EXHIBIT 2.1
CONTRIBUTION AGREEMENT
among
TENNECO PACKAGING INC.,
PCA HOLDINGS LLC
and
PACKAGING CORPORATION OF AMERICA
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND TERMS....................................................3
1.1 Specific Definitions.........................................3
1.2 Other Terms.................................................16
1.3 Other Definitional Provisions...............................16
ARTICLE II
ORGANIZATION OF NEWCO;
CONTRIBUTION OF THE CONTAINERBOARD BUSINESS.............................17
2.1 Organization of Newco.......................................17
2.2 Contribution and Purchase of Assets; Assumption of
Liabilities.................................................17
2.3 Retained Assets and Retained Liabilities....................18
2.4 Closing Mechanics...........................................18
2.5 Post-Closing Adjustment.....................................20
2.6 Purchase Price Adjustment Following Public Sale By TPI......22
2.7 Transfer Taxes and Recording Fees...........................22
2.8 Certain Transfers...........................................22
2.9 Appraisal...................................................23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TPI...................................23
3.1 Organization and Qualification..............................23
3.2 Corporate Authorization.....................................23
3.3 Consents and Approvals......................................24
3.4 Non-Contravention...........................................24
3.5 Binding Effect..............................................24
3.6 Financial Statements: Absence of Certain Changes............24
3.7 Litigation and Claims.......................................26
3.8 Taxes.......................................................26
3.9 Employee Benefits...........................................27
3.10 Compliance with Laws........................................27
3.11 Environmental Matters.......................................27
3.12 Intellectual Property.......................................28
3.13 Labor Matters...............................................29
3.14 Contracts...................................................29
3.15 Real Estate Leases..........................................30
3.16 Entire Business; Title to Property..........................30
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3.17 Finders' Fees...............................................31
3.18 Insurance...................................................31
3.19 No Undisclosed Liabilities..................................32
3.20 No Other Representations or Warranties......................32
3.21 Closing Date................................................32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PCA...................................32
4.1 Organization and Qualification..............................32
4.2 Authorization...............................................32
4.3 Consents and Approvals......................................33
4.4 Non-Contravention...........................................33
4.5 Binding Effect..............................................33
4.6 Finders' Fees...............................................33
4.7 Financial Capability........................................33
4.8 Newco Liabilities...........................................34
4.9 No Other Representations or Warranties......................34
4.10 Closing Date................................................34
ARTICLE V
COVENANTS...............................................................34
5.1 Access......................................................34
5.2 Conduct of Business.........................................34
5.3 Reasonable Efforts..........................................36
5.4 Covenants Regarding Employees...............................37
5.5 Compliance with WARN and Similar Laws.......................38
5.6 Further Assurances..........................................38
5.7 Use of Tenneco Marks........................................39
5.8 Certain Matters Related to Retained and Assumed Liabilities.39
5.9 Intercompany Agreements.....................................39
5.10 Records and Retention and Access............................40
5.11 Insurance...................................................40
5.12 Noncompetition..............................................40
5.13 ............................................................41
5.14 Delivery of Most Recent Year End Statement and the Stub
Period Statements and Regulation S-X Financial Statements...41
5.15 Consent of TPI Auditors. ...................................42
5.16 Covenant Regarding ▇▇▇▇▇▇▇▇ Road Property...................42
5.17 ............................................................42
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ARTICLE VI
CONDITIONS TO CLOSING...................................................42
6.1 Conditions to the Obligations of PCA and TPI................42
6.2 Conditions to the Obligations of PCA........................43
6.3 Conditions to the Obligations of TPI........................45
ARTICLE VII
SURVIVAL; INDEMNIFICATION...............................................46
7.1 Survival....................................................46
7.2 Indemnification by PCA and Newco............................46
7.3 Indemnification by TPI......................................47
7.4 Indemnification Procedures..................................48
7.5 Acknowledgment Regarding Environmental Liabilities..........50
7.6 Computation of Losses Subject to Indemnification............50
7.7 Characterization of Indemnification Payments................51
ARTICLE VIII
TAX COVENANTS...........................................................51
8.1 Liability for Taxes.........................................51
8.2 Preparation of Tax Returns..................................52
8.3 Amended Tax Returns.........................................53
8.4 Carrybacks and Carryforwards................................54
8.5 Additional Tax Matters......................................54
8.6 Tax Controversies; Cooperation..............................55
ARTICLE IX
TERMINATION.............................................................56
9.1 Termination.................................................56
9.2 Effect of Termination.......................................57
ARTICLE X
MISCELLANEOUS...........................................................57
10.1 Notices.....................................................57
10.2 Amendment; Waiver...........................................58
10.3 Assignment..................................................59
10.4 Entire Agreement............................................59
10.5 Fulfillment of Obligations..................................59
10.6 Parties in Interest.........................................59
10.7 Public Disclosure...........................................59
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10.8 Expenses....................................................59
10.9 Schedules...................................................59
10.10 Bulk Transfer Laws..........................................60
10.11 Governing Law; Submission to Jurisdiction; Selection
of Forum....................................................60
10.12 Counterparts................................................60
10.13 Headings....................................................60
10.14 Severability................................................60
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CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT dated as of January 25, 1999, 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").
PRELIMINARY STATEMENTS
A. TPI is engaged, in part, in the business of producing
containerboard and corrugated packaging products (excluding folding carton and
honeycomb paperboard - type products), (as currently conducted at four paper
▇▇▇▇▇ located at Counce, Tennessee, Valdosta, Georgia, Tomahawk, Wisconsin and
Filer City, Michigan (the "▇▇▇▇▇"), 70 box plants, two recycling facilities,
four wood products facilities and certain timberlands and related facilities,
the "Containerboard Business").
B. PCA recognizes that TPI has substantial experience and expertise
in the ownership, management and operation of the Containerboard Business and
desires to invest in the operation of the Containerboard Business. PCA and TPI
have determined that it is advisable to form a joint venture corporation to
facilitate PCA's investment in the operation of the Containerboard Business and
have caused Newco to be incorporated under the laws of the State of Delaware as
such joint venture corporation.
C. As of the date hereof, the Purchased Property (as defined below)
is subject to various lease and financing arrangements, all of which lease and
financing arrangements are described on Schedule PS-1 (the "Existing Financing
Arrangements").
D. Upon the terms and subject to the conditions set forth more fully
herein, each of TPI, PCA and Newco desires to cause PCA's investment in the
Containerboard Business and the initial capitalization of Newco to be
consummated as described below, which will occur in the following order but,
except as otherwise specifically provided herein, will be consummated
contemporaneously as part of the Closing:
First PCA will arrange, negotiate and obtain on behalf of TPI and/or
Newco, subject to Section 5.3(b) hereof, credit facilities and
other financings as set forth in the Commitment Letters (the
"New Financing Arrangements") in an aggregate principal amount
sufficient to fund the borrowings by TPI contemplated by
paragraph D.2 below, and those New Financing Arrangements
under which TPI is the initial borrower will be assigned to,
and assumed by, Newco in connection with the transactions
contemplated hereby (such that following the assignment to and
assumption by Newco, the lenders shall not thereafter have
recourse against PCA or TPI in respect thereof, but shall then
have a security interest in the assets of Newco, including the
Contributed Assets). Capitalized terms used in these
Preliminary Statements and not otherwise defined shall have
the meaning ascribed thereto in the Commitment Letters.
Second: TPI will borrow $1.06 billion under the Term Loan Facilities
on an unsecured basis.
Third: TPI will issue $700 million of Senior Subordinated Notes, or
if elected by TPI, draw down under the Bridge Loan.
Fourth: TPI will contribute the Contributed Assets (including the
Containerboard Business) to Newco free and clear of (i) all
indebtedness for borrowed money or any other obligation that
is fixed as to amount or certainty, other than the Assumed
Indebtedness and (ii) all Encumbrances (other than Permitted
Encumbrances but free and clear of all Encumbrances with
respect to the Existing Financing Arrangements).
Fifth: In consideration of the Contributed Assets, Newco will (i)
assume from TPI $1.06 billion under the Term Loan Facilities,
(ii) enter into the Credit Facilities and become the Borrower
under the Senior Secured Financing, (iii) grant the lenders
under the Senior Secured Financing a security interest in the
assets of Newco, including the Contributed Assets, and (iv)
pay the required fees and expenses with respect thereto.
Sixth: In consideration of the Contributed Assets, Newco will assume
TPI's obligations under the $700 million Senior Subordinated
Notes (or the Bridge Loan if applicable) and issue replacement
Senior Subordinated Notes (or notes evidencing the Bridge Loan
if applicable). Newco will pay the required fees and expenses
with respect to the Senior Subordinated Notes (or the Bridge
Loan if applicable, provided that in such case TPI will pay
the 1.5% Commitment Fee on behalf of Newco and PCA).
Seventh: Subject to adjustment pursuant to paragraph F below, Newco (or
if requested by the underwriters, a holding company) will
issue $100 million of Deferred-Pay Financing and will pay the
required fees and expenses with respect thereto.
Eighth: Subject to adjustment pursuant to paragraph E below, PCA will
contribute $236.5 million in cash (the "Cash Contribution") to
Newco, and Newco will issue to PCA in respect thereof 55% of
Newco's outstanding common stock, $.01 par value (the "Common
Stock").
Ninth: In consideration of the Contributed Assets, Newco will assume
the Assumed Liabilities, and subject to paragraph E below,
Newco will issue to TPI 45% of Newco's outstanding Common
Stock and distribute to TPI
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cash in an amount equal to $246.5 million less the dollar
amount of the PIK Preferred, if any, issued to TPI and/or its
designees, as contemplated by paragraph F below (the "Cash
Distribution"). Subject to paragraph E below, immediately
following such actions PCA and TPI will own Newco Common Stock
representing 55% and 45%, respectively, of the issued and
outstanding common equity of Newco.
For purposes of the Closing hereunder, each of the above actions will be deemed
to occur as part of an integrated Closing and the Closing will not be deemed to
have occurred and no such action shall be effective unless and until all such
actions have been completed, at which time the Closing will be deemed effective.
E. In addition to the issuance of Common Stock to TPI and PCA, at
the Closing and during the 120-day period following the Closing, Newco may, at
PCA's direction, sell shares of the Common Stock, at the same price per share as
such stock is being purchased by PCA, representing up to 5% of the outstanding
Common Stock of Newco (on a fully diluted basis) to certain members of Newco's
management (the "Management Stock"), on the terms set forth on Schedule PS-2.
TPI shall have the option to be exclusively diluted with respect to such
purchases of Management Stock by delivering notice of its election to be
exclusively diluted to PCA on or before the date on which TPI delivers to PCA
the Most Recent Year End Statement in accordance with Section 5.14 hereof (a
"Dilution Notice"). If TPI delivers PCA a Dilution Notice by such date, then to
the extent such members of management purchase Management Stock at Closing,
Newco shall issue fewer shares to TPI (equal to the number of shares of
Management Stock purchased by management at Closing), in which event the Cash
Distribution will be increased by an amount equal to the aggregate purchase
price of the Management Stock purchased at Closing (provided the per share
purchase price for the Management Stock is equal to the price per share paid for
Common Stock purchased by PCA hereunder). If TPI does not deliver a Dilution
Notice in accordance with the terms hereof, TPI and PCA shall be diluted pro
rata with respect to issuances of Management Stock, so that the number of shares
of Common Stock purchased or received by PCA or TPI shall be reduced by an
aggregate number of shares of Management Stock purchased by management at
Closing in a ratio of 55 to 45, the Cash Contribution shall be reduced by an
amount equal to 55% of the aggregate purchase price of the Management Stock
purchased at Closing, and the Cash Distribution shall be increased by an amount
equal to 45% of the aggregate purchase price of the Management Stock purchased
at Closing. To the extent members of management purchase Management Stock after
the Closing, the provisions of Section 5.17 shall apply.
F. In the event the Deferred-Pay Financing is not sold as part of
the New Financing Arrangements, (i) PCA and/or its designees shall purchase $55
million of PIK Preferred for $55 million, and (ii) Newco shall issue $45 million
of PIK Preferred to TPI and/or its designees.
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NOW, THEREFORE, TPI, PCA, and Newco agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
(a) "ACC" shall have the meaning set forth in Section 3.16(c).
(b) "Acquisition Proposal" shall have the meaning set forth in
Section 5.13.
(c) "Adjusted Cash Contribution" means, as of any date, the Cash
Contribution, minus (i) the product determined by multiplying (A) the purchase
price paid per share of Common Stock purchased by PCA hereunder at Closing times
(B)the number of shares of Common Stock transferred by PCA to any Person other
than a PCA Affiliate, minus (ii) the aggregate amount of any cash payments
previously paid to PCA in satisfaction of indemnity obligations to PCA under
Section 7.3 hereof, and minus (iii) any distributions (other than pro rata stock
dividends, splits or combinations) previously made by Newco to PCA.
(d) "Affiliates" shall mean, with respect to any Person, any Persons
directly or indirectly controlling, controlled by or under common control with,
such other 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 or affairs of a Person, whether through the direct
or indirect ownership of voting interests, by contract or otherwise.
(e) "Agreement" shall mean this Agreement (including the Preliminary
Statements set forth above and all Exhibits), as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
(f) "Ancillary Agreements" shall mean the Facility Use Agreement,
the Human Resources Agreement, the Registration Rights Agreement, the
Stockholders Agreement, the Supply Agreements, and the Transition Services
Agreement.
(g) "Applicable Tax Law" shall mean any Law of any nation, state,
region, province, locality, municipality or other jurisdiction relating to
Taxes, including regulations and other official pronouncements of any
governmental entity or political subdivision of such jurisdiction charged with
interpreting such Laws.
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(h) "Appraisal" shall have the meaning set forth in Section 2.9.
(i) "Assumed Indebtedness" shall have the meaning set forth in the
Preliminary Statements hereto.
(j) "Assumed Liabilities" shall mean all debts, liabilities,
commitments, or obligations whatsoever, other than Retained Liabilities, Related
to the Containerboard Business or Related to the Contributed Assets, whether
arising before or after the Closing and whether known or unknown, fixed or
contingent, including the following:
(i) all debts, liabilities, obligations or commitments related
to or arising under the Contracts to the extent such Contracts are
assigned to Newco, including the Real Estate Leases provided that,
the foregoing notwithstanding the Assumed Liabilities shall not
include any liabilities and obligations arising under any Contract
which is not identified in the Disclosure Memorandum except as
follows: (A) if such Contract is for an amount of $1,000,000 or less
and (i) is entered into in the ordinary course of business; (ii) the
terms of which are customary and normal for the Containerboard
Business specifically and the containerboard industry generally and
on market rates at the time entered into, and (iii) all of the fees,
expenses, penalties, liabilities and other payment obligations (or
commitments therefor) arising thereunder which were incurred during
the 12-month period ending December 31, 1998 have been paid and have
been (or will be) properly reflected on the Most Recent Year End
Statement and, if applicable, Final Working Capital Statement), such
Contract shall be an Assumed Liability; and (B) if such Contract is
for an amount greater than $1,000,000 or otherwise does not meet the
conditions set forth in clause (A), such Contract shall be an
Assumed Liability only if and to the extent Newco elects to assume
such Contract in accordance with Section 5.21 hereof.
(ii) all debts, liabilities, obligations or commitments
Related to the Real Property;
(iii) the Current Liabilities;
(iv) the Assumed Indebtedness;
(v) except for the Retained Environmental Liabilities, all
liabilities under Environmental Laws Related to the ownership,
operation or conduct of the Containerboard Business or the Real
Property; and
(vi) except for the Retained Litigation, all liabilities with
respect to all actions, suits, proceedings, disputes, claims or
investigations Related to the Containerboard Business or that
otherwise are Related to the Contributed Assets, at law, in equity
or otherwise.
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(k) "Audited Financial Statements" shall have the meaning set forth
in Section 3.6(a).
(l) "Auditor Consent Letter" shall have the meaning set forth in
Section 5.15.
(m) "Books and Records" shall mean all lists, files and documents
Relating to customers, suppliers and products of the Containerboard Business,
the Contributed Assets, or the Assumed Liabilities, and all general ledgers and
underlying books of original entry and other financial records of the
Containerboard Business, except to the extent included in the Retained Assets
and except for employee records and files.
(n) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City are authorized or obligated by
law or executive order to close.
(o) "▇▇▇▇▇▇▇▇ Road Property" shall mean that Real Property
identified as Item 1.I. on Schedule 1.1(vvv).
(p) "Cap" shall have the meaning set forth in Section 7.2(c).
(q) "Cash Contribution" shall have the meaning set forth in the
Preliminary Statements hereto.
(r) "Cash Distribution" shall have the meaning set forth in the
Preliminary Statements hereto.
(s) "Chosen Courts" shall have the meaning set forth in Section
10.11.
(t) "Closing" shall mean the closing of the transactions
contemplated by this Agreement.
(u) "Closing Date" shall have the meaning set forth in Section 2.4.
(v) "Closing Working Capital" shall have the meaning set forth in
Section 2.5(a).
(w) "Closing Working Capital Statement" shall have the meaning set
forth in Section 2.5(a).
(x) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(y) "Commitment Letters" shall have the meaning set forth in Section
4.7(b).
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(z) "Common Stock" shall have the meaning set forth in the
Preliminary Statements hereto.
(aa) "Confidentiality Agreement" shall mean the Confidentiality
Agreement dated November 20, 1998, between Madison Dearborn Partners, Inc. and
TPI.
(bb) "Consent" shall mean any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with, or report or
notice to any Person, including any Governmental Authority, including those
identified on Schedule 3.3.
(cc) "Containerboard Business" shall have the meaning set forth in
the Preliminary Statements hereto.
(dd) "Contracts" shall mean all agreements, contracts, leases,
timber deeds, purchase orders, trade billback, refund and other arrangements,
incentive agreements, commitments, collective bargaining agreements, and
licenses that are Related to the Containerboard Business or the Contributed
Assets or to which the Contributed Assets are subject, except to the extent
included in the Retained Assets.
(ee) "Contributed Assets" shall mean all of the assets of TPI which
Relate to the Containerboard Business, whether tangible or intangible, real or
personal, as they exist on the date hereof, with such changes, deletions or
additions thereto as may occur from the date hereof to the Closing Date in the
ordinary course of business (except, in each case, for the Retained Assets),
including the following:
(i) the Real Property;
(ii) the Fixtures and Equipment;
(iii) the Current Assets;
(iv) the Intellectual Property and the PCA ▇▇▇▇;
(v) the Books and Records;
(vi) the Contracts other than (A) Existing Financing
Arrangements, and (B) Contracts not included in the Assumed
Liabilities pursuant to the exception set forth in Section 1.1(j)(i)
(unless and to the extent assumed by Newco pursuant to Section 5.21
hereof);
(vii) the stock or other ownership interests of the
Contributed Subsidiaries;
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(viii) all prepaid Taxes, to the extent such prepaid Taxes are
reflected on the Final Working Capital Statement;
(ix) all refunds of Taxes, to the extent such refunds of Taxes
are reflected on the Final Working Capital Statement;
(x) the Purchased Property; and
(xi) all Governmental Authorizations which are transferable
without obtaining any Consent.
(ff) "Contributed Subsidiaries" shall mean those Subsidiaries listed
on Schedule 1.1(ff).
(gg) "CPA Firm" shall have the meaning set forth in Section 2.5(b).
(hh) "Current Assets" shall mean Inventory, accounts receivables
(including the gross amount of any factored accounts receivable), deposits, and
all other current assets of the Containerboard Business other than (i) cash,
cash accounts, disbursement accounts, outstanding checks and disbursements in
transit, investment securities and other short-term and medium-term investments
(other than such items, if any, which are securing the performance of any
obligations included in the Assumed Liabilities), and (ii) Non-Trade accounts
receivable from TPI or its Affiliates. For purposes of this Agreement, an
account receivable shall be deemed "Non-Trade" if it (i) is not supported by an
issued invoice, (ii) is not of the type reflected on the Most Recent Statement
of Assets and Liabilities, and (iii) is not the result of an arms' length sale
of goods or services to a third party or a bona fide sale of goods or services
to a third party.
