<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
APRIL 12, 1999
(Date of earliest event reported)
TENNECO INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction
of Incorporation)
1-12387
(Commission File Number)
76-0515284
(IRS Employer
Identification Number)
1275 KING STREET, GREENWICH, CONNECTICUT 06831
(Address of Principal Executive Offices) (Zip Code)
(203) 863-1000
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 12, 1999, pursuant to a Contribution Agreement (the "Contribution
Agreement") dated as of January 25, 1999, among Tenneco Packaging Inc., a wholly
owned subsidiary of Tenneco Inc. ("TPI"), PCA Holdings LLC, an affiliate of
Madison Dearborn Partners, Inc. ("PCA Holdings") and Packaging Corporation of
America, TPI completed the contribution of the containerboard assets of its
Paperboard Packaging business to a new joint venture with PCA Holdings in
exchange for cash and debt assumption totaling approximately $2.0 billion and a
45% common equity interest in the joint venture, which interest is valued at
approximately $200 million. The consideration received in the transaction was
determined through arms-length negotiations with Madison Dearborn Partners, Inc.
The containerboard assets represent substantially all of the assets of the
Paperboard Packaging segment and include four mills, 67 corrugated products
facilities and an ownership or controlling interest in approximately 950,000
acres of timberland. Paperboard Packaging's folding carton business was not
included in the transaction. The new joint venture entity (called Packaging
Corporation of America) will be headed by Paul T. Stecko, serving as its
chairman and chief executive officer. Upon closing of the transaction, Mr.
Stecko resigned his position as president and chief operating officer of Tenneco
Inc., but will continue to serve on Tenneco Inc.'s Board of Directors.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
<TABLE>
<C> <S>
(b) PRO FORMA FINANCIAL INFORMATION.
</TABLE>
2
<PAGE> 3
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Financial Statements of Tenneco
Inc. and Consolidated Subsidiaries ("Tenneco") illustrate the effects of the
contribution of the containerboard assets of Tenneco's Paperboard Packaging
segment to a new joint venture with PCA Holdings LLC, an affiliate of Madison
Dearborn Partners, Inc. ("PCA Holdings"). The following events occurred prior to
or as a part of the transaction: (i) Tenneco Packaging Inc., a wholly owned
subsidiary of Tenneco Inc. ("TPI"), borrowed $1,760 million; (ii) TPI used
$1,108 million of the debt proceeds to acquire containerboard mill and
timberland assets previously used by the containerboard business pursuant to
operating leases; (iii) TPI used approximately $150 million of the debt proceeds
to purchase containerboard business accounts receivable that had been sold to a
third party; and (iv) TPI contributed the containerboard assets, subject to the
new indebtedness and the existing containerboard business liabilities, to the
joint venture with PCA Holdings in exchange for $247 million in cash and a 45%
common equity interest in the venture valued at approximately $200 million.
Following the completion of the transaction, TPI remitted the net cash proceeds
of approximately $720 million to Tenneco Inc. Tenneco Inc. used the proceeds to
retire short-term debt.
The Unaudited Pro Forma Condensed Balance Sheet has been prepared as if
such events and transactions occurred on December 31, 1998. The Unaudited Pro
Forma Condensed Statement of Income has been prepared as if such events and
transactions occurred as of January 1, 1998.
The Unaudited Pro Forma Condensed Financial Statements should be read in
conjunction with the historical financial statements of Tenneco included in
Tenneco's Annual Report on Form 10-K for the year ended December 31, 1998. The
Unaudited Pro Forma Condensed Financial Statements are not necessarily
indicative of actual operating results or financial position had the events and
transactions reflected therein occurred as of the dates indicated above, nor do
they purport to indicate operating results or financial position which may be
attained in the future.
The pro forma adjustments, as described in the accompanying Notes to the
Unaudited Pro Forma Condensed Financial Statements, are based on available
information and certain assumptions that management believes are reasonable.
3
<PAGE> 4
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1998
(MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-----------------------------------------------------
CONSIDERATION,
CONTRIBUTION USE OF
TENNECO OF PROCEEDS, CONSOLIDATED
AS FINANCING CONTAINERBOARD AND OTHER TENNECO
ASSETS REPORTED TRANSACTIONS (D) ADJUSTMENTS PRO FORMA
------ -------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and temporary cash
investments................. $ 36 $ 473(c) $ -- $ 247(e) $ 36
(720)(g)
Receivables.................... 864 150(b) (152) -- 862
Inventories.................... 988 -- (147) -- 841
Other current assets........... 269 -- (29) (37)(j) 203
------ ------ ------- ------ ------
Total current assets... 2,157 623 (328) (510) 1,942
Plant, property, and equipment,
net............................ 3,628 1,108(b) (2,072) -- 2,664
Investment in PCA................ -- -- -- 194(f) 194
Goodwill and intangibles, net.... 1,613 -- (62) -- 1,551
Other assets and deferred
charges........................ 1,393 -- (210) (27)(i) 1,156
------ ------ ------- ------ ------
Total assets........... $8,791 $1,731 $(2,672) $ (343) $7,507
====== ====== ======= ====== ======
LIABILITIES AND SHAREOWNERS'
EQUITY
Current liabilities:
Short-term debt (including
current maturities on long
term debt).................. $1,071 $ -- $ -- $ (720)(g) $ 374
23(h)
Trade payables................. 701 (5)(c) (104) -- 592
Other current liabilities...... 615 -- (66) 35(h) 584
------ ------ ------- ------ ------
Total current
liabilities.......... 2,387 (5) (170) (662) 1,550
Long-term debt................... 2,360 1,760(a) (1,760) -- 2,343
(17)(c)
Deferred income taxes............ 649 -- (4) (154)(j) 491
Other liabilities and deferred
credits........................ 470 -- (105) -- 365
Minority interest................ 421 -- -- -- 421
Shareowners' equity.............. 2,504 (7)(c) (633) 473(k) 2,337
------ ------ ------- ------ ------
Total liabilities and
shareowners'
equity............... $8,791 $1,731 $(2,672) $ (343) $7,507
====== ====== ======= ====== ======
</TABLE>
See the accompanying Notes to Unaudited Pro Forma Condensed Financial
Statements.
4
<PAGE> 5
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1998
(MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------
CONTRIBUTION CONSIDERATION,
TENNECO OF USE OF PROCEEDS, CONSOLIDATED
AS FINANCING CONTAINERBOARD AND OTHER TENNECO
REPORTED TRANSACTIONS (L) ADJUSTMENTS PRO FORMA(P)
-------- ------------ -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Net sales and operating
revenues................... $ 7,597 $ -- $(1,483) $ -- $ 6,114
Other income, net............. 8 -- (13) 8(m) 3
----------- ---- ------- ------ -----------
7,605 -- (1,496) 8 6,117
----------- ---- ------- ------ -----------
COSTS AND EXPENSES:
Cost of sales (exclusive of
depreciation shown
below)..................... 5,344 -- (1,096) -- 4,248
Engineering, research, and
development................ 66 -- (5) -- 61
Selling, general, and
administrative............. 1,106 -- (171) -- 935
Depreciation, depletion, and
amortization............... 448 -- (97) -- 351
----------- ---- ------- ------ -----------
6,964 -- (1,369) -- 5,595
----------- ---- ------- ------ -----------
INCOME BEFORE INTEREST EXPENSE,
INCOME TAXES AND MINORITY
INTEREST...................... 641 -- (127) 8 522
INTEREST EXPENSE................ 240 -- (3) (40)(n) 197
INCOME TAX EXPENSE.............. 116 -- (50) 19(o) 85
MINORITY INTEREST............... 30 -- -- -- 30
----------- ---- ------- ------ -----------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS
APPLICABLE TO COMMON STOCK.... $ 255 $ -- $ (74) $ 29 $ 210
=========== ==== ======= ====== ===========
EARNINGS PER SHARE
Average shares of common
stock --
Basic......................... 168,505,573 168,505,573
Diluted....................... 168,834,531 168,834,531
Earnings from continuing
operations per share of common
stock --
Basic......................... $ 1.52 $ 1.25
Diluted....................... $ 1.51 $ 1.24
</TABLE>
See the accompanying Notes to Unaudited Pro Forma Condensed Financial
Statements.
5
<PAGE> 6
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
(a) To reflect borrowings of $1,760 million by TPI.
(b) To reflect use of the debt proceeds to: (i) acquire containerboard mill and
timberland assets previously used by the containerboard business pursuant to
operating leases; and (ii) purchase containerboard business accounts
receivable which had been sold to a third party.
(c) To reflect the amount paid by Tenneco to retire certain debt of the
containerboard business. As a result of this debt extinguishment, Tenneco
incurred an after-tax extraordinary loss of approximately $7 million that is
not reflected in the Unaudited Pro Forma Condensed Statement of Income due
its non-recurring impact. Remaining proceeds from the borrowings following
asset acquisition and debt retirement are reflected in cash.
(d) To reflect the contribution of the containerboard assets of Tenneco's
Paperboard Packaging business, subject to the new indebtedness and the
containerboard business liabilities, to the new joint venture with PCA
Holdings. The contribution and assumption of liabilities is subject to a
post-closing adjustment based on the net working capital of the
containerboard business as of the contribution date.
(e) To reflect cash consideration of $247 million received for TPI's
contribution of the containerboard assets, subject to the new indebtedness
and containerboard business liabilities.
(f) To reflect the consideration received in the form of a 45% common equity
interest in the new joint venture formed with PCA Holdings.
(g) To reflect the use of cash proceeds to pay down short-term corporate debt.
(h) To reflect the estimated legal, investment banking, and other costs paid and
incurred by Tenneco in connection with the transaction and liabilities
retained by Tenneco.
(i) To reflect certain intangible assets related to the containerboard business
not contributed to the new joint venture that were no longer realizable as a
result of the transaction.
(j) To reflect the adjustment to deferred taxes resulting from the transaction.
