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EXHIBIT 10.32
STOCKHOLDERS AGREEMENT
BY AND AMONG
TENNECO PACKAGING INC.,
PCA HOLDINGS LLC
AND
PACKAGING CORPORATION OF AMERICA
APRIL 12, 1999
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STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and
entered into as of the 12th day of April, 1999, by and among TENNECO PACKAGING
INC., a Delaware corporation ("TPI"), PCA HOLDINGS LLC, a Delaware limited
liability company ("PCA"), and PACKAGING CORPORATION OF AMERICA, a Delaware
corporation ("NEWCO").
RECITALS
WHEREAS, TPI, PCA and Newco are parties to that certain
Contribution Agreement, dated as of January 25, 1999, as amended (the
"CONTRIBUTION AGREEMENT");
WHEREAS, pursuant to and subject to the terms and conditions
of the Contribution Agreement, each of TPI and PCA will contribute certain
assets to Newco or a Subsidiary of Newco in exchange for shares of the common
stock, $.01 par value per share (the "COMMON STOCK"), of Newco;
WHEREAS, PCA recognizes that TPI has substantial experience
and expertise in the ownership, management and operation of the Containerboard
Business (as such term and each other capitalized term used but not otherwise
defined herein is defined in the Contribution Agreement);
WHEREAS, TPI, PCA and Newco desire to enter into this
Agreement to set forth certain arrangements with respect to the ownership,
operation and management of Newco and its Subsidiaries; and
WHEREAS, the execution and delivery of this Agreement is a
condition to each of TPI's and PCA's respective obligation to effect the
Closing.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and undertakings contained herein, and subject to and on the
terms and conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1 CERTAIN DEFINITIONS. As used herein, the following terms
shall have the meanings set forth or as referenced below:
"AFFILIATE" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such first Person as of the date on which, or at any time during the period
for which, the determination of affiliation is being made. For the purpose of
this definition, "control" means (i) the ownership or control of 50% or more of
the equity interest in any Person, or (ii) the ability to direct or cause the
direction of the management
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or affairs of a Person, whether through the direct or indirect ownership of
voting interests, by contract or otherwise.
"AGREEMENT" shall mean this Agreement, including the exhibits
hereto, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
"BOARD" shall mean the Board of Directors of Newco.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banks in Chicago, Illinois are authorized or obligated
by Law or executive order to close.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"COMMON STOCK" shall have the meaning set forth in the
Recitals hereto.
"CONTRIBUTION AGREEMENT" shall have the meaning set forth in
the Recitals hereto.
"CPA FIRM" shall mean the independent public auditor selected
pursuant to SECTION 4.3, or any subsequent independent public auditor of the
books and records of Newco appointed by the Board in accordance with the terms
of this Agreement.
"DEMAND REGISTRATION" shall have the meaning set forth in the
Registration Rights Agreement.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"ENCUMBRANCES" shall mean liens, charges, encumbrances,
mortgages, pledges, security interests, options or any other restrictions or
third-party rights.
"EXEMPT SALE" shall mean: (i) any Transfer of Shares to an
Affiliate of the selling party; (ii) any distribution of securities by a Person
to its direct or indirect equity owners; (iii) an assignment or pledge of Shares
in connection with the incurrence, maintenance or renewal of indebtedness of
Newco or its Subsidiaries; (iv) any Transfer of Shares pursuant to a Public
Sale; and (v) any Transfer of Shares to directors, officers, or employees of
Newco or its Subsidiaries.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"INDEPENDENT THIRD PARTY" means any Person who, immediately
prior to the contemplated transaction, is not the owner of in excess of 5% of
any class or series of Newco's common equity on a fully-diluted basis (a "5%
OWNER") and who is not an Affiliate of any such 5% Owner.
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"JUNIOR PREFERRED STOCK" shall mean the one hundred (100)
authorized, issued and outstanding shares of Junior Preferred Stock entitled to
elect the CEO Director, with TPI holding 45 shares and PCA holding 55 shares,
respectively, of such Junior Preferred Stock.
"LAW" shall mean any federal, state, foreign or local law,
constitutional provision, code, statute, ordinance, rule, regulation, order,
judgment or decree of any governmental authority.
"MANAGEMENT BUY-IN" shall mean the purchase of Management
Stock as contemplated by the Contribution Agreement.
"NEWCO" shall mean Packaging Corporation of America, a
Delaware Corporation.
"NEW SECURITIES" shall mean any shares of capital stock or
other equity securities (or debt securities convertible into such equity
securities) of Newco, whether now authorized or not, and rights, options or
warrants to purchase said shares of capital stock and securities of any type
whatsoever that are, or may become, convertible into shares of Newco capital
stock or other Newco equity securities; provided, however, that the term "New
Securities" shall not include: (i) securities issued in connection with any
stock split, stock dividend, reclassification or recapitalization of Newco; (ii)
shares of Common Stock issued to employees, consultants, officers or directors
of Newco or its Subsidiaries pursuant to: (A) the exercise of any stock option,
stock purchase or stock bonus plan, agreement or arrangement for the primary
purpose of soliciting or retaining the services of such Persons and which is
hereafter approved by the Board; or (B) the exercise of any stock option issued
pursuant to the Share Performance Plan; (iii) securities issued in a Public
Offering; (iv) securities issued in connection with the acquisition of any
business, assets or securities of another Person in compliance with SECTION 3.6
hereof; and (v) securities issued to any lender of Newco or one of its
Subsidiaries in compliance with SECTION 3.6 hereof.
"PCA" shall mean PCA Holdings LLC, a Delaware limited
liability company.
"PCA HOLDERS" shall collectively refer to PCA together with
any other Stockholders who directly or indirectly acquire any Shares from: (i)
PCA; or (ii) TPI pursuant to an Initial Period Pro-Rata Tag-Along as provided in
SUBSECTION 6.3(b)(ii) below.
"PERMITTED ENCUMBRANCES" shall mean liens for taxes,
assessments and other governmental charges not yet due and payable or due but
not delinquent or being contested in good faith by appropriate proceedings.
"PERSON" shall mean an individual, a corporation, a
partnership, an association, a trust, a limited liability company or any other
entity or organization.
"PRO RATA PORTION" shall mean, with respect to each
Stockholder, that number of shares of New Securities as is equal to the product
of (i) the total number of New Securities proposed to be issued or otherwise
transferred multiplied by (ii) a fraction, the numerator of which is the number
of shares of Common Stock (including any common equity issued or issuable in
respect of such Common Stock) held by such Stockholder immediately prior to such
issuance or transfer, and
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the denominator of which is the total number of shares of Common Stock
(including any such common equity issued or issuable in respect of such Common
Stock) which are held by all Stockholders.
"PUBLIC OFFERING" shall mean an underwritten public offering
pursuant to an effective registration statement under the Securities Act (or any
comparable form under any similar statute then in force), covering the offer and
sale of Common Stock.
"PUBLIC SALE" means: (i) any sale of Common Stock pursuant to
a Public Offering; or (ii) any Spin-Off.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set
forth in the Contribution Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.
