONMENTAL LAWS. Except as otherwise stated in the
Registration Statement and the Prospectus and except as would not, singly or in
the aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
its Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its Subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for
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clean-up or remediation, or an action, suit or proceeding by any private party
or governmental body or agency, against or affecting the Company or any of its
Subsidiaries relating to Hazardous Materials or any Environmental Laws.
(xxv) REGISTRATION RIGHTS. There are no holders of securities (debt
or equity) of the Company or holders of rights (including, without limitation,
preemptive rights), warrants or options to obtain securities of the Company, who
have the right to request the Company to register securities held by them under
the 1933 Act, other than holders who have waived or will not have such rights
for a specified period to be agreed upon among the Company and the Underwriters,
and have waived their rights with respect to the inclusion of their securities
in the Registration Statement.
(xxvi) ACCOUNTING CONTROLS. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxvii) COMPLIANCE WITH APPLICABLE LAW. The Company has complied in
all material respects with all material federal, state, local, foreign and
similar statutes, laws, ordinances, rules, regulations, orders, writs,
injunctions, judgements, and decrees applicable to the Company or any of its
Subsidiaries or to any of the Company's or its Subsidiary's properties or
assets, or with respect to any of the Company's or its Subsidiary's officers,
directors, employees or agents in their capacity as such ("Applicable Laws").
None of the Company or any of its Subsidiaries has received any written notice
or other written communication from any Governmental Authority or arbitrator
regarding any violation by the Company of, or a failure on the part of the
Company to comply with any Applicable Laws, other than any such violation or
failure to comply which would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
(xxviii) TAX RETURNS. All material Tax Returns required to be filed by
the Company and each of its Subsidiaries in any jurisdiction have been filed,
and all material Taxes (whether or not actually shown on such Tax Returns) for
which any of them is directly or indirectly liable or to which any of their
respective properties or assets are subject have been paid other than Taxes
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP. All such Tax Returns are true, correct and
complete in all material respects and set forth with material accuracy all items
to the extent required to be reflected or included in such Tax Returns by any
applicable federal, state, local or foreign Tax law, statute, rule, regulation,
judgment, order, writ or decree of any government, government instrumentality or
court. There is no material proposed Tax assessment against the Company or any
of its
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Subsidiaries, and, to the best knowledge of the Company, there is no
basis for such assessment, except for contested claims. As used herein, the
following terms shall have the respective meanings given to them below:
"Tax Return" means a report, return or other information
(including any amendments) required to be supplied to a governmental
entity with respect to Taxes including, where permitted or required,
combined or consolidated returns for any group of entities that
includes the Company or any of its Subsidiaries.
"Taxes" means all taxes however denominated, including any
interest or penalties that may become payable in respect thereof,
imposed by any federal, state, local or foreign government or any
agency or political subdivision of any such government, which taxes
shall include all income taxes (including, but not limited to, United
States federal income taxes and state income taxes), payroll and
employee withholding taxes, unemployment insurance, social security,
sales and use taxes, excise taxes, franchise taxes, gross receipts
taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, withholding taxes, workers' compensation, and other
obligations of the same or similar nature.
(xxix) INSURANCE. Each of the Company and its Subsidiaries is insured
(including in each case self-insurance and reinsurance) by insurers of
recognized financial responsibility against such losses and risks and in such
amounts and covering such risks as management reasonably believes are prudent
and customary in the businesses in which it is engaged and all such insurance is
in full force and effect; neither the Company nor any of its Subsidiaries has
within the last 3 years been refused any insurance coverage sought or applied
for; and neither the Company nor any of its Subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business; except in the case of each of the
foregoing as would not have a Material Adverse Effect.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Company or any of its Subsidiaries and delivered to any Underwriter or to
counsel for the Underwriters in connection with the offering of the Underwritten
Securities shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby on the date of such certificate
and, unless subsequently amended or supplemented, at each Representation Date
subsequent thereto.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING
(a) UNDERWRITTEN SECURITIES. The several commitments of the
Underwriters to purchase the Underwritten Securities pursuant to the applicable
Terms Agreement shall be deemed to have been made on the basis of the
representations and warranties herein contained and shall be subject to the
terms and conditions herein set forth.
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(b) OPTION UNDERWRITTEN SECURITIES. In addition, subject to the
terms and conditions herein set forth, the Company may grant, if so provided in
the applicable Terms Agreement, an option to the Underwriters, severally and not
jointly, to purchase up to the number or aggregate principal amount, as the case
may be, of the Option Underwritten Securities set forth therein at a price per
Option Underwritten Security equal to the price per Initial Underwritten
Security. Such option, if granted, will expire 30 days after the date of such
Terms Agreement, and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection with
the offering and distribution of the Initial Underwritten Securities upon notice
by the Representative to the Company setting forth the aggregate principal
amount, as the case may be, of Option Underwritten Securities as to which the
several Underwriters are then exercising the option and the time, date and place
of payment and delivery for such Option Underwritten Securities. Any such time
and date of payment and delivery (each, a "Date of Delivery") shall be
determined by the Representative, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, unless otherwise agreed upon by the Representative and the
Company. If the option is exercised as to all or any portion of the Option
Underwritten Securities, each of the Underwriters, severally and not jointly,
will purchase that proportion of the total number or aggregate principal amount,
as the case may be, of Option Underwritten Securities then being purchased which
the number or aggregate principal amount, as the case may be, of Initial
Underwritten Securities each such Underwriter has severally agreed to purchase
as set forth in such Terms Agreement bears to the aggregate principal amount, as
the case may be, of Initial Underwritten Securities, subject to such adjustments
as the Representative in its discretion shall make to eliminate any sales or
purchases of a fractional number or aggregate principal amount, as the case may
be, of Option Underwritten Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Underwritten Securities shall be made at the
offices of McGuire, Woods, Battle & Boothe LLP, Charlotte, North Carolina, or at
such other place as shall be agreed upon by the Representative and the Company,
at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date of the
applicable Terms Agreement (unless postponed in accordance with the provisions
of Section 10 hereof), or such other time not later than ten business days after
such date as shall be agreed upon by the Representative and the Company (such
time and date of payment and delivery being herein called "Closing Time"). In
addition, in the event that the Underwriters have exercised their option, if
any, to purchase any or all of the Option Underwritten Securities, payment of
the purchase price for, and delivery of such Option Underwritten Securities,
shall be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Representative and the Company, on the relevant Date of
Delivery as specified in the notice from the Representative to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the
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respective accounts of the Underwriters of the Underwritten Securities to be
purchased by them. It is understood that each Underwriter has authorized the
Representative, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Underwritten Securities which it has
severally agreed to purchase. The Representative, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Underwritten Securities to be purchased by
any Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. The Underwritten Securities shall
be in such denominations and registered in such names as the Representative may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The Underwritten Securities will
be made available for examination and packaging by the Representative in
Charlotte, North Carolina not later than 9:00 A.M. (Eastern time) on the
business day prior to the Closing Time or the relevant Date of Delivery, as the
case may be.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with the Representative and with each Underwriter
participating in the offering of Underwritten Securities, as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the
1933 Act Regulations, if and as applicable, and will notify the Representative
immediately, and confirm the notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
supplement or amendment to the Prospectus, (ii) the receipt of any comments from
the Commission, (iii) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Underwritten Securities for offering or
sale in any jurisdiction, or of the initiation or threatening of any proceedings
for any of such purposes. The Company will promptly effect the filings necessary
pursuant to Rule 424 and will take such steps as it deems necessary to ascertain
promptly whether any Prospectus transmitted for filing under Rule 424 was
received for filing by the Commission and, in the event that it was not, it will
promptly file the Prospectus. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Representative
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b) of the 1933 Act Regulations),
any Term Sheet or any amendment,
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supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Representative with
copies of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such document to
which the Representative or counsel for the Underwriters shall reasonably
object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Representative and counsel for the Underwriters, without
charge, signed or conformed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and signed or conformed copies of all
consents and certificates of experts, and will also deliver to the
Representative, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each of
the Underwriters. Copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company will deliver to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus as such Underwriter may reasonably request.
The Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Underwritten Securities as contemplated in this Underwriting Agreement and the
applicable Terms Agreement and in the Registration Statement and the Prospectus.
If at any time when the Prospectus is required by the 1933 Act or the 1934 Act
to be delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement in order that the Registration Statement will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or to amend or supplement the Prospectus in order that the Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any
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such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters, without charge, such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Underwritten
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Representative may
designate and to maintain such qualifications in effect for a period of not less
than one year from the date of the applicable Terms Agreement; PROVIDED,
HOWEVER, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a broker or
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. In each jurisdiction in which the
Underwritten Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one year
from the date of such Terms Agreement.
(g) EARNINGS STATEMENT. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(h) REPORTS TO SECURITYHOLDERS. Through its fiscal year ending in
1999, the Company will deliver to the Representative copies of all reports or
other communications (financial or otherwise) made to securityholders of the
Company.
(i) USE OF PROCEEDS. The Company will use the net proceeds
received by it from the sale of the Underwritten Securities in the manner
specified in the Prospectus under "Use of Proceeds."
(j) LISTING. The Company will use its best efforts to effect the
listing of the Underwritten Securities, prior to the Closing Time, on any
national securities exchange or quotation system if and as specified in the
applicable Terms Agreement.
(k) RESTRICTION ON SALE OF SECURITIES. Between the date of the
applicable Terms Agreement and the Closing Time or such other date specified in
such Terms Agreement, the Company will not, without the prior written consent of
the Representative, directly or indirectly, issue, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, the securities specified in
such Terms Agreement.
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(l) REPORTING REQUIREMENTS. The Company, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Underwriting Agreement or the
applicable Terms Agreement, including (i) the preparation, printing and filing
of the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Underwriting Agreement, any Terms
Agreement, any agreement among underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Underwritten Securities, (iii) the preparation,
issuance and delivery of the Underwritten Securities to the Underwriters,
including any transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Underwritten Securities to the Underwriters,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors or agents (including transfer agents and registrars), as well as the
reasonable fees and disbursements of any Trustees and their respective counsel,
(v) the qualification of the Underwritten Securities under state securities laws
in accordance with the provisions of Section 3(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation, printing and
delivery of the Blue Sky Survey and any Legal Investment Survey, and any
amendment thereto, (vi) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, any Term Sheet, and the Prospectus and any
amendments or supplements thereto, (vii) the fees charged by nationally
recognized statistical rating organizations for the rating of the Underwritten
Securities, if applicable, (viii) the fees and expenses incurred with respect to
the listing of the Underwritten Securities, if applicable, (ix) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review, if any, by the National Association
of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Underwritten Securities and (x) the fees and expenses of any Underwriter acting
in the capacity of a "qualified independent underwriter" (as defined in the
bylaws of the NASD), if applicable. It is understood, however, that except as
provided in this Section 4, and in Sections 6 and 7 hereof, the Underwriters
will be responsible for all their own costs and expenses, including the fees of
their counsel, any transfer taxes on the Underwritten Securities upon resale by
them and all other expenses incurred by them in connection with any offering of
the Underwritten Securities made by the Underwriters.
(b) TERMINATION OF AGREEMENT. If the applicable Terms Agreement is
terminated by the Representative in accordance with the provisions of Section 5
or Section 9(b)(i) hereof, the Company shall reimburse the Underwriters for all
of their out-of-pocket expenses reasonably incurred by the Underwriters in
connection with preparations for the
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purchase, sale and delivery of Underwritten Securities pursuant to the
applicable Terms Agreement, including the reasonable fees and disbursements of
counsel for the Underwriters, but the Company shall then be under no further
liability to any Underwriter with respect to such Underwritten Securities except
as provided in Sections 4(a), 6 and 7 hereof.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for the Underwritten Securities pursuant to
the applicable Terms Agreement are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its Subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been initiated or be pending or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Underwritten Securities, the specific method
of distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any
required post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule 430A),
or, if the Company has elected to rely upon Rule 434 of the 1933 Act
Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Robinson, Bradshaw & Hinson, P.A., counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth in EXHIBIT B hereto.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of McGuire, Woods, Battle & Boothe LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, with respect to the matters set forth in clauses (1), (6), (7),
(8), (10), (11) (solely as to the information in the Prospectus under
"Description of Notes" and "Description of Capital Stock," if any, or any
caption purporting to describe any such Securities), (17), (18) and the
penultimate paragraph of EXHIBIT B hereto. In giving such opinion, such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
laws of the State of New York and the federal laws of the United States, upon
the opinions of counsel satisfactory to the Representative. Such counsel may
also
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<PAGE> 23
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company and
its Subsidiaries and certificates of public officials.
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date of the applicable Terms Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and
the Representative shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1 are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
the applicable Terms Agreement, the Representative shall have received from
Arthur Andersen LLP (and, if necessary, any other independent certified public
accountants of any Subsidiary of the Company or of any business acquired by the
Company for which financial statements are, or are required to be, included in
the Registration Statement) a letter dated such date, in form and substance
satisfactory to the Representative, together with signed or reproduced copies of
such letter for each of the other Underwriters, including matters such as those
set forth in Annex I hereto and containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus and to such further effect as
the Representative may reasonably request.
(f) BRING-DOWN COMFORT LETTER. At the Closing Time, the
Representative shall have received from Arthur Andersen LLP (and, if necessary,
any other independent certified public accountants of any Subsidiary of the
Company or of any business acquired by the Company for which financial
statements are, or are required to be, included in the Registration Statement) a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of this
Section 5, except that the specified date referred to shall be a date not more
than three business days prior to the Closing Time.