(k) To reflect the impact on shareowners' equity resulting from the transaction.
(l) To reflect the adjustment to Tenneco's results of operations for the
contribution of the containerboard business assets, subject to the
containerboard business liabilities, to the new joint venture formed with
PCA Holdings.
(m) To reflect Tenneco's 45% common equity interest in the results of operations
of the joint venture.
(n) To reflect the adjustment to interest expense from the reduction of
short-term corporate debt using cash consideration from the transactions.
(o) To reflect the income tax expense effects of pro forma adjustments at an
assumed statutory tax rate of 40%.
(p) The pre-tax loss of approximately $290 million, $180 million after-tax or
$1.07 per basic and diluted share resulting from the sale of the
containerboard business assets, subject to the containerboard business
liabilities, has been excluded from the Unaudited Pro Forma Condensed
Statement of Income due to its non-recurring impact.
6
<PAGE> 7
<TABLE>
<C> <S>
(c) EXHIBITS. The following exhibits are filed with this Report
on Form 8-K (exhibits designated by an asterisk are filed
with the Report; the other exhibit is incorporated by
reference):
10.30 Contribution Agreement (the "Contribution Agreement"), dated
as of January 25, 1999, among Tenneco Packaging Inc., PCA
Holdings LLC and Packaging Corporation of America
(incorporated herein by reference to Exhibit 10.30 of
Tenneco Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998, File No. 1-12387).
*10.31 Letter Agreement (the "Letter Agreement"), dated as of April
12, 1999 among Tenneco Packaging Inc., PCA Holdings LLC and
Packaging Corporation of America, amending the Contribution
Agreement.
*10.32 Stockholders Agreement, as amended, dated as of April 12,
1999, among Tenneco Packaging Inc., PCA Holdings LLC and
Packaging Corporation of America.
*10.33 Registration Rights Agreement, as amended, dated as of April
12, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and
Packaging Corporation of America.
</TABLE>
7
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Tenneco Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TENNECO INC.
By: /s/ Robert T. Blakely
------------------------------------
Robert T. Blakely
Executive Vice President and
Chief Financial Officer
April 27, 1999
8
<PAGE> 9
EXHIBIT INDEX
The following exhibits are filed with this Report on Form 8-K (exhibits
designated by an asterisk are filed with the Report; the other exhibit is
incorporated by reference):
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
10.30 Contribution Agreement (the "Contribution Agreement"), dated
as of January 25, 1999, among Tenneco Packaging Inc., PCA
Holdings LLC and Packaging Corporation of America
(incorporated herein by reference to Exhibit 10.30 of
Tenneco Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998, File No. 1-12387).
*10.31 Letter Agreement (the "Letter Agreement"), dated as of April
12, 1999 among Tenneco Packaging Inc., PCA Holdings LLC and
Packaging Corporation of America, amending the Contribution
Agreement.
*10.32 Stockholders Agreement, as amended, dated as of April 12,
1999, among Tenneco Packaging Inc., PCA Holdings LLC and
Packaging Corporation of America.
*10.33 Registration Rights Agreement, as amended, dated as of April
12, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and
Packaging Corporation of America.
</TABLE>
9
<PAGE> 1
EXHIBIT 10.31
TENNECO PACKAGING INC.
1900 FIELD COURT
LAKE FOREST, ILLINOIS 60045
April 12, 1999
PCA Holdings, LLC
c/o Madison Dearborn Partners, Inc.
Three First National Plaza
Suite 3800
Chicago, IL 60602
Attn: Samuel M. Mencoff
Justin S. Huscher
Re: Contribution Agreement
Gentlemen:
Reference is made to that certain Contribution Agreement,
dated as of January 25, 1999 (the "Contribution Agreement"), among Tenneco
Packaging Inc. ("TPI"), PCA Holdings LLC ("PCA"), and Packaging Corporation of
America ("Newco"). Capitalized terms used in this letter agreement not defined
herein shall have the meanings set forth in the Contribution Agreement.
The purpose of this letter agreement is to correct certain
errors or ambiguities that were included in the Contribution Agreement, and to
reflect the parties' agreements with respect to certain other matters, to the
extent those agreements differ form the terms of the Contribution Agreement
1. The definition of "Assumed Indebtedness" in the
Contribution Agreement refers to the definition set forth in the
Preliminary Statements. The definition of "Assumed Indebtedness" in the
Preliminary Statements of the Contribution Agreement was inadvertently
deleted in preparing the Contribution Agreement. The parties agree
that, as used in the Contribution Agreement, the term "Assumed
Indebtedness" shall mean (i) the $1.21 billion borrowed by TPI under
the Term Loan Facilities and (ii) the $550 million promissory note
issued by TPI to J.P. Morgan Securities, Inc. (the "Morgan Interim
Note"), each of which will be assigned to and assumed by Newco at
Closing.
2. TPI, PCA, and Newco each hereby agree that the amount of
the Term Loan Facilities and the Senior Subordinated Notes, and the
terms of the Deferred-Pay Financing shall be on the terms set forth in
the Offering Memorandum dated March 30, 1999,
<PAGE> 2
notwithstanding that such amounts and terms differ from those set forth
in the Contribution Agreement.
3. TPI agrees that the Term Loan Facilities, pursuant to
which TPI will initially borrow $1.21 billion and which indebtedness
will be assigned to and assumed by Newco as part of the Assumed
Indebtedness, may, until the time of such assignment and assumption, be
secured by certain depositary accounts and timberland assets of TPI, on
terms satisfactory to TPI, notwithstanding that the Contribution
Agreement provides for such loan to be unsecured as to TPI and that
such security interest shall be released contemporaneously with the
assignment and assumption by Newco.
4. The parties agree that the Senior Subordinated Notes will
not be issued by TPI, but that TPI will instead borrow $550 million
pursuant to the Morgan Interim Note that will be assigned to and
assumed by Newco as part of the Assumed Indebtedness, and which
indebtedness will be repaid by Newco at the Closing.
5. PCA hereby waives its right to elect, pursuant to Section
5.16 of the Contribution Agreement, to instruct TPI to retain the
Campbell Road Property, and agrees that the Campbell Road Property
will, for purposes of the Contribution Agreement, constitute Owned Real
Property and will be conveyed to Newco at Closing.
6. Newco agrees that for a period of one year following the
Closing Date TPI may (a) continue to use the PCA Marks on Corrugated
Products purchased by TPI or its Affiliates from Newco pursuant to the
Supply Agreements, until changes can be made to plates, molds, and
similar items so as to allow Newco to produce such materials for TPI
and such Affiliates without such PCA Marks, and (b) use the PCA marks
on Corrugated Products that are in existence as of the Closing Date.
Subject to the preceding sentence, TPI shall cease using the PCA Marks
as soon as possible after Closing during such one year period and,
following such one year period, TPI shall cease all use of any PCA
Marks.
7. PCA waives the condition to Closing set forth in Section
6.2(g) of the Contribution Agreement, to the extent such closing
condition would require PCA and Mr. Stecko to enter into any agreement
beyond the letter agreement referred to therein, as such letter
agreement may be modified.
8. TPI hereby agrees and acknowledges that it has not
delivered a Dilution Notice pursuant to Paragraph E of the Preliminary
Statements of the Contribution Agreement. PCA and TPI hereby agree
that, notwithstanding anything in the Contribution Agreement to the
contrary, upon issuance of Management Stock during the 120-day period
following the Closing, Newco shall simultaneously redeem or purchase
from PCA and TPI an aggregate number of Common Stock shares equal to
the aggregate numbers of shares of Management Stock purchased during
such 120-day period in a ratio of 55 shares from PCA to 45 shares from
TPI at a price per share equal to the price per share paid by the
Persons purchasing such Management Stock (provided such price per share
is equal to the price per share paid for Common Stock purchased by PCA
at Closing).
-2-
<PAGE> 3
9. The following changes are made to the definition of
"Retained Liabilities": (A) paragraph (ix) is amended by adding the
words "subject to paragraph (xiv) of this definition" after the word
"Agreement" in clause (ii) thereof; and (B) a new paragraph (xiv) is
added, a follows: "(xiv) all liability to make severance payments to
seven named individuals who will be transferred to PCA and who have
been identified to Newco and TPI in an aggregate amount of up to
$385,000."
10. TPI has provided the Michigan Department of Natural
Resources with a letter of credit in connection with certain operations
at the Filer City Mill. TPI agrees to leave such letter of credit in
place for 30 days after Closing or until Newco provides the Michigan
Department of Natural Resources with a replacement letter of credit.
Newco agrees to obtain and post such a replacement letter of credit
within such 30-day period. Newco shall reimburse TPI for any draws made
under TPI's letter of credit from and after Closing.
11. PCA and Newco hereby waive the closing condition set forth
in Section 5.14(ii) of the Contribution Agreement, and TPI agrees at
its sole expense to implement the steps set forth in Rick West's
memorandum dated April 7, 1999, entitled "Form S-4 Exchange Option and
Quarterly Filings," relating to the preparation of the quarterly
financial statements referred to in Section 5.14(ii) of the
Contribution Agreement provided that TPI hereby covenants it will
deliver to PCA the financial statements referred to in Section 5.14(ii)
of the Contribution Agreement (a) for the quarter ended March 31, 1998,
no later than May 10, 1999 and (b) for each of the other quarters of
1998, no later than May 31, 1999. Newco agrees that it will cause its
appropriate financial officers and employees to provide reasonable
assistance to TPI in its preparation of the financial statements
referenced in this paragraph 11.
12. TPI hereby certifies that during the period from and
including January 25, 1999 and the Closing, TPI has complied in all
material respects with and not breached Section 5.2 of the Contribution
Agreement.