"SHARE PERFORMANCE PLAN" shall mean the equity incentive plan
for directors, officers and employees of Newco and its Subsidiaries.
"SHARE PERFORMANCE PLAN AMOUNT" means the number of shares of
Common Stock equal to (i) 9.8% of the fully diluted Common Stock of Newco at
Closing, less (ii) the aggregate percentage of Common Stock sold pursuant to the
Management Buy-In.
"SHARES" shall mean any Common Stock held by any Stockholder
(including any equity securities issued or issuable in respect of such Common
Stock pursuant to a stock split, stock dividend, reclassification, combination,
merger, consolidation, recapitalization or other reorganization) and any other
capital stock of any class or series of Newco held by any Stockholder. As to any
particular Shares, such shares shall cease to be Shares for all purposes of this
Agreement when they have been sold or transferred pursuant to a Public Sale, and
the transferee of any Shares pursuant to a Public Sale shall not be considered a
Stockholder for purposes of this Agreement by virtue of the ownership of Shares
transferred pursuant to such Public Sale.
"SPIN-OFF" shall mean any distribution by TPI or one of its
Affiliates of all of its Shares of any class or series to its public
stockholders, if any.
"STOCKHOLDERS" means TPI, PCA and each Person other than Newco
who is or becomes bound by this Agreement; provided, however, that anything
contained in this Agreement to the contrary notwithstanding, directors, officers
and employees who directly or indirectly acquire Shares from TPI and PCA
pursuant to the Management Buy-In shall not be Stockholders for purposes of this
Agreement or bound by the terms hereof. Stockholders are sometimes individually
referred to herein as a "STOCKHOLDER".
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such Person, either
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directly or through or together with any other Subsidiary of such Person, owns
50% or more of the equity interests.
"SUBSIDIARY BOARD" has the meaning set forth in SECTION 3.3.
"TPI" shall mean Tenneco Packaging Inc., a Delaware
corporation.
"TPI HOLDERS" shall collectively refer to: (i) TPI; and (ii)
any other Stockholders who directly or indirectly acquire any Shares from TPI
except for Stockholders who directly or indirectly acquire Shares from TPI
pursuant to an Initial Period Pro-Rata Tag-Along as provided in SUBSECTION
6.3(b)(ii) below.
"TPI REGISTRABLE SECURITIES" shall have the meaning set forth
in the Registration Rights Agreement.
"VOTING STOCK" shall mean securities of Newco of any class or
series the holders of which are entitled to vote generally in the election of
directors of Newco.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", and "hereunder", and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
(d) The term "including" shall be deemed to mean "including
without limitation."
(e) Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Contribution Agreement.
ARTICLE II
BUSINESS AND OPERATIONS OF NEWCO
2.1 PURPOSES AND BUSINESS. Except as otherwise approved
pursuant to SECTION 3.6(i)(c), the sole and exclusive purpose of Newco and its
Subsidiaries shall be to engage in the business of producing and selling
containerboard and corrugated packaging products (other than folding carton,
molded fiber and honeycomb paperboard-type products), including without
limitation, the Containerboard Business (the "BUSINESS SCOPE"). Newco shall not
and shall not permit any of its Subsidiaries to (and PCA shall not cause or, to
the extent reasonably within PCA's control, permit Newco or any of its
Subsidiaries to) engage in any other activity or business except to the extent
approved by the Board in accordance with the terms and conditions hereof.
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2.2 PRINCIPAL EXECUTIVE OFFICES. The principal executive
offices of Newco shall be located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ or such other location as determined by the Board.
2.3 ANNUAL BUSINESS PLAN.
(a) PREPARATION. No later than 90 days prior to the expiration
of any fiscal year of Newco, the Board shall discuss and approve (in the manner
set forth in SECTION 3.6 hereof) an annual business plan and budget for Newco
and its Subsidiaries (the "ANNUAL BUSINESS PLAN") for the next succeeding fiscal
year, which plan shall address, among other things:
(i) The general business direction, policies and programs
for Newco and its Subsidiaries during such period;
(ii) A budget for Newco and its Subsidiaries for such
period, setting forth projected revenues, costs and
expenses (including capital expenditures);
(iii) The extent to which Newco and/or its Subsidiaries
will make any expenditures in connection with
business acquisitions; and
(iv) Information, plans, budgets, forecasts and
projections of the nature included in the annual
business plan for 1999 set forth as EXHIBIT 2.3(a),
which shall be the initial Annual Business Plan.
The Board is expressly empowered to delegate to the management of Newco the
responsibility for the initial preparation of each Annual Business Plan, subject
to the final approval of each such plan by the Board as provided herein.
(b) EFFECT OF ANNUAL BUSINESS PLAN. The parties agree that the
business and operations of Newco and its Subsidiaries will be conducted in
accordance with the applicable Annual Business Plan in all material respects and
in compliance with SECTION 3.6 hereof.
ARTICLE III
BOARD OF DIRECTORS
3.1 GENERAL. From and after the Closing, each Stockholder will
vote all of its respective Shares and any other Voting Stock over which it
possesses direct or indirect voting power and will take all other necessary or
desirable actions within its direct or indirect control (whether in its capacity
as a stockholder of Newco or otherwise), and Newco will take all necessary and
desirable actions within its control, in order to give effect to the provisions
of this ARTICLE III. By way of example and without limiting the generality of
the foregoing, TPI and PCA shall amend the Certificate of Incorporation or
By-laws or both, as applicable, of Newco and each Subsidiary to incorporate and
effectuate the provisions in this ARTICLE III and to authorize and designate the
Junior Preferred Stock for the purpose of implementing the provisions relating
to the CEO Director as
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provided herein. With respect to the enumeration of the matters in SECTION 3.6
below, such matters shall be set forth in the By-laws (and not the Certificate
of Incorporation) except with respect to the establishment of committees of the
Board and each Subsidiary Board and the dissolution of Newco, which matters
shall be set forth in the Certificate of Incorporation.
3.2 POWERS. Subject to the provisions of the DGCL, the
Certificate of Incorporation of Newco, the By-laws of Newco and this Agreement,
the business and affairs of Newco shall be managed by or under the direction of
the Board.