(g) RATINGS. At Closing Time and at any relevant Date of Delivery,
the Underwritten Securities shall have the ratings accorded by any "nationally
recognized statistical rating organization," as defined by the Commission for
purposes of Rule 436(g)(2) of the 1933 Act Regulations, if and as specified in
the applicable Terms Agreement, and the Company shall
20
<PAGE> 24
have delivered to the Representative a letter, dated as of such date, from each
such rating organization, or other evidence satisfactory to the Representative,
confirming that the Underwritten Securities have such rating. Since the time of
execution of such Terms Agreement, there shall not have occurred a downgrading
in the rating assigned to the Underwritten Securities or any of the Company's
other securities by any such rating organization, and no such rating
organization shall have publicly announced that it has under surveillance or
review its rating of the Underwritten Securities or any of the Company's other
securities.
(h) APPROVAL OF LISTING. At Closing Time, the Underwritten
Securities shall have been approved for listing, subject only to official notice
of issuance, if any, as specified in the applicable Terms Agreement.
(i) NO OBJECTION. If the Registration Statement or an offering of
Underwritten Securities has been filed with the NASD for review, the NASD shall
not have raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(j) LOCK-UP ARRANGEMENTS. On the date of the applicable Terms
Agreement, the Representative shall have received, in form and substance
satisfactory to it, each lock-up agreement, if any, specified in such Terms
Agreement as being required to be delivered by the persons listed therein.
(k) OVER-ALLOTMENT OPTION. In the event that the Underwriters are
granted an over-allotment option by the Company in the applicable Terms
Agreement and the Underwriters exercise their option to purchase all or any
portion of the Option Underwritten Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any of its Subsidiaries hereunder shall
be true and correct as of each Date of Delivery, and, at the relevant Date of
Delivery, the Representative shall have received:
(i) A certificate, dated such Date of Delivery, of the President or a
Vice President of the Company and the chief financial officer or chief
accounting officer of the Company, confirming that the certificate
delivered at the Closing Time pursuant to Section 5(d) hereof remains
true and correct as of such Date of Delivery.
(ii) The favorable opinion of Robinson, Bradshaw & Hinson, P.A.,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Underwritten Securities and otherwise to the same effect as the
opinion required by Section 5(b) hereof.
(iii) The favorable opinion of McGuire, Woods, Battle & Boothe LLP,
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Underwritten Securities and otherwise to the same effect as
the opinion required by Section 5(c) hereof.
21
<PAGE> 25
(iv) A letter from Arthur Andersen LLP (and such other accountants) in
form and substance satisfactory to the Representative and dated such
Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representative pursuant to Section 5(f) hereof,
except that the "specified date" on the letter furnished pursuant to
this paragraph shall be a date not more than three business days prior
to such Date of Delivery.
(l) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Underwritten Securities
as herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Underwritten Securities as herein contemplated
shall be satisfactory in form and substance to the Representative and counsel
for the Underwriters.
(m) TERMINATION OF TERMS AGREEMENT. If any condition specified in
this Section 5 shall not have been fulfilled when and as required to be
fulfilled, the applicable Terms Agreement (or, with respect to the Underwriters'
exercise of any applicable over-allotment option for the purchase of Option
Underwritten Securities on a Date of Delivery after the Closing Time, the
obligations of the Underwriters to purchase the Option Underwritten Securities
on such Date of Delivery) may be terminated by the Representative by notice to
the Company at any time at or prior to the Closing Time (or such Date of
Delivery, as applicable), and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information deemed to be a part thereof,
if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make
22
<PAGE> 26
the statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; PROVIDED that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Representative),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representative expressly for use
in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action
23
<PAGE> 27
commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action; PROVIDED, HOWEVER, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. The indemnifying party shall be entitled to appoint counsel
of the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel (and local counsel) if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest in the reasonable judgment of the indemnified party,
(ii) the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall have authorized the indemnified party to
employ separate counsel at the expense of the indemnifying party. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its
24
<PAGE> 28
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
effected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent it considers
such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other hand, from the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on
the one hand, and of the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of such Underwritten Securities (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet bear to the
aggregate initial public offering price of such Securities as set forth on such
cover.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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<PAGE> 29
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number or aggregate principal amount, as the case may be, of
Initial Underwritten Securities set forth opposite their respective names in the
applicable Terms Agreement and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Underwriting Agreement or the applicable Terms Agreement or in certificates of
officers of the Company submitted pursuant hereto or thereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of and payment for the Underwritten
Securities.
SECTION 9. TERMINATION.
(a) UNDERWRITING AGREEMENT. This Underwriting Agreement (excluding
the applicable Terms Agreement) may be terminated for any reason at any time by
the Company or
26
<PAGE> 30
by the Representative upon the giving of 30 days' prior written notice of such
termination to the other party hereto.
(b) TERMINATION; GENERAL. The Representative may terminate the
applicable Terms Agreement, by notice to the Company, at any time at or prior to
the Closing Time or any relevant Date of Delivery, if (i) there has been, since
the time of execution of this Agreement or since the respective dates as of
which information is given in the Prospectus, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) there has
occurred, since the execution of the applicable Terms Agreement, any material
adverse change in the financial markets in the United States or in the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or there has occurred any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representative, impracticable to
market the Underwritten Securities or to enforce contracts for the sale of the
Underwritten Securities, or (iii) trading in any securities of the Company has
been suspended or materially limited by the Commission or any national
securities exchange or quotation system on which the Company's common stock is
listed or quoted, or if trading generally on the New York Stock Exchange or the
American Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or (iv) a banking moratorium has been declared by Federal, New York,
or North Carolina authorities or, if the Underwritten Securities include Debt
Securities denominated or payable in, or indexed to, one or more foreign or
composite currencies, by the relevant authorities in the related foreign country
or countries, or (v) there is any downgrading in the rating accorded the
Underwritten Securities by any "nationally recognized statistical rating
organization" as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act or if any such rating organization shall have
publicly announced that it has placed any of such Underwritten Securities on
what is commonly termed a "watch list" for possible downgrading.
(c) LIABILITIES. If this Underwriting Agreement or the applicable
Terms Agreement is terminated pursuant to this Section 9, such termination shall
be without liability of any party to any other party except as provided in
Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive
such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail at the Closing Time or
the relevant Date of Delivery, as the case may be, to purchase the Underwritten
Securities which it or they are obligated to purchase under the applicable Terms
Agreement (the "Defaulted Securities"), then the Representative shall have the
right, within 24 hours thereafter, to make arrangements for one
27
<PAGE> 31
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number or aggregate principal amount, as the case may be, of
Defaulted Securities does not exceed 10% of the number or aggregate
principal amount, as the case may be, of Underwritten Securities to be
purchased on such date pursuant to such Terms Agreement, the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations under such Terms Agreement
bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number or aggregate principal amount, as the case may be, of
Defaulted Securities exceeds 10% of the number or aggregate principal
amount, as the case may be, of Underwritten Securities to be purchased
on such date pursuant to such Terms Agreement, such Terms Agreement
(or, with respect to the Underwriters' exercise of any applicable
over-allotment option for the purchase of Option Underwritten
Securities on a Date of Delivery after the Closing Time, the
obligations of the Underwriters to purchase, and the Company to sell,
such Option Underwritten Securities on such Date of Delivery) shall
terminate without liability on the part of any non-defaulting
Underwriter or on the part of the Company, except for the expenses to
be borne by the Company and the Underwriters as provided in Section 4
and the indemnification and contribution provisions in Sections 6 and 7
hereof.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in (i) a
termination of the applicable Terms Agreement or (ii) in the case of a Date of
Delivery after the Closing Time, a termination of the obligations of the
Underwriters and the Company with respect to the related Option Underwritten
Securities, as the case may be, either the Representative or the Company shall
have the right to postpone the Closing Time or the relevant Date of Delivery, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or the Prospectus or in any other
documents or arrangements.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the address of the Representative as set forth
in the Terms Agreement; notices to the Company shall be directed to the Company
at 3100 Washington Street, Austell, Georgia 30001, attention of Chief Financial
Officer.
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<PAGE> 32
SECTION 12. PARTIES. This Underwriting Agreement and the applicable
Terms Agreement shall each inure to the benefit of and be binding upon the
Company, the Representative and, upon execution of such Terms Agreement, any
other Underwriters and their respective successors. Nothing expressed or
mentioned in this Underwriting Agreement or such Terms Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Underwriting Agreement or such Terms Agreement or
any provision herein or therein contained. This Underwriting Agreement and such
Terms Agreement and all conditions and provisions hereof and thereof are
intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Underwritten
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT AND ANY
APPLICABLE TERMS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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<PAGE> 33
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Underwriting Agreement, along with all counterparts, will become a binding
agreement between the Representative and the Company in accordance with its
terms.
Very truly yours,
CARAUSTAR INDUSTRIES, INC.
By: /s/ Thomas V. Brown
------------------------------
Name: Thomas V. Brown
Title: Pres. and CEO
CONFIRMED AND ACCEPTED,
as of the date first above written:
BANC OF AMERICA SECURITIES LLC
BT ALEX. BROWN INCORPORATED
As Representatives of the several Underwriters
By: BANC OF AMERICA SECURITIES LLC
By: /s/ Paul Kline
------------------------------------
Authorized Signatory
<PAGE> 34
EXHIBIT A
CARAUSTAR INDUSTRIES, INC.
(a North Carolina corporation)
Debt Securities
TERMS AGREEMENT
, 1999
--------- ---
To: Caraustar Industries, Inc.
3100 Washington Street
Austell, Georgia 30001
Ladies and Gentlemen:
We understand that Caraustar Industries, Inc., a North Carolina
corporation (the "Company"), proposes to issue and sell $[__________] aggregate
principal amount of its debt securities (the "Debt Securities") (such securities
also being hereinafter referred to as the "[Initial] Underwritten Securities").
Subject to the terms and conditions set forth or incorporated by reference
herein, we [the underwriters named below (the "Underwriters")] offer to
purchase, severally and not jointly, the principal amount of Underwritten
Securities [opposite their names set forth below] at the purchase price set
forth below [, and a proportionate share of Option Underwritten Securities set
forth below, to the extent any are purchased].
<TABLE>
<S> <C>
Principal Amount
Underwriter of [Initial] Underwritten Securities
- --------------- --------------------------------------------
Total
-------------------
[$]
===================
</TABLE>
The Underwritten Securities shall have the following terms:
Title:
Rank:
Ratings:
<PAGE> 35
Aggregate principal amount:
Denominations:
Currency of payment:
Interest rate or formula:
Interest payment dates:
Regular record dates:
Stated maturity date:
Redemption provisions:
Sinking fund requirements:
Defeasance provisions:
Listing requirements:
Black-out provisions:
Fixed or Variable Price Offering: [Fixed] [Variable] Price Offering
If Fixed Price Offering: initial public offering price: [__]% of the
principal amount, plus accrued interest, if any, or amortized original
issue discount, if any, from ________________.
Purchase price: ___% of principal amount, plus accrued interest, if
any, or amortized original issue discount, if any, from ____________.
Form:
Other terms and conditions:
Closing date and location:
Additional co-managers, if any:
All of the provisions contained in the document attached as Annex I
hereto entitled "Caraustar Industries, Inc.--Debt Securities--Underwriting
Agreement" are hereby incorporated by reference in their entirety herein and
shall be deemed to be a part of this Terms Agreement to the same extent as if
such provisions had been set forth in full herein. Terms defined in such
document are used herein as therein defined.
Please accept this offer no later than ____ o'clock P.M. (New York City
time) on ________________ by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us.
Very truly yours,
[NAME OF REPRESENTATIVE]
By:
-------------------------------
Authorized Signatory
2
<PAGE> 36
[Acting on behalf of itself and the other named Underwriters.]
Accepted:
CARAUSTAR INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
3
<PAGE> 37
EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(1) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of North Carolina.
(2) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under, or as
contemplated under, the Underwriting Agreement and the applicable Terms
Agreement.
(3) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each of the jurisdictions set forth
on Schedule A hereto, and to the best of our knowledge is so qualified and in
good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in good
standing in such other jurisdiction would not result in a Material Adverse
Effect.
(4) Each Subsidiary set forth on Schedule B hereto has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect. Except as
otherwise stated in the Registration Statement and the Prospectus, all of the
issued and outstanding capital stock of each Subsidiary has been duly authorized
and is validly issued, fully paid and non-assessable and, to the best of our
knowledge, is owned by the Company, directly or through Subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity. To the best of our knowledge, none of the outstanding shares of capital
stock of any Subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such Subsidiary.
(5) The authorized, issued and outstanding shares of capital stock
of the Company as of March 31, 1999 are as set forth in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances
thereof, if any, (A) contemplated under the Underwriting Agreement, (B) pursuant
to reservations, agreements or employee benefit plans referred to in the
Prospectus, (C) pursuant to the exercise of convertible securities or options
referred to in the Prospectus, or (D) which are not material). The shares of
capital stock of the Company have been duly authorized and validly issued by the
Company and are fully paid and non-assessable, and none of such shares of
capital stock was issued in violation of preemptive or other similar rights of
any securityholder of the Company.
<PAGE> 38
(6) The Underwriting Agreement and the applicable Terms Agreement
have been duly authorized, executed and delivered by the Company.
(7) The Underwritten Securities have been duly authorized by the
Company for issuance and sale pursuant to the Underwriting Agreement and the
applicable Terms Agreement. The Underwritten Securities, when issued and
authenticated in the manner provided for in the Indenture and delivered against
payment of the consideration therefor specified in such Terms Agreement, will
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Such Underwritten Securities will be in the form
contemplated by, and each registered holder thereof is entitled to the benefits
of, the Indenture.
(8) The Indenture has been duly authorized, executed and delivered
by the Company and (assuming due authorization, execution and delivery thereof
by the Trustee) constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(9) [Intentionally omitted.]
(10) The Underwritten Securities being sold pursuant to the
applicable Terms Agreement conform in all material respects to the statements
relating thereto contained in the Prospectus and are in substantially the form
filed or incorporated by reference, as the case may be, as an exhibit to the
Registration Statement.
(11) The information in the Prospectus under "Description of Debt
Securities," "Description of Notes" and "Description of Capital Stock," if any,
or any caption purporting to describe any such Securities, and "Certain Federal
Income Tax Considerations," if any, and in the Registration Statement under Item
15, to the extent that it constitutes matters of law, summaries of legal
matters, the Company's charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.