(ii) "Current Liabilities" shall mean all of TPI's current
liabilities to the extent Related to the Containerboard Business other than (i)
Non-Trade accounts payable to TPI or its Affiliates, (ii) cash accounts,
disbursement accounts, outstanding checks and disbursements in transit, and
(iii) federal, state, local and foreign income Taxes with respect to the Tax
Periods, or portions thereof, ending on or before the Closing Date. For purposes
of this Agreement, an account payable shall be deemed "Non-Trade" if (i) it is
not supported by an issued invoice, (ii) is not of the type reflected on the
Most Recent Statement of Assets and Liabilities, and (iii) is not the result of
a of an arms' length purchase of goods or services from a third party or bona
fide purchase of goods or services from a third party. Liabilities for Taxes
(other than federal, state, local or foreign income taxes) shall be Current
Liabilities only to the extent such Tax is reflected in the Final Working
Capital Statement, it being understood that in no event will any Taxes arising
with respect to federal, state, local, or foreign income be included as a
Current Liability.
(jj) "Deductible" shall have the meaning set forth in Section
7.2(c).
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(kk) "Determination Date" shall mean 7:59 a.m. on the Closing Date.
(ll) "Disclosure Memorandum" shall mean the Disclosure Memorandum
dated the date hereof delivered by TPI to PCA and Newco in connection with this
Agreement. References herein to "Schedules" are to the various Schedules of the
Disclosure Memorandum.
(mm) "Dilution Notice" shall have the meaning set forth in the
Preliminary Statements.
(nn) "Encumbrances" shall mean liens, charges, encumbrances,
security interests, options or any other restrictions or third-party rights.
(oo) "Environmental Law" shall mean any applicable federal, state,
local, common or foreign law, statute, ordinance, rule, regulation, code, order,
judgment, decree or injunction relating to (i) the protection of the environment
(including air, water vapor, surface water, groundwater, drinking water supply,
surface or subsurface land), or (ii) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, protection, release or disposal of, Hazardous Substances, or workplace
safety or health.
(pp) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
(qq) "Existing Financing Arrangements" shall have the meaning set
forth in the Preliminary Statements hereto.
(rr) "Facility Use Agreement" shall mean an agreement at the price
as set forth on Exhibit 1.1(ggggg), and otherwise in form and substance
reasonably satisfactory to PCA and TPI, to be entered into by Newco and TPI as
of the Closing pursuant to which TPI grants Newco the right to use the first
floor and related common areas (including the cafeteria, parking, and other
ancillary areas and facilities) of TPI's facility located in Lake Forest,
Illinois.
(ss) "Final Working Capital Statement" shall have the meaning set
forth in Section 2.5(b).
(tt) "Financial Statements" shall have the meaning set forth in
Section 3.6(a).
(uu) "Fixtures and Equipment" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment (including computer hardware,
computer terminals, network servers, and research and development equipment) and
other tangible personal property Related to the Containerboard Business.
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(vv) "Former Facility" shall mean a facility or property previously
owned or operated by TPI or its predecessors in the conduct of the
Containerboard Business that is not located on the Real Property or the Retained
Real Property.
(ww) "GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
(xx) "Governmental Authority" shall mean any nation or government,
any state, province or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States,
any State of the United States or any political subdivision thereof.
(yy) "Governmental Authorizations" shall mean all licenses, permits,
franchises, certificates of occupancy, other certificates and other
authorizations and approvals required to carry on the Containerboard Business as
currently conducted under the applicable laws, ordinances or regulations of any
Governmental Authority.
(zz) "Hazardous Substances" shall mean (i) petroleum, petroleum
byproducts and any petroleum fractions; (ii) materials which contain any
substance defined as a hazardous or toxic substance or words of similar meaning
or effect under the following United States federal statutes and their state
counterparts, as well as such statutes' implementing regulations: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Toxic
Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act,
and the Clean Air Act; and (iii) any other materials as to which liability or
standards of conduct are imposed pursuant to any Environmental Law.
(aaa) "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
(bbb) "Human Resources Agreement" shall mean an agreement to be
entered into on the Closing Date by and among Tenneco, TPI and Newco in the form
of Exhibit 1.1(bbb) attached hereto.
(ccc) "Indemnification Claim Notice" shall have the meaning set
forth in Section 7.4(a).
(ddd) "Indemnified Parties" shall have the meaning set forth in
Section 7.3(a).
(eee) "Indemnifying Party" shall have the meaning set forth in
Section 7.4(a).
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(fff) "Initial Price" per share means (i) in the case of an initial
Public Offering, the initial offering price per share, and (ii) in the case of a
Spin-Off, the average closing price per share on each of the 10 Business Days
commencing on the first Business Day which is 30 days after the effective date
of the Spin-Off, provided that if TPI or ▇▇▇▇▇▇▇, Sachs & Co., or their
respective Affiliates, shall have purchased any shares of Newco through the
public market during such period, then the Initial Price shall be the lower of
(x) the closing price on the effective date of the Spin-Off, and (y) the average
closing price per share on each of the 10 Business Days commencing on the first
Business Day which is 30 days after the effective date of the Spin-Off.
(ggg) "Intellectual Property" shall mean (except to the extent
included in the Retained Assets) the following intellectual property (and the
rights associated therewith) Related to the Containerboard Business or the
Contributed Assets: trademarks, service marks, brand names, certification marks,
trade dress, assumed names, Internet Domain names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; patents, applications for patents (including
divisionals, continuations, continuations-in-part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; patent
disclosures and innovations (whether or not patentable and whether or not
reduced to practice); non-public information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; copyrighted works and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; software; any similar intellectual property or proprietary rights; and
any claims or causes of action arising out of or related to any infringement or
misappropriation of any of the foregoing occurring before or after the Closing.
(hhh) "Inventory" shall mean all inventory held for resale in the
Containerboard Business, all raw materials, work in process, finished products,
office supplies, storeroom inventory, spare parts and equipment, wrapping,
supply and packaging items, of the Containerboard Business.
(iii) "Knowledge" or any similar phrase means the actual knowledge
of those management employees of TPI identified on Schedule 1.1(iii), after due
inquiry
(jjj) "Laws" shall mean any federal, state, foreign or local law,
statute, ordinance, rule, code, regulation, order, judgment or decree of any
Governmental Authority.
(kkk) "Leased Real Property" shall mean all land (including, to the
extent included in any such lease, any timberlands and tree farms associated
with the ▇▇▇▇▇), buildings, fixtures and other real property leased on the date
hereof by TPI or one of the Contributed Subsidiaries as lessee pursuant to the
Real Estate Leases used by the Containerboard Business, other than the real
property identified as "Transition Real Property" on Schedule 1.1(ggggg).
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(lll) "Lemelson Patents" shall have the meaning set forth in Section
6.2(k).
(mmm) "Losses" shall have the meaning set forth in Section 7.2.
(nnn) "Material Adverse Change" shall mean a change that is
materially adverse to the value of the Contributed Assets or the Containerboard
Business taken as a whole or materially adverse to the business, financial
condition or results of operations or business prospects of the Containerboard
Business taken as a whole; provided that any change identified on Schedule
1.1(nnn) shall not constitute a Material Adverse Change. The scope of this
definition of "Material Adverse Change" shall in no way be construed to be
applicable to or to limit in any respect the determination of "Material Adverse
Effect" or "Material Adverse Change" as used in the Commitment Letters, or the
agreements and indentures contemplated thereby, by the lenders thereunder with
respect to the conditions precedent to such lenders' obligation to consummate
the New Financing Arrangements.
(ooo) "Material Adverse Effect" shall mean an effect that is
materially adverse to the value of the Contributed Assets or the Containerboard
Business taken as a whole or materially adverse to the business, financial
condition or results of operations or business prospects of the Containerboard
Business taken as a whole; provided that any effect arising from or attributable
to any condition, event or circumstance identified on Schedule 1.1(nnn) shall
not constitute a Material Adverse Effect. The scope of the definition of
"Material Adverse Effect"shall in no way be construed to be applicable to or to
limit in any respect the determination of "Material Adverse Effect" or "Material
Adverse Change" as used in the Commitment Letters, or the agreements and
indentures contemplated thereby, by the lenders thereunder with respect to the
conditions precedent to such lenders' obligation to consummate the New Financing
Arrangements.
(ppp) "MDP Transaction Fee" has the meaning set forth in Section
4.6.
(qqq) "Most Recent Statement of Assets and Liabilities" shall have
the meaning set forth in Section 3.6(a).
(rrr) "Most Recent Year End Statement" shall have the meaning set
forth in Section 3.6(a).
(sss) "Net Working Capital" shall mean the excess of Current Assets
over Current Liabilities on a consolidated basis determined in accordance with
Section 2.5.
(ttt) "New Financing Arrangements" shall have the meaning set forth
in the Preliminary Statements hereto.
(uuu) "Noncompete Period" shall have the meaning set forth in
Section 5.12(a).
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(vvv) "Objection" shall have the meaning set forth in Section
2.5(b).
(www) "Owned Real Property" shall mean all land (including any
timberlands and tree farms associated with the ▇▇▇▇▇) and all buildings,
fixtures, and other improvements located thereon, and all easements,
rights-of-way and appurtenances thereto, owned by TPI or one of the Contributed
Subsidiaries which is identified on Schedule 1.1(vvv).
(xxx) "PCA Indemnified Parties" shall have the meaning set forth in
Section 7.3(a).
(yyy) "PCA Marks" shall mean any ▇▇▇▇ that includes the phrase
"Packaging Corporation of America" or the word "PCA" or any variation thereof
and any trademark symbol or logo using such phrase or name and any variation
thereof.
(zzz) "Permitted Encumbrances" shall have the meaning set forth in
Section 3.16(b).
(aaaa) "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization.
(bbbb) "PIK Preferred" shall mean the Preferred Stock, as such term
is defined in the Commitment Letters.
(cccc) "Post-Closing Period" shall mean, with respect to any
Contributed Subsidiary, any Tax Period commencing after the Closing Date and the
portion of any Straddle Period commencing after the Closing Date.
(dddd) "Pre-Closing Period" shall mean, with respect to any
Contributed Subsidiary, any Tax Period ending on or before the Closing Date and
the portion of any Straddle Period ending on the Closing Date.
(eeee) "Proceeding" shall have the meaning set forth in Section
7.4(a).
(ffff) "Public Offering" shall mean a 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 for the account of Newco and/or selling stockholders to the public.
(gggg) "Purchased Property" shall mean all land (including any
timberlands and tree farms associated with the ▇▇▇▇▇) and all buildings,
fixtures, other improvements, machinery and equipment located thereon, and all
easements, rights-of-way and appurtenances thereto, that are subject to the
Existing Financing Arrangements listed on Schedule PS-1.
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(hhhh) "Real Estate Leases" shall mean those agreements pursuant to
which TPI or one or more of the Contributed Subsidiaries leases, subleases,
licenses, or otherwise uses or licenses, real property, including land (and
everything growing upon the land, to the extent included in such Real Estate
Lease), buildings, structures and improvements thereon or appurtenances thereto,
which are identified on Schedule 1.1(gggg).
(iiii) "Real Property" shall mean the Owned Real Property (and the
applicable Purchased Property) and the Leased Real Property.
(jjjj) "Registration Rights Agreement" shall have the meaning set
forth in Section 2.1(c).
(kkkk) "Related to" or "Relating to" shall mean primarily related
to, or used primarily in connection with.
(llll) "Required Consent" shall mean any Consents specifically
identified on Schedule 3.3 as a "Required Consent" and each other material
Consent, which may be a Consent listed on Schedule 3.3.
(mmmm) "Retained Assets" shall mean
(i) the assets (including real property, tangible personal
property, accounts receivable, intellectual property and contracts)
Related to all businesses conducted by TPI and any of its
Affiliates, including but not limited to, their plastics and
aluminum packaging, aluminum, plastics, folding carton, molded
fiber, cushion protective packaging (including all honeycomb
paperboard-type products), flexible packaging, and foam building
products businesses, and all tangible assets located at TPI's Lake
Forest, Illinois facility, but not including any assets Related to
the Containerboard Business;
(ii) the stock or other ownership interests of all
Subsidiaries of TPI other than the Contributed Subsidiaries;
(iii) all cash and cash accounts, disbursement accounts,
outstanding checks and disbursements, investment securities and
other short-term and medium-term investments and Non-Trade accounts
receivable from TPI and its Affiliates and the notes receivable
listed in Schedule 1.1(llll)(iii);
(iv) all deferred Tax assets of TPI;
(v) all prepaid Taxes to the extent such prepaid Taxes are not
reflected on the Final Working Capital Statement;
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(vi) all refunds of Taxes to the extent such Taxes are not
reflected on the Final Working Capital Statement;
(vii) all Tax Returns of TPI;
(viii) all Books and Records which TPI is required by law to
retain, provided that TPI shall provide Newco with complete copies
of such Books and Records;
(ix) all Tenneco Plans, and all assets of the Tenneco Plans;
(x) all Governmental Authorizations to the extent not
transferable without obtaining a Consent;
(xi) the Tenneco Marks;
(xii) the Retained Real Property and any financial instruments
related to the Retained Real Property;
(xiii) all of TPI's or Tenneco's insurance policies Related to
the Containerboard Business and, subject to the rights of Newco and
obligations of TPI and TPI's Affiliates, respectively, set forth in
Section 5.11, all rights under such insurance policies; and
(xiv) any Contracts not included in the Assumed Liabilities
pursuant to the exception set forth in Section 1.1(j)(i) (unless and
to the extent assumed by Newco pursuant to Section 5.21 hereof).
(nnnn)"Retained Environmental Liabilities" has the meaning set forth
in the definition of "Retained Liabilities."
(oooo) "Retained Liabilities" shall mean all of the following debts,
liabilities, commitments or obligations, whether arising before or after the
Closing and whether known or unknown, fixed or contingent:
(i) all liabilities Related to the Retained Assets;
(ii) all (A) liabilities under Environmental Laws with respect
to any property to which the Containerboard Business disposed or
arranged for the disposal of Hazardous Substances prior to Closing,
other than (x) at the Real Property, or (y) at locations other than
the Retained Real Property where Hazardous Substances may have
migrated or are alleged to have migrated from the Real Property, (B)
liabilities under Environmental Laws with respect to any Former
Facility, and (C) liabilities in
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connection with the Retained Real Property (collectively, the
"Retained Environmental Liabilities");
(iii) all liabilities arising out of the actions, suits,
proceedings, disputes, claims or investigations identified in
Schedule 1.1(nnnn)(iii) (the "Retained Litigation") and all Losses
arising out of the three matters listed in Section 5.18 of this
Agreement to the extent Newco's Losses in connection therewith
exceed the limitations set forth in such section;
(iv) all liabilities which are retained by Tenneco or TPI
under the Ancillary Agreements;
(v) all liabilities under the Tenneco Plans, except to the
extent such liabilities are specifically assumed by Newco pursuant
to the Human Resources Agreement;
(vi) all liabilities for Taxes imposed with respect to the
taxable periods, or portions thereof, ending on or before the
Closing Date except to the extent that any such Taxes are Current
Liabilities and are reflected on the Final Working Capital
Statement;
(vii) all liabilities for "non-trade" accounts payable to TPI
or its Affiliates which arise prior to the Closing Date;
(viii) all liabilities for indebtedness for borrowed money and
any other obligation which is fixed as to amount and certainty as of
the Closing or which is secured by a lien that is not a Permitted
Encumbrance on any of the Contributed Assets, including any
liabilities under the Existing Financing Arrangements, but not
including (A) the Assumed Indebtedness, (B) Assumed Liabilities as
shown on the Final Working Capital Statement and (C) liabilities
under Contracts included in the Contributed Assets;
(ix) all severance, termination, change of control and similar
agreements, payments, debts, obligations or liabilities with respect
to any director, officer, employee or consultant of TPI or any of
its Subsidiaries which exist as of or prior to the Closing (after
taking into account the transactions contemplated by this
Agreement), other than (i) obligations under any collective
bargaining agreement, (ii) obligations of the type described in
Section 2.3 (v) of the Human Resources Agreement, and (iii)
obligations under any employment, consulting, or other agreement
entered into by Newco;
(x) all liabilities and obligations under any employment,
consulting, or other agreement or arrangement between TPI or its
Affiliates and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, including any liabilities or
obligations to ▇▇. ▇▇▇▇▇▇▇ which exist as of or prior to the
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Closing (including after taking into account the transactions
contemplated by this Agreement and including severance and pension
benefits, costs, or other expenses), except to the extent assumed by
Newco under the Human Resources Agreement;
(xi) all other liabilities and obligations for which TPI has
expressly assumed responsibility pursuant to this Agreement or the
Ancillary Agreements;
(xii) all debts, liabilities or obligations whatsoever, that
do not Relate to the Containerboard Business or that do not
otherwise Relate to the Contributed Assets; and
(xiii) all liabilities and obligations arising under any
Contract which is not identified in the Disclosure Memorandum except
as follows: (A) if such Contract is for an amount of $1,000,000 or
less and (i) is entered into in the ordinary course of business;
(ii) the terms of which are customary and normal for the
Containerboard Business specifically and the containerboard industry
generally and on market rates at the time entered into, and (iii)
all of the fees, expenses, penalties, liabilities and other payment
obligations (or commitments therefor) arising thereunder which were
incurred during the 12-month period ending December 31, 1998 have
been paid and have been (or will be) properly reflected on the Most
Recent Year End Statement, and, if applicable, Final Working Capital
Statement), such Contract shall not be a Retained Liability; and (B)
if such Contract is for an amount greater than $1,000,000 or
otherwise does not meet the conditions set forth in clause (A), such
Contract shall be a Retained Liability only if and to the extent
Newco does not elect to assume such Contract in accordance with
Section 5.21 hereof.
(pppp) "Retained Litigation" has the meaning set forth in the
definition of "Retained Liabilities."
(qqqq) "Retained Real Property" shall mean the real property
identified on Schedule 1.1(pppp).
(rrrr) "Spin-Off" shall mean any distribution by TPI or its
Affiliates of any class or series of Newco Common Stock to TPI's or such
Affiliate's public stockholders.
(ssss) "Straddle Period" shall mean, with respect to any Contributed
Subsidiary, any Tax Period that begins before and ends after the Closing Date.
(tttt) "Stockholders Agreement" shall have the meaning set forth in
Section 2.1(b) hereof.
(uuuu) "Stub Period Financial Statements" shall have the meaning set
forth in Section 3.6(b).
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(vvvv) "Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or other legal entity of which such
Person, either directly or through or together with any other Subsidiary of such
Person, owns any equity interests.
(wwww) "Supply Agreements" shall mean the supply agreements, to be
entered into at Closing by and among Newco, TPI and TPI's affiliates in form and
substance satisfactory to each of TPI and PCA, setting forth the terms and
conditions pursuant to which Newco agrees to supply to TPI and its Affiliates,
and TPI and its Affiliates agree to purchase from Newco, certain products, at
prices set forth on Schedule 1.1(vvvv), for a period of five years from the
Closing Date.
(xxxx) "Survival Period" shall have the meaning set forth in Section
7.1.
(yyyy) "Target Working Capital" has the meaning set forth in Section
2.5(e).
(zzzz) "Tax Authority" shall mean, with respect to any Tax, the
governmental entity or political subdivision thereof that imposes such Tax, and
the agency (if any) charged with the collection of such Taxes for such entity or
subdivision.
(aaaaa) "Tax Benefit" shall mean the amount by which a Person's Tax
liability is actually reduced (including any related interest actually received
from a Tax Authority in connection therewith).
(bbbbb) "Tax Period" shall mean, with respect to any Tax, the period
for which the Tax is reported as provided under Applicable Tax Laws.
(ccccc) "Tax Return" shall mean, with respect to any Tax, any
information return with respect to such Tax, any report, statement, declaration
or document required to be filed under the Applicable Tax Law in respect of such
Tax, any claim for refund of Taxes paid, and any amendment or supplement to any
of the foregoing.
(ddddd) "Taxes" shall mean all federal, state, local or foreign
taxes, including but not limited to income, gross receipts, windfall profits,
goods and services, value added, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes, together
with any interest, additions or penalties with respect thereto and any interest
in respect of such additions or penalties.
(eeeee) "Tenneco" means Tenneco Inc., a Delaware corporation.
(fffff) "Tenneco ▇▇▇▇" shall mean any ▇▇▇▇ that includes the word
"Tenneco" or "Tenn"or any variation thereof, the Tenneco "horizon" symbol, and
any trademark, symbol or logo using the "Tenneco" or "Tenn" name or such symbol
or any variation thereof.
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(ggggg) "Tenneco Plans" means all employee benefit plans, and all
assets and liabilities related to such employee benefit plans, of TPI, or any
Affiliate of TPI, including Tenneco.