3.3 SIZE AND COMPOSITION. The Board shall consist of six
individuals as follows: (i) two directors shall be designated in writing by TPI;
(ii) three directors shall be designated in writing by PCA; and (iii) the
remaining director shall be the Chief Executive Officer of Newco (the "CEO
Director"). The directors in the preceding clause (i) (the "TPI DIRECTORS") and
in the preceding clause (ii) (the "THE PCA DIRECTORS") are sometimes
collectively referred to as the "TPI/PCA DIRECTORS." TPI and PCA, as the holders
of the Junior Preferred Stock and thus entitled to elect the CEO Director,
shall: (x) at each election of directors (or filling of a vacancy with respect
to the CEO Director), elect the individual then serving as the Chief Executive
Officer of Newco as the CEO Director; and (y) remove the CEO Director if the CEO
Director ceases to serve as the Chief Executive Officer of the Company. The size
and composition of the board of directors or similar governing body of each
Subsidiary of Newco (each, a "SUBSIDIARY BOARD") and the manner in which the
initial members and any subsequent members (including any subsequent member
selected or appointed to fill a vacancy) of any such Subsidiary Board will be
the same as that of the Board. Anything to the contrary contained herein
notwithstanding, the rights of each of TPI and PCA to designate directors as
provided herein shall not be assignable (by operation of law, the transfer of
Shares or otherwise) without the prior written consent of the other; provided,
however, that each of TPI and PCA shall be entitled to assign its rights to
designate directors as provided herein to one of its Affiliates that is (or
becomes) a Stockholder without the prior written consent of the other. If
directed by PCA, a representative of ▇.▇. ▇▇▇▇▇▇ & Co. shall be entitled to
attend meetings of (and receive information provided to the directors of) the
Board and each Subsidiary Board; provided, however, that such representative
shall not be or have any rights of a director of the Board or any Subsidiary
Board.
3.4 TERM; REMOVAL; VACANCIES. The members of the Board or any
Subsidiary Board other than the CEO Director shall hold office at the pleasure
of the Stockholder which designated them. Any such Stockholder may at any time,
by written notice to the other Stockholder and Newco, remove (with or without
cause) any member of the Board or any Subsidiary Board designated by such
Stockholder other than the CEO Director. Subject to applicable Law, no member of
the Board or any Subsidiary Board may be removed except by written request by
the Stockholder that designated the same. In the event a vacancy occurs on the
Board (or a Subsidiary Board) for any reason, the vacancy will be filled by the
written designation of the Stockholder entitled to designate the director
creating the vacancy.
3.5 NOTICE; QUORUM. Meetings of the Board and any Subsidiary
Board may be called upon three days' prior written notice to all directors
stating the purpose or purposes thereof. Such notice shall be effective upon
receipt, in the case of personal delivery or facsimile transmission,
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and five Business Days after deposit with the U.S. Postal Service, postage
prepaid, if mailed. The presence in person of three of the five TPI/PCA
Directors shall constitute a quorum for the transaction of business at any
special, annual or regular meeting of the Board or any Subsidiary Board. Each
Stockholder shall use its reasonable efforts to ensure that a quorum is present
at any duly convened meeting of the Board or any Subsidiary Board and each of
TPI and PCA may designate by written notice to the other an alternate
representative to act in the absence of any of its designates at any such
meeting. If at any meeting of the Board or any Subsidiary Board a quorum is not
present, a majority of the directors present may, without further notice,
adjourn the meeting from time to time until a quorum is obtained.
3.6 VOTING. Each member of the Board and each Subsidiary Board
shall be entitled to cast one vote on each matter considered by such Board and
Subsidiary Board, respectively; provided, however, that in the event that a vote
would result in a 3-3 tie with respect to a matter, the CEO Director shall not
be entitled to vote with respect to such matter (the Board and each Subsidiary
Board shall poll its members prior to any vote to effectuate the purposes of
this sentence). Except as otherwise expressly provided by this Agreement, the
act of a majority of the members of the Board and each Subsidiary Board present
at any meeting at which a quorum is present shall constitute an act of the Board
or Subsidiary Board, as applicable. Notwithstanding anything to the contrary
contained herein: (i) the following matters shall require, in addition to any
other vote required by applicable law, the affirmative vote of at least four of
the five TPI/PCA Directors; (ii) Newco shall not directly or indirectly take,
and shall not permit any of its Subsidiaries to directly or indirectly take, any
of the following actions without first obtaining such approval; and (iii) PCA
shall not cause or, to the extent reasonably within PCA's control, permit Newco
or any of its Subsidiaries to take any of the following actions without first
obtaining such approval:
(i) (a) the approval of any Annual Business Plan, (b) any
material change to an approved Annual Business Plan, and (c) engaging
in or the ownership or operation of any activities or business by Newco
and/or any of its Subsidiaries which are not within the Business Scope;
(ii) subject to applicable Law, any dissolution or liquidation
of Newco;
(iii) (a) during the 12-month period beginning on the Closing
Date, any amendment of the certificate of incorporation, articles of
incorporation, by-laws or other governing documents of Newco or any of
its Subsidiaries (other than such amendment which may be necessary in
connection with other actions (or inactions) which would be permissible
under this Agreement but for this clause (a)); and (b) from and after
such 12-month period, any amendment of the certificate of
incorporation, articles of incorporation, by-laws or other governing
documents of Newco or any of its Subsidiaries which would: (1) treat
any TPI Holder disproportionately vis-a-vis any PCA Holder; (2) place
any restriction or limitation on the ability of any TPI Holder to
Transfer all or any portion of its Shares or reduce the consideration
received or to be received by such TPI Holder in connection with such
Transfer; or (3) cause such governing documents, taken as a whole, to
be less favorable to a stockholder than the typical governing documents
of a publicly traded company engaged in a business within the Business
Scope;
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(iv) any merger, consolidation, reorganization (except as
provided in ss.253 of the DGCL and except for a merger, consolidation
or reorganization in which the consideration to be received by TPI is
cash, publicly traded securities or a combination thereof, and TPI
Holders are not treated disproportionately or differently than PCA
Holders) or the issuance of capital stock or other securities of Newco
or any of its Subsidiaries (other than: (a) the formation of or
issuance of securities of a wholly-owned Subsidiary, (b) the issuance
of up to the number of shares of Common Stock equal to the Share
Performance Plan Amount pursuant to the Share Performance Plan, (c)
issuances of a number of shares of Common Stock which, on a cumulative
basis from and after the Closing, does not exceed 5% of the number of
shares of Common Stock outstanding as of the Closing, and (d) issuances
pursuant to the Management Buy-In);
(v) the sale, transfer, exchange, license, assignment or other
disposition by Newco and/or any of its Subsidiaries of assets having a
fair market value exceeding $32.5 million in any transaction or series
of related transactions (excluding sales of inventory and other assets
in the ordinary course of business and timberlands sales pursuant to
SECTION 5.2 hereof), except in each case for Permitted Encumbrances;
(vi) the acquisition of assets (tangible or intangible) by
Newco and/or any of its Subsidiaries (including any capital expenditure
not included in the approved Annual Business Plan) for an acquisition
price exceeding $32.5 million in value in any transaction or series of
related transactions (excluding acquisitions of inventory and other
assets in the ordinary course of business);
(vii) the acquisition of another Person or an existing
business from another Person in any transaction or series of related
transactions or the entry into any partnership or formal joint venture