13. TPI agrees to obtain, at its expense, for Newco commencing
no later than the end of the term of the Technology, Financial and
Administrative Transition Services Agreement (the "Transition
Expiration Date"), licenses to use the following software, which
licenses shall be substantially commensurate with the licenses to such
software held by TPI or its Affiliates and used for the Containerboard
Business prior to Closing (including, without limitation, as to scope
and term as described in such existing licenses):
VENDOR NAME OF SOFTWARE
------ ----------------
Levi, Ray & Shoup VPS and DRS
GEAC Financial Applications (GL, AR, AP,
FA)
Comshare System W
-3-
<PAGE> 4
Hyperion Hyperion (NT)
XRT Treasury Workstation (Netware)
14. TPI agrees to obtain, for Newco commencing no later than
the Transition Expiration Date, licenses to use the following software,
which licenses shall be substantially commensurate with the licenses to
such software held by TPI or its Affiliates and used for the
Containerboard Business prior to Closing (including, without
limitation, as to scope and term as described in such existing
licenses):
VENDOR NAME OF SOFTWARE
------ ----------------
TSI Keymaster
Information Builders Focus
TPI shall pay 50% of the costs of obtaining such licenses and Newco
shall pay 50% of the costs of obtaining such licenses.
15. TPI's sole obligation pursuant to paragraphs 13 and 14
above shall be to purchase the licenses described in such paragraphs in
the name of Newco, and shall not extend to any other fees, maintenance,
costs, expenses or other payments required to be made pursuant to such
licenses in respect of periods commencing after the Transition
Expiration Date. The parties hereto hereby agree that neither TPI nor
any of its Affiliates shall be required pursuant to the Contribution
Agreement or any Ancillary Agreement to pay for any other license to
use software that is not Related to the Containerboard Business but is
used by TPI or its Affiliates to provide the services to Newco under
the Transition Services Agreement, other than those licenses expressly
described in paragraphs 13 or 14.
16. TPI , PCA and Newco hereby stipulate that the definition
of "Retained Liabilities" shall include all liabilities arising from,
related to or incurred in connection with any state of facts or
conditions or transactions (or series of facts, conditions or
transactions) related, under or otherwise in connection with (i) IFC
Credit Corporation v. Tenneco Packaging, Inc. filed in the Circuit
Court of Cook County, Illinois 99CH4738 (the "Lawsuit") or (ii) the
Master Lease Agreement between IFC Credit Corporation and TPI (f/k/a/
Packaging Corporation of America) that is the subject of the Lawsuit,
in each case other than liabilities to the extent arising from, related
to or incurred in connection with any breach by Newco of its
obligations under this paragraph 16. Newco agrees to cease using the
equipment that is the subject of the Lawsuit (the "Equipment") and
return the Equipment where directed by TPI as soon as reasonably
practical, and in no event will Newco use the Equipment after (and it
will return the Equipment by) June 30, 1999. Newco shall use its
reasonable efforts consistent with TPI's past practice to maintain the
Equipment in the
-4-
<PAGE> 5
operating condition and state of repair that it is in as of the date
hereof, ordinary wear and tear excepted.
17. The parties hereby acknowledge that following the date of
the Contribution Agreement and prior to the date hereof, approximately
5,963 acres of timberland located in Hamilton, Dixie and Taylor
Counties, Florida that were subject to the Existing Financing
Arrangements have been sold (the "Florida Property Transfer"). The
parties hereby agree that (i) no PCA Indemnified Party shall have,
assert or be entitled to assert any claim (and each of PCA and Newco
agrees that it shall not assert or permit to be asserted any claim)
against TPI or any of its Subsidiaries or Affiliates arising out of, in
connection with or related to the Florida Property Transfer, whether
pursuant to the Contribution Agreement or otherwise and (ii) Newco
assumes no liability with respect to the Florida Property Transfer.
-5-
<PAGE> 6
Please acknowledge your agreement to the foregoing by signing
below.
Sincerely,
TENNECO PACKAGING INC.
By: /s/ James V. Faulkner, Jr.
---------------------------------
Its: Vice President
----------------------------
Agreed to:
PCA HOLDINGS LLC
By: /s/ Samuel M. Mencoff
------------------------
Samuel M. Mencoff
Managing Director
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
------------------------
Its: Secretary
--------------------
Date: April 12, 1999
---------------------
-6-
<PAGE> 1
EXHIBIT 10.32
STOCKHOLDERS AGREEMENT
BY AND AMONG
TENNECO PACKAGING INC.,
PCA HOLDINGS LLC
AND
PACKAGING CORPORATION OF AMERICA
APRIL 12, 1999
<PAGE> 2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and
entered into as of the 12th day of April, 1999, by and among TENNECO PACKAGING
INC., a Delaware corporation ("TPI"), PCA HOLDINGS LLC, a Delaware limited
liability company ("PCA"), and PACKAGING CORPORATION OF AMERICA, a Delaware
corporation ("NEWCO").
RECITALS
WHEREAS, TPI, PCA and Newco are parties to that certain
Contribution Agreement, dated as of January 25, 1999, as amended (the
"CONTRIBUTION AGREEMENT");
WHEREAS, pursuant to and subject to the terms and conditions
of the Contribution Agreement, each of TPI and PCA will contribute certain
assets to Newco or a Subsidiary of Newco in exchange for shares of the common
stock, $.01 par value per share (the "COMMON STOCK"), of Newco;
WHEREAS, PCA recognizes that TPI has substantial experience
and expertise in the ownership, management and operation of the Containerboard
Business (as such term and each other capitalized term used but not otherwise
defined herein is defined in the Contribution Agreement);
WHEREAS, TPI, PCA and Newco desire to enter into this
Agreement to set forth certain arrangements with respect to the ownership,
operation and management of Newco and its Subsidiaries; and
WHEREAS, the execution and delivery of this Agreement is a
condition to each of TPI's and PCA's respective obligation to effect the
Closing.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and undertakings contained herein, and subject to and on the
terms and conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1 CERTAIN DEFINITIONS. As used herein, the following terms
shall have the meanings set forth or as referenced below:
"AFFILIATE" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such first Person as of the date on which, or at any time during the period
for which, the determination of affiliation is being made. For the purpose of
this definition, "control" means (i) the ownership or control of 50% or more of
the equity interest in any Person, or (ii) the ability to direct or cause the
direction of the management
-1-
<PAGE> 3
or affairs of a Person, whether through the direct or indirect ownership of
voting interests, by contract or otherwise.
"AGREEMENT" shall mean this Agreement, including the exhibits
hereto, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
"BOARD" shall mean the Board of Directors of Newco.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banks in Chicago, Illinois are authorized or obligated
by Law or executive order to close.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"COMMON STOCK" shall have the meaning set forth in the
Recitals hereto.
"CONTRIBUTION AGREEMENT" shall have the meaning set forth in
the Recitals hereto.
"CPA FIRM" shall mean the independent public auditor selected
pursuant to SECTION 4.3, or any subsequent independent public auditor of the
books and records of Newco appointed by the Board in accordance with the terms
of this Agreement.
"DEMAND REGISTRATION" shall have the meaning set forth in the
Registration Rights Agreement.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"ENCUMBRANCES" shall mean liens, charges, encumbrances,
mortgages, pledges, security interests, options or any other restrictions or
third-party rights.
"EXEMPT SALE" shall mean: (i) any Transfer of Shares to an
Affiliate of the selling party; (ii) any distribution of securities by a Person
to its direct or indirect equity owners; (iii) an assignment or pledge of Shares
in connection with the incurrence, maintenance or renewal of indebtedness of
Newco or its Subsidiaries; (iv) any Transfer of Shares pursuant to a Public
Sale; and (v) any Transfer of Shares to directors, officers, or employees of
Newco or its Subsidiaries.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"INDEPENDENT THIRD PARTY" means any Person who, immediately
prior to the contemplated transaction, is not the owner of in excess of 5% of
any class or series of Newco's common equity on a fully-diluted basis (a "5%
OWNER") and who is not an Affiliate of any such 5% Owner.
-2-
<PAGE> 4
"JUNIOR PREFERRED STOCK" shall mean the one hundred (100)
authorized, issued and outstanding shares of Junior Preferred Stock entitled to
elect the CEO Director, with TPI holding 45 shares and PCA holding 55 shares,
respectively, of such Junior Preferred Stock.
"LAW" shall mean any federal, state, foreign or local law,
constitutional provision, code, statute, ordinance, rule, regulation, order,
judgment or decree of any governmental authority.
"MANAGEMENT BUY-IN" shall mean the purchase of Management
Stock as contemplated by the Contribution Agreement.
"NEWCO" shall mean Packaging Corporation of America, a
Delaware Corporation.
"NEW SECURITIES" shall mean any shares of capital stock or
other equity securities (or debt securities convertible into such equity
securities) of Newco, whether now authorized or not, and rights, options or
warrants to purchase said shares of capital stock and securities of any type
whatsoever that are, or may become, convertible into shares of Newco capital
stock or other Newco equity securities; provided, however, that the term "New
Securities" shall not include: (i) securities issued in connection with any
stock split, stock dividend, reclassification or recapitalization of Newco; (ii)
shares of Common Stock issued to employees, consultants, officers or directors
of Newco or its Subsidiaries pursuant to: (A) the exercise of any stock option,
stock purchase or stock bonus plan, agreement or arrangement for the primary
purpose of soliciting or retaining the services of such Persons and which is
hereafter approved by the Board; or (B) the exercise of any stock option issued
pursuant to the Share Performance Plan; (iii) securities issued in a Public
Offering; (iv) securities issued in connection with the acquisition of any
business, assets or securities of another Person in compliance with SECTION 3.6
hereof; and (v) securities issued to any lender of Newco or one of its
Subsidiaries in compliance with SECTION 3.6 hereof.
"PCA" shall mean PCA Holdings LLC, a Delaware limited
liability company.
"PCA HOLDERS" shall collectively refer to PCA together with
any other Stockholders who directly or indirectly acquire any Shares from: (i)
PCA; or (ii) TPI pursuant to an Initial Period Pro-Rata Tag-Along as provided in
SUBSECTION 6.3(b)(ii) below.