(hhhhh) "Transition Services Agreement" shall mean a mutually
satisfactory agreement to be entered into at Closing between Newco and TPI under
which TPI and its Affiliates will provide transition services requested by Newco
in order to allow it to operate the Containerboard Business after Closing in a
manner consistent with past practices. The charge to Newco for such services
will be TPI's or such Affiliate's (as the case may be) actual cost on a fully
loaded basis without allocation of corporate overhead (the "TPI Cost"). To the
extent of any services reflected in any of the eight service categories on
Schedule 1.1 (ggggg) , the charge to Newco for each such service will be the
lesser of (I) TPI's Cost for such services, and (ii) 105% of the cost for such
service set forth on such Schedule. The Transition Services Agreement shall be
for an initial one year term. Newco may extend the term beyond the initial term
for up to six months for an upcharge of 15%. Newco may terminate any such
services under the Transition Services Agreement on 90 days written notice to
TPI. Newco may reduce or phase-down the services to be provided during the
initial term or renewal term under the Transition Services Agreement upon
reasonable written notice to TPI, in which case the charge to Newco will be
reduced to reflect the actual TPI Cost for rendering such reduced service.
(iiiii) "TPI Indemnified Parties" shall have the meaning set forth
in Section 7.2(a).
(jjjjj) "Transfer Costs" shall have the meaning set forth in Section
2.7.
(kkkkk) "WARN" shall have the meaning set forth in Section 5.5.
(lllll) "WARN Obligations" shall have the meaning set forth in
Section 5.5.
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Agreement, and unless otherwise indicated shall have such meanings
throughout this Agreement.
1.3 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. The word
"including" means "including without limitation."
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
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(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
ORGANIZATION OF NEWCO;
CONTRIBUTION OF THE CONTAINERBOARD BUSINESS
2.1 Organization of Newco. At or prior to Closing, TPI , Newco and
PCA shall cause each of the following to occur:
(a) Corporate Documents. Newco's certificate of incorporation shall
be amended and restated to be as set forth as Exhibit 2.1A hereto (except that
such certificate of incorporation shall be amended to create a series of
preferred stock entitled "Series A Preferred Stock as contemplated by the
Stockholders Agreement) and Newco shall adopt amended and restated by-laws in
form and substance satisfactory to PCA and TPI, which by-laws shall include all
provisions required by the Stockholders Agreement to be included in Newco's
by-laws.
(b) Stockholders Agreement. TPI, PCA and Newco shall enter into a
Stockholders Agreement in the form of Exhibit 2.1B.
(c) Registration Rights Agreement. TPI, PCA and Newco shall enter
into a Registration Rights Agreement in the form of Exhibit 2.1C.
2.2 Contribution and Purchase of Assets; Assumption of Liabilities.
(a) Borrowing of Assumed Indebtedness; Repayment of Existing
Financing Arrangements. Immediately prior to the Closing, subject to Article VI,
TPI will borrow the Assumed Indebtedness under the New Financing Arrangements
and will use the proceeds to repay in full the Existing Financing Arrangements
such that TPI shall own all of the Purchased Property free and clear of all
Encumbrances (other than Permitted Encumbrances, but free and clear of all
Encumbrances with respect to Existing Financing Arrangements), and the Purchased
Property shall constitute a part of the Contributed Assets. On the terms and
subject to the conditions set forth herein and in the Ancillary Agreements, at
the Closing the parties shall take the following actions, in the order set forth
below, provided that such actions shall take place contemporaneously as part of
the Closing.
(b) PCA Cash Contribution; Issuance of Common Stock. PCA will
contribute the Cash Contribution to Newco, and Newco will issue to PCA the
number of fully paid, nonassessable shares of Common Stock determined in
accordance with the Preliminary Statements.
(c) Contribution of Contributed Assets; Assumption of Liabilities.
(i) TPI shall contribute, convey, transfer, assign and deliver to Newco, and
Newco shall accept
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and acquire from TPI, all right, title and interest of TPI in and to the
Contributed Assets, free and clear of all Encumbrances (other than Permitted
Encumbrances but free and clear of all Encumbrances with respect to Existing
Financing Arrangements); (ii) Newco shall assume and agree to pay, honor,
discharge and perform the Assumed Liabilities only and shall assume no other
liabilities and obligations of any kind or nature; and (iii) Newco will issue to
TPI the number of fully paid, nonassessable shares of Common Stock determined in
accordance with the Preliminary Statements and pay TPI cash in an amount equal
to the Cash Distribution.
(d) Adjustment for Management Purchases. To the extent members of
Newco management purchase Management Stock at Closing, the number of shares of
Common Stock issued to TPI and PCA, and the amounts of the Cash Distribution and
the Cash Contribution, shall be adjusted as set forth in the Preliminary
Statements.
2.3 Retained Assets and Retained Liabilities. Notwithstanding
anything herein to the contrary, (i) from and after the Closing each of TPI and
its Affiliates shall retain all of its direct or indirect right, title and
interest in and to, and there shall be excluded from the sale, conveyance,
assignment or transfer to Newco hereunder, the Retained Assets and the Retained
Liabilities, and (ii) the Retained Liabilities shall not be assumed by Newco
hereunder.
2.4 Closing Mechanics. The Closing shall take place at the offices
of PCA's counsel at 8:00 a.m. (Chicago time), on the date which is the later of
(i) the 90th day following the execution of this Agreement, (ii) the second
Business Day following the satisfaction or waiver (by the party entitled to
waive the condition) of each condition to the Closing set forth in Article VI,
and (iii) the 45th day following delivery of the Most Recent Year End Statement
and the Regulation S-X Financial Statements pursuant to Section 5.14, provided
that on or prior to any such date TPI shall have provided to Newco any quarterly
financial statements for any calendar quarter ended more than 30 days prior to
such date (unless the foregoing condition is waived by PCA in its sole
discretion), or at such other time and place as the parties hereto may mutually
agree. The date on which the Closing occurs is called the "Closing Date." The
Closing shall be deemed effective at 8:00 a.m. (Chicago time) on the Closing
Date. To effect the steps set forth in Section 2.2 hereof, the parties shall
execute and deliver to each other and to third parties, as appropriate, all
documents reasonably necessary to effect the Closing. Without limiting the
generality of the foregoing,
(a) TPI Deliveries. TPI shall execute and deliver to Newco and PCA:
(i) to Newco, deeds, in limited warranty or other similar
form, in form and substance reasonably acceptable to PCA,
transferring all Owned Real Property (and the applicable Purchased
Property) to Newco;
(ii) to Newco, assignments, or where necessary subleases, in
form and substance reasonably acceptable to PCA, assigning or
subleasing to Newco all Real Property Leases;
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(iii) to Newco, assignments, in form and substance reasonably
acceptable to PCA, assigning to Newco all Intellectual Property and
the PCA Marks;
(iv) to Newco, bills of sale, certificates of title, and all
other instruments of transfer, in form and substance reasonably
acceptable to PCA, transferring to Newco all Contributed Assets
other than the Real Property or the Intellectual Property which are
being transferred to Newco pursuant to conveyance documents in
clauses (i) - (iii) above;
(v) to Newco, such instruments of assumption and other
instruments or documents, in form and substance reasonably
acceptable to PCA, as may be necessary to effect TPI's assignment of
the Assumed Liabilities to Newco;
(vi) to Newco or PCA, as appropriate, a duly executed copy of
each of the Ancillary Agreements to which TPI is a party;
(vii) to PCA, a copy of the opinion of Jenner & Block, TPI's
counsel, in form and substance reasonably satisfactory to PCA;
(viii) to PCA, evidence reasonably satisfactory to PCA that
all Encumbrances other than Permitted Encumbrances on any of the
Contributed Assets have been released;
(ix) to Newco, stock certificates or other evidence of
ownership of each of the Contributed Subsidiaries, in each case duly
endorsed for transfer to Newco;
(x) the certificates and other documents to be delivered
pursuant to Section 6.2(a) and (b); and
(xi) such other instruments or documents, in form and
substance reasonably acceptable to PCA, as may be necessary to
effect the Closing and the contribution of the Contributed Assets in
accordance with this Agreement.
(b) PCA Deliveries. PCA shall execute and deliver to Newco and TPI:
(i) to Newco or TPI, as appropriate, a duly executed copy of
each of the Ancillary Agreements to which PCA is a party;
(ii) to TPI, a copy of the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, PCA's
counsel, in form and substance reasonably satisfactory to TPI;
(iii) to Newco, the Cash Contribution;
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(iv) the certificates and other documents to be delivered by
PCA pursuant to Section 6.3(a) and (b); and
(v) such other instruments or documents, in form and substance
reasonably acceptable to TPI, as may be necessary to effect the
Closing.
(c) Newco Deliveries. Newco shall execute and deliver to TPI and
PCA:
(i) to TPI and PCA, such instruments of assumption and other
instruments or documents, in form and substance reasonably
acceptable to TPI, as may be necessary to effect Newco's assumption
of the Assumed Liabilities, including all documentation required by
the lenders of the Assumed Indebtedness, and to cause such lenders
to release TPI from and PCA any liability from the Assumed
Indebtedness;
(ii) to TPI or PCA, as appropriate, a duly executed copy of
each of the Ancillary Agreements to which Newco is a party;
(iii) to PCA, stock certificates representing that number of
shares of Common Stock in Newco issuable to PCA as determined in
accordance with the Preliminary Statements hereof;
(iv) to TPI, stock certificates representing that number of
shares of Common Stock in Newco issuable to TPI as determined in
accordance with the Preliminary Statements hereof;
(v) to TPI, the Cash Distribution; and
(vi) such other instruments or documents, in form and
substance reasonably acceptable to TPI and PCA, as may be necessary
to effect the Closing.
2.5 Post-Closing Adjustment.
(a) Within 60 days following the Closing, TPI shall, at its expense
and with cooperation from Newco's employees and access to Newco's books and
records, prepare or cause to be prepared, and deliver to PCA and Newco a
statement (the "Closing Working Capital Statement") which shall set forth the
Net Working Capital of the Containerboard Business as of the Determination Date
(the "Closing Working Capital") and as of the date of the Most Recent Statement
of Assets and Liabilities. The amounts so computed shall be used to determine
the amount of the payment between TPI and Newco in accordance with this Section
2.5 (the "Post Closing Adjustment"). The Closing Working Capital Statement shall
be prepared using the same principles, practices and procedures that were used
in preparing the Most Recent Statement of Assets and Liabilities.
Notwithstanding the foregoing, the following paragraphs (i) through (viii) shall
take precedence over such principles, practices and procedures in the
preparation of the Closing Working Capital Statement:
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(i) The Current Assets included in the Closing Working Capital
Statement will be adjusted to exclude the Retained Assets, the LIFO
reserve and any current assets related to Tenneco defined benefit
pension plans and shall not be taken into account in computing the
Post Closing Adjustment.
(ii) The Current Liabilities included in the Closing Working
Capital Statement will be adjusted to exclude the Retained
Liabilities. Any current liabilities related to Tenneco's defined
benefit pension plans shall not be taken into account in computing
the Post Closing Adjustment.
(iii) The Most Recent Statement of Assets and Liabilities does
not, and the Closing Working Capital Statement will not, include any
accrual or deferral related to federal, state, local or foreign
income Taxes.
(iv) The Closing Working Capital Statement shall not include
any dollar amounts related to the Existing Financing Arrangements.
(v) The Closing Working Capital Statement shall not include
any dollar amounts related to the New Financing Arrangements. No
Post Closing Adjustment shall result from the purchase during the
period from the date of the Most Recent Statement of Assets and
Liabilities to the Determination Date of any assets which were
leased at the date of the Most Recent Statement of Assets and
Liabilities.
(vi) The Closing Working Capital Statement shall not include
any liabilities related to bonuses or incentive compensation earned
in 1998.
(vii) Any change in accounting principles after the date of
the Most Recent Statement of Assets and Liabilities (including any
changes required by GAAP) will not apply in determining the Closing
Working Capital Statement.
(viii) The Closing Working Capital Statement shall exclude any
increase or decrease in Current Assets or Current Liabilities
resulting directly from accounting for the Transaction.
(b) PCA and PCA's accountants and Newco and Newco's accountants
shall have 30 days after the delivery by TPI of the Closing Working Capital
Statement to review the Closing Working Capital Statement. In the event that PCA
or Newco determines that the Closing Working Capital as derived from the Closing
Working Capital Statement has not been determined on the basis set forth herein,
PCA or Newco shall inform TPI in writing (the "Objection"), setting forth a
specific description of the basis of the Objection and the adjustments to the
Closing Working Capital which PCA or Newco believes should be made, which
Objection must be delivered to TPI on or before the last day of such 30-day
period. TPI shall then have 30 days to review and respond to the Objection. TPI
and PCA and Newco shall
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attempt in good faith to reach an agreement with respect to any matters in
dispute. If TPI and PCA and Newco are unable to resolve all of their
disagreements with respect to the determination of the foregoing items within 45
days following the delivery of Objection, they shall refer their remaining
differences to a "Big Five" firm of independent public accountants as to which
TPI and PCA and Newco mutually agree (the "CPA Firm"), who shall, acting as
experts and not as arbitrators, determine in accordance with this Agreement, and
only with respect to the remaining differences so submitted, whether and to what
extent, if any, the Closing Working Capital as derived from the Closing Working
Capital Statement requires adjustment. TPI and PCA and Newco shall direct the
CPA Firm to use its best efforts to render its determination within 30 days
after such submission. The CPA Firm's determination shall be conclusive and
binding ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ and TPI. The fees and disbursements of the CPA Firm
shall be paid by Newco. PCA, Newco and TPI shall make readily available to the
CPA Firm all relevant books and records and any work papers (including those of
the parties' respective accountants) relating to the Closing Working Capital
Statement and all other items reasonably requested by the CPA Firm. The "Final
Working Capital Statement" shall be (i) the Closing Working Capital Statement in
the event that no Objection is delivered by PCA or Newco during the 30-day
period specified above, or (ii) the Closing Working Capital Statement, as
adjusted by either (x) the agreement of TPI, PCA and Newco or (y) the CPA Firm.
(c) PCA and Newco shall have the opportunity to participate in the
preparation of the Closing Working Capital Statement by (i) observing the
physical inventory taken in connection therewith (which may begin prior to the
Closing Date), (ii) attending any audit planning meetings in connection
therewith, (iii) meeting with and discussing procedures with TPI and its
accountants, and (iv) otherwise having full access to all information used by
TPI in preparing the Closing Working Capital Statement, including the Books and
Records and the work papers of its accountants (subject to PCA or Newco
executing any necessary waivers or indemnifications required by TPI's
accountants).
(d) In reviewing the Objection, TPI and its accountants shall have
full access to all information used by PCA or Newco in preparing the Objection,
including the work papers of PCA's and Newco's accountants (subject to TPI
executing any necessary waivers or indemnifications required by PCA's and
Newco's accountants).
(e) If the Closing Working Capital as reflected on the Final Working
Capital Statement is less than the Working Capital of the Containerboard
Business determined on the Most Recent Statement of Assets and Liabilities,
subject to adjustments as set forth in this Section 2.5(a)(i-viii) (the "Target
Working Capital"), then within 10 Business Days following issuance of the Final
Working Capital Statement, TPI shall make a payment to Newco equal to such net
change, plus interest at the prime rate (as set forth in the "Money Rates"
section of The Wall Street Journal) on such amount from the Closing Date through
the date of payment. If the Closing Working Capital as reflected on the Final
Working Capital Statement is greater than the Target Working Capital, then
within 10 Business Days following issuance of the Final Working Capital
Statement, Newco shall make a payment to TPI equal
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to such net change, plus interest at the prime rate (as set forth in the "Money
Rates" section of The Wall Street Journal) on such amount from the Closing Date
through the date of payment.
(f) Payments made by TPI pursuant to this Section 2.5 shall be
deemed to result in adjustments to the Cash Distribution made to TPI in partial
payment for the Contributed Assets for all purposes of this Agreement, including
for purposes of (i) the tax appraisal pursuant to Section 2.9 hereof and (ii)
the purchase price adjustment under Section 2.6 hereof.
(g) In preparing the Closing Working Capital Statement, (i)
liabilities of Newco related to this transaction shall not be treated as
liabilities, and (ii) no liabilities or reserves shall be established for
matters for which PCA, TPI or Newco is (or but for the Cap or the Deductible
would be) entitled to indemnification hereunder.
2.6 Purchase Price Adjustment Following Certain Sales of Common
Stock By TPI. If
(a) during the one year period following the Closing Date, (i)
Newco or TPI shall sell any of its shares of Common Stock in Newco
pursuant to an initial Public Offering undertaken by Newco pursuant
an exercise by TPI of its Demand Registration Right (as defined in
the Registration Rights Agreement) under the Registration Rights
Agreement, or (ii) TPI sells, transfers or distributes any of its
shares of common stock in Newco pursuant to a Spin-Off, and
(b) the Initial Price per share is less than result of (i) the
Adjusted Cash Contribution, divided by (ii) the number of
outstanding shares of common stock of Newco issued to PCA as of the
Closing hereunder and held by PCA and its Affiliates as of the date
the calculation under this Section 2.6 is being made,
then TPI shall pay to PCA an amount equal to the product of such difference per
share, times (y) the number of shares of common stock of Newco then held by PCA
and its Affiliates, provided that the maximum amount to be paid by TPI under
this Section 2.6 shall not exceed the lesser of (A) $64,500,000 and (B) 15% of
the market value of Newco based on the Initial Price per share of the Public
Offering or Spin-Off giving rise to the calculation under this Section 2.6 but
excluding any shares issued or issuable in connection with such event). At TPI's
option, any payment under this Section 2.6 may be paid in cash, in shares of
Common Stock (valued at the Initial Price), or in a combination of cash and
shares of Common Stock. In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in the shares of
Newco's common stock, the parties shall make appropriate and equitable
adjustments to the foregoing computation in order to prevent the dilution or
enlargement of rights under this Section 2.6. This Section 2.6 shall not apply
to any Spin-Off by TPI after Newco has had an initial Public Offering (unless
such Spin-Off is part of the initial Public Offering).
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2.7 Transfer Taxes and Recording Fees. One half of any and all Taxes
(other than Taxes imposed on income or gains) or fees imposed or incurred by
reason of the transfer of the Contributed Assets hereunder and/or the filing or
recording of any instruments necessary to effect the transfer of the Contributed
Assets hereunder, regardless of when such Taxes or fees are levied or imposed,
including sales, use, value-added, excise, real estate transfer, lease
assignment, stamp, documentary and similar Taxes and fees (the "Transfer Costs")
shall be the responsibility of, and shall be paid by each of TPI and Newco.
Newco shall prepare all Tax Returns required to be filed in respect of Transfer
Costs, and PCA and TPI shall have the right to review and approve all such Tax
Returns, upon approval, to be timely filed (if such filing is the responsibility
of TPI or any of its Affiliates under applicable Law and to the extent that such
Tax Returns are approved and given to TPI by Newco in final form before the
applicable due dates thereof). In the event Transfer Costs are imposed on or
incurred by TPI or its Affiliates in excess of its share hereunder, Newco shall
promptly reimburse TPI and its Affiliates for such excess. In the event Transfer
Costs are imposed on or incurred by Newco in excess of its share hereunder, TPI
shall promptly reimburse Newco for such excess.
2.8 Certain Transfers. TPI shall use commercially reasonable efforts
to obtain, at its sole expense, each Consent listed on Schedule 3.3 (other than
those Consents marked with an asterisk on Schedule 3.3), and any other material
Consent not listed on Section 3.3, if any, if such Consent is required to
operate the Containerboard Business after Closing as such business has been
operated over the 12-month period immediately prior to Closing. If prior to
Closing TPI shall not have obtained any such Consent (other than a Required
Consent), the failure to obtain such Consent shall not prevent the Closing,
unless the failure to obtain such Consent, could, individually or together with
the failure to obtain other Consents, have a Material Adverse Effect or preclude
any closing condition to be satisfied. If TPI has not obtained a Consent (other
than a Required Consent), the Closing of the transactions contemplated by this
Agreement shall not constitute a transfer, or any attempted transfer of any
Contract or asset, the transfer of which requires such Consent. Rather,
following the Closing, TPI shall use commercially reasonable efforts at TPI's
sole expense, and PCA and Newco shall cooperate in such efforts, to obtain
promptly such Consent or to enter into reasonable and lawful arrangements
(including subleasing or subcontracting if permitted) reasonably acceptable to
Newco to provide to Newco the full economic (taking into account Tax costs and
benefits) and operational benefits and liabilities which Newco would have had
such Consent been obtained as of Closing. Once such Consent for the transfer of
a Contributed Asset not transferred at the Closing is obtained on terms
reasonably satisfactory to Newco, TPI shall promptly transfer or cause to be
transferred, such Contributed Asset to Newco for no additional consideration.