or similar arrangement involving an acquisition price or investment
exceeding $32.5 million in value;
(viii) the refinancing of existing indebtedness, amendment of
any existing loan or financing arrangement or incurrence of any new
indebtedness by Newco and/or any of its Subsidiaries on terms which
either: (a) are, taken as a whole, less favorable to Newco and its
Subsidiaries than the terms then reasonably available in the financial
markets to similarly situated borrowers; (b) place any restriction or
limitation on the ability of any TPI Holder to Transfer all or any
portion of its Shares; or (c) include any event of default or other
materially adverse consequence to Newco and/or any of its Subsidiaries
(including, for example, an increase in the interest rate) as a result
of a sale of all or a portion of any Stockholder's Shares;
(ix) the making or guarantee by Newco or any of its
Subsidiaries of any loan or advance to any Person except: (a) in the
ordinary course of business; (b) to a wholly owned Subsidiary; (c) for
advances to employees in amounts not to exceed $500,000 to any one
individual and $5 million in the aggregate; (d) for loans or advances
made in connection with any acquisition of the business, capital stock
or assets or any other Person that is otherwise permitted or approved
as provided by this SECTION 3.6; and (e) guarantees, loans and
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advances in connection with the Management Buy-In and Share Performance
Plan, not to exceed $15 million in the aggregate;
(x) the entry into, or amendment of, contracts or other
transactions between Newco and/or any of its Subsidiaries, on the one
hand, and a Stockholder or any Affiliate thereof, on the other hand
except for: (a) the execution and delivery of the Contribution
Agreement, Ancillary Agreements and other documents and agreements to
be delivered by Newco at Closing pursuant to the Contribution
Agreement; and (b) contracts, amendments and transactions which are no
less favorable to Newco and its Subsidiaries than could be obtained
from TPI or its Affiliates or Independent Third Parties negotiated on
an arms-length basis;
(xi) the direct or indirect redemption, retirement, purchase
or other acquisition of any equity securities of Newco or any of its
Subsidiaries (other than securities of its wholly owned Subsidiary)
except for pro rata redemptions with respect to the proceeds received
from the disposition of the timberlands or any of the assets or
operations related thereto or located thereon or pursuant to the
provisions of agreements with employees of the Corporation or its
Subsidiaries under which such equity securities were originally issued
to such employees;
(xii) the appointment of the members of any committee of the
Board or any Subsidiary Board, unless at least one member of such
committee is a director who was designated by TPI;
(xiii) (a) the creation of any Subsidiary, unless: (1) all of
the equity interests of such Subsidiary are owned by Newco, or by
another Subsidiary in which all the equity interests of such other
Subsidiary are owned directly or indirectly by Newco; and (2) the
by-laws or similar governing documents of each such Subsidiary contain
provisions regarding the size, composition, quorum requirements and
voting of the board of directors equivalent to those provided for
herein with respect to Newco; and (b) the Transfer of any equity
interest in a Subsidiary other than to Newco or another Subsidiary in
which all the equity interests of such other Subsidiary are owned by
Newco.
(xiv) removal of the independent public auditors of Newco or a
Subsidiary of Newco or appointment of any public auditors which are not
one of the Big Five accounting firms; and
(xv) delegation of any of the matters covered by any of
clauses (i) through (xiv) above to any committee of the Board or
committee of any Subsidiary Board.
Notwithstanding the foregoing: (i) the approvals required by
this SECTION 3.6 with respect to any of the matters in SUBSECTIONS (ii) THROUGH
(xv) above shall not apply to any matter included in an Annual Business Plan
which has been approved pursuant to this SECTION 3.6; (ii) nothing in this
SECTION 3.6 shall restrict the sale of the timberlands or any of the assets or
operations related thereto or located thereon; and (iii) nothing in this SECTION
5 shall restrict the
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issuances of management equity (representing in the aggregate up to 9.8% of
Newco's outstanding Common Stock) and the related distribution of proceeds from
such issuance and the repurchase of the corresponding number of outstanding
shares for such issuances as contemplated in the Contribution Agreement.
TPI hereby covenants and agrees, as more fully described in
this paragraph, that it shall use its reasonable good faith efforts to not cause
or, to the extent reasonably within its control, permit any member of the Board
or Subsidiary Board designated by TPI to withhold approval of a matter
recommended for approval by management of Newco and presented to the Board or
Subsidiary Board for consideration which requires the affirmative vote of four
of the five TPI/PCA Directors pursuant to this SECTION 3.6. TPI's covenant and
agreement in the preceding sentence: (i) shall relate only to matters, the
approval of which TPI determines in good faith are in the best interests of TPI
and its stockholders and Affiliates; and (ii) is exclusive to TPI and shall not
be binding upon any direct or indirect transferee of TPI's Shares.
3.7 TELEPHONIC MEETINGS; WRITTEN CONSENTS. Except as may
otherwise be provided by applicable Law, any action required or permitted to be
taken at any meeting of the Board or any committee thereof may be taken without
a meeting pursuant to a written consent, in compliance with the DGCL and SECTION
3.6 hereof and such written consent is filed with the minutes of the proceedings
of the Board or such committee. Any meeting of the Board or any committee
thereof may be held by conference telephone or similar communication equipment,
so long as all Board or committee members participating in the meeting can hear
one another clearly, and participation in a meeting by use of conference
telephone or similar communication equipment shall constitute presence in person
at such meeting.
3.8 INITIAL DIRECTORS. TPI and PCA shall make their
designations pursuant to SECTION 3.3 on or prior to the Closing Date.
3.9 RECAPITALIZATION OF NEWCO UNDER CERTAIN CIRCUMSTANCES. For
any Public Offering or Spin-Off prior to the time Newco becomes subject to the
Exchange Act with respect to Shares: (i) Newco shall use commercially reasonable
efforts to effect a stock split, stock dividend or stock combination which, in
the opinion of the managing underwriter for the Public Offering or TPI's
financial advisor in connection with a Spin-Off, is desirable for the sale,
marketing or distribution of the Shares to the public; and (ii) each Stockholder
agrees to vote all of its respective Shares and any other Voting Stock over
which it posses direct or indirect voting power in order to cause such stock
split, dividend or combination to be effected consistent with the provisions of
this SECTION 3.9.
ARTICLE IV
ACCOUNTING, BOOKS AND RECORDS
4.1 FISCAL YEAR. The fiscal year of Newco shall be the period
commencing January 1 in any year and ending December 31 of that year, except
that the first fiscal year of Newco shall commence on the Closing Date and end
on December 31 of the year in which the Closing Date occurs.
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4.2 BOOKS AND RECORDS. Newco shall keep at its principal
executive offices books and records typically maintained by Persons engaged in
similar businesses and which set forth a true, accurate and complete account of
the business and affairs of Newco and its Subsidiaries, including a fair
presentation of all income, expenditures, assets and liabilities thereof. Such
books and records shall include all information reasonably necessary to permit
the preparation of financial statements required by applicable Law in accordance
with GAAP. Each Stockholder who, together with its Affiliates, owns 17-1/2% or
more of the outstanding common equity of Newco (a "17-1/2% Stockholder") and its
respective authorized representatives shall have the right, at all reasonable
times and upon reasonable advance written notice to Newco, to have access to,
inspect, audit and copy the original books, records, files, securities,
vouchers, canceled checks, employment records, bank statements, bank deposit
slips, bank reconciliations, cash receipts and disbursement records, and other
documents of Newco and its Subsidiaries.