(12) To the best of our knowledge, (i) neither the Company nor any
of its Subsidiaries is in violation of its charter or by-laws and (ii) no
default by the Company or any of its Subsidiaries exists in the due performance
or observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement.
(13) The execution, delivery and performance of the Underwriting
Agreement, the
2
<PAGE> 39
applicable Terms Agreement and the Indenture and any other agreement or
instrument entered into or issued or to be entered into or issued by the Company
in connection with the transactions contemplated in the Registration Statement
and the Prospectus and the consummation of the transactions contemplated in the
Underwriting Agreement and such Terms Agreement and in the Registration
Statement and the Prospectus (including the issuance and sale of the
Underwritten Securities and the use of the proceeds from the sale of the
Underwritten Securities as described under the caption "Use Of Proceeds") and
compliance by the Company with its obligations thereunder do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant to, any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to us, to which the Company or
any of its Subsidiaries is a party or by which it or any of them may be bound,
or to which any of the assets, properties or operations of the Company or any of
its Subsidiaries is subject, except for such conflicts, breaches, defaults,
events or liens, charges or encumbrances that would not result in a Material
Adverse Effect, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any of its Subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries or any
of their assets, properties or operations.
(14) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation to which the
Company or any of its Subsidiaries thereof is a party or to which the assets,
properties or operations of the Company or any of its Subsidiaries thereof is
subject, before or by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a Material Adverse
Effect or which might reasonably be expected to materially and adversely affect
the consummation of the transactions contemplated under the Underwriting
Agreement, the applicable Terms Agreement or the Indenture or the performance by
the Company of its obligations thereunder.
(15) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(16) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that are not
described as required.
(17) The Registration Statement has been declared effective under
the 1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b). To
the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act
3
<PAGE> 40
and, to the best of our knowledge, no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
(18) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom, and each Trustee's Statement of Eligibility on Form T-1 (the
"Form T-1s"), as to which we express no opinion) complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(19) The documents incorporated by reference in the Prospectus
(other than the financial statements and supporting schedules therein or omitted
therefrom, as to which we express no opinion), when they were filed with the
Commission complied as to form in all material respects with the requirements of
the 1934 Act and the rules and regulations of the Commission thereunder.
(20) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by the Company of its obligations under the Underwriting Agreement
or the applicable Terms Agreement or in connection with the transactions
contemplated under the Underwriting Agreement, such Terms Agreement or the
Indenture other than under the 1933 Act, the 1933 Act Regulations, the 1939 Act
and the 1939 Act Regulations, which have been obtained, or as may be required
under state securities or blue sky laws.
(21) [Intentionally omitted.]
(22) Neither the Company nor any of its Subsidiaries is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
As counsel to the Company, we have examined various documents and
records and have participated in the preparation of and reviewed the
Registration Statement and the Prospectus, participated in discussions with
representatives of the Company and its counsel and accountants, and
representatives of the Underwriters and their counsel, and advised the Company
as to the requirements of the 1933 Act and the 1934 Act and the 1933 Act
Regulations and the 1934 Act Regulations.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any post-effective amendment thereto, including
the Rule 430A Information and Rule 434 Information (if applicable) (including
the filing of the Company's Annual Report on Form 10-K with the Commission)
(except for financial statements and schedules and other
4
<PAGE> 41
financial data included therein or omitted therefrom and for the Form T-1s, as
to which we make no statement), at the time such Registration Statement or any
post-effective amendment thereto became effective or at the date of the
applicable Terms Agreement, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included therein or omitted therefrom, as to which we
make no statement), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time, included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
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<PAGE> 42
ANNEX I
FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)
(i) We are independent public accountants with respect to the
Company within the meaning of the 1933 Act and the applicable published 1933 Act
Regulations.
(ii) In our opinion, the audited financial statements and the
related financial statement schedules included or incorporated by reference in
the Registration Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder.
(iii) On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a reading
of the unaudited interim consolidated financial statements of the Company for
the _____-month periods ended _________, 19___ and _________, 19___, included in
the Registration Statement and the Prospectus (the "____-month financials"), [a
reading of the latest available unaudited interim consolidated financial
statements of the Company], a reading of the minutes of all meetings of the
stockholders and directors of the Company and its Subsidiaries and the and
Committees of the Company's Board of Directors and any Subsidiary committees
since _________________, inquiries of certain officials of the Company and its
Subsidiaries responsible for financial and accounting matters, a review of
interim financial information in accordance with standards established by the
American Institute of Certified Public Accountants in Statement on Auditing
Standards No. 71, Interim Financial Information ("SAS 71"), with respect to the
_____-month financials, and such other inquiries and procedures as may be
specified in such letter, nothing came to our attention that caused us to
believe that:
(A) the _____-month financials included in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations applicable to unaudited interim financial statements included in
registration statements or any material modifications should be made to the
_____-month financials included in the Registration Statement and the Prospectus
for them to be in conformity with generally accepted accounting principles;
(B) at _________, 19___ and at a specified date not more than five
days prior to the date of the applicable Terms Agreement, there was any change
in the capital stock of the Company and its Subsidiaries or any decrease in the
total assets or stockholders investment of the Company and its Subsidiaries or
any increase in the notes and bonds payable and total liabilities of the Company
and its Subsidiaries, in each case as compared with amounts shown in the latest
balance sheet included in the Registration Statement and the Prospectus, except
in each case for changes, decreases or increases that the Registration Statement
and the Prospectus disclose have occurred or may occur; or
(C) for the period from _________, 19___ to _________, 19___ and
for the period from _________, 19___ to a specified date not more than five days
prior to the date of the
2
<PAGE> 43
applicable Terms Agreement, there was any decrease in consolidated total
revenues, operating income, or net income, in each case as compared with the
comparable period in the preceding year, except in each case for any decreases
that the Registration Statement and the Prospectus discloses have occurred or
may occur.
(iv) Based upon the procedures set forth in clause (iii) above and
a reading of the Selected Financial Data included in the Registration Statement
and the Prospectus and a reading of the financial statements from which such
data were derived, nothing came to our attention that caused us to believe that
the Selected Financial Data included in the Registration Statement and the
Prospectus do not comply as to form in all material respects with the disclosure
requirements of Item 301 of Regulation S-K of the 1933 Act, that the amounts
included in the Selected Financial Data are not in agreement with the
corresponding amounts in the audited consolidated financial statements for the
respective periods or that the financial statements not included in the
Registration Statement and the Prospectus from which certain of such data were
derived are not in conformity with generally accepted accounting principles.
(v) We have compared the information in the Registration Statement
and the Prospectus under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures specified
herein, nothing came to our attention that caused us to believe that this
information does not comply as to form in all material respects with the
disclosure requirements of Items 302, 402 and 503(d), respectively, of
Regulation S-K.
(vi) We are unable to and do not express any opinion on the Pro
Forma Financial Information (the "Pro Forma Statement") included in the
Registration Statement and the Prospectus or on the pro forma adjustments
applied to the historical amounts included in the Pro Forma Statement; however,
for purposes of this letter we have:
(A) read the Pro Forma Statement;
(B) performed an audit of the financial statements to which the
pro forma adjustments were applied;
3
<PAGE> 44
(C) made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters about the basis for their
determination of the pro forma adjustments and whether the Pro Forma Statement
complies as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X; and
(D) proved the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the Pro Forma Statement; and on
the basis of such procedures and such other inquiries and procedures as
specified herein, nothing came to our attention that caused us to believe that
the Pro Forma Statement included in the Registration Statement does not comply
as to form in all material respects with the applicable requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those statements.
(vii) In addition to the procedures referred to in clause (ii)
above, we have performed other procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement and the Prospectus, which
are specified herein, and have compared certain of such items with, and have
found such items to be in agreement with, the accounting and financial records
of the Company.
4
<PAGE> 1
EXHIBIT 4.2
=====================================================================
CARAUSTAR INDUSTRIES, INC.,
as Issuer,
and
THE BANK OF NEW YORK,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 1, 1999
$200,000,000 7 3/8% NOTES due 2009
=====================================================================
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of June 1, 1999, between
CARAUSTAR INDUSTRIES, INC., a North Carolina corporation (the "Company"), having
its principal office at 3100 Washington Street, Austell, Georgia, 30106, and THE
BANK OF NEW YORK, as Trustee hereunder (the "Trustee"), having its Corporate
Trust Office at 101 Barclay Street, 21W, Corporate Trust Administration,
New York, NY 10286. Terms used herein which are defined in the Indenture (as
defined below) shall have the respective meanings assigned to them in the
Indenture.
RECITALS OF THE COMPANY
The Company and the Trustee have entered into an Indenture (the
"Indenture") dated as of the date hereof, providing for the issuance of debt
securities in series.
For its lawful corporate purposes, the Company desires to create and
authorize the series of 7 3/8% Notes due 2009 in an aggregate principal amount
of $200,000,000 (the "Notes"), and to provide the terms and conditions upon
which the Notes are to be executed, registered, authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this
First Supplemental Indenture.
The Notes are a series of Securities (as that term is defined in the
Indenture) and are being issued under the Indenture, as supplemented by this
First Supplemental Indenture, and are subject to the terms contained therein and
herein.
WHEREAS, the Notes are to be substantially in the following form:
CARAUSTAR INDUSTRIES, INC.
7 3/8% Note due 2009
No.___ $200,000,000
CUSIP NO.______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 3
Caraustar Industries, Inc., a corporation duly organized and existing
under the laws of the State of North Carolina (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of Two Hundred Million Dollars
($200,000,000) on June 1, 2009 and to pay interest thereon from June 1, 1999 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on June 1 and December 1 in each year,
commencing December 1, 1999, at the rate of 7 3/8% per annum, until the
principal hereof is paid or made available for payment, and (to the extent that
the payment of such interest shall be legally enforceable) at the rate of 7 3/8%
per annum on any overdue principal and premium and on any overdue installment of
interest, provided that any principal and premium, and any such installment of
interest, which is overdue shall bear interest at the rate of 7 3/8% per annum
(to the extent permitted by applicable law), from the dates such amounts are due
until they are paid or made available for payment, and such interest shall be
payable on demand. The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on this Security is not
a Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. A "Business Day" shall
mean, when used with respect to any Place of Payment, each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment are authorized or obligated by law or executive order
to close. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the May 15 or November 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated
quotation system on which the Securities of this series may be listed or traded,
and upon such notice as may be required by such exchange or automated quotation
system, all as more fully provided in said Indenture).
Payment of the principal of (and premium, if any) and any such interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in New York, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
2
<PAGE> 4
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CARAUSTAR INDUSTRIES, INC.
By:
------------------------------
Attest:
- --------------------------
[Reverse of Note]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of June 1, 1999, (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture, the First Supplemental Indenture, dated as of
June 1, 1999 (herein called the "First Supplemental Indenture", which term shall
have the meaning assigned to it in such instrument) between the Company and the
Trustee and all other indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof.
The Securities of this series are subject, at the election of the
Company, to redemption as a whole or in part at any time upon not less than 30
nor more than 60 days' notice by mail at the greater of (i) 100% of the
principal amount of the Securities being redeemed or (ii) as determined by the
Quotation Agent, the sum of the present values of the remaining scheduled
payments of principal and interest on the Securities (not including any portion
of those payments of interest accrued as of the Redemption Date) discounted to
the Redemption Date on a semi-annual basis assuming a 360 day year consisting of
twelve 30 day months at the Adjusted Treasury Rate plus 25 basis points plus, in
each case, accrued and unpaid interest on the Securities to the
3
<PAGE> 5
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
For purposes of determining the amount at which the Securities may be
redeemed, the following terms shall have the meanings set forth next to each of
them below:
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to maturity of
the Comparable Treasury Issue, assuming a price of the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at
the time of a selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest Reference Treasury
Dealer Quotation, or (ii) if the Trustee obtains fewer than three Reference
Treasury Dealer Quotations, the average of the quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
"Reference Treasury Dealer" means (i) each of Banc of America
Securities LLC, BT Alex. Brown Incorporated, Donaldson, Lufkin & Jenrette
Securities Corporation and SunTrust Equitable Securities Corporation and
their respective successors; however, if any of the foregoing shall cease
to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company will substitute another Primary
Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the trustee by the Reference Treasury Dealer
at 5:00 p.m., New York City time, on the third Business Day preceding the
redemption date.
4
<PAGE> 6
In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for Defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee
in its reasonable judgment, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and
5
<PAGE> 7
unconditional, to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth and set forth herein, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000.00 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture or
the First Supplemental Indenture shall have the meanings assigned to them in the
Indenture or the First Supplemental Indenture, as the case may be.
THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: June 1, 1999 THE BANK OF NEW YORK,
As Trustee
By:
-------------------------------------
Authorized Signatory
6
<PAGE> 8
All acts and things necessary to make the Notes, when executed by the
Company and authenticated and delivered by or on behalf of the Trustee as
provided in this Supplemental Indenture, the valid, binding and legal
obligations of the Company, and to constitute these presents a valid indenture
and agreement according to its terms, have been done and performed;
NOW, THEREFORE, in order to declare the terms and conditions upon which
the Notes are executed, registered, authenticated, issued and delivered, and in
consideration of the premises, of the purchase of such Notes by the Holders
thereof and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders from time to time of such Notes,
as follows:
ARTICLE I
CREATION AND AUTHORIZATION OF SERIES
There is hereby created and authorized the series of Notes entitled the
"7 3/8% Notes Due 2009," which shall be a series in an aggregate principal
amount of $200,000,000.
ARTICLE II
SPECIAL PROVISIONS APPLICABLE TO SUCH SERIES
(a) Except as otherwise set forth herein and in the Notes, the terms of
the Notes shall be as set forth in the Indenture, including those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended, as in effect on the date of the Indenture (the
"Act"). Holders are referred to the Indenture and the Act for a statement of
such terms.