2.9 Appraisal. Newco shall obtain a professional appraisal (the
"Appraisal") which sets forth separately the fair market values of the
Contributed Assets, and, within 90 days after the Closing Date, Newco shall
provide a copy of such Appraisal to TPI and PCA. Within 15 days after the
receipt of such appraisal, each of TPI and PCA will submit in writing to the
other and to Newco any changes it proposes be made to such Appraisal, and Newco,
TPI, and PCA will endeavor in good faith to resolve any differences with respect
to
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the Appraisal. Subject to the requirements of Applicable Tax Law or election,
all Tax Returns and reports filed by Newco, PCA and TPI will be prepared
consistently with the Appraisal, as modified by any subsequent agreement of
Newco, TPI and PCA.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TPI
TPI represents and warrants to PCA and Newco as follows:
3.1 Organization and Qualification. TPI and each of the Contributed
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and has all requisite corporate
power and authority to own and operate the Contributed Assets and to carry on
the Containerboard Business as currently conducted. TPI and each of the
Contributed Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in the jurisdictions listed on Schedule 3.1
with respect to TPI or the applicable Contributed Subsidiary which are the only
jurisdictions where the ownership or operation of the Contributed Assets or the
conduct of the Containerboard Business requires such qualification.
3.2 Corporate Authorization. TPI has full corporate power and
authority to execute and deliver this Agreement and each of the Ancillary
Agreements, and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by TPI of this Agreement and each of the
Ancillary Agreements have been duly and validly authorized and no additional
corporate authorization or consent is required in connection with the execution,
delivery and performance by TPI of this Agreement and each of the Ancillary
Agreements.
3.3 Consents and Approvals. Except as specifically set forth in
Schedule 3.3 or as required by the HSR Act, no Consent is required to be
obtained by TPI from, and no notice or filing is required to be given by TPI to
or made by TPI with, any Governmental Authority or other Person or under any
Contract listed, or required to be listed, on Schedule 3.14 in connection with
the execution, delivery and performance by TPI of this Agreement and each of the
Ancillary Agreements and the contribution of the Contributed Assets.
3.4 Non-Contravention. Except as set forth on Schedule 3.3, the
execution, delivery and performance by TPI of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate any provision of the
certificate of incorporation or bylaws of TPI, (ii) subject to obtaining the
Consents referred to in Section 3.3, conflict with, or result in the breach of,
or constitute a default under, or result in the termination, cancellation or
acceleration (whether after the filing of notice or the lapse of time or both)
of any right or obligation of TPI under, or to a loss of any benefit to which
TPI is entitled under, any Contract or result in the
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creation of any Encumbrance (other than a Permitted Encumbrance) upon any of the
Contributed Assets; or (iii) assuming compliance with the matters set forth in
Section 3.3, violate, or result in a breach of or constitute a default under any
law, rule, regulation, judgment, injunction, order, decree or other restriction
of any court or governmental authority to which TPI is subject, including any
Governmental Authorization.
3.5 Binding Effect. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of TPI, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles.
3.6 Financial Statements: Absence of Certain Changes. Subject to the
matters set forth on Section 3.6:
(a) The following financial statements of the Containerboard
Business are (and, with respect to the Most Recent Year End Statement, will be
prior to the Closing Date) attached as Schedule 3.6: (i) the audited combined
financial statements of the Containerboard Business (collectively, the "Audited
Financial Statements") as of and for the years ended December 31, 1996, 1997 and
1998 (the "Most Recent Year End Statement"); (ii) the unaudited combined
statement of assets, liabilities and interdivision accounts of the
Containerboard Business as of September 30, 1998 (the "Most Recent Statement of
Assets and Liabilities"); and collectively with statements described in the
foregoing clause (i) , the "Financial Statements"). The Financial Statements
present (or, in the case of the Most Recent Year End Statement, will present),
in all material respects, the financial condition of the Containerboard Business
as of the dates thereof, or the results of operations for the periods then
ended, as the case may be. The Financial Statements were (or, in the case of the
Most Recent Year End Statement, will be) consistent with the Books and Records,
which are complete and accurate in all material respects.
(b) TPI will either (i) engage AA on behalf of Newco to audit the
combined statement of assets, liabilities, and interdivision account as of the
Closing Date, and the related statements of revenues, expenses, and
interdivision account and cash flows for the period from January 1, 1999 to the
Closing Date (the "Stub Period Financial Statements"), or (ii) cooperate with
Newco in the audit of the Stub Period Financial Statements.
(c) The Audited Financial Statements were (or, in the case of the
Most Recent Year End Statement and the Stub Period Statements, will be) prepared
in accordance with GAAP. All of the liabilities reflected in the Financial
Statements are Related to the Containerboard Business and arose out of or were
incurred in connection with the conduct of the Containerboard Business.
(d) The Inventory shown on the Financial Statements was determined
in accordance with GAAP, and is stated at the lower of cost or market on a LIFO
basis. This
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representation shall not be deemed to constitute a warranty or guaranty that all
such Inventory shall be sold.
(e) All accounts receivable reflected on the Financial Statements
are, and all accounts receivable reflected on the Most Recent Year End Statement
and the Stub Period Statements will be, bona fide receivables, accounted for in
accordance with GAAP, and subject to no setoffs or counterclaims, representing
amounts due with respect to actual transactions in the operation of the
Containerboard Business; it being understood that this representation shall not
be deemed to constitute a warranty or guaranty that all such accounts receivable
shall be collected.
(f) Except as set forth in Schedule 3.6(e) or otherwise disclosed in
this Agreement, since December 31, 1997, TPI has conducted the Containerboard
Business in the ordinary and usual course and, other than in the ordinary and
usual course, has not, with respect to the Containerboard Business: (i) sold,
assigned, pledged, hypothecated or otherwise transferred any of the Contributed
Assets, other than for such sales, assignments, pledges, hypothecations or other
transfers which could not, individually or in the aggregate, have a Material
Adverse Effect; (ii) terminated or materially amended any Contracts that are
individually or in the aggregate material to the Containerboard Business; (iii)
suffered any extraordinary damage, destruction or other casualty loss; (iv)
except for normal salary administration for employees of the Containerboard
Business, increases pursuant to collective bargaining agreements, or other
compensation increases (including bonuses), in each case in the ordinary course
of business, increased the compensation payable or to become payable by TPI to
any of the employees of the Containerboard Business or increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
by TPI, for or with any such employees; or (v) entered into an agreement to do
any of the foregoing.
3.7 Litigation and Claims. Except as disclosed on Schedule 3.7:
(a) There is no action (whether civil, criminal or administrative),
suit, demand, claim, dispute, hearing, proceeding (including condemnation or
other proceeding in eminent domain) or investigation pending or, to the
Knowledge of TPI, threatened, Related to the Containerboard Business or any of
the Contributed Assets or included in the Assumed Liabilities.
(b) None of the Contributed Assets is subject to any order, writ,
judgment, award, injunction, or decree of or settlement enforceable in any court
or governmental or regulatory authority of competent jurisdiction or any
arbitrator or arbitrators.
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3.8 Taxes. Except as disclosed on Schedule 3.8:
(a) TPI has duly and timely filed (or has caused to be duly and
timely filed) each Tax Return required to be filed with any Tax Authority which
includes or is based upon the Contributed Assets, or the operations, ownership
or activities of the Containerboard Business, and all Taxes due and payable
(whether or not shown on or required to be shown on a Tax Return) have been paid
prior to their due dates; provided, however, that the representations and
warranties set forth in this paragraph are made only to the extent that (i) such
Taxes are or may become Encumbrances on the Contributed Assets, or (ii) Newco is
or may be liable in the capacity of transferee of the Contributed Assets.
(b) TPI has duly and timely filed (or has caused to be duly and
timely filed) each Tax Return which includes or is based upon the assets,
operations, ownership or activities of any of the Contributed Subsidiaries, and
all Taxes due and payable (whether or not shown on or required to be shown on a
Tax Return) have been paid prior to their due dates.
(c) None of TPI (with respect to the Containerboard Business) and
the Contributed Subsidiaries has made any payments, is obligated to make any
payments or is a party to any agreement that could obligate it to make any
future payments that will not be deductible under Sections 162(m) or 280G of the
Code.
(d) None of the Contributed Assets or the assets of the Contributed
Subsidiaries (i) is subject to any lien arising in connection with any failure
or alleged failure to pay any Tax, (ii) secures any debt the interest on which
is Tax-exempt under Section 103(a) of the Code, (iii) is required to be or is
being depreciated under the alternative depreciation system under Section
168(g)(2) of the Code, (iv) is "limited use property" with the meaning of
Revenue Procedure 76-30 or (v) will be treated as owned by any other person
pursuant to the provisions of former Section 168(f)(8) of the Code.
(e) TPI (with respect to the Containerboard Business) and the
Contributed Subsidiaries have withheld and paid each material Tax required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other party.
(f) There are no pending, threatened, or proposed audits,
assessments or claims from any Tax Authority for deficiencies, penalties or
interest against TPI (with respect to the Contributed Assets or the
Containerboard Business) any of the Contributed Subsidiaries or any of their
assets, operations or activities.
(g) No Contributed Subsidiary owns, directly or indirectly, and none
of the Contributed Assets consists of any interest in any entity classified as a
partnership for United States federal income Tax purposes.
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(h) TPI's aggregate tax basis in the stock of the Containerboard
Subsidiaries, determined immediately prior to the Closing, shall not exceed the
aggregate tax basis of the net assets of the Containerboard Subsidiaries
immediately prior to the Closing, by more than $100,000,000.
3.9 Employee Benefits. Each Tenneco Plan which is an employee
benefit plan, as defined in Section 3(3) of ERISA, has been and is being
maintained in substantial compliance with all applicable laws, including ERISA
and the Code, and each plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has received a determination of such
qualification from the Internal Revenue Service. Except as provided on Schedule
3.9, no employee of the Containerboard Business is covered by a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA. None of the Tenneco Plans
obligates Newco to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this Agreement or
solely as a result of a "change in control" (as such term is defined in Section
280G of the Code). No liability to the PBGC (except for routine payment of
premiums), Internal Revenue Service, Department of Labor, or otherwise has been
or is expected to be incurred with respect to any Tenneco Plan that is subject
to Title IV of ERISA which could result in a material liability to Newco.
3.10 Compliance with Laws. Except as set forth in Schedule 3.10, the
Containerboard Business is being conducted in compliance in all material
respects with all Laws material to the Containerboard Business and as of the
Closing, Newco will have (subject to obtaining the Consents) all Governmental
Authorizations necessary for the conduct of the Containerboard Business as
currently conducted in all material respects and as shall be conducted
immediately following Closing (assuming no material change in operations of the
Containerboard Business from the manner of operation prior to Closing); it being
understood that nothing in this representation is intended to address any
compliance issue that is the subject of the representations and warranties set
forth in Sections 3.7, 3.8, 3.9, 3.11, 3.12, or 3.13 hereof, and that TPI makes
no representations as to the transferability or assignability of any such
Governmental Authorizations. TPI has not received written notice that any
Governmental Authorization may be suspended, revoked, materially modified or
canceled.
3.11 Environmental Matters. Except as set forth in Schedule 3.11
and, in each case, other than as Relates to a Retained Liability:
(a) TPI has complied during the past five years and is currently in
compliance with all applicable Environmental Laws with respect to the
Containerboard Business, and there are no liabilities under any Environmental
Law with respect to the Containerboard Business;
(b) TPI has not received any written notice of any material
violation or alleged material violation of, or any material liability under, any
Environmental Law in connec tion with the Containerboard Business during the
past five years; and
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(c) there are no material writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, proceedings or investigations
pending or, to the Knowledge of TPI, threatened, relating to compliance with or
liability under any Environmental Law affecting the Containerboard Business or
the Contributed Assets.
3.12 Intellectual Property.
(a) Schedule 3.12 sets forth a list and description (including the
country of registration) of all registered Intellectual Property currently (or,
to the Knowledge of TPI, within the last 12 months) used in the Containerboard
Business. No third party has rights in, or otherwise has the right to restrict
TPI's use of, such Intellectual Property, and, to TPI's Knowledge (without any
inquiry), no third party has rights in, or otherwise has the right to restrict
Newco's use of the PCA Marks as of and following the Closing.
(b) To the Knowledge of TPI, no product (or component thereof or
process) currently used, sold or manufactured by the Containerboard Business
infringes on, misappropriates, or otherwise violates a valid and enforceable
intellectual property right of any other Person.
(c) There are no actions or proceedings pending or, to the Knowledge
of TPI, threatened challenging, and, to the Knowledge of TPI, no Person is
infringing or otherwise violating, the Intellectual Property, except for
challenges, infringements or violations which, individually or in the aggregate,
would not have a Material Adverse Effect. As of November 1, 1995, to TPI's
Knowledge (without any inquiry), no Person was infringing on or otherwise
violating the PCA Marks.
(d) All of the Intellectual Property used in the Containerboard
Business and all of TPI's interest in the PCA Marks will be transferred to Newco
at Closing, except for the Intellectual Property that is used by TPI to provide
services under the Transition Services Agreement, and such transferred
Intellectual Property and the PCA Marks will be available to Newco after Closing
on the same terms and conditions under which it was available to TPI prior to
the Closing.
(e) Attached hereto as Schedule 3.12(e) is a copy of the provisions
in Tenneco's most recent Form 10-Q describing Tenneco's efforts at addressing
the Year 2000 issue in Tenneco's business. The information set forth therein is
accurate as of the date hereof, in all material respects. TPI has developed and
begun implementing a Project Plan to remediate and/or replace software,
firmware, hardware (whether general or special purpose) or other similar or
related items of automated, computerized or software systems that are used or
relied upon in the Containerboard Business (each a "Computer System"), but are
not Year 2000 ready. Such remediation and/or replacement is scheduled to be
completed in 1999. Year 2000 ready means that the Computer System when used in
accordance with its associated documentation is Year 2000 compliant, or is not
Year 2000 compliant but will process date data accurately with the
implementation of a tested procedure, or is not 2000 compliant but will not
cause any
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processing problem. Year 2000 compliant means that the applicable Computer
System when used in accordance with its associated documentation will accurately
process date data such that: no value for a date prior to year 2028 will cause
any interruption in processing; date-based functionality operates consistently
for dates prior to, during and after Year 2000 (through year 2027); in all
interfaces and data storage, the century any date is specified either explicitly
or by algorithms or inferencing rules; and leap years will be accurately
recognized and processed. If implemented properly, the Project Plan should be
successful in making all material Computer Systems Year 2000 ready, except to
the extent that a Computer Systems interfaces or exchanges data with other
software, firmware, hardware or other similar or related items of automated,
computerized or software systems that are not Year 2000 compliant.
3.13 Labor Matters. Except as disclosed on Schedule 3.13:
(a) TPI is not a party to any labor or collective bargaining
agreement with respect to employees of the Containerboard Business, no such
employees are represented by any labor organization and, to the Knowledge of
TPI, there are no organizing or decertification activities (including any demand
for recognition or certification proceedings pending or threatened to be brought
or filed with the National Labor Relations Board or other labor relations
tribunal) involving TPI;
(b) There are no strikes, work stoppages, slowdowns, lockouts,
unfair labor practice charges pending or, to the Knowledge of TPI, threatened
against or involving the employees of the Containerboard Business;
(c) There are no complaints, charges, claims or grievances against
TPI pending or, to the Knowledge of TPI, threatened to be brought or filed with
any governmental authority, arbitrator or court based on or arising out of the
employment by TPI of any employee of the Containerboard Business, except for
those which, individually or in the aggregate, would not have a Material Adverse
Effect; and
(d) TPI is in compliance with all Laws relating to the employment of
labor, including all such Laws relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, immigration, workers'
compensation, layoffs, and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes.
3.14 Contracts. Schedule 3.14 sets forth a list, as of the date
hereof, of each Contract that is Related to the Containerboard Business other
than (a) Real Estate Leases, which are listed on Schedule 1.1(gggg), and
collective bargaining agreements which are listed on Schedule 3.13, (b) purchase
orders or similar agreements for the purchase or sale of goods or services in
the ordinary and usual course of business, (c) confidentiality agreements
entered into in the usual course of business in connection with the purchase and
sale of Inventory, and (d) any Contract which requires a payment or imposes an
obligation on either party thereto less than $1,000,000 in the aggregate.
Schedule 3.14 also identifies any Contract that contains a non-compete covenant
or similar provision that could restrict Newco in its conduct of the
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Containerboard Business following Closing, any employment agreement with any
employee of the Containerboard Business, any employment agreement included in
the Contributed Assets or Assumed Liabilities, and any Contract between any
Affiliates of TPI, on one hand, and TPI or any of the Contributed Subsidiaries,
on the other hand, which is related to the Containerboard Business. Each
Contract set forth on Schedule 3.14 is a valid and binding agreement of TPI and,
to the Knowledge of TPI, is in full force and effect. Except as otherwise
provided in Schedule 3.14, TPI is not in, and, to TPI's knowledge, no other
party thereto is, in default in any material respect under any Contract listed
on Schedule 3.14 or any collective bargaining agreement listed on Schedule 3.13.
Schedule 3.14 lists all of the Contracts that are material to the Containerboard
Business other than those referred to in clauses (a) through (d) above.
3.15 Real Estate Leases. Schedule 1.1(gggg) sets forth a list, as of
the date hereof, of each material written Real Estate Lease with a term of more
than one month that is related to the Containerboard Business. Each Real Estate
Lease set forth on Schedule 1.1(gggg) is a valid and binding agreement of TPI
and is in full force and effect. There are no defaults under any Real Estate
Lease listed on Schedule 1.1(gggg) which defaults have not been cured or waived
and which would, individually or in the aggregate, have a Material Adverse
Effect. If the Real Estate Leases that are part of the Existing Financing
Arrangements are terminated prior to closing, as contemplated herein, TPI shall
own title to the assets subject to such Real Estate Leases, upon such
termination, the assets subject to such Real Estate Leases shall be deemed
Purchased Property.
3.16 Entire Business; Title to Property.
(a) Except as set forth in Schedule 3.16(a) and Schedule 3.6(e), the
Contributed Assets, the assets held by the Contributed Subsidiaries, the
intangible Retained Assets (including cash and cash accounts, disbursement
accounts, invested securities and other short and medium term investments, the
Tenneco Marks, the Tenneco Plans, and TPI's and Tenneco's insurance policies),
and the rights specifically provided or made available to Newco under the
Ancillary Agreements include all of the buildings, machinery, equipment and
other assets (whether tangible or intangible) necessary and adequate for Newco
immediately after Closing to conduct in all material respects the Containerboard
Business as conducted as of the date hereof and as of September 30, 1998, and as
conducted during the 12-month period prior to the date hereof (subject to
changes expressly permitted by the terms hereof to be made after the date
hereof).
(b) TPI has (or in the case of the Purchased Property, will have on
the Closing Date) good (and, in the case of Owned Real Property and Purchased
Property (as applicable), marketable) title to, or a valid and binding leasehold
interest in, the Contributed Assets, free and clear of all Encumbrances, except
(i) as set forth in Schedule 3.16(b); (ii) any Encumbrances expressly disclosed
in the Financial Statements; (iii) liens for Taxes (which are not related to
income, sales or withholding Taxes), assessments and other governmental charges
not yet due and payable or due but not delinquent as of the Closing Date or
being
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contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP on the Final Working
Capital Statement; (iv) mechanic's, workmen's, repairmen's, warehousemen's,
carriers, or other like liens arising or incurred in the ordinary course of
business for amounts which are not delinquent and which will not individually or
in the aggregate have a Material Adverse Effect, original purchase price
conditional sales contracts and equipment leases with third parties entered into
in the ordinary course of business; (v) with respect to the Real Property, (A)
easements, quasi-easements, licenses, covenants, rights-of-way and other similar
restrictions, including any other agreements, conditions, restrictions, or other
matters which would be shown by a current title report or other similar report
or listing, (B) any conditions that may be shown by a current survey, title
report or physical inspection, and (C) zoning, building and other similar
restrictions, none of which Encumbrances in (A) through (C) materially impairs
the uses of the Real Property as currently used in the Containerboard Business
or materially detracts from the value thereof as currently used in the
Containerboard Business; and (vi) Encumbrances not described in items (i) - (v)
immediately preceding and which, individually or in the aggregate, would not
have a Material Adverse Effect (all items included in (i) through (vi),
including any matter set forth in Schedule 3.16(b), are referred to collectively
herein as the "Permitted Encumbrances"); provided, however that as of the
Closing Date and for any periods of time thereafter (including for purposes of
Section 2.4 and Article VI), "Permitted Encumbrances" shall not include any
Encumbrances granted or arising in connection with the Existing Financing
Arrangements.