4.3 AUDITORS. Newco shall engage one of the Big Five
accounting firms as the initial independent public auditors of Newco and its
Subsidiaries.
4.4 REPORTING. Newco shall use its reasonable best efforts to
deliver to each Stockholder unaudited consolidated interim financial statements
for Newco and its Subsidiaries for such fiscal quarter (including a balance
sheet as of the end of such period and statements of income, stockholders'
equity and cash flows for such period within 30 days after the close of each
fiscal quarter. Newco will use its reasonable best efforts to deliver to each
Stockholder within 60 days after the close of each fiscal year of Newco
consolidated annual financial statements for Newco and its Subsidiaries for such
fiscal year (including a balance sheet as of the end of such fiscal year and
statements of income, stockholders' equity and cash flows for such fiscal year),
in each case audited and certified by the CPA Firm. Such annual and interim
financial statements shall contain such statements and schedules, prepared in
accordance with the requirements of the Stockholders, as may be requested in
writing by any of the 17-1/2% Stockholders. Newco shall bear the cost of
providing financial and accounting information reasonably required by any of the
17-1/2% Stockholders in the preparation of such 17-1/2% Stockholder's own
financial statements. Such annual and interim financial statements shall be
prepared in accordance with GAAP, shall be true and accurate in all material
respects and shall present fairly the financial position and results of
operations of Newco.
4.5 STOCKHOLDER'S AUDIT. Upon reasonable advance written
notice to Newco, any Stockholder may request an audit of the books and records
of Newco and its Subsidiaries (a "STOCKHOLDER'S AUDIT") by an independent
auditor of its selection, other than the CPA Firm. Any Stockholder's Audit shall
be at the expense of the requesting 17-1/2% Stockholder unless material error or
fraud is found, in which case such audit shall be at the expense of Newco. All
information obtained by any 17-1/2% Stockholder in any such audit shall be
treated as confidential.
4.6 CONSENT OF NEWCO AUDITORS. Upon request from time to time
by TPI, Newco shall use its commercially reasonable efforts to obtain the
written agreements of Newco's auditors to permit the use of Newco's Audited
Financial Statements in connection with TPI's and/or its Affiliates filings made
with the Securities and Exchange Commission and, subject to such auditor's
normal procedures, in private or public offerings of securities of TPI and/or
its Affiliates as may be
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reasonably requested by TPI. In addition, Newco will use commercially reasonable
efforts to cause Newco's auditors to provide a comfort letter in accordance with
SAS 72 for any such offering.
ARTICLE V
CERTAIN MATTERS REGARDING STOCKHOLDERS AND NEWCO
5.1 TRANSACTIONS BETWEEN STOCKHOLDERS AND NEWCO. The
Stockholders hereby approve on behalf of Newco the Contribution Agreement and
each of the Ancillary Agreements and other documents and agreements to be
delivered by Newco at the Closing pursuant to the Contribution Agreement, and
the transactions contemplated thereby.
5.2 SALE OF TIMBERLANDS. Newco, TPI and PCA hereby acknowledge
that it is their mutual intention to effect a sale for cash of the timberlands
(and the assets and operations related thereto and located thereon) included in
the Contributed Assets and to distribute the net proceeds from any such sale as
soon as practicable following the Closing Date. If and to the extent the net
proceeds from any such sale are distributed to the holders of the Common Stock,
such distribution shall be on a pro-rata basis among such holders.
ARTICLE VI
TRANSFER OF SHARES
6.1 GENERAL. No Stockholder will directly or indirectly sell,
assign, pledge, encumber, hypothecate, dispose of or otherwise transfer
("TRANSFER") any Shares or interest in any Shares, agree to any such Transfer or
permit any such interest to be subject to Transfer, directly or indirectly, by
merger or other operation of law, agreement or otherwise, except pursuant to and
in compliance with the provisions of this ARTICLE VI. Any purported Transfer in
any other manner, unless otherwise expressly permitted by this ARTICLE VI, shall
be null and void, and shall not be recognized or given effect by Newco or any
Stockholder. Any other provision of this Agreement, including, without
limitation, in this Article VI, to the contrary notwithstanding (except pursuant
to Section 8.1), neither TPI nor PCA shall Transfer any Shares of the Junior
Preferred Stock prior to the termination of this Agreement.
6.2 TRANSFERS BY TPI HOLDERS.
(a) PERMITTED TRANSFERS. A TPI Holder may at any time, without
the consent of any other Stockholder, Transfer any or all of its Shares or
interests in Shares to any Affiliate or third Person or Persons or pursuant to a
Public Sale, subject to the remaining provisions of this SECTION 6.2; provided,
however, that, except in the case of a Public Sale, TPI shall not Transfer any
Shares to any other Person then engaged, directly or indirectly, in a business
within the Business Scope with annual revenues from such business in excess of
$100 million without PCA's prior written consent. The foregoing consent right
shall not be assignable by PCA or inure to the benefit of any transferee,
successor or assign of PCA, except for an Affiliate of PCA who is (or becomes) a
Stockholder. Notwithstanding the foregoing and except in the case of a Public
Sale or sale to directors, officers or employees of Newco pursuant to the
Management Buy-In, any Transfer of Shares by a TPI Holder shall be null and void
and Newco shall refuse to recognize such Transfer
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unless the transferee executes and delivers to each party hereto an agreement (a
"TPI JOINDER AGREEMENT"): (i) acknowledging that all Shares or interests in any
Shares so transferred are and shall remain subject to this Agreement; and (ii)
agreeing to be bound hereby. Upon execution of a TPI Joinder Agreement, except
as otherwise expressly provided herein and except for any right hereunder to
consent to any action or proposed action (including, without limitation, any
proposed Transfer of Shares), the rights of the transferring TPI Holder
hereunder with respect to the Shares transferred shall be assigned to such
transferree. Any TPI Holder shall notify the other parties of any intended
Transfer of Shares or interests in Shares pursuant to this SECTION 6.2 (other
than pursuant to an Exempt Sale), giving the name and address of the intended
transferee; provided, however, that no otherwise valid Transfer shall be
rendered invalid solely as a result of a failure to give notice hereunder.
Transferees of a TPI Holder shall assume all obligations of the transferring TPI
Holder hereunder, but, except with respect to an Affiliate of TPI, shall not be
entitled to any rights of a TPI Holder.
6.3 TRANSFERS BY PCA HOLDERS.
(a) PERMITTED TRANSFERS. A PCA Holder may at any time, without
the consent of any other Stockholder, (i) Transfer any or all of its Shares to
an Affiliate of PCA, (ii) Transfer any or all its Shares pursuant to an Exempt
Sale, or (iii) sell any or all of its Shares to any other third Person or
Persons or pursuant to a Public Sale or otherwise Transfer Shares, subject to
the remaining provisions of this SECTION 6.3. The foregoing consent right shall
not be assignable by TPI or inure to the benefit of any transferee, successor or
assign of TPI, except for an Affiliate of TPI who is (or becomes) a Stockholder.