(b) The Notes shall include all of the terms in the form of the Notes
contained in the Recitals to this First Supplemental Indenture.
(c) The aggregate principal amount of the Notes may be changed from
time to time pursuant to Section 301(2) of the Indenture. All the Notes need not
be issued at the same time and this series of the Notes may be reopened at any
time, without the consent of any Holder, for issuances of additional Notes.
(d) The provisions of Section 1402 of the Indenture entitled
"Defeasance and Discharge" shall be applicable to the Notes.
7
<PAGE> 9
(e) The provisions of Section 1403 of the Indenture entitled "Covenant
Defeasance" shall be applicable to the Notes.
(f) The provisions of Article Twelve of the Indenture entitled "Sinking
Funds" shall not be applicable to the Notes.
(g) The paying agent for the Notes issued pursuant hereto shall be The
Bank of New York at its principal corporate trust office located at 101 Barclay
Street, 21W, Floor, Corporate Trust Administration, New York, NY 10286.
[Signature page follows]
8
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture 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.
CARAUSTAR INDUSTRIES, INC.
By:
--------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
By:
--------------------------
Name:
Title:
THE BANK OF NEW YORK,
Trustee
By:
--------------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 10.1
================================================================================
AMENDED AND RESTATED RIGHTS AGREEMENT
DATED AS OF
MAY 24, 1999
BETWEEN
CARAUSTAR INDUSTRIES, INC.
AND
THE BANK OF NEW YORK,
AS RIGHTS AGENT
================================================================================
<PAGE> 2
AMENDED AND RESTATED RIGHTS AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions .......................................................2
ARTICLE II
THE RIGHTS
2.1 Summary of Rights..........................................................9
2.2 Nature of Rights...........................................................9
2.3 Evidence of Rights........................................................10
2.4 Issuance of Rights Certificates...........................................11
2.5 Issuance of Rights........................................................12
2.6 Transfer and Exercise of Rights...........................................13
2.7 Adjustments to Exercise Price; Number of Rights...........................15
2.8 Date on Which Exercise is Effective.......................................17
2.9 Execution, Authentication, Delivery and Dating of Rights Certificates.....17
2.10 Registration, Registration of Transfer and Exchange.......................18
2.11 Mutilated, Destroyed, Lost and Stolen Rights Certificates.................19
2.12 Persons Deemed Owners.....................................................20
2.13 Delivery and Cancellation of Rights Certificates..........................20
ARTICLE III
FLIP-IN; EXCHANGE, REDEMPTION, TERMINATION OF RIGHTS
3.1 Flip-in...................................................................21
3.2 Certain Rights Void.......................................................21
3.3 Exchange of Rights........................................................22
3.4 Substitution of Securities................................................23
3.5 Suspension of Exercisability..............................................24
3.6 Redemption; Termination...................................................25
3.7 Expiration................................................................25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
THE RIGHTS AGENT
4.1 General...................................................................26
4.2 Merger or Consolidation or Change of Name of Rights Agent.................27
4.3 Duties of Rights Agent....................................................28
4.4 Change of Rights Agent....................................................32
ARTICLE V
MISCELLANEOUS
5.1 Supplements and Amendments................................................33
5.2 Fractional Shares.........................................................34
5.3 Rights of Action..........................................................34
5.4 Agreement of Rights Holders...............................................35
5.5 Holder of Rights Not Deemed a Shareholder.................................36
5.6 Notice of Proposed Actions................................................36
5.7 Successors................................................................36
5.8 Determinations and Actions by the Board of Directors, etc.................37
5.9 Notices...................................................................37
5.10 Benefits of this Agreement................................................38
5.11 Descriptive Headings, Gender..............................................38
5.12 Governing Law.............................................................38
5.13 Severability..............................................................39
5.14 Counterparts..............................................................39
</TABLE>
EXHIBITS
Exhibit A Form of Rights Certificate
(Together with Form of Election to Exercise)
Exhibit B Form of Articles of Amendment with respect to the Series A
Junior Participating Preferred Stock of Caraustar Industries,
Inc.
ii
<PAGE> 4
AMENDED AND RESTATED RIGHTS AGREEMENT
THIS AMENDED AND RESTATED RIGHTS AGREEMENT (this "Agreement"), dated as
of May 24, 1999, is made between CARAUSTAR INDUSTRIES, INC., a North Carolina
corporation (the "Company"), and THE BANK OF NEW YORK, a New York banking
corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on April 19, 1995, the Board of Directors of the Company (i)
authorized and declared a dividend distribution of one Right (as hereinafter
defined) in respect of each share of Common Stock (as hereinafter defined)
outstanding as of the close of business on June 1, 1995 (the "Record Time"), and
(ii) authorized the issuance of one Right in respect of each share of Common
Stock issued after the Record Time and prior to the Separation Time (as such
terms are hereinafter defined) and, to the extent provided for pursuant to the
terms and conditions set forth herein, each share of Common Stock issued after
the Separation Time;
WHEREAS, each Right initially represents the right to purchase, after
the Separation Time and prior to the Expiration Time (as hereinafter defined),
one one-hundredth of one share of Preferred Stock (as hereinafter defined),
pursuant to the terms and subject to the conditions set forth herein
(collectively, the "Rights"); and
WHEREAS, the Company entered into a Rights Agreement dated as of April
19, 1995 (the "Original Rights Agreement") with First Union National Bank of
North Carolina, as Rights Agent ("First Union"), pursuant to which First Union
was appointed Rights Agent to act on behalf of the Company in accordance with
the terms of the Original Rights Agreement; and
WHEREAS, First Union resigned as Rights Agent under the Original Rights
Agreement on or about August 24, 1998; and
<PAGE> 5
WHEREAS, The Bank of New York succeeded First Union as Rights Agent;
and
WHEREAS, The Company and The Bank of New York desire to amend and
restate in its entirety the Original Rights Agreement to clarify certain duties
of The Bank of New York as Rights Agent and to make certain other technical
changes.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, in
addition to the terms defined elsewhere herein the following terms have the
meanings indicated:
(a) "Acquiring Person" shall mean any Person who, together with
all Affiliates and Associates of such Person, shall at any time become the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding;
provided, however, that the term "Acquiring Person" shall not include:
(i) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of a Subsidiary of the Company,
or any Person organized, appointed or established by the Company or by
any Subsidiary of the Company for or pursuant to the terms of any such
plan;
(ii) any Person who, together with all Affiliates and
Associates of such Person, shall at any time become the Beneficial
Owner of 20% or more of the shares of Common Stock then outstanding
solely as a result of an acquisition by the Company of shares of Common
Stock, but only until such time thereafter as such Person shall become
2
<PAGE> 6
the Beneficial Owner (other than by means of a stock dividend or stock
split) of any additional shares of Common Stock; or
(iii) any Person who would otherwise be deemed to be an
"Acquiring Person" within the meaning of this definition, provided
that, prior to or promptly upon notice from the Company that such
Person has attained a level of Beneficial Ownership of shares of Common
Stock that would constitute such Person an "Acquiring Person," such
Person (A) notifies the Company that such level of Beneficial Ownership
was attained without any plan or intention to seek or affect control of
the Company and without knowledge that such acquisition would otherwise
make such Person an Acquiring Person, and (B) concurrently with giving
such notice to the Company, enters into an irrevocable commitment
promptly to divest, and promptly thereafter divests (without exercising
or retaining any power, including voting, with respect to such shares),
sufficient shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) so that such Person,
together with all Affiliates and Associates of such Person, ceases to
be the Beneficial Owner of 20% or more of the shares of Common Stock
then outstanding.
(b) "Affiliate" and "Associate" shall mean, with respect to any
Person, any other Person who would be deemed to be an "affiliate" or "associate"
of such Person within the respective meanings ascribed to such terms in Rule
12b-2 under the Exchange Act, as such Rule is in effect on the date of this
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and to
have "Beneficial Ownership" of and to "Beneficially Own," any securities:
3
<PAGE> 7
(i) that such Person or any of such Person's Affiliates
or Associates has "beneficial ownership" of within the meaning of Rule
13d-3 under the Exchange Act, as such Rule is in effect on the date of
this Agreement;
(ii) that such Person or any of such Person's Affiliates
or Associates has, directly or indirectly, the right to acquire
(whether such right is exercisable immediately or after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing), or upon the exercise of conversion, exchange or
other rights (other than the Rights), warrants, options or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to have "Beneficial Ownership" of or to "Beneficially
Own," any security (y) issuable upon exercise of Rights or (z) tendered
pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered security is
accepted for payment or exchange;
(iii) that such Person or any of such Person's Affiliates
or Associates has, directly or indirectly, the right to vote or dispose
of, including 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 have "Beneficial Ownership"
of or to "Beneficially Own," any security if the agreement, arrangement
or understanding to vote such security (y) arises solely from a
revocable proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (z) is not
also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
4
<PAGE> 8
(iv) that are "beneficially owned" (within the meaning of
Rule 13d-3 under the Exchange Act, as such Rule is in effect on the
date of this Agreement) by any other Person, or any Affiliate or
Associate thereof, 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 (other
than pursuant to a revocable proxy as described in the proviso to
clause (iii) above) or disposing of any securities of the Company;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to have "Beneficial Ownership" of or to "Beneficially
Own," any security (x) in the course of engaging in business as an
underwriter of securities, solely by reason of having acquired such
security through such Person's participation in good faith in a firm
commitment underwriting of securities of the Company registered under
the Securities Act, until the expiration of 40 days after the date of
acquisition, (y) beneficially owned by another officer or director of
the Company or of a Subsidiary of the Company, solely by reason of
actions undertaken by such Person in his capacity as an officer or
director of the Company or of a Subsidiary of the Company, or (z) held
of record by the trustee of any employee benefit plan of the Company or
of any Subsidiary of the Company for the benefit of any employee of the
Company or of any Subsidiary of the Company (other than such Person),
solely by reason of any influence that such officer or director may
have over the voting of the securities held in the plan.
Notwithstanding any provision contained herein to the contrary, the phrase "then
outstanding," when used with reference to a Person's Beneficial Ownership of
securities of the Company at any particular time, shall mean the number of such
securities then outstanding together with the
5
<PAGE> 9
number of such securities not then actually outstanding that such Person would
be deemed to Beneficially Own hereunder.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
generally authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 p.m.,
New York City time on such date (or, if such date is not a Business Day, 5:00
p.m., New York City time on the next succeeding Business Day).
(f) "Common Stock" shall mean the Common Stock, par value $0.10
per share, of the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(h) "Exchange Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to the provisions of Section 3.3.
(i) "Exercise Price" shall mean, as of any date, the price at
which a holder may purchase on such date the securities issuable upon exercise
of one Right. Until adjustment thereof in accordance with the terms hereof, the
Exercise Price shall be $70.00.
(j) "Expiration Time" shall mean the earliest of (i) the Exchange
Time, (ii) the Redemption Time and (iii) the close of business on April 19,
2005.
(k) "Flip-in Date" shall mean the tenth Business Day after any
Stock Acquisition Date.
(l) "Market Price" shall mean, with respect to any securities on
any date, the average of the daily closing prices per share of such securities
(determined as described below) on each of the 30 consecutive Trading Days
through and including the Trading Day immediately
6
<PAGE> 10
preceding such date; provided, however, that if an event of a type analogous to
any of the events described in Section 2.7 shall have caused the closing prices
used to determine the Market Price on any Trading Days during such period of 30
Trading Days not to be fully comparable with the closing price on such date,
each such closing price so used shall be appropriately adjusted in order to make
it fully comparable with the closing price on such date. The closing price per
share of any securities on any date shall be the last reported sale price,
regular way, or, in case no such sale takes place or is quoted on such date, the
average of the closing bid and asked prices, regular way, for each share of such
securities, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the securities are not listed or admitted to trading on any
national securities exchange or quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the securities selected by the Board of Directors of the
Company; provided, however, that if on any such date the securities are not
listed or admitted to trading on a national securities exchange or traded in the
over-the-counter market, the closing price per share of such securities on such
date shall mean the fair value per share of securities on such date as
determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm, and set forth
in a certificate delivered to the Rights Agent.
(m) "Person" shall mean any individual, firm, partnership,
association, joint venture, trust, corporation or other entity.
7
<PAGE> 11
(n) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, no par value, of the Company, created by, and having the terms,
rights and preferences set forth in, Articles of Amendment appropriately
completed in substantially the form of Exhibit A attached hereto.
(o) "Redemption Price" shall mean, with respect to each Right, an
amount equal to $0.01.
(p) "Redemption Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to the provisions of Section 3.6,
whether by reason of redemption or termination.
(q) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(r) "Separation Time" shall mean the close of business on the
earlier of (i) the tenth Business Day (or such later date as the Board of
Directors of the Company may from time to time fix by resolution adopted prior
to the Separation Time that would otherwise have occurred) after the date on
which any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of a Subsidiary of the Company, or any
Person organized, appointed or established by the Company or by any Subsidiary
of the Company for or pursuant to the terms of any such plan) commences, or of
the first public announcement of the commencement by any such Person of, a
tender or exchange offer that, if consummated, would result in such Person
becoming an Acquiring Person, and (ii) the Flip-in Date; provided, that if the
foregoing results in the Separation Time occurring prior to the Record Time, the
Separation Time shall be the Record Time; and provided further, that if any
tender or exchange offer referred to in clause (i) of this definition is
cancelled, terminated or otherwise withdrawn prior to
8
<PAGE> 12
the Separation Time without the purchase of any shares of Common Stock pursuant
thereto, such offer shall be deemed never to have been made.
(s) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or by an Acquiring Person (including by means of
filing a report under Section 13(d) of the Exchange Act) that an Acquiring
Person has become such.
(t) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which a majority of the voting power of the
equity securities or a majority of the ownership interest is Beneficially Owned,
directly or indirectly, by such Person.