(c) The capital structure of each of the Contributed Subsidiaries is
as set forth in Schedule 3.16(c). The shares of stock of the Contributed
Subsidiaries included in the Contributed Assets constitute 100% of the issued
and outstanding shares of stock of each Contributed Subsidiary, except for
American Cellulose Corporation ("ACC"). The shares of stock of ACC included in
the Contributed Assets constitute 50% of the issued and outstanding shares of
stock of ACC, the remainder of which is owned as set forth on Schedule 3.16(c)
hereof. All shares of stock of the Contributed Subsidiaries included in the
Contributed Assets are validly issued, fully paid and non-assessable. Except as
set forth in the ACC Agreement (as hereinafter defined) (i) there are no
options, warrants, or similar rights to purchase any of the shares of any of the
Contributed Subsidiaries, and no obligations binding upon any Contributed
Subsidiary to issue, sell, redeem, purchase or exchange any of its capital stock
or any right relating thereto, and (ii) there are shareholders' agreements,
voting agreements, voting trusts or other agreements or rights of third parties
with respect to or affecting any of the Contributed Subsidiaries or any of their
shares of stock.
(d) The Contributed Assets and the assets of the Contributed
Subsidiaries are in operating condition and repair (subject to normal wear and
tear) and are in a condition to allow the continued conduct after the Closing by
Newco of the Containerboard Business as it is currently conducted in all
material respects.
3.17 Finders' Fees. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees will
be paid by TPI, there is no investment banker, broker or finder which has been
retained by or
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is authorized to act on behalf of TPI who might be entitled to any fee or
commission from PCA or Newco in connection with the transactions contemplated by
this Agreement.
3.18 Insurance. Schedule 3.18 attached hereto sets forth the
following information with respect to each insurance policy to which TPI, with
respect to the Containerboard Business, has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five years:
(a) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(b) the scope, period and amount of coverage; and
(c) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Schedule 3.18 also describes any self insurance arrangements affecting the
Containerboard Business.
3.19 No Undisclosed Liabilities. TPI does not have any material
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known to TPI, whether due or to become due and
regardless of when asserted) arising out of transactions entered into at or
prior to the Closing, or any action or inaction at or prior to the Closing, or
any state of facts existing at or prior to the Closing other than: (i)
liabilities set forth on the Most Recent Statement of Assets and Liabilities
(including any notes thereto, if any), (ii) liabilities and obligations arising
from or in connection with matters disclosed pursuant to TPI's representations
and warranties in this Agreement or in the Disclosure Memorandum (none of which,
except as set forth on Schedule 3.7, is a liability resulting from a breach of
contract, breach of warranty, tort, infringement claim or lawsuit), (iii)
liabilities and obligations which have arisen after September 30, 1998, in the
ordinary course of business (none of which, except as set forth on Schedule 3.7,
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim or lawsuit).
3.20 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither TPI nor
any other Person makes any other express or implied representation or warranty
on behalf of TPI.
3.21 Closing Date. The representations and warranties of TPI
contained in this Article III and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
certificate or other writing delivered by, or on behalf of, TPI pursuant to this
Agreement to PCA or Newco shall be true and correct in all respects on the
Closing Date as though then made, except as affected by the transactions
expressly contemplated by this Agreement. TPI shall have the right to update the
Schedules up to five Business days prior to Closing to reflect changes in the
Containerboard Business between the
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date hereof and the Closing Date, provided that such changes are actions taken
by TPI permitted under Section 5.2 without PCA's prior consent and that no such
changes shall be deemed to cure any breach that existed as of the date hereof
(none of which relates to any liability resulting from a breach of contract,
breach of warranty, tort, infringement claim or lawsuit).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PCA
PCA represents and warrants to TPI and Newco as follows:
4.1 Organization and Qualification. PCA is a limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite limited liability
company power and authority to own and operate and to carry on its business as
currently conducted. PCA is duly qualified to do business and is in good
standing as a foreign limited liability company in each jurisdiction where the
ownership of its properties or the operation of its business requires such
qualification.
4.2 Authorization. PCA has full power and authority to execute and
deliver this Agreement and each of the Ancillary Agreements, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
PCA of this Agreement and each of the Ancillary Agreements have been duly and
validly authorized and no additional authorization or consent is required in
connection with the execution, delivery and performance by PCA of this Agreement
and each of the Ancillary Agreements.
4.3 Consents and Approvals. Except as required by the HSR Act, no
consent is required to be obtained by PCA from, and no notice or filing is
required to be given by PCA to, or made by PCA with, any Governmental Authority
or other Person in connection with the execution, delivery and performance by
PCA of this Agreement and each of the Ancillary Agreements.
4.4 Non-Contravention. The execution, delivery and performance by
PCA of this Agreement and each of the Ancillary Agreements, and the consummation
of the transactions contemplated hereby and thereby, does not and will not (i)
violate any provision of the charter, bylaws or other organizational documents
of PCA or (ii) assuming compliance with the matters set forth in Section 4.3,
violate or result in a breach of or constitute a default under any law, rule,
regulation, judgment, injunction, order, decree or other restriction of any
court or governmental authority to which PCA is subject, including any
Governmental Authorization.
4.5 Binding Effect. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of PCA enforceable in
accordance with its terms, subject to
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bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
4.6 Finders' Fees. Except for fees payable pursuant to the
Commitment Letters and a fee in the amount of $15,000,000 to be paid to Madison
Dearborn Capital Partners, Inc. or its designated affiliates at Closing (the
"MDP Transaction Fee"), which fees will be paid by Newco, there is no fee or
commission payable from TPI or Newco to any investment banker, broker or finder
which has been retained by or is authorized to act on behalf of PCA or any
Subsidiary of PCA in connection with the transactions contemplated by this
Agreement.
4.7 Financial Capability.
(a) On the Closing Date PCA will have, sufficient funds to fund the
Cash Contribution.
(b) PCA has received the commitment letters with respect to the New
Financing Arrangements attached hereto as Schedule 4.7(b) (the "Commitment
Letters"). As of the date of this Agreement, the Commitment Letters are in full
force and effect and have not been amended or rescinded. The Commitment Letters
set forth, to the best of PCA's knowledge, to the extent customarily set forth
in commitment letters of such nature from such Persons, all the conditions to
and material terms of the New Financing Arrangements. PCA has paid all fees and
other amounts required by such Commitment Letters to be paid by it prior to the
Closing, which amounts may be reimbursed by Newco to PCA, or paid directly by
Newco, following Closing (provided that such reimbursement or any obligation
with respect thereto shall not be included or incorporated in, or reflected as a
Current Liability on, the Closing Working Capital Statement or the Final Working
Capital Statement).
4.8 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither PCA nor any
other Person makes any other express or implied representation or warranty on
behalf of PCA.
4.9 Closing Date. The representations and warranties by PCA
contained in this Article IV and elsewhere in this Agreement, and all
information contained in any exhibit, schedule or attachment hereto or in any
certificate or other writing delivered by, or on behalf of, PCA pursuant to this
Agreement to TPI or its representatives shall be true and correct in all
respects on the Closing Date as though then made, except as affected by the
transactions expressly contemplated by this Agreement.
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ARTICLE V
COVENANTS
5.1 Access. Prior to the Closing, TPI shall permit PCA and its
representatives to have full access, during regular business hours and upon
reasonable advance notice, to the Contributed Assets and the Containerboard
Business, subject to reasonable rules and regulations of TPI, and shall furnish,
or cause to be furnished, to PCA, any financial and operating data and other
information that is available with respect to the Containerboard Business, the
Contributed Assets, or the Assumed Liabilities as PCA shall from time to time
reasonably request. PCA shall abide by the terms of the Confidentiality
Agreement with respect to such access and any information furnished to it or its
representatives pursuant to this Section 5.1. Notwithstanding anything herein to
the contrary, PCA shall not be permitted to perform any invasive testing of any
of the Real Property without specific additional authorization from TPI (which
consent shall not be unreasonably withheld), or to perform any testing which
would cause a breach of any Real Estate Lease to which TPI is a party, provided
that, upon request from PCA, TPI shall use reasonable efforts to obtain any
necessary consent to permit such testing.
5.2 Conduct of Business. During the period from the date hereof to
the Closing, except as otherwise contemplated by this Agreement or as PCA shall
otherwise agree in writing in advance, TPI shall conduct the Containerboard
Business in the ordinary and usual course. During the period from the date
hereof to the Closing, except as otherwise expressly provided for in this
Agreement or as PCA shall otherwise consent (which consent shall not be
unreasonably withheld), with respect to the Containerboard Business, the
Contributed Assets or the Assumed Liabilities other than in the ordinary and
usual course or as set forth in Schedule 5.2, TPI shall not:
(a) enter into commitments for new capital expenditures in excess of
$10,000,000 in the aggregate to the extent not otherwise contemplated in the
1999 business plan for the Containerboard Business;
(b) dispose of or otherwise transfer, or incur, create or assume any
Encumbrance (other than Permitted Encumbrances) on (i) any individual fixed
asset of the Containerboard Business if the greater of the book value or the
fair market value of such fixed asset exceeds $1,000,000, or (ii) any group of
fixed assets of the Containerboard Business if the greater of the book value or
the fair market value of such fixed assets, taken as a whole and which in the
aggregate during such period, exceeds $2,500,000, and such dispositions or
transfers, in either case, are in the ordinary course of business;
(c) institute any material change in the methods of purchase, sale,
lease or accounting or engage in any activity which would accelerate the
collection of TPI's accounts or notes receivable, delay the payment of the TPI's
accounts payable, or reduce or otherwise
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restrict the amount of Inventory (including raw material, packaging,
work-in-process, or finished goods) on hand;
(d) acquire (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or material assets thereof;
(e) grant licenses of Intellectual Property to any Person or allow
registered Intellectual Property to lapse, expire or become abandoned;
(f) amend any Contributed Subsidiary's certificate of incorporation,
bylaws or other charter documents;
(g) grant (or agree to grant) any salary or wage increases or (as it
relates to employees of the Containerboard Business) materially change or amend
any employee benefit or welfare plan, other than pursuant to renegotiation of
any collective bargaining agreements in the normal course; or
(h) make any loans or advances to, guarantees for the benefit of or
investments in any Person, other than intercompany loans to Affiliates of TPI;
(i) agree, in writing or otherwise, to do any of the foregoing or to
take any other action which would be required to be disclosed in Schedule
3.6(e);
(j) enter into any transactions with Affiliates not in the ordinary
course of business consistent with past practice; and
(k) enter into any Contracts required to be disclosed hereunder,
other than timber leases, cutting rights agreements, and similar agreements
entered into in the ordinary course of business at fair value consistent with
past practices.
TPI will:
(a) use its commercially reasonable efforts to (A) preserve
intact the organization and goodwill of the Containerboard Business,
(B) keep available the services of its officers and employees as a
group (provided that such efforts shall not require TPI to pay any
bonuses or other amounts beyond normal compensation to such
persons), (C) maintain satisfactory relationships with its material
suppliers and customers and other Persons having business
relationships with it, and (D) maintain all Governmental
Authorizations;
(b) maintain its facilities and assets in good condition and
repair and replace its facilities and assets in a manner consistent
with past practices and
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make capital expenditures in the ordinary course of business in an
aggregate amount consistent with the 1999 Annual Operating Plan; and
(c) notify PCA of any emergency or other change in the normal
course of the Containerboard Business or in the condition of the
Contributed Assets or the Assumed Liabilities or the operation of
the Containerboard Business and of any governmental or third party
complaint, investigation or hearing (or communication indicating
that such a complaint, investigation or hearing is or may be
contemplated), if such emergency, change, complaint, investigation
or hearing could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
5.3 Reasonable Efforts. Each of TPI and PCA will use commercially
reasonable efforts to fulfill the conditions precedent to its respective
obligations hereunder and to secure as promptly as practicable all Consents
required to be obtained by it in connection with the transactions contemplated
hereby, and TPI and PCA will cooperate in all reasonable requests to fulfill the
conditions precedent to their and the other party's obligations described in
this Section 5.3. Without limiting the generality of the foregoing,
(a) TPI and PCA will file within 5 Business Days of the date hereof
the required notice (including all documentary materials) under the HSR Act and
promptly file any additional information requested as soon as practicable after
receipt of request therefor.
(b) PCA, TPI and Newco each shall use all reasonable efforts to
satisfy all conditions precedent in the Commitment Letters and to otherwise
obtain, on behalf of TPI and Newco, the New Financing Arrangements. TPI shall
use its reasonable efforts to cooperate with PCA in connection with the New
Financing Arrangements, including providing information to and permitting the
lenders and their representatives access to the Contributed Assets and the
Containerboard Business, as set forth in Section 5.1 hereof. Such information
shall include all existing title insurance polices and surveys for the Real
Property, to the extent such items are in TPI's reasonable control. In addition,
TPI shall provide affidavits and customary title insurance undertakings
(including gap and non-imputation undertakings) with respect to the Real
Property to the extent reasonably required by the title insurer. TPI shall have
the opportunity to review and participate in the preparation of the New
Financing Arrangements. The New Financing Arrangements shall be on the terms no
less favorable to Newco as set forth in the Commitment Letters. The New
Financing Arrangements shall provide (unless waived by TPI in its sole
discretion and notwithstanding any provision in the Commitment Letters) that:
(i) the PIK Preferred generally shall have the terms set forth
on Schedule 5.3, and that in the event the Deferred-Pay Financing
(as defined in the Commitment Letters) is not sold to the
underwriter, then (A) PCA and/or its designees will purchase $55
million of PIK Preferred, and (B) TPI and/or its designees will
receive $45 million of PIK Preferred without additional payment;
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(ii) the New Financing Arrangements shall not create a
security interest on any of TPI's assets, including the Contributed
Assets prior to their contribution to Newco hereunder; and
(iii) there are no materially adverse consequences to Newco
which arise under the terms of the New Financing Arrangements as a
result of a sale of all or a portion of TPI's equity interest in
Newco (e.g., such sale will not trigger a change of control
default), and there are no restrictions or limitations in the New
Financing Arrangements on TPI's ability to sell or transfer all or
any portion of TPI's equity interest in Newco; and
(iv) all of the proceeds of the New Financing Arrangements
(other than from the Deferred-Pay Financing) shall be initially
loaned to TPI, and thereafter assumed by Newco as the Assumed
Indebtedness, as set forth in the Preliminary Statements hereof.
In addition, the material terms of the New Financing Arrangements (taken as a
whole) shall be as favorable to Newco and TPI as financing arrangements then
reasonably available in the financial markets to Newco in connection with the
transactions contemplated hereby. In the event TPI is not reasonably satisfied
with the New Financing Arrangements because the condition in the immediately
preceding sentence has not been met, then TPI's sole remedy will be to arrange
for substitute New Financing Arrangements on terms which are in all material
respects no less favorable to Newco or PCA than under the proposed New Financing
Arrangements. TPI shall have the right, at TPI's sole discretion, to direct PCA
to make the necessary elections under the New Financing Arrangements (i) to
cause Newco to obtain a commitment for the Bridge Loan (defined in the
Commitment Letters), provided that if TPI makes such election, TPI shall pay the
1.5% Commitment Fee attributable to such Bridge Loan as set forth in the
Commitment Letters, with Newco paying any other fees or costs associated with
such Bridge Loan, and (ii) direct that all of the New Financing Arrangements
initially be at the TPI level or to direct that a portion of such New Financing
Arrangements initially be at the Newco level, to the extent PCA has the right to
make such elections in the Commitment Letters. PCA shall make such elections as
directed in writing by TPI, and shall not make such elections absent such
directions from TPI.
(c) TPI shall use its commercially reasonable efforts to obtain
prior to the Closing fee simple title to all of the Purchased Property.
5.4 Covenants Regarding Employees.
(a) At Closing, TPI and Newco shall enter into the Human Resources
Agreement, and shall take all actions required by them pursuant to such Human
Resources Agreement.
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(b) Tenneco shall retain sponsorship of the Tenneco Plans, and
neither Newco nor PCA shall be entitled to any assets of the Tenneco Plans.
(c) For a period of three years from the Closing Date, other than
pursuant to the Human Resources Agreement.
(i) neither Newco, PCA nor any Affiliate of Newco will
contact, solicit, induce or encourage any employee of TPI or any
Affiliate of TPI, to leave such employment, or contact, solicit or
approach any employee of TPI or any Affiliate of TPI for the purpose
of offering employment to or hiring (whether as an employee,
consultant, independent contractor or otherwise) without the prior
written consent of TPI, and
(ii) TPI will not contact, solicit, induce or encourage any
employee of Newco or any Affiliate of Newco to leave such
employment, or contact, solicit or approach any employee of Newco
for the purpose of offering employment to or hiring (whether as an
employee, consultant, independent contractor or otherwise) without
the prior written consent of Newco.
The foregoing clauses (i) and (ii) shall not apply to any employee who shall
contact or approach such Person in response to a general solicitation for
employment.
5.5 Compliance with WARN and Similar Laws. TPI and Newco do not
anticipate that there will be any major employment losses as a consequence of
the transactions contemplated by this Agreement and the Human Resources
Agreement that might trigger obligations under the Worker Adjustment and
Retraining Notification ("WARN") Act, 29 U.S.C. Section 2101 et seq., or under
any similar provision of any federal, state, regional, foreign, or local law,
rule, or regulation (referred to collectively as "WARN Obligations").
Nevertheless, to the extent that any WARN Obligations might arise as a
consequence of the transactions contemplated by this Agreement, it is agreed
that Newco will timely give all notices required to be given under WARN or other
similar statutes or regulations of any jurisdiction relating to any plant
closing or mass layoff or as otherwise required by any such statute. For this
purpose, Newco shall be deemed to have caused a mass layoff if the mass layoff
would not have occurred but for Newco's failure to employ the employees of the
Containerboard Business in accordance with the terms of this Agreement and the
Human Resources Agreement.
5.6 Further Assurances. At any time after the Closing Date, TPI, PCA
and Newco shall promptly execute, acknowledge and deliver any other assurances
or documents reasonably requested by Newco, PCA or TPI, as the case may be, and
necessary for them or it to satisfy their or its respective obligations
hereunder or obtain the benefits contemplated hereby. Without limiting the
generality of the foregoing, Newco agrees that if any of the Contributed
Subsidiaries are found to own assets that are not part of the Contributed Assets
(that is, such assets are not Related to the Containerboard Business), or if any
Retained
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Assets are inadvertently transferred to Newco, Newco shall transfer such assets
to TPI , or as TPI shall direct, at TPI's expense but without consideration.
Similarly, if after the Closing TPI identifies any assets that should have been
transferred to Newco as part of the Contributed Assets, but were not, TPI shall
transfer such assets to Newco at TPI's expense without further consideration.
5.7 Use of Tenneco Marks. Except as set forth in this Section 5.7,
after the Closing Newco shall not use the Tenneco Marks, except that for a
period of one year following the Closing Date Newco may (a) continue to produce
materials with such Tenneco Marks until changes can be made to plates, molds,
and similar items so as to allow Newco to produce materials without such Tenneco
Marks, (b) use the Tenneco Marks on products, labels, packaging and promotional
materials that are in existence as of the Closing Date or produced pursuant to
clause (a) above, and (c) use signage, invoices and stationery in existence as
of the Closing Date bearing a Tenneco ▇▇▇▇. Subject to the preceding sentence,
Newco shall cease using the Tenneco Marks as soon as possible after closing
during such one year period and, following the periods described above, Newco
shall cease all use of any Tenneco Marks.