Notwithstanding the foregoing and except in the case of a Public Sale or sale to
directors, officers or employees of Newco pursuant to the Management Buy-In, any
Transfer of Shares by an PCA Holder shall be null and void and Newco shall
refuse to recognize such Transfer unless the transferee executes and delivers to
each party hereto an agreement (an "PCA JOINDER AGREEMENT"): (i) acknowledging
that all Shares or interests in any Shares so transferred are and shall remain
subject to this Agreement; and (ii) agreeing to be bound hereby. Upon execution
of an PCA Joinder Agreement, except as otherwise expressly provided herein and
except for any right hereunder to consent to any action or proposed action
(including, without limitation, any proposed Transfer of Shares), the rights of
the transferring PCA Holder hereunder with respect to the Shares transferred
shall be assigned to such transferee. Any PCA Holder shall notify the other
parties of any intended Transfer of Shares or interests in Shares pursuant to
this SECTION 6.3 (other than an Exempt Sale), giving the name and address of the
intended transferee; provided, however, that no otherwise valid Transfer shall
be rendered invalid solely as a result of a failure to give notice hereunder.
(b) TAG-ALONG RIGHTS. TPI and its Affiliates shall have
tag-along rights as provided in this SECTION 6.3(b):
(i) In the event any PCA Holder desires to sell all or any
part of any class or series of its Shares to a third Person (other than pursuant
to an Exempt Sale), it shall provide prior written notice (the "SALE NOTICE") to
TPI setting forth in reasonable detail the terms and conditions on which the
proposed sale is to be made and identifying the proposed purchaser. TPI shall
have the option (the "TAG-ALONG OPTION") to sell any or all of its Shares of the
same class and series to
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the proposed purchaser on the terms and conditions set forth in such Sale Notice
subject to the provisions set forth in this Section 6.3(b). TPI shall exercise
its Tag-Along Option by giving written notice to PCA within ten Business Days
following its receipt of the Sale Notice, which notice shall specify the number
of Shares of the same class and series as to which TPI is exercising its
Tag-Along Right (the "SPECIFIED SHARES"). In the event TPI exercises its
Tag-Along Option with respect to any Sale Notice: (A) if such exercise is within
14 months after the Closing Date, the PCA Holder shall not be entitled to sell
any of its Shares unless and until the prospective purchasers or PCA has
purchased all of the Specified Shares; and (B) if such exercise is more than 14
months after the Closing Date, TPI shall be entitled to sell its pro rata share
(based on the number of Shares proposed to be sold by the PCA Holder and TPI,
respectively) of the Shares proposed to be sold by the PCA Holder in the Sale
Notice, in each case on terms and conditions no less favorable than specified in
the Sale Notice or otherwise applicable to the sale to such prospective
purchasers by the PCA Holder. In the event TPI does not exercise its Tag-Along
Option with respect to any Sale Notice, the PCA Holder shall be entitled to sell
all or any part of its Shares as specified in the Sale Notice to the prospective
purchaser specified in the Sale Notice on the terms and conditions set forth in
the Sale Notice (subject to the provisions of the third sentence of SECTION
6.3(a) hereof).
(ii) Notwithstanding SUBSECTION 6.3(b)(i) above, with respect
to sales by a PCA Holder of any part of any class or series of its Shares to a
third Person (other than pursuant to an Exempt Sale) prior to the expiration of
the six-month period beginning on the Closing Date at a per share price which
does not exceed the per share price paid (excluding any interest for the
carrying cost of such Share) by such PCA Holder for such Shares pursuant to the
Contribution Agreement:
(A) TPI and its Affiliates shall not have a Tag-Along
Option during such six-month period for (i) sales of
Shares (other than PIK Preferred) in the aggregate
amount of $40 million; and (ii) the sale of 9.3% of
the number of Shares of PIK Preferred issued at
Closing ("EXCLUDED TAG-ALONG SALES); and
(B) TPI shall have a Tag-Along Option on a pro-rata basis
(i.e., on the same basis applicable 14 months after
the Closing Date as provided in SUBSECTION 6.3(b)(i)
above) with respect to such sales of Shares by PCA
Holders during such six-month period in excess of the
Excluded Tag Along Sales up to an aggregate amount of
consideration for such additional sales of $100
million (the "INITIAL PERIOD PRO-RATA TAG-ALONG").
The provisions of this SUBSECTION 6.3(b)(ii) shall terminate upon the expiration
of the six-month period beginning on the Closing Date.
(iii) Notwithstanding anything in this Agreement to the
contrary, the rights under this SECTION 6.3(b) shall be exclusive to TPI and its
Affiliates and shall not be assignable to or inure to the benefit of any
transferee of TPI or any successors or assigns of TPI, other than Affiliates of
TPI.
6.4 DRAG-ALONG RIGHTS.
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(a) DRAG-ALONG SALE. If a sale of all or substantially all of
Newco's assets determined on a consolidated basis or a sale of all or
substantially all of Newco's outstanding capital stock (whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise) to
any Independent Third Party or group of Independent Third Parties is approved by
the Board or the holders of a majority of the Shares of Common Stock held by the
PCA Holders (a "DRAG-ALONG SALE"), each Stockholder will consent to raise no
objections against such Drag-Along Sale on the terms and subject to the
conditions set forth in the remaining provisions of this SECTION 6.4.
(b) DRAG-ALONG NOTICE. A notice regarding any Drag-Along Sale
(a "DRAG-ALONG NOTICE") shall be delivered within two Business Days following
approval of any Drag-Along Sale by Newco or the PCA Holders to each Stockholder.
The Drag-Along Notice shall include a copy of a bona fide offer from the
intended buyer, which shall set forth the principal terms of the Drag-Along
Sale, including the name and address of the intended buyer.
(c) DRAG-ALONG SALE OBLIGATIONS. In connection with any
Drag-Along Sale, the Stockholders shall, and shall elect directors who shall,
take all necessary or desirable actions in connection with the consummation of
the Drag-Along Sale. If the Drag-Along Sale is structured as: (i) a merger or
consolidation, each Stockholder shall waive any dissenters rights, appraisal
rights or similar rights in connection with such merger or consolidation; (ii) a
sale of stock, each Stockholder shall agree to sell all of its Shares and rights
to acquire Shares on the terms and conditions so approved; or (iii) a sale or
assets, each Stockholder shall vote in favor of such sale and any subsequent
liquidation of Newco or other distribution of the proceeds therefrom. Each
Stockholder shall take all necessary or desirable actions in connection with the
consummation of the Drag-Along Sale reasonably requested by PCA or Newco, and
each Stockholder shall be obligated to agree on a pro rata, several (and not
joint) basis (based on the share of the aggregate proceeds paid in such
Drag-Along Sale) to any indemnification obligations that the PCA Holders agree
to provide in connection with such Drag-Along Sale (other than any such
obligations that relate specifically to a particular holder of Shares such as
indemnification with respect to representations and warranties given by a holder
regarding such holder's title to and ownership of Shares).