(u) "Trading Day" shall mean, with respect to any securities, a
day on which the principal national securities exchange on which such securities
are listed or admitted to trading is open for the transaction of business or, if
such securities are not listed or admitted to trading on any national securities
exchange, a Business Day.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the Record
Time, the Company will mail or cause to be mailed a letter summarizing the terms
of the Rights to each holder of record of Common Stock as of the Record Time, at
such holder's address as shown by the records of the Company.
2.2 Nature of Rights. Subject to the provisions of Article III and
subject to adjustment as herein set forth, each Right will entitle the holder
thereof to purchase, after the Separation Time and prior to the Expiration Time,
for the Exercise Price, one one-hundredth of one share of Preferred Stock.
9
<PAGE> 13
2.3 Evidence of Rights.
(a) Until the Separation Time, and subject to the provisions of
subsections (b) and (c) below and Section 3.2, the Rights shall be evidenced by
the certificates representing shares of Common Stock registered in the names of
the holders thereof, and not by separate certificates.
(b) Subject to the provisions of Section 3.2, certificates issued
after the Record Time but prior to the earlier of the Separation Time and the
Expiration Time and representing either (i) shares of Common Stock issued after
the Record Time but prior to the earlier of the Separation Time and the
Expiration Time or (ii) shares of Common Stock outstanding at the Record Time
that are delivered upon transfer or exchange of such Common Stock, shall
evidence one Right for each share of Common Stock represented thereby and shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences certain
Rights as set forth in an Amended and Restated Rights
Agreement, dated as of May 24, 1999 (as the same may be
supplemented or amended from time to time, the "Rights
Agreement"), between Caraustar Industries, Inc. (the
"Company"), and The Bank of New York, as Rights Agent, the
terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed or
terminated, may be exchanged for shares of Common Stock or
other securities or assets of the Company or a "Subsidiary"
(as defined in the Rights Agreement), may expire, may (if they
are "Beneficially Owned" by an "Acquiring Person" or an
"Affiliate" or "Associate" thereof, as such terms are defined
in the Rights Agreement, or by any transferee of any of the
foregoing) become void, or may be evidenced by separate
certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing
of a copy of the Rights Agreement to the holder of this
certificate without charge after the receipt of a written
request therefor.
Until the Separation Time, and subject to the provisions of Section
3.2, certificates representing shares of Common Stock outstanding as of the
Record Time shall evidence one
10
<PAGE> 14
Right for each share of Common Stock represented thereby notwithstanding the
absence of the legend set forth above.
(c) After the Separation Time, the Rights shall be evidenced by
the Rights Certificates described in Section 2.4(a).
2.4 Issuance of Rights Certificates.
(a) Promptly following the Separation Time, the Rights Agent will
mail to each holder of record of Common Stock as of the Separation Time (other
than any Person whose Rights have become void pursuant to the provisions of
Section 3.2), at such holder's address as shown by the records of the Company
(the Company hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose), one or more certificates (each, a "Rights
Certificate"), in substantially the form of Exhibit B attached hereto and
appropriately completed, representing the number of Rights held by such holder
at the Separation Time and having such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate that 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 national
securities exchange or quotation system on which the Rights may from time to
time be listed or traded, or to conform to usage.
(b) Notwithstanding any of the provisions of this Agreement or of
the Rights or Rights Certificates to the contrary, the Company may, at its
option, issue new Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the
number or kind or class of shares of stock, securities or assets purchasable
upon exercise of Rights made in accordance with the provisions of this
Agreement.
11
<PAGE> 15
2.5 Issuance of Rights. Unless the Board of Directors of the
Company specifies to the contrary by resolution adopted at or before the time of
issuance (including pursuant to the exercise of rights under employee benefit
plans) of any shares of Common Stock, one Right shall be issued in respect of
each share of Common Stock that is issued at any time after the Record Time but
prior to the earlier of the Separation Time and the Expiration Time other than
in a transaction referred to in Section 2.7, subject to the provisions of
Section 3.2. In addition, subject to the provisions of Section 3.2, in
connection with the issuance or sale of shares of Common Stock by the Company
following the Separation Time and prior to the Expiration Time, the Company (i)
shall, with respect to shares of Common Stock so issued or sold upon conversion,
exchange or exercise of options, warrants, securities, notes or debentures
issued prior to the Separation Time, and (ii) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue to the
holders of such shares of Common Stock Rights Certificates representing the
appropriate number of Rights in connection with the issuance or sale of such
shares of Common Stock; provided, however, that in the case of either clause (i)
or (ii), (x) no such Rights Certificate shall be issued, if, and to the extent
that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or to the
Person to whom such Rights Certificates would be issued, (y) no such Rights
Certificates shall be issued if, and to the extent that, appropriate adjustment
shall have otherwise been made in lieu of the issuance thereof, and (z) the
Company shall have no obligation to distribute Rights Certificates to any
Acquiring Person or Affiliate or Associate of an Acquiring Person or any
transferee of any of the foregoing.
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2.6 Transfer and Exercise of Rights.
(a) Subject to the provisions of Section 3.2, (i) until the
earlier of the Separation Time and the Expiration Time, Rights shall be
transferable only in connection with the transfer of the underlying shares of
Common Stock, and the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares, and (ii) until the
Separation Time, no Rights may be exercised.
(b) Subject to the provisions of this Section 2.6 and Article III,
after the Separation Time and prior to the Expiration Time, Rights may be
transferred independent of Common Stock and may be exercised in accordance with
the terms and conditions set forth herein and in the Rights Certificates.
(c) Subject to the provisions of Article III, Rights may be
exercised on any Business Day after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent the Rights Certificate
evidencing such Rights, together with an Election to Exercise (an "Election to
Exercise") in the form attached to the Rights Certificate duly completed,
accompanied by payment in cash, or by certified or official bank check or money
order payable to the order of the Company, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum sufficient to cover
any transfer tax or charge that may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the issuance or
delivery of certificates for shares or depositary receipts (or both) in a name
other than that of the holder of the Rights being exercised.
(d) Upon receipt of a Rights Certificate, together with an
Election to Exercise accompanied by payment as set forth in subsection (c)
above, and subject to the provisions of
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Article III, the Rights Agent will thereupon promptly (i) requisition
certificates evidencing such number of shares of Preferred Stock to be purchased
(the Company hereby irrevocably authorizing its transfer agents, indenture
trustees, Subsidiaries or others, as the case may be, to comply with all such
requisitions), (ii) if the Company elects pursuant to Section 5.2 not to issue
certificates representing fractional shares, requisition from the depositary
selected by the Company depositary receipts representing the fractional shares
to be purchased or requisition from the Company the amount of cash to be paid in
lieu of fractional shares in accordance with the provisions of Section 5.2 and
after receipt of such certificates, depositary receipts and/or cash, deliver the
same to or upon the order of the registered holder of such Rights Certificate,
registered (in the case of certificates or depositary receipts) in such name or
names as may be designated by such holder.
(e) In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, the Rights Agent will
issue a new Rights Certificate evidencing the Rights remaining unexercised to
such holder or to such holder's duly authorized assigns.
(f) The Company covenants and agrees that it will (i) take all
such action as may be necessary to ensure that all shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable,
(ii) take all such action as may be necessary to comply with any applicable
requirements of the Securities Act or the Exchange Act, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in
connection with the issuance of any shares upon exercise of Rights and (iii) pay
when due and payable any and all federal and state transfer taxes and charges
that may be
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payable in respect of the original issuance or delivery of the Rights
Certificates or of any shares issued upon the exercise of Rights, provided that
the Company shall not be required to pay any transfer tax or charge that may be
payable in respect of any transfer involved in the transfer or delivery of
Rights Certificates or the issuance or delivery of certificates for shares in a
name other than that of the holder of the Rights being transferred or exercised.
(g) Notwithstanding any other provision of this Agreement, any
Rights held by the Company or any of its Subsidiaries other than in a fiduciary
capacity, whether acquired in connection with the acquisition of Common Stock or
otherwise, shall be void.
2.7 Adjustments to Exercise Price; Number of Rights.
(a) In the event the Company shall, at any time after the Record
Time and prior to the Separation Time, (i) declare or pay a dividend on Common
Stock payable in Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares of
Common Stock, then (y) the Exercise Price in effect after such adjustment shall
be equal to the Exercise Price in effect immediately prior to such adjustment
divided by the number of shares of Common Stock (the "Expansion Factor") that a
holder of one share of Common Stock immediately prior to such dividend,
subdivision or combination would hold thereafter as a result thereof and (z)
each Right held prior to such adjustment shall become that number of Rights
equal to the Expansion Factor, and the adjusted number of Rights shall be deemed
to be distributed among the shares of Common Stock with respect to which the
original Rights were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision or combination, so that each
such share of Common Stock will have exactly one Right associated with it. Each
adjustment made pursuant to this subsection (a) shall
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be made as of the payment or effective date for the applicable dividend,
subdivision or combination.
(b) In the event the Company shall, at any time after the Record
Time and prior to the Separation Time, issue or distribute any securities or
assets in respect of, in lieu of or in exchange for Common Stock (other than
pursuant to a regular periodic cash dividend or a dividend paid solely in Common
Stock), whether by dividend, in a reclassification or recapitalization
(including any such transaction involving a merger, consolidation or binding
share exchange), or otherwise, the Company shall make such adjustments, if any,
in the Exercise Price, number of Rights and/or securities or other property
purchasable upon exercise of Rights as the Board of Directors of the Company, in
its sole discretion, may deem to be appropriate under the circumstances in order
adequately to protect the interests of the holders of Rights generally, and the
Company and the Rights Agent will amend this Agreement as necessary to provide
for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this
Section 2.7 shall be calculated to the nearest cent. Whenever an adjustment to
the Exercise Price is made pursuant to this Section 2.7, the Company will (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (ii) promptly file with
the Rights Agent and with each transfer agent for the Common Stock a copy of
such certificate and (iii) mail a brief summary thereof to each holder of
Rights.
(d) Irrespective of any adjustment or change in the securities
purchasable upon exercise of Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the securities so purchasable that
were expressed in the initial Rights Certificates issued hereunder.
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2.8 Date on Which Exercise is Effective. Each Person in whose name
any certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares 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
Exercise Price for such Rights (and any applicable taxes and other governmental
charges payable by the exercising holder hereunder) was made; provided, however,
that if the date of such surrender and payment is a date upon which the stock
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the stock transfer books of the
Company are open.
2.9 Execution, Authentication, Delivery and Dating of Rights
Certificates.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President or
Treasurer, under its corporate seal reproduced thereon attested by its Secretary
or one of its Assistant Secretaries. The signature of any of these officers on
the Rights Certificates may be manual or facsimile. Rights Certificates bearing
the manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature and delivery of such Rights Certificates.
(b) Promptly after the Company learns of the Separation Time, the
Company will notify the Rights Agent of such Separation Time and will deliver
Rights Certificates executed by the Company to the Rights Agent for
countersignature, and, subject to the provisions of Section 3.2, the Rights
Agent will manually countersign and deliver such Rights Certificates to
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the holders of the Rights pursuant to Section 2.4(a). No Rights Certificate
shall be valid for any purpose until manually countersigned by the Rights Agent.
Each Rights Certificate shall be dated the date of countersignature thereof.
2.10 Registration, Registration of Transfer and Exchange.
(a) After the Separation Time, the Rights Agent will keep or cause
to be kept, at its principal office or other office designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, a register (the "Rights Register") providing for the registration and
transfer of Rights. The Rights Agent will maintain the Rights Register by
registering Rights and transfers of Rights after the Separation Time as herein
provided. The Rights Register shall show the names and addresses of the
respective holders of Rights Certificates, the number of Rights evidenced on its
face by each of the Rights Certificates and the date of each of the Rights
Certificates.
(b) After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any Rights
Certificate, and subject to subsections (d) and (e) below, the Company will
execute, and the Rights Agent will countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Rights Certificates evidencing the same
aggregate number of Rights as did the Rights Certificate so surrendered.
(c) Except as otherwise provided in Section 3.2, all Rights issued
upon any registration of transfer or exchange of Rights Certificates shall be
the valid obligations of the Company, and such Rights shall be entitled to the
same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
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(d) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company or the Rights Agent,
as the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any new
Rights Certificate under this Section 2.10, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
(e) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under the provisions
of Section 3.2, have been exchanged under the provisions of Section 3.3 or have
been redeemed or terminated under the provisions of Section 3.6.
2.11 Mutilated, Destroyed, Lost and Stolen Rights Certificates.
(a) If any mutilated Rights Certificate is surrendered to the
Rights Agent prior to the Expiration Time, then, subject to the provisions of
Sections 3.2 and 3.6, the Company will execute and the Rights Agent will
countersign and deliver in exchange therefor a new Rights Certificate evidencing
the same number of Rights as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to the provisions of Sections 3.2 and 3.6 and in
the absence of notice to the Company or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights
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<PAGE> 23
Certificate, a new Rights Certificate evidencing the same number of Rights as
did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.11, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
2.12 Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may deem and treat the Person in whose
name such Rights Certificate (or, prior to the Separation Time, such Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
2.13 Delivery and Cancellation of Rights Certificates. All Rights
Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any Person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly cancelled by
the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered
hereunder that the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly cancelled by the Rights
Agent. No Rights Certificates shall be countersigned in lieu of or in exchange
for any Rights Certificates cancelled as provided in this
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Section 2.13, except as expressly permitted by this Agreement. The Rights Agent
shall deliver all cancelled Rights Certificates to the Company.
ARTICLE III
FLIP-IN; EXCHANGE, REDEMPTION, TERMINATION OF RIGHTS
3.1 Flip-in. In the event that a Flip-in Date shall occur prior to
the Expiration Time, the Company shall take such action as shall be necessary to
ensure and provide that, except as otherwise provided in this Section 3.1, each
Right shall constitute the right to purchase from the Company, upon exercise
thereof in accordance with the terms hereof (but subject to the provisions of
Section 3.5), that number of shares of Common Stock having an aggregate Market
Price on the Stock Acquisition Date equal to twice the Exercise Price, for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in
the event that on or after such Stock Acquisition Date an event of a type
analogous to any of the events described in Section 2.7 shall have occurred with
respect to the Common Stock).