5.8 Certain Matters Related to Retained and Assumed Liabilities.
(a) With respect to all Retained Liabilities, Newco Indemnified
Parties shall, at TPI's expense, reasonably cooperate with TPI, provide TPI as
promptly as possible with notices and other information received by such parties
as well as all relevant materials, information and data requested by TPI and
shall grant TPI, without charge, reasonable access to employees of the
Containerboard Business and to the Real Property.
(b) With respect to all Assumed Liabilities, TPI Indemnified Parties
shall, at Newco's expense, reasonably cooperate with Newco, provide Newco as
promptly as possible with notices and other information received by such parties
as well as all relevant materials, information and data requested by Newco and
shall grant Newco, without charge, reasonable access to employees of TPI.
5.9 Intercompany Agreements. In the period between execution of this
Agreement and the Closing, TPI shall terminate and shall cause its Affiliates to
terminate, any and all agreements (i) between TPI, on one hand, and any of the
Contributed Subsidiaries, on the other hand, or (ii) between TPI, on one hand,
and any of TPI's Affiliates, on the other hand, to the extent such agreements
Relate to the Containerboard Business. Without limiting the generality of the
foregoing, all intercompany loans and Non-Trade accounts receivable and
Non-Trade accounts payable between TPI, and any of its Affiliates, on one hand,
and any of the Contributed Subsidiaries, on the other hand, shall be eliminated
via dividend or capital contribution.
5.10 Records and Retention and Access. Newco shall keep and preserve
in an organized and retrievable manner the Books and Records for at least seven
years from the Closing Date. Newco shall neither dispose of nor destroy such
Books and Records without
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first offering to turn over possession thereof to TPI by written notice to TPI
at least thirty (30) days prior to the proposed date of such disposition or
destruction. While such Books and Records remain in existence, each party shall
allow the other party, its representatives, attorneys and accountants, if
accompanied by the party's tax representatives, accountants or attorneys, at the
requesting party's expense, access to the Books and Records upon reasonable
request and advance notice and during normal business hours for the purpose of
interviewing, examining and copying in connection with such parties' preparation
of financial .
5.11 Insurance.
(a) TPI shall use commercially reasonable efforts to assign to
Newco, to the fullest extent, all of the benefits and rights under any insurance
policies held by TPI and/or any of its Affiliates with respect to any Losses
arising out of, related to or in connection with the Contributed Assets, the
Assumed Liabilities and the Containerboard Business with respect to events
occurring prior to the Closing Date. Newco shall have the right to such benefits
and rights only to the extent actually paid or payable, and exclusive of any
deductibles (including pass through deductibles for which TPI or any Affiliate
is required to reimburse the insurer). To the extent such assignment is not
permitted, TPI shall use commercially reasonable efforts on Newco's behalf to
obtain such proceeds or benefits for Newco, or otherwise to provide Newco with
the benefit equivalent to that which would have been available had such
assignment been permitted. (b) TPI shall cooperate with Newco in obtaining
insurance policies for the Containerboard Business to be in effect from and
after Closing. Notwithstanding such assistance, all decisions with respect to
such policies shall be made solely by Newco, and TPI shall not have any
liability, whether to Newco or to any other Person, whether as an advisor,
broker or otherwise, under any other theory, in connection with providing such
assistance and cooperation. TPI makes no assurances whatsoever with respect to
such insurance coverage, including the availability or price thereof.
5.12 Noncompetition. From and after the Closing:
(a) Noncompetition. In consideration of the mutual covenants
provided for herein, during the period beginning on the Closing Date and ending
on the fifth anniversary of the Closing Date (the "Noncompete Period"), neither
TPI nor any of its Affiliates shall (i) sell containerboard or corrugated
products (other than the sale of folding carton and honeycomb paperboard-type
products), or otherwise engage in the business of the Containerboard Business
(as conducted as of Closing), anywhere within the United States, or (ii) induce
or attempt to induce any customer or other business relation of Newco or any of
its Affiliates to terminate such relationship with Newco; provided that TPI
shall not deemed to be competing in violation of this Section 5.12 by virtue of
its or their (x) ownership of less than 5% of the outstanding stock of any
publicly-traded corporation, (y) acquisition of any Person (whether by asset
purchase, stock purchase, merger or otherwise) engaged in the sale of
containerboard or corrugated products if such sales are not such Person's
primary business and such sales are less than $100 million per year; and (z)
sales of goods or services other than sales of goods or
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services made in the Containerboard Business as of the Closing Date (e.g., sales
of plastic, foam, molded fiber, folding carton, honeycomb paperboard-type
products and other products not sold by the Containerboard Business as of the
Closing Date). This Section 5.12 shall not apply to any entity which might
acquire TPI, or any Affiliate of TPI, or any assets or division of TPI, subject
to the terms of the Stockholders Agreement.
(b) Severability. The parties hereto agree that the covenant set
forth in Section 5.12(a) is reasonable with respect to its duration,
geographical area and scope. If the final judgment of a court of competent
jurisdiction declares that any term or provision of Section 5.12(a) is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(c) Remedy for Breach. TPI, PCA and Newco acknowledge and agree that
in the event of a breach of any of the provisions of this Section 5.12, monetary
damages shall not constitute a sufficient remedy. Consequently, in the event of
any such breach, PCA, Newco and/or their respective successors or assigns may,
in addition to other rights and remedies existing in their favor, apply to any
court of law or equity of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce or prevent any violation of the
provision hereof.
5.13 Exclusivity. TPI and Tenneco will not, and will not permit or
cause their respective officers, directors, agents and Affiliates to, discuss a
possible sale or other disposition of all or any part of the assets of the
Containerboard Business other than the sale of Inventory in the ordinary course
of business or other sales or dispositions permitted by this Agreement (whether
by merger, reorganization, recapitalization or otherwise) with any party other
than PCA and its Affiliates (an "Acquisition Proposal"), or provide any
information to any other party regarding the Containerboard Business other than
information which is traditionally provided in the regular course of its
business operations to third parties where TPI or Tenneco and its officers,
directors, agents and Affiliates have no reason to believe that such information
may be utilized to evaluate a possible sale or other disposition of the
Containerboard Business. TPI and its officers, directors and Affiliates (i) do
not have any agreement, arrangement or understanding with any third party with
respect to any Acquisition Proposal (other than confidentiality agreements),
(ii) will cease and cause to be terminated any and all discussions with third
parties regarding any Acquisition Proposal and (iii) will promptly notify PCA if
any Acquisition Proposal, or any inquiry or contact with any Person or entity
with respect thereto, is made.
5.14 Delivery of Most Recent Year End Statement and the Stub Period
Statements and Regulation S-X Financial Statements. As soon as practicable, but
in any
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event no later than March 31, 1999 TPI will deliver to PCA a copy of the Most
Recent Year End Statement, which statements shall be attached as part of
Schedule 3.6. Prior to the Closing, TPI shall furnish or shall cause TPI's
independent accountants to furnish audited financial statements for the
Containerboard Business for the years ended December 31, 1996, 1997 and 1998 in
a form meeting the requirements of Regulation S-X of the Securities Act of 1933,
as amended ("Regulation S-X"). In addition, prior to the Closing, or as soon as
practicable thereafter in the case of (iii) below, TPI shall provide to Newco:
(i) unaudited selected financial data as of and for the years ended December 31,
1994 and 1995 (as described in Regulation S-K of the Securities Act of 1933, as
amended); (ii) unaudited condensed combined statements of assets, liabilities
and interdivision account as of March 31, 1998, June 30, 1998, and September 30,
1998, and the related unaudited condensed combined statements of revenues,
expenses and interdivision account and cash flows for the three months ended
March 31, 1998, the three and six months ended June 30, 1998, and the three and
nine months ended September 30, 1998; and (iii) in the event the Closing Date is
later than March 31, 1999, unaudited condensed combined statements of assets,
liabilities and interdivision account and the related unaudited condensed
combined statements of revenues, expenses and interdivision account and cash
flows for any interim periods as are required by Regulation S-X. The financial
statements and financial data in (i) through (iii) are collectively known as the
"Regulation S-X Financial Statements." The Regulation S-X Financial Statements
will be prepared in accordance with GAAP and in a form meeting the requirements
of Regulation S-X for Newco's or its Subsidiaries' registration statement and
any amendments thereto in connection with the New Financing Arrangements.
5.15 Consent of TPI Auditors. TPI shall use its commercially
reasonable efforts to obtain prior to the Closing the written agreement (the
"Auditor Consent Letter") of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("AA") to permit the use of the
Audited Financial Statements and any applicable Stub Period Financial Statements
(a) in connection with Newco's offerings of securities as contemplated by the
Commitment Letters, and (b) subject to AA's normal procedures, in other private
or public offerings of securities as may be reasonably requested by Newco. In
addition, TPI will use commercially reasonable efforts to cause AA to provide a
comfort letter in accordance with SAS 72 for any such offering.
5.16 Covenant Regarding ▇▇▇▇▇▇▇▇ Road Property. Prior to the
Closing, TPI shall permit PCA and its representatives to have full access, in
accordance with Section 5.1 hereof, to the ▇▇▇▇▇▇▇▇ Road Property for the
purposes of conducting such due diligence review of such property as PCA
reasonably deems appropriate. If, based upon such review, PCA identifies any
existing environmental conditions the reasonable costs of addressing which could
reasonably be expected to exceed $1,000,000 within five years from the Closing
Date, PCA may, in its sole discretion, elect to instruct TPI to retain the
▇▇▇▇▇▇▇▇ Road Property, in which case, the ▇▇▇▇▇▇▇▇ Road Property shall
constitute Retained Real Property rather than Owned Real Property for purposes
hereof and TPI shall be deemed to have consented to the appropriate revisions to
the Schedules and any other necessary amendments to this Agreement to reflect
such election.
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5.17 Post Closing Sales of Management Stock. If (i) TPI has
delivered PCA a Dilution Notice in accordance with the terms hereof and (ii) any
members of management purchase Management Stock in the 120-day period following
the Closing Date, then either (x) TPI shall sell shares of its Common Stock to
such members of management, on the same terms as Newco would sell such shares,
provided that such sales by TPI would not violate any state and federal
securities laws and are in compliance with and pursuant to an exemption from
registration under all state and federal securities laws, or (y) in the event
that such sales by TPI cannot be implemented due to such restrictions in the
foregoing clause (x), Newco shall sell such shares of Common Stock to such
members of Management, and shall simultaneously redeem from TPI one share of
Common Stock for each share sold to such Persons, at a redemption price per
share equal to the per share price paid by the Persons purchasing such
Management Stock (provided such amount is equal to the price per share paid for
Common Stock purchased by PCA at Closing hereunder), provided such sales and
redemptions are permitted under the New Financing Arrangements. Any shares sold
by TPI under this Section 5.17 shall not be subject to, or entitle the holder to
any of the benefits of, the Stockholders Agreement or the Registration Rights
Agreement.
5.18 Certain Litigation and Claims. TPI shall indemnify Newco if and
to the extent any Losses for the following matters exceeds the following
amounts:
Matter No. 3.A on Schedule 3.7: $350,000
Matter No. 1.K on Schedule 3.7: $150,000
Matter No. 2.F on Schedule 3.7: $250,000
Newco shall use its commercially reasonable efforts to settle or otherwise
resolve such matters, in accordance with Newco's reasonable business judgment,
for the least amount practical. Upon request, Newco will inform TPI as to the
status of such matters. In the event Newco proposes a definitive settlement, for
which a settlement agreement has been agreed to by all of the other parties
thereto, that TPI does not approve, Newco may pay TPI the amount of such
settlement (up to the aforesaid limits), and TPI shall be responsible for, and
indemnify Newco from and against, all Losses in connection with such matters
5.19 ACC.
(a) The parties acknowledge that the shares of ACC held by TPI
are subject to the terms and conditions set forth in that certain
Subscription and Shareholders Agreement dated as of August 21, 1989,
between ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and TPI (the "ACC Agreement"), a
true and complete copy of which has been previously delivered to
PCA.
(b) Within 30 days from the date hereof, Newco shall instruct
TPI to (i) seek ▇▇▇▇▇'▇ consent to the transfer of the ACC shares to
Newco without triggering the provisions of Section 5.1 or 5.2 of the
ACC Agreement, (ii) deliver an Offering Notice (as defined in the
ACC Agreement) to ▇▇▇▇▇ under Section 5.1 of
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the ACC Agreement with respect to the proposed transfer of the ACC
shares to Newco, at a price to be reasonably determined (based upon
estimated fair market value) by TPI and Newco, granting ▇▇▇▇▇ a
right of first refusal to purchase the shares of ACC owned by TPI at
such price on the terms set forth in Section 5.1 of the ACC
Agreement, or (iii) deliver a Notice of Purchase (as defined in the
ACC Agreement) to ▇▇▇▇▇ under Section 5.2 of the ACC Agreement, at a
price determined by Newco, granting ▇▇▇▇▇ the right to purchase
TPI's shares of ACC at such price, and requiring TPI to purchase
▇▇▇▇▇'▇ shares at such price if ▇▇▇▇▇ does not elect to purchase
TPI's shares.
(c) If ▇▇▇▇▇ consents to the transfer of the ACC shares to
Newco, or if an Offering Notice is given pursuant to Section
5.19(b)(ii) and ▇▇▇▇▇ does not elect to purchase TPI's shares of
ACC, such shares shall be contributed to Newco as part of the
Contributed Assets. If an Offering Notice is given pursuant to
Section 5.19(b)(ii) or a Notice of Purchase is given pursuant to
Section 5.19(b)(iii) and ▇▇▇▇▇ elects to purchase TPI's shares of
ACC, TPI shall sell such shares to ▇▇▇▇▇ and Newco shall receive the
proceeds thereof. If a Notice of Purchase is given pursuant to
Section 5.19(b)(iii) and ▇▇▇▇▇ does not elect to purchase TPI's
shares of ACC, Newco shall purchase ▇▇▇▇▇'▇ shares of ACC, and TPI's
shares of ACC shall be contributed to Newco as part of the
Contributed Assets.
(d) In no event shall the Cash Contribution, the Cash
Distribution, or the stock issuances contemplated by this Agreement
be effected by the disposition or transfer of the ACC shares.
5.20 Write Down. Prior to Closing, TPI will write down the
Contributed Assets to fair market value based on the value of the consideration
received by TPI pursuant to this Contribution Agreement unless prohibited by
GAAP. The parties agree that 100% of the Common Stock of Newco will have a fair
market value of $430 million immediately after the transactions contemplated by
this Agreement.
5.21 Newco Right to Assume Certain Contracts. Newco shall have the
right to assume any Contract not included in the Assumed Liabilities by reason
of the exclusion in Section 1.1(j)(i) thereof. Newco must assume or reject such
Contract within 30 days after discovery or notice of such Contract. If Newco
assumes such Contract, such Contract shall be included in the Contributed
Assets. Any such assumption must be for all benefits and obligations under the
Contract arising from and after the date of assumption, provided that,
notwithstanding such assumption, TPI shall be liable for performance of all
obligations incurred prior to the date of assumption, and shall indemnify Newco
against any and all Losses attributable to such Contract arising or based on
event occurring prior to the date on which Newco elects to assume such Contract.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of PCA and TPI. The obligations of
the parties hereto to effect the Closing and otherwise under Article II hereof
are subject to the satisfaction (or waiver by both PCA and TPI) prior to the
Closing of the following conditions:
(a) HSR Act. All filings under the HSR Act shall have been made and
any required waiting period under such laws (including any extensions thereof
obtained by request or other action of any governmental authority) applicable to
the transactions contemplated hereby shall have expired or been earlier
terminated.
(b) No Injunctions. No court or governmental authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, non-appealable judgment, decree, injunction or other
order which is in effect on the Closing Date and prohibits the consummation of
the Closing.
6.2 Conditions to the Obligations of PCA. The obligations of PCA to
effect the Closing and otherwise under Article II hereof are subject to the
satisfaction (or waiver by PCA) prior to the Closing, of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of TPI contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all respects as of
the Closing, as if made as of the Closing (except that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date), except to the extent the failure of any such
representations or warranties to be true and correct in all respects could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and PCA shall have received a certificate to such effect dated
the Closing Date and executed by a duly authorized officer of TPI.
(b) Covenants. The covenants and agreements of TPI to be performed
on or prior to the Closing shall have been duly performed in all material
respects, and PCA shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of TPI.
(c) Most Recent Year End Statement. TPI shall have delivered the
Most Recent Year End Statement to PCA prepared and presented in accordance with
Sections 3.6 and 5.14 and on a consistent basis with the audited financial
statements for the year ended December 31, 1997. The Most Recent Year End
Statement shall demonstrate Adjusted EBITDA, as described in this Section
6.2(c), of at least $309.8 million. Adjusted EBITDA is defined as operating
profit adjusted for the following items (if reflected in Most Recent Year
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End Statement): plus (i) interest expense, plus (ii) depreciation, depletion and
amortization expenses, plus (iii) lease expense related to leases terminated as
a result of the transaction, minus (iv) amortization of deferred gain on
refinanced leases included in operating profit, plus (v) the amount of corporate
allocations minus management's estimate of total divisional and corporate
overhead costs ($69.2 million) plus divisional overhead costs, plus (vi) charge
related to the 1998 restructuring included in operating profit, and plus (vii)
rebates TPI or its Affiliates included in operating profit. An example of the
foregoing calculation is set forth on Schedule 6.2(c).
(d) New Financing Arrangements; No Liens or Indebtedness. PCA shall
have obtained, on behalf of TPI for assignment to and assumption by Newco at
Closing, the New Financing Arrangements under which TPI is to be the initial
borrower, and shall have obtained on behalf of Newco all other New Financing
Arrangements, in each case as described in the Commitment Letters or otherwise
on a basis reasonably satisfactory to PCA and TPI (as provided in Section
5.3(b)), and all conditions to funding under the New Financing Arrangements
shall have been satisfied or waived by requisite lenders thereunder. Each of the
Contributed Assets shall be free and clear of all Encumbrances other than
Permitted Encumbrances, and the Containerboard Business shall not have or be
liable for any indebtedness (meaning, for purposes hereof, any indebtedness for
borrowed money or any other obligation that is fixed as to amount or certainty),
or obligation giving rise to any lien on any of the Contributed Assets (other
that the Permitted Encumbrances) other than the Assumed Indebtedness. The
Purchased Property and all other Contributed Assets shall be free and clear of
all Encumbrances with respect to Existing Financing Arrangements.
(e) No Material Adverse Change. Since the date of the Most Recent
Statement of Assets and Liabilities, the Containerboard Business shall not have
suffered a Material Adverse Change.
(f) TPI Required Consents. TPI shall have obtained and delivered
copies to PCA of all Required Consents identified on Schedule 3.3 and any other
Consents reasonably indicated by PCA or Newco's lenders in connection with the
New Financing Arrangements as required for the continued operation of the
Containerboard Business by Newco following Closing in accordance with past
practices.
(g) Senior Management Arrangements. Newco shall have entered into an
employment arrangement with ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ on the terms set forth in that
certain letter dated January 25, 1999, between PCA and ▇▇. ▇▇▇▇▇▇, and as of
Closing ▇▇. ▇▇▇▇▇▇ shall confirm that he is willing to serve in the capacity and
on the terms set forth in such letter.
(h) Resignation of Officers and Directors. All officers and
directors of the Contributed Subsidiaries shall resign, effective as of the
Closing, except as PCA shall otherwise request.
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(i) Closing Documents. TPI and Newco shall have executed and
delivered to Newco and PCA all of these documents, instruments, agreements and
other deliveries described in Sections 2.4(a) and 2.4(c).
(j) Estoppel Certificates. TPI shall have obtained and delivered
estoppel certificates with respect to those sites for which estoppel
certificates shall have been requested by the lenders in connection with the New
Financing Arrangements.
(k) Lemelson Settlement. Either (i) Newco shall have received from
the Lemelson Foundation Partnership, either directly or through TPI, a
royalty-free license or sublicense under all patents relating to machine vision,
bar coding or flexible manufacturing that either have issued, or that in the
future may issue, with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as a named inventor and which patents
are now, or in the future may be owned by, or able to be licensed by, the
Lemelson Foundation Partnership (collectively the "Lemelson Patents") and such
license or sublicense shall include the right for Newco to make, use, sell
and/or lease any and all products, apparatus, methods and services of the
Containerboard Business, subject to any additional terms and conditions included
in the royalty-free license (or sublicense), or (ii) in the event such a license
or sublicense is not obtained by Closing, TPI shall defend indemnify and hold
harmless the PCA Indemnified Parties from, against and in respect of any claim
of infringement of the Lemelson Patents asserted against any of the PCA
Indemnified Parties, directly or indirectly, relating to or arising out of Newco
making, using, selling and/or leasing products, apparatus, methods and services
of the Containerboard Business; provided TPI's obligations hereunder shall apply
only to the extent of the levels of production of the Containerboard Business
affected by the Lemelson Patents as of the Closing Date.