(d) CONDITIONS TO DRAG-ALONG SALE OBLIGATIONS. The obligations
of each Stockholder with respect to a Drag-Along Sale are subject to the
satisfaction of the following conditions: (i) the consideration to be received
by the Stockholders with respect to the Drag-Along Sale shall consist only of
cash, publicly-traded securities, or a combination of cash and publicly-traded
Securities; (ii) if any holders of a class or series of Shares are given an
option as to the form and amount of consideration to be received, each holder of
such class or series of Shares will be given the same option; (iii) each holder
of then currently exercisable rights to acquire shares of a class or series of
Shares will be given an opportunity to exercise such rights prior to the
consummation of the Drag-Along Sale and participate in such sale as holders of
such class or series of Shares; and (iv) each Stockholder shall be entitled to
receive consideration per each Share in connection with the Drag-Along Sale at
least equivalent to the consideration received per each Share of the same class
and series by any PCA Holder in connection with the Drag-Along Sale.
(e) EXPENSES. Each Stockholder will bear its pro-rata share
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(based on the share of the aggregate proceeds paid in such Drag-Along Sale) of
the costs of any sale of Shares pursuant to a Drag-Along Sale to the extent such
costs are incurred for the benefit of all holders of Common Stock and are not
otherwise paid by Newco or the acquiring party. For purposes of this SECTION
6.4(e), costs incurred in exercising reasonable efforts to take all necessary
actions in connection with the consummation of a Drag-Along Sale in accordance
with this SECTION 6.4 shall be deemed to be for the benefit of all holders of
Common Stock. Costs incurred by Stockholders on their own behalf will not be
considered costs of the transaction hereunder.
(f) EXCEPTION TO DRAG-ALONG. Notwithstanding anything to the
contrary contained in this SECTION 6.4, no Stockholder shall have any obligation
under this SECTION 6.4 with respect to a Drag-Along Sale if the Drag-Along
Notice with respect to the Drag-Along Sale is received by TPI after the holders
of TPI Registrable Securities have requested a Demand Registration and for a
period thereafter ending on the date following consummation of the sale of all
Shares subject to such Demand Registration unless, in the opinion of the
managing underwriter for such Demand Registration, the per Share consideration
payable pursuant to the Drag-Along Sale exceeds the net proceeds per Share
expected to be received by selling stockholders pursuant to the Demand
Registration.
6.5 INDIRECT TRANSFERS OF INTERESTS. Any Transfer of equity
securities of PCA which results in the group of Persons holding such equity
securities immediately following the transactions contemplated in the
Contribution Agreement from ceasing to beneficially own, as a group, directly or
indirectly, 50.1% or more of the equity securities of PCA or enough voting
equity of PCA to be able to cause a majority of the board of managers (or
equivalent governing body or members) to be elected shall be deemed to be a
Transfer of Shares hereunder and any such Transfer shall be subject to the
provisions of this ARTICLE VI as if PCA had directly transferred Shares.
6.6 LEGENDS. A copy of this Agreement shall be filed with the
Secretary of Newco and kept with the records of Newco. Each of the Stockholders
hereby agrees that each outstanding certificate representing Shares shall bear
a conspicuous legend reading substantially as follows:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933 or the applicable state and
other securities laws and may not be sold, pledged, hypothecated,
encumbered, disposed of or otherwise transferred without compliance
with the Securities Act of 1933 or any exemption thereunder and
applicable state and other securities laws. The securities represented
by this Certificate are subject to the restrictions on transfer and
other provisions of a Stockholders Agreement dated as of April 12,
1999, (as amended from time to time, the "Agreement") by and among
Packing Corporation of America (the "Company") and certain of its
stockholders, and may not be sold, pledged, hypothecated, encumbered,
disposed of or otherwise transferred except in accordance therewith. A
copy of the Agreement is on file at the principal executive offices of
the Company.
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ARTICLE VII
RIGHTS ON NEW SECURITY ISSUANCE
7.1 PREEMPTIVE RIGHTS. Newco hereby grants to each Stockholder
the irrevocable and exclusive first option (the "FIRST OPTION") to purchase all
or part of its Pro Rata Portion of any New Securities which Newco may, from time
to time after the date of this Agreement, propose to issue and sell or otherwise
transfer.
7.2 NOTICES WITH RESPECT TO PROPOSED ISSUANCE OF NEW
SECURITIES. In the event Newco proposes to undertake an issuance or other
transfer of New Securities, it shall give each Stockholder entitled to a First
Option pursuant to this ARTICLE VII written notice (the "COMPANY NOTICE") of its
intention, describing in detail the type of New Securities, the price and the
terms upon which Newco proposes to issue or otherwise transfer such New
Securities. Each such Stockholder shall have 10 Business Days from the date of
receipt of any such Company Notice to agree to purchase, pursuant to the
exercise of the First Option, up to such Stockholder's Pro Rata Portion of each
type and class and series of such New Securities (i.e., the same strips) for the
price and upon the terms and conditions specified in the Company Notice by
giving written notice to Newco and stating therein the quantity of New
Securities to be purchased.
7.3 COMPANY'S RIGHT TO COMPLETE PROPOSED SALE OF NEW
SECURITIES TO THE EXTENT PREEMPTIVE RIGHTS ARE NOT EXERCISED. In the event the
Stockholders fail to exercise a preemptive right with respect to any New
Securities within The periods specified in SECTION 7.2, Newco shall have 90 days
thereafter to sell or enter into an agreement (pursuant to which the sale of
such New Securities shall be closed, if at all, within 45 days from the date of
said agreement) to sell the New Securities not elected to be purchased by the
Stockholders at the price and upon terms not substantially more favorable to the
prospective purchasers of such securities than those specified in Newco Notice.
In the event Newco has not sold the New Securities or entered into an agreement
to sell the New Securities within said 90-day period. Newco shall not thereafter
issue or sell or otherwise transfer such New Securities without first offering
such securities to the Stockholders in the manner provided in this ARTICLE VII.
7.4 CLOSING OF PURCHASE. If a Stockholder elects to purchase
up to its Pro Rata Portion of any New Securities set forth in any Company
Notice, such purchase shall be consummated at such time and at such location
selected by Newco upon reasonable advance notice. At the consummation of any
purchase and sale of New Securities pursuant to this ARTICLE VII: (i) Newco
shall issue or otherwise transfer to the Stockholder the certificates evidencing
the New Securities being purchased, together with such other documents or
instruments reasonably required by counsel for the Stockholder to consummate
such purchase and sale; (ii) the Stockholder will deliver the cash consideration
payable by wire transfer of immediately available funds to an account or
accounts designated in writing by Newco (such designation to be made no later
than two Business Days prior to the date of such consummation); (iii) Newco
shall deliver to the Stockholder a written representation that the New
Securities are being purchased and sold free and clear of any and all
Encumbrances; and (iv) the Stockholder shall deliver to Newco such written
investment representations as may reasonably be required by counsel to Newco for
securities Laws purposes and
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all other applicable representations and warranties as other purchasers of New
Securities. Notwithstanding the foregoing, any purchase of New Securities
pursuant to this Article VII shall be on the same terms and conditions as set
forth in the Company Notice.