"PERMITTED ENCUMBRANCES" shall mean liens for taxes,
assessments and other governmental charges not yet due and payable or due but
not delinquent or being contested in good faith by appropriate proceedings.
"PERSON" shall mean an individual, a corporation, a
partnership, an association, a trust, a limited liability company or any other
entity or organization.
"PRO RATA PORTION" shall mean, with respect to each
Stockholder, that number of shares of New Securities as is equal to the product
of (i) the total number of New Securities proposed to be issued or otherwise
transferred multiplied by (ii) a fraction, the numerator of which is the number
of shares of Common Stock (including any common equity issued or issuable in
respect of such Common Stock) held by such Stockholder immediately prior to such
issuance or transfer, and
-3-
<PAGE> 5
the denominator of which is the total number of shares of Common Stock
(including any such common equity issued or issuable in respect of such Common
Stock) which are held by all Stockholders.
"PUBLIC OFFERING" shall mean an underwritten public offering
pursuant to an effective registration statement under the Securities Act (or any
comparable form under any similar statute then in force), covering the offer and
sale of Common Stock.
"PUBLIC SALE" means: (i) any sale of Common Stock pursuant to
a Public Offering; or (ii) any Spin-Off.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set
forth in the Contribution Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.
"SHARE PERFORMANCE PLAN" shall mean the equity incentive plan
for directors, officers and employees of Newco and its Subsidiaries.
"SHARE PERFORMANCE PLAN AMOUNT" means the number of shares of
Common Stock equal to (i) 9.8% of the fully diluted Common Stock of Newco at
Closing, less (ii) the aggregate percentage of Common Stock sold pursuant to the
Management Buy-In.
"SHARES" shall mean any Common Stock held by any Stockholder
(including any equity securities issued or issuable in respect of such Common
Stock pursuant to a stock split, stock dividend, reclassification, combination,
merger, consolidation, recapitalization or other reorganization) and any other
capital stock of any class or series of Newco held by any Stockholder. As to any
particular Shares, such shares shall cease to be Shares for all purposes of this
Agreement when they have been sold or transferred pursuant to a Public Sale, and
the transferee of any Shares pursuant to a Public Sale shall not be considered a
Stockholder for purposes of this Agreement by virtue of the ownership of Shares
transferred pursuant to such Public Sale.
"SPIN-OFF" shall mean any distribution by TPI or one of its
Affiliates of all of its Shares of any class or series to its public
stockholders, if any.
"STOCKHOLDERS" means TPI, PCA and each Person other than Newco
who is or becomes bound by this Agreement; provided, however, that anything
contained in this Agreement to the contrary notwithstanding, directors, officers
and employees who directly or indirectly acquire Shares from TPI and PCA
pursuant to the Management Buy-In shall not be Stockholders for purposes of this
Agreement or bound by the terms hereof. Stockholders are sometimes individually
referred to herein as a "STOCKHOLDER".
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such Person, either
-4-
<PAGE> 6
directly or through or together with any other Subsidiary of such Person, owns
50% or more of the equity interests.
"SUBSIDIARY BOARD" has the meaning set forth in SECTION 3.3.
"TPI" shall mean Tenneco Packaging Inc., a Delaware
corporation.
"TPI HOLDERS" shall collectively refer to: (i) TPI; and (ii)
any other Stockholders who directly or indirectly acquire any Shares from TPI
except for Stockholders who directly or indirectly acquire Shares from TPI
pursuant to an Initial Period Pro-Rata Tag-Along as provided in SUBSECTION
6.3(b)(ii) below.
"TPI REGISTRABLE SECURITIES" shall have the meaning set forth
in the Registration Rights Agreement.
"VOTING STOCK" shall mean securities of Newco of any class or
series the holders of which are entitled to vote generally in the election of
directors of Newco.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", and "hereunder", and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
(d) The term "including" shall be deemed to mean "including
without limitation."
(e) Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Contribution Agreement.
ARTICLE II
BUSINESS AND OPERATIONS OF NEWCO
2.1 PURPOSES AND BUSINESS. Except as otherwise approved
pursuant to SECTION 3.6(i)(c), the sole and exclusive purpose of Newco and its
Subsidiaries shall be to engage in the business of producing and selling
containerboard and corrugated packaging products (other than folding carton,
molded fiber and honeycomb paperboard-type products), including without
limitation, the Containerboard Business (the "BUSINESS SCOPE"). Newco shall not
and shall not permit any of its Subsidiaries to (and PCA shall not cause or, to
the extent reasonably within PCA's control, permit Newco or any of its
Subsidiaries to) engage in any other activity or business except to the extent
approved by the Board in accordance with the terms and conditions hereof.
-5-
<PAGE> 7
2.2 PRINCIPAL EXECUTIVE OFFICES. The principal executive
offices of Newco shall be located at 1900 West Field Court, Lake Forest,
Illinois or such other location as determined by the Board.
2.3 ANNUAL BUSINESS PLAN.
(a) PREPARATION. No later than 90 days prior to the expiration
of any fiscal year of Newco, the Board shall discuss and approve (in the manner
set forth in SECTION 3.6 hereof) an annual business plan and budget for Newco
and its Subsidiaries (the "ANNUAL BUSINESS PLAN") for the next succeeding fiscal
year, which plan shall address, among other things:
(i) The general business direction, policies and programs
for Newco and its Subsidiaries during such period;
(ii) A budget for Newco and its Subsidiaries for such
period, setting forth projected revenues, costs and
expenses (including capital expenditures);
(iii) The extent to which Newco and/or its Subsidiaries
will make any expenditures in connection with
business acquisitions; and
(iv) Information, plans, budgets, forecasts and
projections of the nature included in the annual
business plan for 1999 set forth as EXHIBIT 2.3(a),
which shall be the initial Annual Business Plan.
The Board is expressly empowered to delegate to the management of Newco the
responsibility for the initial preparation of each Annual Business Plan, subject
to the final approval of each such plan by the Board as provided herein.
(b) EFFECT OF ANNUAL BUSINESS PLAN. The parties agree that the
business and operations of Newco and its Subsidiaries will be conducted in
accordance with the applicable Annual Business Plan in all material respects and
in compliance with SECTION 3.6 hereof.
ARTICLE III
BOARD OF DIRECTORS
3.1 GENERAL. From and after the Closing, each Stockholder will
vote all of its respective Shares and any other Voting Stock over which it
possesses direct or indirect voting power and will take all other necessary or
desirable actions within its direct or indirect control (whether in its capacity
as a stockholder of Newco or otherwise), and Newco will take all necessary and
desirable actions within its control, in order to give effect to the provisions
of this ARTICLE III. By way of example and without limiting the generality of
the foregoing, TPI and PCA shall amend the Certificate of Incorporation or
By-laws or both, as applicable, of Newco and each Subsidiary to incorporate and
effectuate the provisions in this ARTICLE III and to authorize and designate the
Junior Preferred Stock for the purpose of implementing the provisions relating
to the CEO Director as
-6-
<PAGE> 8
provided herein. With respect to the enumeration of the matters in SECTION 3.6
below, such matters shall be set forth in the By-laws (and not the Certificate
of Incorporation) except with respect to the establishment of committees of the
Board and each Subsidiary Board and the dissolution of Newco, which matters
shall be set forth in the Certificate of Incorporation.
3.2 POWERS. Subject to the provisions of the DGCL, the
Certificate of Incorporation of Newco, the By-laws of Newco and this Agreement,
the business and affairs of Newco shall be managed by or under the direction of
the Board.
3.3 SIZE AND COMPOSITION. The Board shall consist of six
individuals as follows: (i) two directors shall be designated in writing by TPI;
(ii) three directors shall be designated in writing by PCA; and (iii) the
remaining director shall be the Chief Executive Officer of Newco (the "CEO
Director"). The directors in the preceding clause (i) (the "TPI DIRECTORS") and
in the preceding clause (ii) (the "THE PCA DIRECTORS") are sometimes
collectively referred to as the "TPI/PCA DIRECTORS." TPI and PCA, as the holders
of the Junior Preferred Stock and thus entitled to elect the CEO Director,
shall: (x) at each election of directors (or filling of a vacancy with respect
to the CEO Director), elect the individual then serving as the Chief Executive
Officer of Newco as the CEO Director; and (y) remove the CEO Director if the CEO
Director ceases to serve as the Chief Executive Officer of the Company. The size
and composition of the board of directors or similar governing body of each
Subsidiary of Newco (each, a "SUBSIDIARY BOARD") and the manner in which the
initial members and any subsequent members (including any subsequent member
selected or appointed to fill a vacancy) of any such Subsidiary Board will be
the same as that of the Board. Anything to the contrary contained herein
notwithstanding, the rights of each of TPI and PCA to designate directors as
provided herein shall not be assignable (by operation of law, the transfer of
Shares or otherwise) without the prior written consent of the other; provided,
however, that each of TPI and PCA shall be entitled to assign its rights to
designate directors as provided herein to one of its Affiliates that is (or
becomes) a Stockholder without the prior written consent of the other. If
directed by PCA, a representative of J.P. Morgan & Co. shall be entitled to
attend meetings of (and receive information provided to the directors of) the
Board and each Subsidiary Board; provided, however, that such representative
shall not be or have any rights of a director of the Board or any Subsidiary
Board.
3.4 TERM; REMOVAL; VACANCIES. The members of the Board or any
Subsidiary Board other than the CEO Director shall hold office at the pleasure
of the Stockholder which designated them. Any such Stockholder may at any time,
by written notice to the other Stockholder and Newco, remove (with or without
cause) any member of the Board or any Subsidiary Board designated by such
Stockholder other than the CEO Director. Subject to applicable Law, no member of
the Board or any Subsidiary Board may be removed except by written request by
the Stockholder that designated the same. In the event a vacancy occurs on the
Board (or a Subsidiary Board) for any reason, the vacancy will be filled by the
written designation of the Stockholder entitled to designate the director
creating the vacancy.