3.2 Certain Rights Void. Notwithstanding the provisions of Section
3.1 or any other provisions of this Agreement or of any Rights Certificate, any
Rights that are or were Beneficially Owned on or after the Stock Acquisition
Date by an Acquiring Person or an Affiliate or Associate thereof or by any
transferee, direct or indirect, of any of the foregoing shall, immediately upon
becoming so Beneficially Owned, become void, and any holder of such Rights
(including any transferees) shall thereafter have no right to exercise or
transfer such Rights under any provision of this Agreement. If any Rights
Certificate is presented for assignment or exercise or exchange and the Person
presenting the same shall not complete the certification set forth at the end of
the form of assignment or notice of election to exercise and
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provide such additional evidence of the identity of the Beneficial Owner and its
Affiliates and Associates (or former Beneficial Owners and their Affiliates and
Associates) as the Company shall reasonably request, then the Company shall be
entitled conclusively to deem the Beneficial Owner thereof to be an Acquiring
Person or an Affiliate or Associate thereof or a transferee of any of the
foregoing and accordingly shall be entitled to deem the Rights evidenced thereby
to be void and not transferable or exercisable.
3.3 Exchange of Rights.
(a) The Board of Directors of the Company may, at its option, at
any time after a Flip-in Date and prior to the time that an Acquiring Person
becomes the Beneficial Owner of more than 50% of the outstanding shares of
Common Stock, elect to exchange all (but not less than all) of the then
outstanding Rights (other than Rights that have become void pursuant to the
provisions of Section 3.2) for shares of Common Stock at an exchange rate of two
shares of Common Stock per Right, appropriately adjusted in order to protect the
interests of holders of Rights generally in the event that after the Separation
Time an event of a type analogous to any of the events described in Section 2.7
shall have occurred with respect to the Common Stock (such exchange rate, as
adjusted from time to time, being hereinafter referred to as the "Exchange
Rate").
(b) Immediately upon the action of the Board of Directors of the
Company electing to exchange the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right
(other than Rights that have become void pursuant to the provisions of Section
3.2) will thereafter represent only the right to receive a number of shares of
Common Stock equal to the product of one share multiplied by the Exchange Rate.
Promptly after the action of the Board of Directors electing to exchange the
Rights, the Company shall
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give notice thereof (specifying the steps to be taken to receive shares of
Common Stock in exchange for Rights) to the Rights Agent and the holders of the
Rights outstanding immediately prior thereto (other than Rights that have become
void pursuant to Section 3.2).
(c) Each Person in whose name any certificate for shares is issued
upon the exchange of Rights pursuant to this Section 3.3 shall for all purposes
be deemed to have become the holder of record of the shares 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 any
applicable taxes and other governmental charges payable by the holder was made;
provided, however, that if the date of such surrender and payment is a date upon
which the stock transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the stock transfer
books of the Company are open.
3.4 Substitution of Securities.
(a) Whenever the Company shall become obligated under Sections 3.1
or 3.3 to issue shares of Common Stock upon exercise of or in exchange for
Rights, the Company, at its option, may substitute Preferred Stock for any or
all of such shares of Common Stock, at a rate of one one-hundredth of a share of
Preferred Stock in the case of Section 3.1, or at a rate of two one-hundredths
of a share of Preferred Stock in the case of Section 3.3, for each share of
Common Stock so issuable, respectively.
(b) In the event that there shall not be sufficient authorized but
unissued shares of Common Stock or Preferred Stock of the Company to permit the
exercise or exchange in full of the Rights in accordance with Sections 3.1 or
3.3, the Company shall either (i) call a meeting of shareholders seeking
approval to cause sufficient additional shares to be authorized (provided
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that if such approval is not obtained the Company will take the action specified
in clause (ii) of this sentence) or (ii) take such action as shall be necessary
to ensure and provide, to the extent permitted by applicable law and any
agreements or instruments in effect on the Stock Acquisition Date to which it is
a party, that each Right shall thereafter constitute the right to receive, (x)
at the Company's option, either (A) in return for the Exercise Price, debt or
equity securities or other assets (or a combination thereof) of the Company
and/or one or more Subsidiaries of the Company having a fair value equal to
twice the Exercise Price, or (B) without payment of consideration (except as
otherwise required by applicable law), debt or equity securities or other assets
(or a combination thereof) of the Company and/or one or more Subsidiaries of the
Company having a fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in accordance with the
provisions of Section 3.3, debt or equity securities or other assets (or a
combination thereof) of the Company and/or one or more Subsidiaries of the
Company having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date multiplied by the Exchange Rate in effect on
the Flip-in Date, where in any case set forth in (x) or (y) above the fair value
of such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of the Company, after consultation with a
nationally recognized investment banking firm.
3.5 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Sections 3.1, 3.3 or 3.4 or to comply with federal or state securities laws, the
Company may suspend the exercisability of the Rights for a period of up to 90
days following the date of the occurrence of the Separation Time or the Flip-in
Date in order to take such action or comply with such laws. In the event of any
such suspension,
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the Company will issue as promptly as practicable a public announcement stating
that the exercisability or exchangeability of the Rights has been temporarily
suspended. Notice thereof pursuant to Section 5.9 shall not be required. Failure
to give a notice pursuant to the provisions of this Agreement shall not affect
the validity of any action taken hereunder.
3.6 Redemption; Termination.
(a) The Board of Directors of the Company may, at its option, at
any time (i) prior to the close of business on the Flip-in Date, elect to redeem
all (but not less than all) of the then outstanding Rights at the Redemption
Price, or (ii) notwithstanding the provisions of Section 5.1, prior to the
Separation Time, amend this Agreement to provide for the termination of the then
outstanding Rights without any payment to any holder thereof.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem or terminate the Rights (or, if the resolution of the
Board of Directors electing to redeem or terminate the Rights states that such
redemption or termination will not be effective until the occurrence of a
specified future time or event, upon the occurrence of such future time or
event), without any further action and without any notice, the right to exercise
the Rights shall terminate and each Right shall thereafter, in the event of
redemption, represent only the right to receive the Redemption Price in cash or,
in the event of termination, be null and void. Promptly after the Rights are so
redeemed or terminated, the Company will give notice thereof to the Rights Agent
and the holders of the then outstanding Rights.
3.7 Expiration. No Person shall have any rights pursuant to this
Agreement or any Right after the Expiration Time, except, if the Rights are
exchanged or redeemed, as provided in Sections 3.3, 3.4 or 3.6.
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ARTICLE IV
THE RIGHTS AGENT
4.1 General.
(a) The Company hereby appoints the Rights Agent to act as agent
for the Company and the Rights Agent hereby accepts such appointment. The
Company may from time to time, upon notice to the Rights Agent, appoint such
Co-Rights Agents as it may deem necessary or desirable upon ten (10) days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Rights Agent. The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights
Agent 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, its officers, directors, employees and agents for,
and to hold each of them harmless against, any loss, liability, or expense,
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent or such other indemnified party, for anything done or
omitted to be done by the Rights Agent or such other indemnified party in
connection with the acceptance or administration of this Agreement or the
exercise or performance of its duties hereunder, including without limitation
the costs and expenses of defending against any claim (whether asserted by the
Company, a holder of Rights, or any other Person) of liability in the premises,
including reasonable attorney's fees and expenses. The provisions of this
Section 4.1(a) shall survive the expiration of the Rights and the termination of
this Agreement.
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(b) The Rights Agent shall be protected by the Company 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 or the exercise or
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, instruction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, and executed by the
proper Person or Persons.
4.2 Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the 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 is a party, or any corporation
succeeding to all or substantially all the shareholder services, stock transfer
or corporate trust business of the Rights Agent, shall succeed to the rights and
duties of and shall become the Rights Agent under this Agreement without the
execution or filing of any paper 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 4.4. In case at the
time such successor Rights Agent succeeds to the agency created by this
Agreement any of the Rights Certificates have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have not been
countersigned, any successor Rights Agent may countersign such Rights
Certificates 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
will have the full force provided in the Rights Certificates and in this
Agreement.
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(b) In case at any time the name of the Rights Agent is 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 such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations expressly imposed by this Agreement (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent) 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 of its
selection (who may be legal counsel for the Company), and the opinion of such
counsel will 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 may deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
Affiliate or Associate thereof and the determination of the 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
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person reasonably believed by the
Rights Agent to be the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, the Secretary or any
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Assistant 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 its own
gross negligence, bad faith or willful misconduct.
(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 as to its countersignature thereon) 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 is serving as an administrative agent and,
accordingly, shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due
authorization, execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except as to its
countersignature thereon); 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 in the
exercisability of the Rights (including the Rights becoming void pursuant to the
provisions of Section 3.2) or any adjustment required under Sections 2.7 or 3.4
or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights after the Rights Agent's actual
receipt of the certificate contemplated by Section 2.7 describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
securities purchasable
29
<PAGE> 33
upon exercise of Rights or any Rights or as to whether any securities
purchasable upon exercise of Rights will, when issued, be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable or,
if debt obligations, valid, binding and enforceable.
(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 performing 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 any
person reasonably believed by the Rights Agent to be the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Treasurer,
the Secretary or any Assistant Secretary 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 by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions.
(h) Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent
30
<PAGE> 34
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(i) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the Company or of any Subsidiary of the Company or become
pecuniarily interested in any transaction in which the Company or any Subsidiary
of the Company may be interested, or contract with or lend money to the Company
or any Subsidiary of the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or any Subsidiary
of the Company.
(j) 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, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(k) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(l) 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 exercise, as the case may be, has either not
been completed or indicates an affirmative response
31
<PAGE> 35
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.
(m) The Company agrees to give the Rights Agent prompt written
notice of any event or ownership which would prohibit the exercise or transfer
of the Rights Certificates.
4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 days' notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company.
The Company may remove the Rights Agent upon 30 days' notice in writing mailed
to the Rights Agent and to each transfer agent of the Common Stock by registered
or certified mail and, subsequent to the Separation Date, to the holders of the
Rights in accordance with the provisions of Section 5.9. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the Company
will appoint a successor to the Rights Agent. If the Company fails to make such
appointment within 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of Rights (which holder shall, with
such notice, submit such holder's Rights Certificate for inspection by the
Company), then the Rights Agent or any holder of Rights may, at the expense of
the Company, 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, the State of Georgia, the State of New York or
the State of North Carolina (or of any other State of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of Georgia, the State of New York or the State of North Carolina), in good
standing, having an office in the State of Georgia, the State of New York or the
State of North Carolina that is authorized under such laws
32
<PAGE> 36
to exercise the powers of the Rights Agent contemplated by this Agreement, that
is subject to supervision or examination by federal or state authority and that
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 the purpose; and,
except as the context herein otherwise requires, such successor Rights Agent
shall be deemed to be the "Rights Agent" for all purposes of this Agreement. Not
later than the effective date of any such appointment, the Company will mail
notice thereof in writing to the predecessor Rights Agent, to each transfer
agent of the Common Stock and to the holders of the Rights. Failure to give any
notice provided for in this Section 4.4, 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.
ARTICLE V
MISCELLANEOUS
5.1 Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Rights
(i) prior to the close of business on the Flip-in Date, in any respect, and (ii)
from and after the close of business on the Flip-in Date, (x) in order to cure
any ambiguity or to correct or supplement any provision contained herein that
may be inconsistent with any other provisions herein or otherwise defective, (y)
as provided in Section 3.6(a) or (z) to make any changes that the Company may
33
<PAGE> 37
deem necessary or desirable and that shall not adversely affect the interests of
the holders of Rights generally (other than an Acquiring Person and any
Affiliate or Associate of an Acquiring Person). Any such supplement or amendment
shall be evidenced in a writing signed by the Company and the Rights Agent. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section, the Rights Agent will duly execute and deliver any supplement
or amendment hereto requested by the Company that satisfies the terms of this
Section 5.1, provided that if such supplement or amendment directly affects any
of the rights, duties or obligations of the Rights Agent hereunder, the Rights
Agent may, but absent its concurrence therewith shall not be required to,
execute and deliver such supplement or amendment.
5.2 Fractional Shares. If the Company elects not to issue
certificates representing fractional shares upon exercise or exchange of Rights,
the Company shall, in lieu thereof, (i) evidence such fractional shares by
depositary receipts issued pursuant to an appropriate agreement between the
Company and a depositary selected by it, providing that each holder of a
depositary receipt shall have all of the rights, privileges and preferences to
which such holder would be entitled as a beneficial owner of such fractional
share, or (ii) pay to the registered holder of such Rights the same fraction of
the Market Price (determined as of the date of exercise) of one share of the
stock issuable upon such exercise on the day of exercise.
5.3 Rights of Action. Subject to the terms of this Agreement, all
rights of action in respect of this Agreement, other than rights of action
vested solely in the Rights Agent, are vested in the respective holders of the
Rights; and any holder of any Rights, without the consent of the Rights Agent or
of the holder of any other Rights, may, on such holder's own behalf and for such
holder's own benefit and the benefit of other holders of Rights, enforce, and
may
34
<PAGE> 38
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise such
holder's Rights in the manner provided in such holder's Rights Certificate and
in 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
hereunder of any Person subject to this Agreement.
5.4 Agreement of Rights Holders. Every holder of Rights, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of Rights that:
(a) prior to the earlier of the Separation Time and the Expiration
Time, each Right will be transferable only together with, and will be
transferred by a transfer of, the associated share of Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register pursuant to the terms and conditions
set forth herein;
(c) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate) for registration
of transfer, the Company, the Rights Agent and any agent of the Company or of
the Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary;
35
<PAGE> 39
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.2, become void; and
(e) this Agreement may be supplemented or amended from time to
time pursuant to Sections 2.7(b), 3.6(a) and 5.1.