ARTICLE VIII
TERM
8.1 TERM. Subject to the next sentence, unless earlier
terminated by mutual agreement of TPI and PCA, this Agreement shall terminate
upon the earliest to occur of: (i) the complete liquidation or dissolution of
Newco or its Subsidiaries; (ii) a Public Offering; (iii) such date as TPI and
its Affiliates first hold less than 17-1/2% of Newco's outstanding Common Stock
or; (iv) the acquisition of all or substantially all of the stock or assets of
TPI (whether by stock sale, asset sale, merger, consolidation, combination or
otherwise) by a Person engaged, directly or indirectly, in a business within the
Business Scope with annual revenues from such business in excess of $100
million; provided; however, that in the case of termination pursuant to clause
(iv), TPI (or its successor in interest) shall (unless or until this Agreement
is terminated pursuant to clauses (i)-(iii)) have the right at each election of
directors to designate as the two TPI Directors of Newco and each Subsidiary who
are not directors, officers, employees or affiliates of such Person and are
approved by PCA, such approval not to be unreasonably withheld; provided,
further, that in case of any termination pursuant to this SECTION 8.1, unless
otherwise determined by PCA, this Agreement shall nevertheless remain in full
force and effect with respect to the drag-along provisions set forth in SECTION
6.4 and all related definitions and provisions to the extent necessary or
desirable to give full force and effect to SECTION 6.4. The rights of each of
TPI and PCA to terminate this Agreement by mutual agreement and the right of PCA
to terminate this Agreement with respect to the drag-along provisions of SECTION
6.4 are not assignable by TPI or PCA, and shall not inure to the benefit of any
transferee, successor or assign of TPI or TPI, other than to an Affiliate of
such party who is (or becomes) a Stockholder, without the prior written consent
of the other. Upon the termination of this Agreement pursuant to clauses
(i)-(iv) (regardless of whether certain provisions of this Agreement survive
such termination), TPI shall sell the 45 shares of Junior Preferred Stock held
by it to PCA for the fair market value thereof, as determined by the auditors of
Newco.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if: (i) delivered in
person (to the individual whose attention
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is specified below) or via facsimile (followed immediately with a copy in the
manner specified in clause (ii) hereof); (ii) sent by prepaid first-class
registered or certified mail, return receipt requested; or (iii) sent by
recognized overnight courier service, as follows:
to Newco:
Packaging Corporation of America
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
to TPI:
Tenneco Packaging Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Tenneco Packaging Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jenner & Block
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
to PCA:
PCA Packaging LLC
c/o Madison Dearborn Partners, Inc.
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
to other Stockholders:
To the address which appears
on the books and records
of Newco
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner. All notices and other communications
hereunder shall be effective: (i) the day of delivery when delivered by hand,
facsimile or overnight courier; and (ii) three Business Days from the date
deposited in the mail in the manner specified above.
9.2 AMENDMENT; WAIVER. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed: (i) in the case of an amendment, by: (A) Newco; (B) Stockholders holding
a majority of the Shares of Common Stock held by the TPI Holders; (C)
Stockholders holding a majority of the Shares of Common Stock held by PCA
Holders; and (D) by each of PCA and TPI (in each case only so long as such
Person or any of its Affiliates is a Stockholder); or (ii) in the case of a
waiver, by the party against whom the waiver is to be effective. The rights of
TPI and PCA to consent to a amendment to this Agreement shall not be assignable
by TPI or PCA and shall not inure to the benefit of any transferee, successor or
assign of TPI or PCA, other than to an Affiliate of such party who is a (or in
connection therewith, becomes) Stockholder, without the prior written consent of
the other. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Except as otherwise provided
herein, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
9.3 ASSIGNMENT. Except as otherwise expressly provided herein,
no party to this Agreement may assign any of its rights or obligations under
this Agreement without the prior written consent of the other parties hereto.
9.4 ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto), contains the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
9.5 PUBLIC DISCLOSURE. Each of the parties hereby agrees that,
except as may be required to comply with the requirements of any applicable Laws
or the rules and regulations of any stock exchange upon which its securities (or
the securities of one of its Affiliates) are traded, it shall
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not make or permit to be made any press release or similar public announcement
or communication concerning the execution or performance of this Agreement
unless specifically approved in advance by all parties hereto. In the event,
however, that legal counsel for any party is of the opinion that a press release
or similar public announcement or communication is required by Law or by the
rules and regulations of any stock exchange on which such party's securities (or
the securities of one of such party's Affiliates) are traded, then such party
may issue a public announcement limited solely to that which legal counsel for
such party advises is required under such Law or such rules and regulations (and
the party making any such announcement shall provide a copy thereof to the other
party for review before issuing such announcement).
9.6 PARTIES IN INTEREST. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than Newco, TPI, PCA or their
respective successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
9.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF
FORUM. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without giving effect to its principles of
conflicts of laws. Each party hereto agrees that it shall bring any action or
proceeding in respect of any claim arising out of or related to this agreement
or the transactions contained in or contemplated by this agreement, whether in
tort or contract or at law or in equity, exclusively in any United States
federal court or any state court located in the State of Illinois (the "CHOSEN
COURTS") and: (i) irrevocably submits to the exclusive jurisdiction of the
Chosen Courts; (ii) waives any objection to laying venue in any such action or
proceeding in the Chosen Courts; (iii) waives any objection that the Chosen
Courts are an inconvenient forum or do not have jurisdiction over any party
hereto; and (iv) agrees that service of process upon such party in any such
action or proceeding shall be effective if notice is given in accordance with
SECTION 9.1 of this Agreement.
9.8 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same Agreement.
9.9 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof or
thereof. If any provision of this Agreement, or the application thereof to any
Person or any circumstance, is invalid or unenforceable: (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision; and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
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9.10 HEADINGS. The heading references and the table of contents
herein are for convenience purposes only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
9.11 EQUITABLE RELIEF. Each party acknowledges that money
damages would be inadequate to protect against any actual or threatened breach
of this Agreement by any party and that each party shall be entitled to
equitable relief, including specific performance and/or injunction, without
posting bond or other security in order to enforce or prevent any violations of
the provisions of this Agreement.
9.12 NO PARTNERSHIP. This Agreement shall not constitute an
appointment of any party as the agent of any other party, nor shall any party
have any right or authority to assume, create or incur in any manner any
obligation or other liability of any kind, express or implied, against, in the
name or on behalf of, any other party. Nothing herein or in the transactions
contemplated by this Agreement shall be construed as, or deemed to be, the
formation of a partnership by or among the parties hereto.
* * * *
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
TENNECO PACKAGING INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
PCA HOLDINGS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
PACKAGING CORPORATION OF AMERICA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary
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