(l) Auditor Consent Letter. TPI shall have obtained and delivered a
copy to PCA of the Auditor Consent Letter and related "cold comfort" letter for
the financing arrangements contemplated as part of the New Financing
Arrangements, each of which shall be in form and substance reasonably
satisfactory to PCA.
(m) Existing Financing Arrangements; Leased Real Property. TPI shall
have delivered to PCA, in form and substance reasonably satisfactory to PCA,
evidence that all of the obligations arising under or related to the Existing
Financing Arrangements have been paid and satisfied in full and that TPI has
obtained a fee simple interest in all of the Purchased Property, free and clear
of all Encumbrances other than Permitted Encumbrances, but free and clear of all
Encumbrances in connection with the Existing Financing Arrangements.
(n) No Shared Facilities. Except as provided in the Facility Use
Agreement and for the Transition Real Property, none of the Owned Real Property
or the Leased Real Property or other assets of the Containerboard Business shall
be owned, used or occupied in whole or in part by TPI or any of its Affiliates
other than in connection with the operation of the Containerboard Business.
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6.3 Conditions to the Obligations of TPI. The obligations of TPI to
effect the Closing and otherwise under Article II hereof are subject to the
satisfaction (or waiver by TPI) prior to the Closing of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of PCA contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all respects as of
the Closing, as if made as of the Closing (except that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date), except to the extent the failure of any such
representations or warranties to be true and correct in all respects, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and TPI shall have received a certificate to such effect dated
the Closing Date and executed by a duly authorized officer of PCA.
(b) Covenants. The covenants and agreements of PCA to be performed
on or prior to the Closing shall have been duly performed in all material
respects, and TPI shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of PCA.
(c) New Financing Arrangements. PCA shall have obtained on behalf of
TPI, for assignment to and assumption by Newco at Closing, the New Financing
Arrangements under which TPI is to be the initial borrower and all conditions to
funding such New Financing Arrangements shall have been satisfied or waived. PCA
shall have obtained on behalf of Newco all other New Financing Arrangements and
all conditions to funding under such New Financing Arrangements shall have been
satisfied or waived.
(d) Management Incentive Plan. Any stock option, management
incentive, stock appreciation, phantom stock, or other similar plan established
for Newco's management as of the Closing whereby such persons receive, or
receive options or rights to acquire, any equity in Newco or equity-based
compensation shall provide that the maximum amount of equity or equity
equivalents (such as stock appreciation rights or phantom stock) that may be
earned, acquired, paid or distributed under such plan, together with Management
Stock issued at the Closing or within 120 days following Closing, shall not
exceed 9.8% of the outstanding equity (in a fully diluted basis) of Newco.
(e) Closing Documents. PCA and Newco shall have executed and
delivered to TPI and Newco, all of those documents, instruments, agreements and
other deliveries described in Section 2.4(b) and Section 2.4(i).
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ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 Survival. The representations and warranties contained in this
Agreement shall survive the Closing (regardless of any investigation, inquiry or
examination made by or on behalf of, or any knowledge of any party hereto or the
acceptance of any party or on its behalf of a certificate and opinion) for the
respective periods (each, a "Survival Period") set forth in this Section 7.1.
All of the representations and warranties of TPI contained in this Agreement and
all claims and causes of action with respect thereto shall terminate upon
expiration of the 18 month period commencing on the Closing Date, except that
(a) the representations and warranties set forth in Section 3.8 shall survive
until the expiration of the applicable statute of limitation (including any
extension thereof), (b) the representations and warranties set forth in Sections
3.1-3.5, 3.16(a)-(c), 3.17, and 4.1-4.6 shall have no expiration date and (c)
the representations and warranty set forth in Section 3.19 shall survive only
until Closing. Any claim for indemnification for breach of a representation and
warranty must be made during the applicable Survival Period. In the event notice
of any claim for indemnification for a breach of a representation or warranty is
given (within the meaning of Section 10.1) within the applicable Survival
Period, an Indemnifying Party's obligations with respect to such indemnification
claim shall survive until such time as such claim is finally resolved.
7.2 Indemnification by PCA and Newco.
(a) PCA shall indemnify, defend and hold harmless TPI, its
Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, members, attorneys, accountants, agents and employees
and their heirs, successors and assigns (the "TPI Indemnified Parties") from,
against and in respect of any damages, claims, losses, charges, actions, suits,
proceedings, deficiencies, Taxes, interest, penalties, and reasonable costs and
expenses (including reasonable attorneys' fees, removal costs, remediation
costs, closure costs, fines, penalties and expenses of investigation and ongoing
monitoring) (collectively, the "Losses") imposed on, sustained, incurred or
suffered by or asserted against any of the TPI Indemnified Parties, directly or
indirectly, relating to or arising out of (i) subject to Section 7.2(c), any
breach of any representation or warranty made by PCA contained in this
Agreement, and (ii) the breach of any covenant or agreement of PCA contained in
this Agreement.
(b) Newco shall indemnify, defend and hold harmless the TPI
Indemnified Parties and the PCA Indemnified Parties from, against and in respect
of any Losses imposed on, sustained, incurred or suffered by or asserted against
any of the TPI Indemnified Parties or the PCA Indemnified Parties, directly or
indirectly, relating to or arising out of (i) the breach of any covenant or
agreement of Newco contained in this Agreement, and (ii) the Assumed
Liabilities; provided that Newco shall have no indemnification obligations
hereunder in respect
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of Losses incurred or suffered by a Person solely in such Person's capacity as
an equity holder or a debt holder (such as a diminution of value of such equity
or debt) of Newco.
(c) PCA shall not be liable to the TPI Indemnified Parties for any
Losses with respect to the matters contained in Section 7.2(a)(i) except to the
extent (and then only to the extent) the Losses therefrom exceed an aggregate
amount equal to $12,500,000 (the "Deductible"), and then only for all such
Losses in excess thereof up to an aggregate amount equal to $150,000,000 (the
"Cap"); provided that Losses from breaches of the representations and warranties
in Sections 4.1-4.6 shall not be subject to the Cap and the Deductible.
(d) TPI acknowledges that this Article VII constitutes TPI's sole
remedy against PCA or Newco with respect to any of the matters referred to
herein other than with respect to claims based on fraud, including any Losses or
liability under any Environmental Law or with respect to any Hazardous
Substances, and expressly waives any other rights or causes of action, including
under any Environmental Law or with respect to any claim involving the presence
of or exposure to any Hazardous Substances.
7.3 Indemnification by TPI.
(a) TPI shall indemnify, defend and hold harmless Newco, PCA, their
Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, members, lenders, attorneys, accountants, agents and
employees and their heirs, successors and assigns (the "PCA Indemnified Parties"
and, collectively with the TPI Indemnified Parties, the "Indemnified Parties")
from, against and in respect and to the extent of any Losses imposed on,
sustained, incurred or suffered by or asserted against each of the PCA
Indemnified Parties, directly or indirectly, relating to or arising out of
(i) subject to Section 7.3(b), any breach of any
representation or warranty made by TPI contained in this Agreement;
(ii) the Retained Liabilities;
(iii) the breach of any covenant or agreement of TPI contained
in this Agreement;
(iv) provided such claim is made during the 18-month period
commencing on the Closing Date, any liabilities from any Losses
arising from, related to or incurred in connection with any state of
facts or conditions or transactions (or series of facts, conditions
or transactions) existing at or prior to the Closing Related to the
Containerboard Business, other than (A) the Assumed Indebtedness,
(B) the liabilities reflected on the Final Working Capital
Statement, (C) liabilities and obligations disclosed pursuant to
TPI's representations or warranties in this Agreement or in the
Disclosure Memorandum (none of which relates to any liability
resulting from a breach
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of contract, breach of warranty, tort, infringement claim or
lawsuit), (D) matters arising from or in connection with the matters
disclosed on Schedule 3.7 or Schedule 3.11, and (E) other
liabilities incurred in the ordinary course of business (none of
which is or relates to any liability resulting from a breach of
contract, breach of warranty, tort, infringement claim or lawsuit);
provided, however, that if a liability for a matter which for
indemnification is sought under this clause (iv) would also
constitute a breach of a representation or warranty of TPI in
Article III hereof (other than Section 3.19), TPI's sole obligation
with respect to such liability, if any, shall be determined pursuant
to Section 7.3(a)(i) hereof and not this Section 7.3(a)(iv), and
provided further that TPI shall not have any liability with respect
to a matter that is the subject of a representation and warranty
hereunder but which was not required to be disclosed hereunder or in
the Disclosure Memorandum due to the specific thresholds or
exclusions included in such representation and warranty; and
(v) any liabilities arising with respect to the matters
described in Section 6.2(k)(ii).
Newco and PCA acknowledge that Section 5.12(c), Section 5.18, and this Article
VII constitute Newco's and PCA's sole remedy with respect to any of the covered
by this Article VII, other than with respect to claims based on fraud, including
any Losses or liability under any Environmental Law or with respect to any
Hazardous Substances and expressly waives any other rights or causes of action,
including under any Environmental Law or with respect to any claim involving the
presence of or exposure to any Hazardous Substances.
(b) TPI shall not be liable to the PCA Indemnified Parties for any
Losses with respect to the matters contained in Section 7.3(a)(i) except to the
extent (and then only to the extent) the Losses therefrom exceed an aggregate
amount equal to the Deductible, and then only for all such Losses in excess
thereof up to an aggregate amount equal to the Cap; provided that Losses from
breaches of the representations and warranties in Sections 3.1-3.5, 3.8,
3.16(a)-(c) and 3.17 shall not be subject to the Cap or the Deductible. TPI
shall not be liable to the PCA Indemnified Parties for any Losses for which and
to the extent (and only to the extent) a reserve is specifically provided on the
Final Working Capital Statement that was not specifically provided in the Most
Recent Statement of Assets or Liabilities, or to the extent of any increase in
any such reserve on the Final Working Capital Statement from the amount of such
reserve on the Most Recent Statement of Assets and Liabilities. In order to
avoid double counting, the portion of any Loss incurred or sustained by Newco
and PCA, respectively, will be determined after giving effect to indemnification
payments (if any) made in respect of such Loss to the other Person. In the event
of a breach of the representation contained in Section 3.8(h), the amount of any
Loss shall be determined in the same manner in which Tax Benefits are determined
under Section 7.6.
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7.4 Indemnification Procedures.
(a) Any Indemnified Person making a claim for indemnification
pursuant to Section 7.2 or 7.3 above must give the party from whom
indemnification is sought (an "Indemnifying Party") written notice of such claim
describing such claim with reasonable particularity and the nature and amount of
such Loss to the extent that the nature and amount of such Loss is known at such
time) (an "Indemnification Claim Notice") promptly after the Indemnified Party
receives any written notice of any action, lawsuit, proceeding, investigation or
other claim (a "Proceeding") against or involving the Indemnified Party by a
Governmental Authority or other third party or otherwise discovers the
liability, obligations or facts giving rise to such claim for indemnification;
provided that the failure to notify or delay in notifying an Indemnifying Party
will not relieve the Indemnifying Party of its obligations pursuant to Section
7.2 or 7.3, as applicable, except to the extent that (and only to the extent
that) such failure shall have caused the damages for which the Indemnifying
Party is obligated to be greater than such damages would have been had the
Indemnified Party given the Indemnifying Party prompt notice hereunder.
(b) The Indemnifying Party shall have 30 days from the personal
delivery or mailing of the Indemnification Claim Notice (the "Notice Period") to
notify the Indemnified Party (i) whether or not the Indemnifying Party disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (ii) whether or not it desires to defend the
Indemnified Party against such claim or demand.
(c) If (i) the Indemnifying Party agrees in writing to be,
responsible for the full amount of such Loss, and (ii) the claim for
indemnification does not relate to a matter (A) that, if determined adversely,
could reasonably be expected to expose the Indemnified Party to criminal
prosecution or penalties, (B) that, if determined adversely, could reasonably be
expected to result in the imposition of a consent order, injunction or decree
which would restrict the activity or conduct of the Indemnified Party or any
Affiliate thereof, or (C) for which the Indemnified Party shall have reasonably
concluded, in good faith, after consultation with the Indemnifying Party, that
such representation is likely to result in a conflict of interest or materially
jeopardize the viability of such defense, then the Indemnifying Party shall have
the right to defend the Indemnified Party by appropriate proceedings and shall
have the sole power to direct and control such defense. If any Indemnified Party
desires to participate in any such defense, it may do so at its sole cost and
expense. The Indemnifying Party in no event shall have any right to control (as
opposed to participate in pursuant to Section 7.4(d) hereof) the defense of any
claim and shall pay the expenses of the Indemnified Party's defense of such
claim if:
(x) the Indemnifying Party does not agree in writing to be
responsible for the full amount of any claim;
(y) the claim for indemnification Relates to a matter (A)
that, if determined adversely, could reasonably be expected to
expose the Indemnified Party
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to criminal prosecution or penalties, (B) that, if determined
adversely, could reasonably be expected to result in the imposition
of a consent order, injunction or decree which would restrict the
activity or conduct of the Indemnified Party or any Affiliate
thereof, (C) for which the Indemnified party shall have reasonably
concluded, in good faith, after consultation with the Indemnifying
Party, that such representations is likely to result in a conflict
of interest or materially jeopardize the viability of such defense;
or
(z) a court determines that the Indemnified Party is not
vigorously defending the claim.
(d) If the claim relates to a matter for which both the Indemnifying
Party and any Indemnified Party could be liable or responsible hereunder, such
as a Loss for which both parties could be partially liable due to the Cap and
Deductible, the Indemnifying Party and the Indemnified Parties shall cooperate
in good faith in the defense of such action. No party shall settle any claim
without the prior consent of the other party (which consent shall not be
unreasonably withheld); provided, however, that an Indemnified Party shall not
be required to consent to any settlement if the proposed settlement (i) does not
provide for a full release of all claims against such Indemnified Party, (ii) is
on a basis which would result in the imposition of a consent order, injunction
or decree or any other restriction on the activity or conduct of such
Indemnified Party, or (iii) is on a basis which could, in such Indemnified
Party's judgment, expose such Indemnified Party to criminal liability or
required an admission of wrongdoing by such Indemnified Party; provided further
that, the foregoing notwithstanding, an Indemnified Party may settle or
compromise any claim without the prior consent of the Indemnifying Party if
under Section 7.3(c) the Indemnifying Party had no right to control the defense
of such claim. If an Indemnified Party does not consent to a definitive
settlement proposed by the Indemnifying Party (with respect to which a
settlement agreement has been agreed to by all parties other than the
Indemnified Party) which settlement satisfies the foregoing clauses (i) through
(iii) or if the Indemnifying Party does not consent to a settlement proposed by
an Indemnified Party, then the party declining such settlement shall thereafter
have full control of the defense of such claim, and the maximum liability of the
party that proposed such settlement shall be determined as though such matter
had settled on the terms so proposed, and, if applicable, the amount of the
proposed settlement, together with all legal costs and expenses incurred in
connection with such matter through and including the proposed settlement date,
shall be deemed the amount of the Loss of the Indemnified Party for purposes of
determining whether the Cap and Deductible have been met. If both parties agree
to the settlement, the relative liabilities of the parties for such Losses shall
be determined as provided in the other provisions of this Article VII.
(e) All costs and expenses incurred by the Indemnifying Party in
defending claim or demand under Section 7.4(c), and all costs and expenses
incurred by the Indemnified Party in defending claim or demand which the
Indemnifying Party has elected not to defend (including by virtue of its failure
to give timely notice to the Indemnified Party) or is not permitted to defend
under Section 7.4(c) shall be a liability of, and shall be paid by, the
Indemnifying Party.
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(f) To the extent the Indemnifying Party shall direct, control or
participate in the defense or settlement of any third-party claim or demand, the
Indemnified Party will give the Indemnifying Party and its counsel access to,
during normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnifying Party and Indemnified Parties shall use
their best efforts in the defense of all such claims.
7.5 Acknowledgment Regarding Environmental Liabilities. PCA and TPI
acknowledge the allocation of relative responsibility for liabilities under
Environmental Laws under this Agreement is a material term of this Agreement,
and that (i) they have taken such matters into consideration in determining the
financial and other terms of this transaction, and (ii) they understand that
Newco is accepting all risks resulting or arising in any way from any known or
unknown liabilities in connection with such matters (other than the Retained
Environmental Liabilities or liabilities as to which indemnification is provided
under Section 7.3(a)) and TPI is retaining all risks relating the Retained
Environmental Liabilities and indemnifying Newco for certain Losses relating to
environmental matters under Section 7.3(a), and (iii) they acknowledge that
neither shall have any claim of any nature against the other or the other's
Affiliates in connection with any matters relating to known or unknown soil or
groundwater contamination or any other claims under any Environmental Laws,
other than as set forth herein.
7.6 Computation of Losses Subject to Indemnification. The amount of
any Loss for which indemnification is provided under this Article VII shall be
computed net of any insurance proceeds actually received by the Indemnified
Party in connection with such Loss. Indemnification for any Loss shall be
determined and paid without reduction for any Tax Benefits not yet realized by
the Indemnified Party. The Indemnified Party will pay to the Indemnifying Party
the amount of any Tax Benefits attributable to the Loss actually realized by the
Indemnified Party promptly after such Tax Benefits are realized; provided,
however, that in the event such Tax Benefits are realized prior to the
indemnification payment hereunder, such indemnification payment shall be reduced
by Tax Benefits previously realized in lieu of a separate payment to the
Indemnifying Party. The amount of any Tax Benefit shall be determined (i) by
comparing the liability of the Indemnified Party for Taxes, determined without
the Loss, to the liability of the Indemnified Party for Taxes, taking into
account the Loss and (ii) by treating any items attributable to the Loss as the
last items claimed by the Indemnified Party in any given Tax Period. The amount
of any Loss for which indemnification is provided under this Article VII shall
exclude consequential and punitive damages and lost profits by an Indemnified
Party, provided that any consequential or punitive damages or lost profits of a
third party for which an Indemnified Party is liable shall be included in
computing such Indemnified Party's Loss.
7.7 Characterization of Indemnification Payments. All amounts paid
by PCA, Newco, or TPI, as the case may be, under Article II, Article V, this
Article VII, or Article VIII shall be treated as adjustments to the amount
contributed to Newco by PCA or TPI, pursuant to Section 2.4(a) or (b) hereof, as
appropriate for all Tax purposes.
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ARTICLE VIII
TAX COVENANTS
8.1 Liability for Taxes.
(a) TPI shall be liable for, and shall indemnify, defend and hold
Newco harmless from and against, any and all Taxes imposed on or with respect to
the Contributed Subsidiaries, or their respective assets, operations or
activities for any Pre-Closing Period, except to the extent that any such Taxes
are a Current Liability and are reflected on the Final Working Capital
Statement.
(b) Newco shall be liable for, and shall indemnify, defend and hold
TPI harmless from and against, any and all Taxes imposed on or with respect to
the Contributed Subsidiaries or their respective operations, ownership, assets
or activities for any Post-Closing Period.
(c) Tax items shall be apportioned between Pre-Closing Periods and
Post-Closing Periods based on a closing of the books and records of the relevant
entity or entities as of the Closing Date (provided that (i) depreciation,
amortization and depletion for any Straddle Period shall be apportioned on a
daily pro rata basis and (ii) any Taxes imposed on a periodic basis (including
real property Taxes, but not including Taxes based on income and receipts) for
any Straddle Period shall be apportioned on a daily pro rata basis).
Notwithstanding anything to the contrary in the preceding sentence, the parties
agree that for U.S. federal income Tax purposes, Tax items for any Straddle
Period shall be apportioned between Pre-Closing Periods and Post-Closing Periods
in accordance with U.S. Treasury Regulation Section 1.1502-76(b), which
regulation shall be reasonably interpreted by the parties in a manner intended
to achieve the method of apportionment described in the preceding sentence.
Neither TPI nor PCA will exercise any option or election (including any election
to ratably allocate a Tax year's items under Treasury Regulation Section
1.1502-76(b)(2)(ii)) to allocate Tax items in a manner inconsistent with this
section.