5.5 Holder of Rights Not Deemed a Shareholder. No holder, as such,
of any Rights shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of shares or any other securities that may at any time be
issuable upon the exercise of such Rights, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights, as such, any of the rights of a shareholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 5.6), or to receive dividends or
subscription rights, or otherwise, until such Rights shall have been exercised
or exchanged in accordance with the provisions hereof.
5.6 Notice of Proposed Actions. In case the Company shall propose
after the Separation Time and prior to the Expiration Time (i) to effect or
permit the occurrence of any Flip-in Date or (ii) to 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 a notice of such proposed action, which
shall specify the Flip-in Date or the date on which liquidation, dissolution or
winding up is to take place.
5.7 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.
36
<PAGE> 40
5.8 Determinations and Actions by the Board of Directors, etc. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers herein
specifically granted to the Board or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
to redeem the Rights or to amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (z) below, all omissions with respect to the foregoing) that are done or
made by the Board in good faith, shall (y) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties,
and (z) not subject the Board to any liability to the holders of the Rights.
5.9 Notices. Notices or demands permitted or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Company shall be sufficiently given or made if delivered or sent as
may be required hereunder in any particular instance or, if no particular method
is specified, by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Caraustar Industries, Inc.
3100 Washington Street
Austell, Georgia 30001
Attention: Secretary
Notices or demands permitted or required by this Agreement to be given or made
by the Company or by the holder of any Rights to or on the Rights Agent shall be
sufficiently given or made if delivered or sent as may be required hereunder in
any particular instance or, if no
37
<PAGE> 41
particular method is specified, by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
The Bank of New York
161 Barclay Street, Floor 12W
New York, New York 10286
Attention: Stock Transfer Department
Notices or demands permitted or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any notice mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice.
5.10 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
holders of the Rights any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of the Rights.
5.11 Descriptive Headings, Gender. Descriptive headings appear
herein for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof. As used herein, the singular shall
include the plural and the plural the singular, and the use of any gender,
including the neutral, shall be applicable to all genders.
5.12 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 North Carolina and for all purposes shall be governed by and construed
in accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state, provided, however, that the
38
<PAGE> 42
rights and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York.
5.13 Severability. If any term or provision hereof or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such term or provision to circumstances
other than those as to which it is held invalid or unenforceable.
5.14 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
39
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
CARAUSTAR INDUSTRIES, INC.
By: /s/ H. Lee Thrash, III
-------------------------------------
Title: Vice President
THE BANK OF NEW YORK, as Rights Agent
By: /s/ Raymond Poplasky
-------------------------------------
Title: Ass't Vice President
40
<PAGE> 44
EXHIBIT A
[Form of Articles of Amendment with respect
to the Series A Junior Participating Preferred Stock]
ARTICLES OF AMENDMENT
OF
CARAUSTAR INDUSTRIES, INC.
The undersigned corporation (the "Corporation") hereby submits these
Articles of Amendment for the purposes of amending its Articles of
Incorporation:
(1) The name of the Corporation is Caraustar Industries, Inc.
(2) The Articles of Incorporation of the Corporation are hereby
amended by the addition of a subparagraph (b)(1) to Article 3 as follows:
(b)(1) Series A Junior Participating Preferred Stock
1. Designation and Amount. The shares of this series
shall be designated as "Series A Junior Participating Preferred Stock,
$0.10 par value per share" (hereinafter called this "Series"). Each
share of this Series shall be identical in all respects with the other
shares of this Series except as to the dates from and after which
dividends thereon shall be cumulative.
The number of shares in this Series shall initially be
250,000, which number may from time to time be increased or decreased
(but not below the number then outstanding) by the Board of Directors.
Shares of this Series purchased or otherwise acquired by the
Corporation shall be cancelled and shall thereupon be restored to the
status of authorized but unissued shares of Preferred Stock
undesignated as to class or series. Shares of this Series may be issued
in fractional shares, which fractional shares shall entitle the holder,
in proportion to such holder's fractional share, to all rights of a
holder of a whole share of this Series.
2. Dividends.
(a) The holders of whole or fractional shares of this
Series shall be entitled to receive dividends, when, as and if declared
by the Board of Directors out of funds legally available therefor (i)
on each date that dividends or other distributions (other than
dividends or distributions payable in Common Stock (as defined below)
of the Corporation) are payable on or in respect of Common Stock
comprising part of the Reference Package (as defined below), in an
amount per whole share of this Series equal to the aggregate amount of
dividends or other distributions (other than dividends or distributions
payable in Common Stock of the corporation) that would be payable on
A-1
<PAGE> 45
such date to a holder of the Reference Package and (ii) on the last day
of March, June, September and December in each year, in an amount per
whole share of this Series equal to the excess (if any) of $__________*
over the aggregate dividends paid per whole share of this Series during
the three-month period ending on such last day. Each such dividend
shall be payable to the holders of record of shares of this Series on
the date, not exceeding fifty days preceding such dividend or
distribution payment date, fixed for the purpose by the Board of
Directors in advance of payment of each particular dividend or
distribution. Dividends on each whole and each fractional share of this
Series shall be cumulative from the date such whole or fractional share
is originally issued; provided that any such whole or fractional share
originally issued after a dividend record date and on or prior to the
dividend payment date to which such record date relates shall not be
entitled to receive the dividend payable on such dividend payment date
or any amount in respect of the period from such original issuance to
such dividend payment date. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend that is not paid
when it accrues.
(b) No dividend shall be declared and paid, or set apart
for payment on, any share of this Series or any share of any other
series or class of Preferred Stock or any share of any other class or
series of stock, ranking on a parity with this Series as to dividends,
for any dividend period unless at the same time a like proportionate
dividend for the same dividend period, ratably in proportion to the
respective dividends applicable thereto, shall be declared and paid, or
set apart for payment on, all shares of this Series and all shares of
each other series or class of Preferred Stock and all shares of any
other class or series of stock, ranking on a parity with this Series as
to dividends, then issued and outstanding and entitled to receive
dividends. Holders of shares of this Series shall not be entitled to
any dividend, whether payable in cash, property or stock, in excess of
full cumulative dividends, as herein provided, on this Series.
(c) So long as any shares of this Series shall be
outstanding, unless the full cumulative dividends on all outstanding
shares of this Series shall have been declared and paid, or set apart
for payment, for all past dividend periods and except as provided in
Paragraph 2(b), (i) no dividend (other than a dividend in Common Stock
or in any other stock of the Corporation ranking junior to this Series
as to dividends and distribution of assets upon liquidation,
dissolution or winding-up) shall be declared or paid or set aside for
payment, or other distribution declared or made, upon the Common Stock
or upon any other stock ranking junior to or on a parity with this
Series as to dividends or distribution of assets upon liquidation,
dissolution or winding-up, and (ii) no shares of Common Stock or shares
of any other stock of the Corporation ranking junior to or on a parity
with this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding-up shall be redeemed, purchased or
otherwise acquired for any consideration by the Corporation or any
subsidiary of the Corporation (nor shall any moneys be paid to or made
available for a sinking or other fund for the redemption, purchase or
other
- -------------------------
* Insert an amount equal to 1/4 of the Exercise Price divided by the number of
shares purchasable upon exercise of one Right (i.e., a guaranteed 1% dividend).
Where a Right is exercisable for one-hundredths of shares, this simplifies to
one-fourth the Exercise Price for one one-hundredth of a share of Preferred
Stock.
A-2
<PAGE> 46
acquisition of any shares of any such stock), other than by conversion
into or exchange for Common Stock or any other stock of the Corporation
ranking junior to this Series as to dividends and distribution of
assets upon liquidation, dissolution or winding-up.
3. Merger; Consolidation; Reclassification. In the event
of any merger, consolidation, reclassification 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 whole and fractional shares of this Series shall at the
same time be similarly exchanged or changed in an amount per whole
share equal to the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, that a holder
of the Reference Package would be entitled to receive as a result of
such transaction.
4. Liquidation.
(a) Upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, the holders of whole and
fractional shares of this Series shall be entitled to receive out of
the net assets of the Corporation, before any payment or distribution
shall be made or set apart for payment on the Common Stock or any other
class or series of stock of the Corporation ranking junior to this
Series as to distribution of assets upon such liquidation, dissolution
or winding-up, the amount per whole share of this Series equal to the
greater of (i) $_________** or (ii) the aggregate amount distributed or
to be distributed prior to such date in connection with such
liquidation, dissolution or winding-up to a holder of the Reference
Package, plus an amount equal to accrued and unpaid dividends (whether
or not declared) to the date of final distribution (the "Preferential
Amount").
(b) In the event the assets of the Corporation available
for distribution to the holders of shares of this Series upon any
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation shall be insufficient to pay the full Preferential Amount
to which such holders are entitled pursuant to Paragraph 4(a), no such
distribution shall be made on account of any shares of any other series
or class of Preferred Stock or of any other class or series of stock,
in any case ranking on a parity with the shares of this Series as to
the distribution of assets upon such liquidation, dissolution or
winding-up, unless proportionate distributive amounts shall be paid on
account of the shares of this Series, ratably in proportion to the
preferential sums that would be payable in such distribution if all
sums payable in respect of shares of each such series or class of
Preferred Stock and each other such class or series of stock were
discharged in full.
(c) After the payment to the holders of the shares of
this Series of the full Preferential Amount, the holders of shares of
this Series, as such, shall have no right or claim to any of the
remaining net assets of the Corporation.
- -----------------------
** Insert an amount equal to 100 times the Exercise Price in effect as of the
Separation Time.
A-3
<PAGE> 47
(d) Neither the sale, lease or conveyance of all or
substantially all of the property or business of the Corporation, nor
the merger or consolidation of the Corporation into or with any other
corporation or the merger or consolidation of any other corporation
into or with the Corporation, shall be deemed to be a liquidation,
dissolution or winding-up, voluntary or involuntary, for the purposes
of this Paragraph 4.
5. Redemption. The shares of this Series shall not be
redeemable.
6. Conversion and Exchange. The holders of shares of
this Series shall not have any rights to convert such shares into or to
exchange such shares for shares of Common Stock or any other class or
series of stock (or any other security) of the Corporation.
7. Voting Rights. In addition to any other vote or
consent of shareholders required by law or by the Articles of
Incorporation of the Corporation, each whole and fractional share of
this Series shall, on any matter, vote as a class with any other
capital stock comprising part of the Reference Package and voting on
such matter and shall have the number of votes thereon that a holder of
the Reference Package would have.
8. Rank. The shares of this Series shall rank, as to
dividends and distribution of assets upon liquidation, dissolution or
winding-up, junior to each other class or series of Preferred Stock of
the Corporation, except to the extent that the terms of the shares of
any such other class or series provide otherwise.
9. Definitions.
(a) For purposes of this Amendment, any class or series
of stock of the Corporation shall be deemed to rank:
(i) prior to this Series as to dividends or
distribution of assets upon liquidation, dissolution or
winding-up, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding-up, as
the case may be, in preference or priority to the holders of
this Series;
(ii) on a parity with this Series as to dividends
or distribution of assets upon liquidation, dissolution or
winding-up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share
thereof are different from those of this Series, if the
holders of such class or series of stock and of this Series
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding-up, as
the case may be, in proportion to their respective dividend
amounts or liquidation prices, without preference or priority
to the holders of this Series; and
(iii) junior to this Series as to dividends or
distribution of assets upon liquidation, dissolution or
winding-up, if such stock shall be Common Stock or if the
holders of this Series shall be entitled to the receipt of
dividends or of amounts
A-4
<PAGE> 48
distributable upon liquidation, dissolution or winding-up, as
the case may be, in preference or priority to the holders of
shares of such class or series.
(b) The term "Reference Package", in terms of one whole
share of this Series, shall initially mean 100 shares of Common Stock,
par value $0.10 per share ("Common Stock"), of the Corporation. In the
event the Corporation shall at any time after the close of business on
________________, ___*** (A) declare or pay a dividend on any Common
Stock payable in Common Stock, (B) subdivide any Common Stock or (C)
combine any Common Stock into a smaller number of shares, then and in
each such case the Reference Package after such event shall be the
Common Stock that a holder of the Reference Package immediately prior
to such event would hold thereafter as a result thereof.
(3) The foregoing amendment was duly adopted on the 19th day of
April, 1995, by the Board of Directors of the Corporation without shareholder
action, which action was not required under North Carolina law or the Articles
of Incorporation of the Corporation.
This the _____ day of ____________, _____.
CARAUSTAR INDUSTRIES, INC.
By:
-------------------------------------
----------------, -------------------
- --------------------
*** For an amendment relating to shares to be issued pursuant to Section 2.6 of
the Rights Agreement, insert the Separation Time. For an amendment relating to
shares to be issued pursuant to Section 3.4 of the Rights Agreement, insert the
Flip-in Date.
A-5
<PAGE> 49
EXHIBIT B
[Form of Rights Certificate]
Certificate No. W- Rights
------------
THE RIGHTS ARE SUBJECT TO REDEMPTION, TERMINATION
AND MANDATORY EXCHANGE, AT THE OPTION OF THE COMPANY,
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY
OF THE FOREGOING WILL BE VOID.
Rights Certificate
CARAUSTAR INDUSTRIES, INC.