3.5 NOTICE; QUORUM. Meetings of the Board and any Subsidiary
Board may be called upon three days' prior written notice to all directors
stating the purpose or purposes thereof. Such notice shall be effective upon
receipt, in the case of personal delivery or facsimile transmission,
-7-
<PAGE> 9
and five Business Days after deposit with the U.S. Postal Service, postage
prepaid, if mailed. The presence in person of three of the five TPI/PCA
Directors shall constitute a quorum for the transaction of business at any
special, annual or regular meeting of the Board or any Subsidiary Board. Each
Stockholder shall use its reasonable efforts to ensure that a quorum is present
at any duly convened meeting of the Board or any Subsidiary Board and each of
TPI and PCA may designate by written notice to the other an alternate
representative to act in the absence of any of its designates at any such
meeting. If at any meeting of the Board or any Subsidiary Board a quorum is not
present, a majority of the directors present may, without further notice,
adjourn the meeting from time to time until a quorum is obtained.
3.6 VOTING. Each member of the Board and each Subsidiary Board
shall be entitled to cast one vote on each matter considered by such Board and
Subsidiary Board, respectively; provided, however, that in the event that a vote
would result in a 3-3 tie with respect to a matter, the CEO Director shall not
be entitled to vote with respect to such matter (the Board and each Subsidiary
Board shall poll its members prior to any vote to effectuate the purposes of
this sentence). Except as otherwise expressly provided by this Agreement, the
act of a majority of the members of the Board and each Subsidiary Board present
at any meeting at which a quorum is present shall constitute an act of the Board
or Subsidiary Board, as applicable. Notwithstanding anything to the contrary
contained herein: (i) the following matters shall require, in addition to any
other vote required by applicable law, the affirmative vote of at least four of
the five TPI/PCA Directors; (ii) Newco shall not directly or indirectly take,
and shall not permit any of its Subsidiaries to directly or indirectly take, any
of the following actions without first obtaining such approval; and (iii) PCA
shall not cause or, to the extent reasonably within PCA's control, permit Newco
or any of its Subsidiaries to take any of the following actions without first
obtaining such approval:
(i) (a) the approval of any Annual Business Plan, (b) any
material change to an approved Annual Business Plan, and (c) engaging
in or the ownership or operation of any activities or business by Newco
and/or any of its Subsidiaries which are not within the Business Scope;
(ii) subject to applicable Law, any dissolution or liquidation
of Newco;
(iii) (a) during the 12-month period beginning on the Closing
Date, any amendment of the certificate of incorporation, articles of
incorporation, by-laws or other governing documents of Newco or any of
its Subsidiaries (other than such amendment which may be necessary in
connection with other actions (or inactions) which would be permissible
under this Agreement but for this clause (a)); and (b) from and after
such 12-month period, any amendment of the certificate of
incorporation, articles of incorporation, by-laws or other governing
documents of Newco or any of its Subsidiaries which would: (1) treat
any TPI Holder disproportionately vis-a-vis any PCA Holder; (2) place
any restriction or limitation on the ability of any TPI Holder to
Transfer all or any portion of its Shares or reduce the consideration
received or to be received by such TPI Holder in connection with such
Transfer; or (3) cause such governing documents, taken as a whole, to
be less favorable to a stockholder than the typical governing documents
of a publicly traded company engaged in a business within the Business
Scope;
-8-
<PAGE> 10
(iv) any merger, consolidation, reorganization (except as
provided in ss.253 of the DGCL and except for a merger, consolidation
or reorganization in which the consideration to be received by TPI is
cash, publicly traded securities or a combination thereof, and TPI
Holders are not treated disproportionately or differently than PCA
Holders) or the issuance of capital stock or other securities of Newco
or any of its Subsidiaries (other than: (a) the formation of or
issuance of securities of a wholly-owned Subsidiary, (b) the issuance
of up to the number of shares of Common Stock equal to the Share
Performance Plan Amount pursuant to the Share Performance Plan, (c)
issuances of a number of shares of Common Stock which, on a cumulative
basis from and after the Closing, does not exceed 5% of the number of
shares of Common Stock outstanding as of the Closing, and (d) issuances
pursuant to the Management Buy-In);
(v) the sale, transfer, exchange, license, assignment or other
disposition by Newco and/or any of its Subsidiaries of assets having a
fair market value exceeding $32.5 million in any transaction or series
of related transactions (excluding sales of inventory and other assets
in the ordinary course of business and timberlands sales pursuant to
SECTION 5.2 hereof), except in each case for Permitted Encumbrances;
(vi) the acquisition of assets (tangible or intangible) by
Newco and/or any of its Subsidiaries (including any capital expenditure
not included in the approved Annual Business Plan) for an acquisition
price exceeding $32.5 million in value in any transaction or series of
related transactions (excluding acquisitions of inventory and other
assets in the ordinary course of business);
(vii) the acquisition of another Person or an existing
business from another Person in any transaction or series of related
transactions or the entry into any partnership or formal joint venture
or similar arrangement involving an acquisition price or investment
exceeding $32.5 million in value;
(viii) the refinancing of existing indebtedness, amendment of
any existing loan or financing arrangement or incurrence of any new
indebtedness by Newco and/or any of its Subsidiaries on terms which
either: (a) are, taken as a whole, less favorable to Newco and its
Subsidiaries than the terms then reasonably available in the financial
markets to similarly situated borrowers; (b) place any restriction or
limitation on the ability of any TPI Holder to Transfer all or any
portion of its Shares; or (c) include any event of default or other
materially adverse consequence to Newco and/or any of its Subsidiaries
(including, for example, an increase in the interest rate) as a result
of a sale of all or a portion of any Stockholder's Shares;
(ix) the making or guarantee by Newco or any of its
Subsidiaries of any loan or advance to any Person except: (a) in the
ordinary course of business; (b) to a wholly owned Subsidiary; (c) for
advances to employees in amounts not to exceed $500,000 to any one
individual and $5 million in the aggregate; (d) for loans or advances
made in connection with any acquisition of the business, capital stock
or assets or any other Person that is otherwise permitted or approved
as provided by this SECTION 3.6; and (e) guarantees, loans and
-9-
<PAGE> 11
advances in connection with the Management Buy-In and Share Performance
Plan, not to exceed $15 million in the aggregate;
(x) the entry into, or amendment of, contracts or other
transactions between Newco and/or any of its Subsidiaries, on the one
hand, and a Stockholder or any Affiliate thereof, on the other hand
except for: (a) the execution and delivery of the Contribution
Agreement, Ancillary Agreements and other documents and agreements to
be delivered by Newco at Closing pursuant to the Contribution
Agreement; and (b) contracts, amendments and transactions which are no
less favorable to Newco and its Subsidiaries than could be obtained
from TPI or its Affiliates or Independent Third Parties negotiated on
an arms-length basis;
(xi) the direct or indirect redemption, retirement, purchase
or other acquisition of any equity securities of Newco or any of its
Subsidiaries (other than securities of its wholly owned Subsidiary)
except for pro rata redemptions with respect to the proceeds received
from the disposition of the timberlands or any of the assets or
operations related thereto or located thereon or pursuant to the
provisions of agreements with employees of the Corporation or its
Subsidiaries under which such equity securities were originally issued
to such employees;
(xii) the appointment of the members of any committee of the
Board or any Subsidiary Board, unless at least one member of such
committee is a director who was designated by TPI;
(xiii) (a) the creation of any Subsidiary, unless: (1) all of
the equity interests of such Subsidiary are owned by Newco, or by
another Subsidiary in which all the equity interests of such other
Subsidiary are owned directly or indirectly by Newco; and (2) the
by-laws or similar governing documents of each such Subsidiary contain
provisions regarding the size, composition, quorum requirements and
voting of the board of directors equivalent to those provided for
herein with respect to Newco; and (b) the Transfer of any equity
interest in a Subsidiary other than to Newco or another Subsidiary in
which all the equity interests of such other Subsidiary are owned by
Newco.
(xiv) removal of the independent public auditors of Newco or a
Subsidiary of Newco or appointment of any public auditors which are not
one of the Big Five accounting firms; and
(xv) delegation of any of the matters covered by any of
clauses (i) through (xiv) above to any committee of the Board or
committee of any Subsidiary Board.
Notwithstanding the foregoing: (i) the approvals required by
this SECTION 3.6 with respect to any of the matters in SUBSECTIONS (ii) THROUGH
(xv) above shall not apply to any matter included in an Annual Business Plan
which has been approved pursuant to this SECTION 3.6; (ii) nothing in this
SECTION 3.6 shall restrict the sale of the timberlands or any of the assets or
operations related thereto or located thereon; and (iii) nothing in this SECTION
5 shall restrict the
-10-
<PAGE> 12
issuances of management equity (representing in the aggregate up to 9.8% of
Newco's outstanding Common Stock) and the related distribution of proceeds from
such issuance and the repurchase of the corresponding number of outstanding
shares for such issuances as contemplated in the Contribution Agreement.
TPI hereby covenants and agrees, as more fully described in
this paragraph, that it shall use its reasonable good faith efforts to not cause
or, to the extent reasonably within its control, permit any member of the Board
or Subsidiary Board designated by TPI to withhold approval of a matter
recommended for approval by management of Newco and presented to the Board or
Subsidiary Board for consideration which requires the affirmative vote of four
of the five TPI/PCA Directors pursuant to this SECTION 3.6. TPI's covenant and
agreement in the preceding sentence: (i) shall relate only to matters, the
approval of which TPI determines in good faith are in the best interests of TPI
and its stockholders and Affiliates; and (ii) is exclusive to TPI and shall not
be binding upon any direct or indirect transferee of TPI's Shares.