8.2 Preparation of Tax Returns.
(a) TPI shall have the right and obligation to timely prepare and
file, and cause to be timely prepared and filed, when due, any Tax Return that
is required to include the operations, ownership, assets or activities of TPI,
with respect to the Contributed Assets, or of any Contributed Subsidiary for Tax
Periods ending on or before the Closing Date. TPI shall provide Newco with
copies of any such Tax Returns (to the extent that they relate to the
Contributed Assets or the Containerboard Business and reasonably may have a
material effect on Newco's and its Affiliates' liability for Taxes) at least 30
days prior to the due date (as extended) for filing such Tax Returns. In the
event that Newco reasonably determines that any such Tax Return should be
modified, Newco shall notify TPI of Newco's proposed
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modifications no later than 15 days from the date of receipt of such Tax Return.
To the extent that TPI disagrees with such modifications, Newco and TPI shall
endeavor to agree on the positions to be taken on such return. To the extent
that they are unable to do so, a "Big-Five" accounting firm (other than the
regular auditor of TPI or Newco) shall be retained to determine the position to
be taken, with the fees and expenses of such accounting firm to be borne equally
by TPI and Newco. Any such Tax Return which TPI is required to prepare under the
terms hereof shall (to the extent such Tax Return relates to the Contributed
Assets or the Containerboard Business and reasonably may have a material effect
on Newco's or its Affiliates' Tax liability) be prepared in accordance with past
Tax accounting practices used with respect to the Tax Returns in question
(unless such past practices are no longer permissible under the Applicable Tax
Law), and to the extent any item is not covered by such past practices (or such
past practices are no longer permissible under the Applicable Tax Law), in
accordance with reasonable Tax accounting practices selected by TPI. Newco shall
have the right and obligation to timely prepare and file, or cause to be timely
prepared and filed, when due, all Tax Returns that are required to include the
operations, ownership, assets or activities Related to the Containerboard
Business or of any Contributed Subsidiary for any Tax Period ending after the
Closing Date (including, solely with respect to the Contributed Subsidiaries,
Straddle Period Returns). Newco shall provide TPI with copies of any Straddle
Period Tax Returns required to be filed by Newco hereunder at least 30 days
prior to the due date (as extended) for filing such Tax Returns. In the event
TPI reasonably determines that any Straddle Period Tax Return should be
modified, TPI shall notify Newco of TPI's proposed modifications no later than
fifteen days from the date of receipt of such Tax Return. To the extent that
Newco disagrees with such modifications, Newco and TPI shall endeavor to agree
on the positions to be taken on such return. To the extent that they are unable
to do so, a "Big Five" accounting firm (other than the regular auditor of TPI or
Newco) shall be retained to determine the position to be taken, with the fees
and expenses of such accounting firm to be borne equally by TPI and Newco. Any
Straddle Period Tax Return which Newco is required to prepare under the terms
hereof shall be prepared in accordance with past Tax accounting practices used
with respect to the Tax Returns in question (unless such past practices are no
longer permissible under the Applicable Tax Law), and to the extent any item is
not covered by such past practices (or such past practices are no longer
permissible under the Applicable Tax Law), in accordance with reasonable Tax
accounting practices selected by Newco.
(b) TPI shall prepare and provide to Newco such Tax information as
is reasonably requested by Newco with respect to the operations, ownership,
assets or activities of TPI, with respect to the Contributed Assets, or of any
Contributed Subsidiary for Straddle Periods to the extent such information is
relevant to any Tax Return which Newco has the right and obligation hereunder to
file.
(c) The party not preparing a Tax Return shall pay the party
preparing such Tax Return an amount equal to the non-preparing party's share of
the Taxes shown on such Tax Return, if any, determined in accordance with the
principles of Articles VII and VIII, not later than 2 business days before the
filing of such Tax Return.
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8.3 Amended Tax Returns.
(a) Any amended Tax Return or claim for Tax refund for any
Contributed Subsidiary for any Pre-Closing Period other than a Straddle Period
shall be filed, or caused to be filed, only by TPI who shall not be obligated to
make (or cause to be made) such filing. TPI shall not, without the prior written
consent of Newco (which consent shall not be unreasonably withheld or delayed),
make or cause to be made, any such filing, to the extent such filing, if
accepted, reasonably might change the Tax liability of Newco or any Affiliate of
Newco for any Post-Closing Period. At Newco's request, TPI shall file an amended
Tax Return with respect to Taxes accrued on the Final Working Capital Statement,
except to the extent TPI reasonably objects.
(b) Any amended Tax Return or claim for Tax refund for any Straddle
Period shall be filed by the party responsible for filing the original Tax
Return hereunder if either Newco or TPI so requests, except that such filing
shall not be done without the consent (which shall not be unreasonably withheld
or delayed) of Newco (if the request is made by TPI) or of TPI (if the request
is made by Newco).
(c) Any amended Tax Return or claim for Tax refund for any
Post-Closing Period other than a Straddle Period shall be filed, or caused to be
filed, only by Newco, who shall not be obligated to make (or cause to be made)
such filing. Newco shall not, without the prior written consent of TPI (which
consent shall not be unreasonably withheld or delayed) file, or cause to be
filed, any such filing to the extent that such filing, if accepted, reasonably
might change the Tax liability of TPI or any Affiliates of TPI for any
Pre-Closing Period.
8.4 Carrybacks and Carryforwards.
(a) To the extent permitted by Applicable Tax Law, unless TPI, in
its sole and absolute discretion, consents, Newco shall not and shall not permit
any Contributed Subsidiary to carry back any losses or credits accruing after
the Closing Date to any Tax Return of TPI, a Contributed Subsidiary, or any
Affiliate of either TPI or a Contributed Subsidiary for any Pre-Closing Period.
To the extent permitted by Applicable Tax Law, Newco shall and shall cause each
Contributed Subsidiary to make any elections and take all such actions necessary
to avoid any such carry back. To the extent that, under Applicable Tax Law, a
Contributed Subsidiary is required to carry back any losses or credits accruing
after the Closing Date to any Tax Return of TPI or its Affiliates, TPI shall pay
to Newco the amount of any Tax Benefit actually realized by TPI and its
Affiliates as a result of such carryback promptly after such Tax Benefits are
realized. The amount of any Tax Benefit shall be determined (i) by comparing the
liability of TPI and its Affiliates for Taxes, determined without the carryback,
to the liability of TPI and its Affiliates for Taxes, taking into account the
carryback and (ii) by treating the carryback as the last item claimed by TPI and
its Affiliates in any given Tax Period.
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(b) TPI shall not be liable hereunder for any decrease to any net
operating loss carry forward or any other Tax attributes available to a
Contributed Subsidiary resulting from adjustments to any item of income,
deduction, credit, or exclusion on Tax Returns for which TPI is responsible.
8.5 Additional Tax Matters.
(a) As of the Closing Date, TPI shall cause all Tax allocation, Tax
sharing, Tax reimbursement and similar arrangements or agreements between TPI
and its Affiliates, on the one hand, and any of the Contributed Subsidiaries, on
the other, to be extinguished and terminated with respect to such Contributed
Subsidiaries and any rights or obligations existing under any such agreement or
arrangement to be no longer enforceable.
(b) After the Closing Date, Newco will cause appropriate employees
of the Contributed Subsidiaries to prepare usual and customary Tax Return
packages with respect to the Tax Period beginning January 1, 1999 and ending as
of the Closing Date. Newco will use its commercially reasonable efforts to cause
such Tax Return packages to be delivered to TPI on or before March 1, 2000, but
in any event not later that May 1, 2000.
(c) TPI and Newco agree that Newco has acquired substantially all of
the property used in the Containerboard Business and that in connection
therewith Newco will employ individuals who immediately before the Closing Date
were employed in such trade or business by TPI. Accordingly, pursuant to Rev.
Proc. 96-60, 1996-2 C.B. 399, provided that TPI makes available to Newco all
necessary payroll records for the calendar year that includes the Closing Date,
Newco will furnish a Form W-2 to each employee employed by Newco who had been
employed by TPI, disclosing all wages and other compensation paid for such
calendar year, and Taxes withheld therefrom, and TPI will be relieved of the
responsibility to do so.
(d) If Newco or any Contributed Subsidiary receives a Tax refund
with respect to Taxes of any Contributed Subsidiary attributable to a
Pre-Closing Period (other than a Tax refund accrued on the Final Working Capital
Statement or a refund of Taxes accrued on the Final Working Capital Statement )
Newco shall pay, within the thirty (30) days following the receipt of such Tax
refund, the amount of such Tax refund, net of any Taxes imposed thereon, to TPI.
If TPI receives a Tax refund with respect to Taxes of any Contributed Subsidiary
attributable to any Post-Closing Period or any Taxes accrued on the Final
Working Capital Statement, TPI will pay, within thirty (30) days following the
receipt of such Tax refund, the amount of such Tax refund, net of any Taxes
imposed thereon, to Newco. In the case of any Tax refund with respect to Taxes
of a Contributed Subsidiary attributable to a Straddle Period, the Tax refund
shall be apportioned between Pre-Closing Periods and Post-Closing Periods in
accordance with the principles of Section 8.1(c) hereof; provided that to the
extent any Tax refund for a Straddle Period was accrued on the Final Working
Capital Statement, such refund shall be for the account of Newco. The reduction
of any Tax refund amount under this Section 8.5(d) by the amount of Taxes
imposed on the payor's receipt of
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such refund, shall be determined in the same manner in which Tax Benefits are
determined and paid under Section 7.6.
(e) To the extent requested by TPI, Newco agrees that it will timely
file all required applications and notices with the appropriate authorities to
the extent necessary, under the applicable forest Tax laws, to maintain the
current property tax classification of TPI's timberland properties being
contributed to Newco under the terms hereof, except to the extent that any such
filing would adversely affect Newco.
8.6 Tax Controversies; Cooperation.
(a) TPI shall control any audit, dispute, administrative, judicial
or other proceeding related to Tax Returns filed for Pre-Closing Periods, and
Newco shall control any audit, dispute, administrative, judicial or other
proceeding related to Tax Returns filed for Post-Closing Periods and Straddle
Periods of any Contributed Subsidiary. Subject to the preceding sentence, in the
event an adverse determination may result in each party having responsibility
for any amount of Taxes, each party shall be entitled to fully participate in
that portion of the proceedings relating to the Taxes with respect to which it
may incur liability hereunder. For purposes of this Section 8.6(a), the term
"participation" shall include (i) participation in conferences, meetings or
proceedings with any Tax Authority, the subject matter of which includes an item
for which such party may have liability hereunder, (ii) participation in
appearances before any court or tribunal, the subject matter of which includes
an item for which a party may have liability hereunder, and (iii) with respect
to the matters described in the preceding clauses (i) and (ii), participation in
the submission and determination of the content of the documentation, protests,
memorandum of fact and law, briefs, and the conduct of oral arguments and
presentations.
(b) Newco and TPI shall not agree to settle any Tax liability or
compromise any claim with respect to Taxes, which settlement or compromise may
affect the liability for Taxes (or right to a Tax Benefit) hereunder of the
other party, without such other party's consent (which consent shall not be
unreasonably withheld or delayed).
(c) Newco and TPI shall bear their own expenses incurred in
connection with audits and other administrative judicial proceedings relating to
Taxes for which such party and its Affiliates are liable.
(d) TPI on the one hand, and Newco and the Contributed Subsidiaries,
on the other, shall cooperate (and cause their Affiliates to cooperate) with
each other and with each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the Contributed Assets and
the Contributed Subsidiaries, including (i) preparation and filing of Tax
Returns, (ii) determining the liability and amount of any Taxes due or the right
to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and
(iv) any administrative or judicial proceeding in respect of Taxes assessed or
proposed to be assessed. Such cooperation shall include each party making all
information and documents
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in its possession relating to the Contributed Subsidiaries available to the
other party. The parties shall retain all Tax Returns, schedules and work
papers, and all material records and other documents relating thereto, until one
year after the expiration of the applicable statute of limitations (including,
to the extent notified by any party, any extension thereof) of the Tax Period to
which such Tax Returns and other documents and information relate. Each of the
parties shall also make available to the other party, as reasonably requested
and available, personnel (including officers, directors, employees and agents)
responsible for preparing, maintaining, and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by agreement of PCA and TPI;
(b) by either PCA or TPI by giving written notice of such
termination to the other party if the Closing shall not have occurred on or
prior to June 30, 1999, provided that the terminating party is not in material
breach of its obligations under this Agreement;
(c) by either PCA or TPI if there shall be in effect any law or
regulation that prohibits the consummation of the Closing or if consummation of
the Closing would violate any non-appealable final order, decree or judgment of
any court or governmental body having competent jurisdiction;
(d) by TPI if, as a result of action or inaction by PCA, the Closing
shall not have occurred on or prior to the date that is 10 Business Days
following the date on which the Closing is required to occur pursuant to Section
2.4;
(e) by PCA if, as a result of action or inaction by TPI, the Closing
shall not have occurred on or prior to the date that is 10 Business Days
following the date on which the Closing is required to occur pursuant to Section
2.4; or
(f) by either party, prior to Closing, following a material breach
of this Agreement by the other party hereto, upon 10 Business Days' written
notice to the breaching party, unless such breach is cured within such 10
Business Day period; provided that the terminating party is not in material
breach of its obligations under this Agreement.
9.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 9.1, this Agreement shall thereafter become
void and
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have no effect, and no party hereto shall have any liability to the other party
hereto or their respective Affiliates, directors, officers or employees, except
for the obligations of the parties hereto contained in this Section 9.2 and in
Sections 10.1, 10.7, 10.8 and 10.11, and except that nothing herein will relieve
any party from liability for any breach of this Agreement prior to such
termination. Upon such termination, PCA shall (i) return immediately all of the
originals or copies of the Books and Records to TPI, (ii) return (or, at TPI's
option, destroy) all other copies of any Evaluation Material (as defined in the
Confidentiality Agreement) in its possession or in the possession of its
Affiliates, directors, officers, employees, agents and attorneys, and (iii)
hold, and cause each of said parties to hold, all of such materials and the
information contained in the Books and Records or Evaluation Material in
confidence subject to the terms of the Confidentiality Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices or other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service, or
if sent by facsimile transmission; provided that the facsimile transmission is
promptly confirmed by telephone confirmation thereof, to the Person at the
address or facsimile number set forth below, or such other address or facsimile
number as may be designated in writing hereafter, in the same manner, by such
Person:
To PCA: PCA HOLDINGS LLC
c/o Madison Dearborn Partners, Inc.
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇.▇.
-▇▇-
▇▇ ▇▇▇: TENNECO PACKAGING INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
With a copy to: TENNECO PACKAGING INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
10.2 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, in the case of an amendment, by PCA and TPI, or in the case of a waiver,
by the party against whom the waiver is to be effective. 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. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
10.3 Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto (not to be unreasonably withheld), except that (i) a
party may collaterally assign its rights and obligations under this Agreement to
a lender as security for a loan to Newco or its Subsidiaries, (ii) following
Closing, PCA and TPI may assign their rights, but not their obligations, to any
Person to whom PCA or TPI may transfer their shares in Newco, and (iii) Newco
may assign its rights under this Agreement in connection with any sale of all or
any portion of timberland (and tree farms associated with the ▇▇▇▇▇) including
any assets or operations related to or located thereon, to the extent such
assigned rights relate to the assets so sold.
10.4 Entire Agreement. This Agreement (including the Preliminary
Statements, all Schedules and Exhibits hereto and the Ancillary Agreements)
contains the entire agreement between 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, except for the obligations of the
parties under the Confidentiality Agreement and the obligations of Madison
Dearborn Partners, Inc., set forth in that certain letter dated January 25,
1999, to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., which obligations will remain in full force and
effect.
10.5 Fulfillment of Obligations. Any obligation of any party to any
other party under this Agreement or any of the Ancillary Agreements, which
obligation is performed,
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satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
10.6 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 PCA, TPI, Newco or their respective successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
10.7 Public Disclosure. Notwithstanding anything herein to the
contrary, except as may be required to comply with the requirements of any
applicable Laws and the rules and regulations of each stock exchange upon which
the securities of one of the parties (or its Affiliate) is listed, no press
release or similar public announcement or communication shall, prior to the
Closing, be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto.
10.8 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses. Notwithstanding the foregoing, (a) all expenses of PCA shall be
paid by Newco, (b) all legal and accounting fees and expenses of TPI incurred in
connection with negotiating the terms of this Agreement and the Ancillary
Agreements and otherwise in connection with the transactions contemplated under
this Agreement and the Ancillary Agreements (not to exceed $2,000,000) shall be
paid by Newco, (c) the 1.5% Commitment Fee with respect to the Bridge Loan
pursuant to the Commitment Letters, if such commitment is obtained by Newco
pursuant to the direction of TPI, shall be paid by TPI as set forth in Section
5.3(b) hereof, and (d) the MDP Transaction Fee shall be paid by Newco, provided
that the aggregate amount of bank fees and expenses (excluding any Commitment
Fee with respect to the Bridge Loan) paid by Newco plus the MDP Transaction Fee
shall not exceed $90 million.
10.9 Schedules. The disclosure of any matter in any Schedule shall
not be deemed to constitute an admission by PCA or TPI or to otherwise imply
that any such matter is material for the purposes of this Agreement.
10.10 Bulk Transfer Laws. PCA and Newco acknowledge that TPI has not
taken, and does not intend to take, any action required to comply with any
applicable bulk sale or bulk transfer laws or similar laws; provided that TPI
shall indemnify PCA for any Losses arising from such non-compliance.
10.11 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 Illinois. 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
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contemplated by this Agreement, whether in tort or contract or at law or in
equity, exclusively in the United States District Court for the Northern
District of Illinois or any state court located in ▇▇▇▇ County, 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 10.1 of this Agreement.
10.12 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.
10.13 Headings. The heading references herein and the table of
contents hereto 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.
10.14 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. 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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IN WITNESS WHEREOF, the parties have executed this Contribution
Agreement as of the date first written above.
TENNECO PACKAGING INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
PCA HOLDINGS LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
PACKAGING CORPORATION OF AMERICA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
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SCHEDULES AND EXHIBITS
Schedules
Schedule PS-1 - Existing Financing Arrangements
Schedule PS-2 - Term Sheet for Management Stock Purchases
Schedule 1.1(ff) - Contributed Subsidiaries
Schedule 1.1(hhh) - TPI Employees with "Knowledge"
Schedule 1.1(mmm) - Exceptions to Material Adverse Change or Effect
Schedule 1.1(vvv) - Owned Real Property
Schedule 1.1(gggg) - Real Estate Leases
Schedule 1.1(pppp) - Retained Real Property
Schedule 1.1(llll)(iii) - Retained Notes Receivable
Schedule 1.1(nnnn)(iii) - Retained Litigation
Schedule 1.1(vvvv) - Supply Agreement Pricing Terms
Schedule 1.1(ggggg) - Services and Pricing under Transition Services
Agreement and Facility Use Agreement
Schedule 2.5 - Target Capital Expenditure
Schedule 3.1 - TPI Qualifications
Schedule 3.3 - TPI Consent and Approvals
Schedule 3.6 - Certain Matters Related to Financial Statements
Schedule 3.6 - Financing Statements
Schedule 3.6(e) - Changes Since 12/31/97
Schedule 3.7 - Litigation and Claims
Schedule 3.8 - Taxes
Schedule 3.9 - Employee Benefits
Schedule 3.10 - Compliance with Laws
Schedule 3.11 - Environmental Matters
Schedule 3.12 - Intellectual Property
Schedule 3.12(e) - Year 2000 language from most recent 10-Q
Schedule 3.13 - Labor Matters
Schedule 3.14 - Contracts
Schedule 3.16(a) - Exceptions to Entire Business
Schedule 3.16(b) - Encumbrances
Schedule 3.16(c) - Capital Structure of Contributed Subsidiaries
Schedule 3.18 - Insurance
Schedule 4.7(b) - PCA New Financing Arrangement Commitment Letters
Schedule 5.2 - Conduct of Business
Schedule 5.3 - Terms of PIK Preferred
Schedule 6.2(c) - Adjusted EBITDA
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Exhibits
Exhibit 1.1(aaa) - Human Resources Agreement
Exhibit 2.1A. - Newco Certificate of Incorporation
Exhibit 2.1B - Stockholders Agreement
Exhibit 2.1C - Registration Rights Agreement
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