This certifies that __________________________________, or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the registered holder thereof, subject to the terms,
provisions and conditions of the Amended and Restated Rights Agreement, dated as
of May 24, 1999 (as the same may be amended or supplemented from time to time,
the "Rights Agreement"), between Caraustar Industries, Inc. (the "Company"), and
The Bank of New York, as Rights Agent (the "Rights Agent"), to purchase from the
Company, at any time after the Separation Time (as such term is defined in the
Rights Agreement) and prior to the close of business on April 19, 2005, at the
office or offices of the Rights Agent (or its successor as Rights Agent)
designated for such purpose, one one-hundredth of a fully paid share of Series A
Junior Participating Preferred Stock, no par value (the "Preferred Stock"), of
the Company (subject to adjustment as provided in the Rights Agreement) at the
Exercise Price referred to below, upon presentation and surrender of this Rights
Certificate with the form of Election to Exercise and related certificate duly
executed. Capitalized terms
B-1
<PAGE> 50
used in this Rights Certificate without definition shall have the meanings given
to them in the Rights Agreement. The Exercise Price shall initially be $70.00
per Right, shall be payable in cash and shall be subject to adjustment in
certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities or assets other than Preferred Stock, all as provided in the Rights
Agreement.
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. Under no
circumstances may this Rights Certificate or any of the Rights represented by
this Rights Certificate be transferred, directly or indirectly, (i) to any
Person who is an Acquiring Person, (ii) to any Person in connection with a
transaction in which such Person becomes an Acquiring Person, or (iii) to any
Affiliate or Associate of any such Person. Any attempt to transfer Rights to
such Person will be null and void as of the date of the purported transfer. Any
Right that has been the subject of any such purported transfer will be null and
void and may not be exercised for shares of Preferred Stock, other securities or
other assets. Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written request to the
Rights Agent or the Secretary of the Company.
Subject to the terms of the Rights Agreement, this Rights Certificate,
with or without other Rights Certificates, upon surrender at the office or
offices of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like
B-2
<PAGE> 51
tenor evidencing an aggregate number of Rights equal to the aggregate number of
Rights evidenced by the Rights Certificate or Rights Certificates surrendered.
If this Rights Certificate shall be exercised in part, the registered 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, each Right evidenced
by this Rights Certificate may be (i) redeemed by the Company under certain
circumstances, at its option, at a redemption price of $0.01 per Right, (ii)
terminated by the Company under certain circumstances, at its option, without
payment, or (iii) exchanged by the Company under certain circumstances, at its
option, for two shares of Common Stock or two one-hundredths of a share of
Preferred Stock per Right (or, in certain cases, other securities or assets),
subject, in the case of the actions described in clauses (i) and (iii), to
adjustment in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of any shares
of Preferred Stock or of any other securities that may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights Certificate shall have been exercised
or exchanged as provided in the Rights Agreement.
B-3
<PAGE> 52
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.
Date: , 19
------------------- ---
ATTEST: CARAUSTAR INDUSTRIES, INC.
By:
- ---------------------------- --------------------------------
Secretary Title:
--------------------------
Countersigned:
THE BANK OF NEW YORK,
AS RIGHTS AGENT
By:
-----------------------------
Authorized Signatory
Date of Countersignature:
B-4
<PAGE> 53
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: , 19
------------ --
------------------------------------------
Signature
Signature Guaranteed:*
- ------------------------
* Signatures must be guaranteed by an eligible guarantor institution (including
banks, stockbrokers, savings and loan associations, clearing agencies and credit
unions with membership in an approved signature guarantee medallion program)
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
B-5
<PAGE> 54
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) This Rights Certificate [ ] is [ ] is 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 any such Acquiring
Person (as such terms are defined pursuant to 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, was or
subsequently became an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
Dated: , 19
-------------------- ----
------------------------------------------
Signature
Signature Guaranteed:*
- -----------------
* Signatures must be guaranteed by an eligible guarantor institution (including
banks, stockbrokers, savings and loan associations, clearing agencies and credit
unions with membership in an approved signature guarantee medallion program)
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
B-6
<PAGE> 55
NOTICE
The signatures to the foregoing Assignment and Certificate 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 is not completed in
connection with a purported assignment, 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 such terms are defined in the
Rights Agreement) or a transferee of any of the foregoing and accordingly will
deem the Rights evidenced by this Rights Certificate to be void and not
transferable or exercisable.
B-7
<PAGE> 56
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: Caraustar Industries, Inc.
The undersigned hereby irrevocably elects to exercise
_______________________ whole Rights represented by the attached Rights
Certificate to purchase the shares of Preferred Stock issuable upon the exercise
of such Rights (or such other securities of the Company or of any other person
that may be issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
Social Security or Other Taxpayer Identification Number:
- -------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by the
attached Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
B-8
<PAGE> 57
Social Security or Other Taxpayer Identification Number:
- ------------------------------------------------------
Dated: , 19
-------------------- ----
------------------------------------------
Signature
Signature Guaranteed:*
- ------------------------
* Signatures must be guaranteed by an eligible guarantor institution (including
banks, stockbrokers, savings and loan associations, clearing agencies and credit
unions with membership in an approved signature guarantee medallion program)
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
B-9
<PAGE> 58
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) The Rights evidenced by the attached 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 any such
Acquiring Person (as such terms are defined pursuant to 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 the attached Rights Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated: , 19
-------------------- ----
------------------------------------------
Signature
Signature Guaranteed:*
* Signatures must be guaranteed by an eligible guarantor institution
(including banks, stockbrokers, savings and loan associations, clearing agencies
and credit unions with membership in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
B-10
<PAGE> 59
NOTICE
The signatures to the foregoing Election to Exercise and Certificate
must correspond to the name as written upon the face of the attached Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the attached Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement) or a transferee of any of the foregoing and accordingly
will deem the Rights evidenced by the attached Rights Certificate to be void and
not transferable or exercisable.
B-11
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1 TO THE
CARAUSTAR INDUSTRIES, INC.
1996 DIRECTOR EQUITY PLAN
1. Purpose
The purpose of this Amendment No. 1 (this "Amendment") to the Caraustar
Industries, Inc. 1996 Director Equity Plan, as amended (the "Plan"), is to
provide that options granted under the Plan may be transferable under the
conditions as set forth herein and to remove transfer limitations no longer
applicable under the short-swing profit recovery provisions of Section 16 of the
Securities Exchange Act of 1934. Terms not otherwise defined herein shall have
the meanings given them in the Plan.
2. Effective Date
The effective date of this Amendment shall be July 16, 1998.
3. Section 16 Changes
The Plan is amended by deleting Section 4 in its entirety and restating
Section 4 to read as follows:
"4. Annual Retainer. Caraustar pays to those of its directors
who are not employees of Caraustar or any subsidiary (such directors
are referred to herein as "Eligible Directors") an annual retainer. The
amount of this annual retainer is paid to the Eligible Directors in
four quarterly installments, on the first business day of each calendar
quarter. From and after the effective date of this Plan, Caraustar will
pay the July and January quarterly installments of the annual retainer
by delivery of shares of Caraustar common stock, valued for such
purpose at the closing trading price of the Caraustar shares on the
last business day immediately preceding the date of payment, or if such
shares did not trade publicly on this date, the most recent date on
which they did so trade. No fractional shares will be issued; and any
balance of the quarterly installment shall be paid in cash."
4. Transferability of Options
The Plan is hereby amended by deleting Section 8 thereof in its
entirety and restating Section 8 to read as follows:
"8. Transferability. Any option granted hereunder will be
non-transferable and, accordingly, shall not be assignable, alienable,
salable or otherwise transferable by the holder; provided that:
(1) Options may be transferred by a participant by will
or the laws of descent and distribution;
<PAGE> 2
(2) Options may be transferred by a participant pursuant
to a qualified domestic relations order, either at
the time of grant or subsequently; and
(3) Options may be transferred by a participant by gift
or other transfer to (i) a trust in which the
participant or such person's spouse, or other
immediate family member, or entity owned by such a
person, has an exclusive interest, or (ii) the
participant's spouse, or other immediate family
member."
5. Conforming and Other Changes
Section 6 of the Plan is hereby amended to permit the exercise of any
option properly transferred (pursuant to the Plan and any applicable option
agreement) by the holder thereof to the same extent that such option could have
been exercised by the participant (or the participant's legal representative or
designated beneficiary, in the case of the participant's death) had such option
not been transferred.
Accordingly, the Plan is hereby amended by deleting Section 6 in its
entirety and restating Section 6 as follows:
"6. Exercise.
An option granted hereunder may be exercised as to part or all
of the shares covered thereby at any time before the expiration date of
such option.
The option may be exercised by (i) the participant or (ii) the
holder of any option properly transferred (pursuant to the Plan and any
applicable option agreement) to the same extent that the option could
have been exercised by the participant (or the participant's legal
representative or designated beneficiary, in the case of the
participant's death) had such option not been transferred."
<PAGE> 3
EXHIBIT A
AMENDMENT NO. 1 TO THE
CARAUSTAR INDUSTRIES, INC.
1996 DIRECTOR EQUITY PLAN
1. Purpose
The purpose of this Amendment No. 1 (this "Amendment") to the Caraustar
Industries, Inc. 1996 Director Equity Plan, as amended (the "Plan"), is to
provide that options granted under the Plan may be transferable under the
conditions as set forth herein and to remove transfer limitations no longer
applicable under the short-swing profit recovery provisions of Section 16 of the
Securities Exchange Act of 1934. Terms not otherwise defined herein shall have
the meanings given them in the Plan.
2. Effective Date
The effective date of this Amendment shall be ________ __, 1998.
3. Section 16 Changes
The Plan is amended by deleting Section 4 in its entirety and restating
Section 4 to read as follows:
"4. Annual Retainer. Caraustar pays to those of its directors
who are not employees of Caraustar or any subsidiary (such directors
are referred to herein as "Eligible Directors") an annual retainer. The
amount of this annual retainer is paid to the Eligible Directors in
four quarterly installments, on the first business day of each calendar
quarter. From and after the effective date of this Plan, Caraustar will
pay the July and January quarterly installments of the annual retainer
by delivery of shares of Caraustar common stock, valued for such
purpose at the closing trading price of the Caraustar shares on the
last business day immediately preceding the date of payment, or if such
shares did not trade publicly on this date, the most recent date on
which they did so trade. No fractional shares will be issued; and any
balance of the quarterly installment shall be paid in cash."
4. Transferability of Options
The Plan is hereby amended by deleting Section 8 thereof in its
entirety and restating Section 8 to read as follows:
"8. Transferability. Any option granted hereunder will be
non-transferable and, accordingly, shall not be assignable, alienable,
salable or otherwise transferable by the holder; provided that:
<PAGE> 4
(4) Options may be transferred by a participant by will
or the laws of descent and distribution;
(5) Options may be transferred by a participant pursuant
to a qualified domestic relations order,
either at the time of grant or subsequently; and
(6) Options may be transferred by a participant by gift
or other transfer to (iii) a trust in which the
participant or such person's spouse, or other
immediate family member, or entity owned by such a
person, has an exclusive interest, or (iv) the
participant's spouse, or other immediate family
member."
5. Conforming and Other Changes
Section 6 of the Plan is hereby amended to permit the exercise of any
option properly transferred (pursuant to the Plan and any applicable option
agreement) by the holder thereof to the same extent that such option could have
been exercised by the participant (or the participant's legal representative or
designated beneficiary, in the case of the participant's death) had such option
not been transferred.
Accordingly, the Plan is hereby amended by deleting Section 6 in its
entirety and restating Section 6 as follows:
"6. Exercise.
An option granted hereunder may be exercised as to part or all
of the shares covered thereby at any time before the expiration date of
such option.
The option may be exercised by (i) the participant or (ii) the
holder of any option properly transferred (pursuant to the Plan and any
applicable option agreement) to the same extent that the option could
have been exercised by the participant (or the participant's legal
representative or designated beneficiary, in the case of the
participant's death) had such option not been transferred."
<PAGE> 1
CARAUSTAR INDUSTRIES, INC. EXHIBIT 12.1
Computation of Ratio of Earnings to Fixed Charges
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
1994 1995 1996 1997 1998 Mar 31, 1998 Mar 31, 1999
-------- -------- -------- -------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations
before income taxes, minority interest,
reversal of loss on discontinued
operations and cumulative effect of
accounting changes $ 57,560 $ 69,100 $ 95,230 $ 83,388 $ 83,018 $21,763 $18,052
Equity in income of less-than
-50-percent-owned entities - - (104) (40) 12 (15) -
Fixed charges 9,194 9,716 12,865 16,536 19,469 4,494 5,012
Less capitalized interest expense - - - - (219) (139)
-------- -------- -------- -------- -------- ------- -------
Earnings $ 66,754 $ 78,816 $107,991 $ 99,884 $102,280 $26,242 $22,925
======== ======== ======== ======== ======== ======= =======
Fixed charges:
Interest expense $ 6,870 $ 6,955 $10,698 $ 14,111 $ 16,072 $ 3,699 $ 4,071
Amortization of debt issuance costs 169 116 348 - - - -
Estimate of the interest cost
within rental expense 2,155 2,645 1,819 2,425 3,178 795 802
Capitalized interest expense - - - - 219 - 139
-------- -------- ------- -------- -------- ------- -------
Fixed charges $ 9,194 $ 9,716 $12,865 $ 16,536 $ 19,469 $ 4,494 $ 5,012
======== ======== ======= ======== ======== ======= =======
Ratio of earnings to fixed charges 7.26 8.11 8.39 6.04 5.25 5.84 4.57
======== ======== ======= ======== ======= ======= =======
COMPUTATION OF PRO FORMA RATIO
OF EARNINGS TO FIXED CHARGES
AFTER ADJUSTMENT FOR ISSUANCE OF NOTES
Earnings, as above $ 102,280 $ 22,925
========= ========
Fixed charges, as above $ 19,469 $ 5,012
Pro forma adjustments:
Annual interest cost of notes offered
hereby (including amortization of discount) $ 14,846 $ 3,713
Annual interest cost attributable to
use of proceeds of notes offered hereby to
repay borrowings outstanding during
the period under our revolving credit facility $ (8,408) $ (2,040)
Annual amortization of costs of the offering $ 190 $ 48
--------- --------
Pro forma fixed charges $ 26,097 $ 6,733
========= ========
Pro forma ratio of earnings to fixed charges 3.92 3.40
========= ========
</TABLE>