3.7 TELEPHONIC MEETINGS; WRITTEN CONSENTS. Except as may
otherwise be provided by applicable Law, any action required or permitted to be
taken at any meeting of the Board or any committee thereof may be taken without
a meeting pursuant to a written consent, in compliance with the DGCL and SECTION
3.6 hereof and such written consent is filed with the minutes of the proceedings
of the Board or such committee. Any meeting of the Board or any committee
thereof may be held by conference telephone or similar communication equipment,
so long as all Board or committee members participating in the meeting can hear
one another clearly, and participation in a meeting by use of conference
telephone or similar communication equipment shall constitute presence in person
at such meeting.
3.8 INITIAL DIRECTORS. TPI and PCA shall make their
designations pursuant to SECTION 3.3 on or prior to the Closing Date.
3.9 RECAPITALIZATION OF NEWCO UNDER CERTAIN CIRCUMSTANCES. For
any Public Offering or Spin-Off prior to the time Newco becomes subject to the
Exchange Act with respect to Shares: (i) Newco shall use commercially reasonable
efforts to effect a stock split, stock dividend or stock combination which, in
the opinion of the managing underwriter for the Public Offering or TPI's
financial advisor in connection with a Spin-Off, is desirable for the sale,
marketing or distribution of the Shares to the public; and (ii) each Stockholder
agrees to vote all of its respective Shares and any other Voting Stock over
which it posses direct or indirect voting power in order to cause such stock
split, dividend or combination to be effected consistent with the provisions of
this SECTION 3.9.
ARTICLE IV
ACCOUNTING, BOOKS AND RECORDS
4.1 FISCAL YEAR. The fiscal year of Newco shall be the period
commencing January 1 in any year and ending December 31 of that year, except
that the first fiscal year of Newco shall commence on the Closing Date and end
on December 31 of the year in which the Closing Date occurs.
-11-
<PAGE> 13
4.2 BOOKS AND RECORDS. Newco shall keep at its principal
executive offices books and records typically maintained by Persons engaged in
similar businesses and which set forth a true, accurate and complete account of
the business and affairs of Newco and its Subsidiaries, including a fair
presentation of all income, expenditures, assets and liabilities thereof. Such
books and records shall include all information reasonably necessary to permit
the preparation of financial statements required by applicable Law in accordance
with GAAP. Each Stockholder who, together with its Affiliates, owns 17-1/2% or
more of the outstanding common equity of Newco (a "17-1/2% Stockholder") and its
respective authorized representatives shall have the right, at all reasonable
times and upon reasonable advance written notice to Newco, to have access to,
inspect, audit and copy the original books, records, files, securities,
vouchers, canceled checks, employment records, bank statements, bank deposit
slips, bank reconciliations, cash receipts and disbursement records, and other
documents of Newco and its Subsidiaries.
4.3 AUDITORS. Newco shall engage one of the Big Five
accounting firms as the initial independent public auditors of Newco and its
Subsidiaries.
4.4 REPORTING. Newco shall use its reasonable best efforts to
deliver to each Stockholder unaudited consolidated interim financial statements
for Newco and its Subsidiaries for such fiscal quarter (including a balance
sheet as of the end of such period and statements of income, stockholders'
equity and cash flows for such period within 30 days after the close of each
fiscal quarter. Newco will use its reasonable best efforts to deliver to each
Stockholder within 60 days after the close of each fiscal year of Newco
consolidated annual financial statements for Newco and its Subsidiaries for such
fiscal year (including a balance sheet as of the end of such fiscal year and
statements of income, stockholders' equity and cash flows for such fiscal year),
in each case audited and certified by the CPA Firm. Such annual and interim
financial statements shall contain such statements and schedules, prepared in
accordance with the requirements of the Stockholders, as may be requested in
writing by any of the 17-1/2% Stockholders. Newco shall bear the cost of
providing financial and accounting information reasonably required by any of the
17-1/2% Stockholders in the preparation of such 17-1/2% Stockholder's own
financial statements. Such annual and interim financial statements shall be
prepared in accordance with GAAP, shall be true and accurate in all material
respects and shall present fairly the financial position and results of
operations of Newco.
4.5 STOCKHOLDER'S AUDIT. Upon reasonable advance written
notice to Newco, any Stockholder may request an audit of the books and records
of Newco and its Subsidiaries (a "STOCKHOLDER'S AUDIT") by an independent
auditor of its selection, other than the CPA Firm. Any Stockholder's Audit shall
be at the expense of the requesting 17-1/2% Stockholder unless material error or
fraud is found, in which case such audit shall be at the expense of Newco. All
information obtained by any 17-1/2% Stockholder in any such audit shall be
treated as confidential.
4.6 CONSENT OF NEWCO AUDITORS. Upon request from time to time
by TPI, Newco shall use its commercially reasonable efforts to obtain the
written agreements of Newco's auditors to permit the use of Newco's Audited
Financial Statements in connection with TPI's and/or its Affiliates filings made
with the Securities and Exchange Commission and, subject to such auditor's
normal procedures, in private or public offerings of securities of TPI and/or
its Affiliates as may be
-12-
<PAGE> 14
reasonably requested by TPI. In addition, Newco will use commercially reasonable
efforts to cause Newco's auditors to provide a comfort letter in accordance with
SAS 72 for any such offering.
ARTICLE V
CERTAIN MATTERS REGARDING STOCKHOLDERS AND NEWCO
5.1 TRANSACTIONS BETWEEN STOCKHOLDERS AND NEWCO. The
Stockholders hereby approve on behalf of Newco the Contribution Agreement and
each of the Ancillary Agreements and other documents and agreements to be
delivered by Newco at the Closing pursuant to the Contribution Agreement, and
the transactions contemplated thereby.
5.2 SALE OF TIMBERLANDS. Newco, TPI and PCA hereby acknowledge
that it is their mutual intention to effect a sale for cash of the timberlands
(and the assets and operations related thereto and located thereon) included in
the Contributed Assets and to distribute the net proceeds from any such sale as
soon as practicable following the Closing Date. If and to the extent the net
proceeds from any such sale are distributed to the holders of the Common Stock,
such distribution shall be on a pro-rata basis among such holders.
ARTICLE VI
TRANSFER OF SHARES
6.1 GENERAL. No Stockholder will directly or indirectly sell,
assign, pledge, encumber, hypothecate, dispose of or otherwise transfer
("TRANSFER") any Shares or interest in any Shares, agree to any such Transfer or
permit any such interest to be subject to Transfer, directly or indirectly, by
merger or other operation of law, agreement or otherwise, except pursuant to and
in compliance with the provisions of this ARTICLE VI. Any purported Transfer in
any other manner, unless otherwise expressly permitted by this ARTICLE VI, shall
be null and void, and shall not be recognized or given effect by Newco or any
Stockholder. Any other provision of this Agreement, including, without
limitation, in this Article VI, to the contrary notwithstanding (except pursuant
to Section 8.1), neither TPI nor PCA shall Transfer any Shares of the Junior
Preferred Stock prior to the termination of this Agreement.
6.2 TRANSFERS BY TPI HOLDERS.
(a) PERMITTED TRANSFERS. A TPI Holder may at any time, without
the consent of any other Stockholder, Transfer any or all of its Shares or
interests in Shares to any Affiliate or third Person or Persons or pursuant to a
Public Sale, subject to the remaining provisions of this SECTION 6.2; provided,
however, that, except in the case of a Public Sale, TPI shall not Transfer any
Shares to any other Person then engaged, directly or indirectly, in a business
within the Business Scope with annual revenues from such business in excess of
$100 million without PCA's prior written consent. The foregoing consent right
shall not be assignable by PCA or inure to the benefit of any transferee,
successor or assign of PCA, except for an Affiliate of PCA who is (or becomes) a
Stockholder. Notwithstanding the foregoing and except in the case of a Public
Sale or sale to directors, officers or employees of Newco pursuant to the
Management Buy-In, any Transfer of Shares by a TPI Holder shall be null and void
and Newco shall refuse to recognize such Transfer
-13-
<PAGE> 15
unless the transferee executes and delivers to each party hereto an agreement (a
"TPI JOINDER AGREEMENT"): (i) acknowledging that all Shares or interests in any
Shares so transferred are and shall remain subject to this Agreement; and (ii)
agreeing to be bound hereby. Upon execution of a TPI Joinder Agreement, except
as otherwise expressly provided herein and except for any right hereunder to
consent to any action or proposed action (including, without limitation, any
proposed Transfer of Shares), the rights of the transferring TPI Holder
hereunder with respect to the Shares transferred shall be assigned to such
transferree. Any TPI Holder shall notify the other parties of any intended
Transfer of Shares or interests in Shares pursuant to this SECTION 6.2 (other
than pursuant to an Exempt Sale), giving the name and address of the intended
transferee; provided, however, that no otherwise valid Transfer shall be
rendered invalid solely as a result of a failure to give notice hereunder.
Transferees of a TPI Holder shall assume all obligations of the transferring TPI
Holder hereunder, but, except with respect to an Affiliate of TPI, shall not be
entitled to any rights of a TPI Holder.
6.3 TRANSFERS BY PCA HOLDERS.
(a) PERMITTED TRANSFERS. A PCA Holder may at any time, without
the consent of any other Stockholder, (i) Transfer any or all of its Shares to
an Affiliate of PCA, (ii) Transfer any or all its Shares pursuant to an Exempt
Sale, or (iii) sell any or all of its Shares to any other third Person or
Persons or pursuant to a Public Sale or otherwise Transfer Shares, subject to
the remaining provisions of this SECTION 6.3. The foregoing consent right shall
not be assignable by TPI or inure to the benefit of any transferee, successor or
assign of TPI, except for an Affiliate of TPI who is (or becomes) a Stockholder.
Notwithstanding the foregoing and except in the case of a Public Sale or sale to
directors, officers or employees of Newco pursuant to the Management Buy-In, any
Transfer of Shares by an PCA Holder shall be null and void and Newco shall
refuse to recognize such Transfer unless the transferee executes and delivers to
each party hereto an agreement (an "PCA JOINDER AGREEMENT"): (i) acknowledging
that all Shares or interests in any Shares so transferred are and shall remain
subject to this Agreement; and (ii) agreeing to be bound hereby. Upon execution
of an PCA Joinder Agreement, except as otherwise expressly provided herein and
except for any right hereunder to consent to any action or proposed action
(including, without limitation, any proposed Transfer of Shares), the rights of
the transferring PCA Holder hereunder with respect to the Shares transferred
shall be assigned to such transferee. Any PCA Holder shall notify the other
parties of any intended Transfer of Shares or interests in Shares pursuant to
this SECTION 6.3 (other than an Exempt Sale), giving the name and address of the
intended transferee; provided, however, that no otherwise valid Transfer shall
be rendered invalid solely as a result of a failure to give notice hereunder.
(b) TAG-ALONG RIGHTS. TPI and its Affiliates shall have
tag-along rights as provided in this SECTION 6.3(b):
(i) In the event any PCA Holder desires to sell all or any
part of any class or series of its Shares to a third Person (other than pursuant
to an Exempt Sale), it shall provide prior written notice (the "SALE NOTICE") to
TPI setting forth in reasonable detail the terms and conditions on which the
proposed sale is to be made and identifying the proposed purchaser. TPI shall
have the option (the "TAG-ALONG OPTION") to sell any or all of its Shares of the
same class and series to
-14-
<PAGE> 16
the proposed purchaser on the terms and conditions set forth in such Sale Notice
subject to the provisions set forth in this Section 6.3(b). TPI shall exercise
its Tag-Along Option by giving written notice to PCA within ten Business Days
following its receipt of the Sale Notice, which notice shall specify the number
of Shares of the same class and series as to which TPI is exercising its
Tag-Along Right (the "SPECIFIED SHARES"). In the event TPI exercises its
Tag-Along Option with respect to any Sale Notice: (A) if such exercise is within
14 months after the Closing Date, the PCA Holder shall not be entitled to sell
any of its Shares unless and until the prospective purchasers or PCA has
purchased all of the Specified Shares; and (B) if such exercise is more than 14
months after the Closing Date, TPI shall be entitled to sell its pro rata share
(based on the number of Shares proposed to be sold by the PCA Holder and TPI,
respectively) of the Shares proposed to be sold by the PCA Holder in the Sale
Notice, in each case on terms and conditions no less favorable than specified in
the Sale Notice or otherwise applicable to the sale to such prospective
purchasers by the PCA Holder. In the event TPI does not exercise its Tag-Along
Option with respect to any Sale Notice, the PCA Holder shall be entitled to sell
all or any part of its Shares as specified in the Sale Notice to the prospective
purchaser specified in the Sale Notice on the terms and conditions set forth in
the Sale Notice (subject to the provisions of the third sentence of SECTION
6.3(a) hereof).
(ii) Notwithstanding SUBSECTION 6.3(b)(i) above, with respect
to sales by a PCA Holder of any part of any class or series of its Shares to a
third Person (other than pursuant to an Exempt Sale) prior to the expiration of
the six-month period beginning on the Closing Date at a per share price which
does not exceed the per share price paid (excluding any interest for the
carrying cost of such Share) by such PCA Holder for such Shares pursuant to the
Contribution Agreement:
(A) TPI and its Affiliates shall not have a Tag-Along
Option during such six-month period for (i) sales of
Shares (other than PIK Preferred) in the aggregate
amount of $40 million; and (ii) the sale of 9.3% of
the number of Shares of PIK Preferred issued at
Closing ("EXCLUDED TAG-ALONG SALES); and
(B) TPI shall have a Tag-Along Option on a pro-rata basis
(i.e., on the same basis applicable 14 months after
the Closing Date as provided in SUBSECTION 6.3(b)(i)
above) with respect to such sales of Shares by PCA
Holders during such six-month period in excess of the
Excluded Tag Along Sales up to an aggregate amount of
consideration for such additional sales of $100
million (the "INITIAL PERIOD PRO-RATA TAG-ALONG").
The provisions of this SUBSECTION 6.3(b)(ii) shall terminate upon the expiration
of the six-month period beginning on the Closing Date.
(iii) Notwithstanding anything in this Agreement to the
contrary, the rights under this SECTION 6.3(b) shall be exclusive to TPI and its
Affiliates and shall not be assignable to or inure to the benefit of any
transferee of TPI or any successors or assigns of TPI, other than Affiliates of
TPI.
6.4 DRAG-ALONG RIGHTS.
-15-
<PAGE> 17
(a) DRAG-ALONG SALE. If a sale of all or substantially all of
Newco's assets determined on a consolidated basis or a sale of all or
substantially all of Newco's outstanding capital stock (whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise) to
any Independent Third Party or group of Independent Third Parties is approved by
the Board or the holders of a majority of the Shares of Common Stock held by the
PCA Holders (a "DRAG-ALONG SALE"), each Stockholder will consent to raise no
objections against such Drag-Along Sale on the terms and subject to the
conditions set forth in the remaining provisions of this SECTION 6.4.
(b) DRAG-ALONG NOTICE. A notice regarding any Drag-Along Sale
(a "DRAG-ALONG NOTICE") shall be delivered within two Business Days following
approval of any Drag-Along Sale by Newco or the PCA Holders to each Stockholder.
The Drag-Along Notice shall include a copy of a bona fide offer from the
intended buyer, which shall set forth the principal terms of the Drag-Along
Sale, including the name and address of the intended buyer.
(c) DRAG-ALONG SALE OBLIGATIONS. In connection with any
Drag-Along Sale, the Stockholders shall, and shall elect directors who shall,
take all necessary or desirable actions in connection with the consummation of
the Drag-Along Sale. If the Drag-Along Sale is structured as: (i) a merger or
consolidation, each Stockholder shall waive any dissenters rights, appraisal
rights or similar rights in connection with such merger or consolidation; (ii) a
sale of stock, each Stockholder shall agree to sell all of its Shares and rights
to acquire Shares on the terms and conditions so approved; or (iii) a sale or
assets, each Stockholder shall vote in favor of such sale and any subsequent
liquidation of Newco or other distribution of the proceeds therefrom. Each
Stockholder shall take all necessary or desirable actions in connection with the
consummation of the Drag-Along Sale reasonably requested by PCA or Newco, and
each Stockholder shall be obligated to agree on a pro rata, several (and not
joint) basis (based on the share of the aggregate proceeds paid in such
Drag-Along Sale) to any indemnification obligations that the PCA Holders agree
to provide in connection with such Drag-Along Sale (other than any such
obligations that relate specifically to a particular holder of Shares such as
indemnification with respect to representations and warranties given by a holder
regarding such holder's title to and ownership of Shares).
(d) CONDITIONS TO DRAG-ALONG SALE OBLIGATIONS. The obligations
of each Stockholder with respect to a Drag-Along Sale are subject to the
satisfaction of the following conditions: (i) the consideration to be received
by the Stockholders with respect to the Drag-Along Sale shall consist only of
cash, publicly-traded securities, or a combination of cash and publicly-traded
Securities; (ii) if any holders of a class or series of Shares are given an
option as to the form and amount of consideration to be received, each holder of
such class or series of Shares will be given the same option; (iii) each holder
of then currently exercisable rights to acquire shares of a class or series of
Shares will be given an opportunity to exercise such rights prior to the
consummation of the Drag-Along Sale and participate in such sale as holders of
such class or series of Shares; and (iv) each Stockholder shall be entitled to
receive consideration per each Share in connection with the Drag-Along Sale at
least equivalent to the consideration received per each Share of the same class
and series by any PCA Holder in connection with the Drag-Along Sale.
(e) EXPENSES. Each Stockholder will bear its pro-rata share
-16-
<PAGE> 18
(based on the share of the aggregate proceeds paid in such Drag-Along Sale) of
the costs of any sale of Shares pursuant to a Drag-Along Sale to the extent such
costs are incurred for the benefit of all holders of Common Stock and are not
otherwise paid by Newco or the acquiring party. For purposes of this SECTION
6.4(e), costs incurred in exercising reasonable efforts to take all necessary
actions in connection with the consummation of a Drag-Along Sale in accordance
with this SECTION 6.4 shall be deemed to be for the benefit of all holders of
Common Stock. Costs incurred by Stockholders on their own behalf will not be
considered costs of the transaction hereunder.
(f) EXCEPTION TO DRAG-ALONG. Notwithstanding anything to the
contrary contained in this SECTION 6.4, no Stockholder shall have any obligation
under this SECTION 6.4 with respect to a Drag-Along Sale if the Drag-Along
Notice with respect to the Drag-Along Sale is received by TPI after the holders
of TPI Registrable Securities have requested a Demand Registration and for a
period thereafter ending on the date following consummation of the sale of all
Shares subject to such Demand Registration unless, in the opinion of the
managing underwriter for such Demand Registration, the per Share consideration
payable pursuant to the Drag-Along Sale exceeds the net proceeds per Share
expected to be received by selling stockholders pursuant to the Demand
Registration.
6.5 INDIRECT TRANSFERS OF INTERESTS. Any Transfer of equity
securities of PCA which results in the group of Persons holding such equity
securities immediately following the transactions contemplated in the
Contribution Agreement from ceasing to beneficially own, as a group, directly or
indirectly, 50.1% or more of the equity securities of PCA or enough voting
equity of PCA to be able to cause a majority of the board of managers (or
equivalent governing body or members) to be elected shall be deemed to be a
Transfer of Shares hereunder and any such Transfer shall be subject to the
provisions of this ARTICLE VI as if PCA had directly transferred Shares.
6.6 LEGENDS. A copy of this Agreement shall be filed with the
Secretary of Newco and kept with the records of Newco. Each of the Stockholders
hereby agrees that each outstanding certificate representing Shares shall bear
a conspicuous legend reading substantially as follows:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933 or the applicable state and
other securities laws and may not be sold, pledged, hypothecated,
encumbered, disposed of or otherwise transferred without compliance
with the Securities Act of 1933 or any exemption thereunder and
applicable state and other securities laws. The securities represented
by this Certificate are subject to the restrictions on transfer and
other provisions of a Stockholders Agreement dated as of April 12,
1999, (as amended from time to time, the "Agreement") by and among
Packing Corporation of America (the "Company") and certain of its
stockholders, and may not be sold, pledged, hypothecated, encumbered,
disposed of or otherwise transferred except in accordance therewith. A
copy of the Agreement is on file at the principal executive offices of
the Company.
-17-
<PAGE> 19
ARTICLE VII
RIGHTS ON NEW SECURITY ISSUANCE
7.1 PREEMPTIVE RIGHTS. Newco hereby grants to each Stockholder
the irrevocable and exclusive first option (the "FIRST OPTION") to purchase all
or part of its Pro Rata Portion of any New Securities which Newco may, from time
to time after the date of this Agreement, propose to issue and sell or otherwise
transfer.
7.2 NOTICES WITH RESPECT TO PROPOSED ISSUANCE OF NEW
SECURITIES. In the event Newco proposes to undertake an issuance or other
transfer of New Securities, it shall give each Stockholder entitled to a First
Option pursuant to this ARTICLE VII written notice (the "COMPANY NOTICE") of its
intention, describing in detail the type of New Securities, the price and the
terms upon which Newco proposes to issue or otherwise transfer such New
Securities. Each such Stockholder shall have 10 Business Days from the date of
receipt of any such Company Notice to agree to purchase, pursuant to the
exercise of the First Option, up to such Stockholder's Pro Rata Portion of each
type and class and series of such New Securities (i.e., the same strips) for the
price and upon the terms and conditions specified in the Company Notice by
giving written notice to Newco and stating therein the quantity of New
Securities to be purchased.
7.3 COMPANY'S RIGHT TO COMPLETE PROPOSED SALE OF NEW
SECURITIES TO THE EXTENT PREEMPTIVE RIGHTS ARE NOT EXERCISED. In the event the
Stockholders fail to exercise a preemptive right with respect to any New
Securities within The periods specified in SECTION 7.2, Newco shall have 90 days
thereafter to sell or enter into an agreement (pursuant to which the sale of
such New Securities shall be closed, if at all, within 45 days from the date of
said agreement) to sell the New Securities not elected to be purchased by the
Stockholders at the price and upon terms not substantially more favorable to the
prospective purchasers of such securities than those specified in Newco Notice.
In the event Newco has not sold the New Securities or entered into an agreement
to sell the New Securities within said 90-day period. Newco shall not thereafter
issue or sell or otherwise transfer such New Securities without first offering
such securities to the Stockholders in the manner provided in this ARTICLE VII.
7.4 CLOSING OF PURCHASE. If a Stockholder elects to purchase
up to its Pro Rata Portion of any New Securities set forth in any Company
Notice, such purchase shall be consummated at such time and at such location
selected by Newco upon reasonable advance notice. At the consummation of any
purchase and sale of New Securities pursuant to this ARTICLE VII: (i) Newco
shall issue or otherwise transfer to the Stockholder the certificates evidencing
the New Securities being purchased, together with such other documents or
instruments reasonably required by counsel for the Stockholder to consummate
such purchase and sale; (ii) the Stockholder will deliver the cash consideration
payable by wire transfer of immediately available funds to an account or
accounts designated in writing by Newco (such designation to be made no later
than two Business Days prior to the date of such consummation); (iii) Newco
shall deliver to the Stockholder a written representation that the New
Securities are being purchased and sold free and clear of any and all
Encumbrances; and (iv) the Stockholder shall deliver to Newco such written
investment representations as may reasonably be required by counsel to Newco for
securities Laws purposes and
-18-
<PAGE> 20
all other applicable representations and warranties as other purchasers of New
Securities. Notwithstanding the foregoing, any purchase of New Securities
pursuant to this Article VII shall be on the same terms and conditions as set
forth in the Company Notice.
ARTICLE VIII
TERM
8.1 TERM. Subject to the next sentence, unless earlier
terminated by mutual agreement of TPI and PCA, this Agreement shall terminate
upon the earliest to occur of: (i) the complete liquidation or dissolution of
Newco or its Subsidiaries; (ii) a Public Offering; (iii) such date as TPI and
its Affiliates first hold less than 17-1/2% of Newco's outstanding Common Stock
or; (iv) the acquisition of all or substantially all of the stock or assets of
TPI (whether by stock sale, asset sale, merger, consolidation, combination or
otherwise) by a Person engaged, directly or indirectly, in a business within the
Business Scope with annual revenues from such business in excess of $100
million; provided; however, that in the case of termination pursuant to clause
(iv), TPI (or its successor in interest) shall (unless or until this Agreement
is terminated pursuant to clauses (i)-(iii)) have the right at each election of
directors to designate as the two TPI Directors of Newco and each Subsidiary who
are not directors, officers, employees or affiliates of such Person and are
approved by PCA, such approval not to be unreasonably withheld; provided,
further, that in case of any termination pursuant to this SECTION 8.1, unless
otherwise determined by PCA, this Agreement shall nevertheless remain in full
force and effect with respect to the drag-along provisions set forth in SECTION
6.4 and all related definitions and provisions to the extent necessary or
desirable to give full force and effect to SECTION 6.4. The rights of each of
TPI and PCA to terminate this Agreement by mutual agreement and the right of PCA
to terminate this Agreement with respect to the drag-along provisions of SECTION
6.4 are not assignable by TPI or PCA, and shall not inure to the benefit of any
transferee, successor or assign of TPI or TPI, other than to an Affiliate of
such party who is (or becomes) a Stockholder, without the prior written consent
of the other. Upon the termination of this Agreement pursuant to clauses
(i)-(iv) (regardless of whether certain provisions of this Agreement survive
such termination), TPI shall sell the 45 shares of Junior Preferred Stock held
by it to PCA for the fair market value thereof, as determined by the auditors of
Newco.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if: (i) delivered in
person (to the individual whose attention
-19-
<PAGE> 21
is specified below) or via facsimile (followed immediately with a copy in the
manner specified in clause (ii) hereof); (ii) sent by prepaid first-class
registered or certified mail, return receipt requested; or (iii) sent by
recognized overnight courier service, as follows:
to Newco:
Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Attention: Chief Executive Officer
to TPI:
Tenneco Packaging Inc.
1900 West Field Court
Lake Forest, IL 60045
Attention: President
Facsimile: (847) 482-4589
with a copy to:
Tenneco Packaging Inc.
1900 West Field Court
Lake Forest, IL 60045
Attention: General Counsel
Facsimile: (847) 482-4589
with a copy to:
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Attention: Timothy R. Donovan
Facsimile: (312) 840-7271
to PCA:
PCA Packaging LLC
c/o Madison Dearborn Partners, Inc.
Three First National Plaza
Suite 3800
Chicago, IL 60602
Attention: Samuel M. Mencoff
Justin S. Huscher
Facsimile: (312) 895-1056
-20-
<PAGE> 22
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch, P.C.
Facsimile: (312) 861-2200
to other Stockholders:
To the address which appears
on the books and records
of Newco
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner. All notices and other communications
hereunder shall be effective: (i) the day of delivery when delivered by hand,
facsimile or overnight courier; and (ii) three Business Days from the date
deposited in the mail in the manner specified above.
9.2 AMENDMENT; WAIVER. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed: (i) in the case of an amendment, by: (A) Newco; (B) Stockholders holding
a majority of the Shares of Common Stock held by the TPI Holders; (C)
Stockholders holding a majority of the Shares of Common Stock held by PCA
Holders; and (D) by each of PCA and TPI (in each case only so long as such
Person or any of its Affiliates is a Stockholder); or (ii) in the case of a
waiver, by the party against whom the waiver is to be effective. The rights of
TPI and PCA to consent to a amendment to this Agreement shall not be assignable
by TPI or PCA and shall not inure to the benefit of any transferee, successor or
assign of TPI or PCA, other than to an Affiliate of such party who is a (or in
connection therewith, becomes) Stockholder, without the prior written consent of
the other. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Except as otherwise provided
herein, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
9.3 ASSIGNMENT. Except as otherwise expressly provided herein,
no party to this Agreement may assign any of its rights or obligations under
this Agreement without the prior written consent of the other parties hereto.
9.4 ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto), contains the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
9.5 PUBLIC DISCLOSURE. Each of the parties hereby agrees that,
except as may be required to comply with the requirements of any applicable Laws
or the rules and regulations of any stock exchange upon which its securities (or
the securities of one of its Affiliates) are traded, it shall
-21-
<PAGE> 23
not make or permit to be made any press release or similar public announcement
or communication concerning the execution or performance of this Agreement
unless specifically approved in advance by all parties hereto. In the event,
however, that legal counsel for any party is of the opinion that a press release
or similar public announcement or communication is required by Law or by the
rules and regulations of any stock exchange on which such party's securities (or
the securities of one of such party's Affiliates) are traded, then such party
may issue a public announcement limited solely to that which legal counsel for
such party advises is required under such Law or such rules and regulations (and
the party making any such announcement shall provide a copy thereof to the other
party for review before issuing such announcement).
9.6 PARTIES IN INTEREST. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than Newco, TPI, PCA or their
respective successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
9.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF
FORUM. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without giving effect to its principles of
conflicts of laws. Each party hereto agrees that it shall bring any action or
proceeding in respect of any claim arising out of or related to this agreement
or the transactions contained in or contemplated by this agreement, whether in
tort or contract or at law or in equity, exclusively in any United States
federal court or any state court located in the State of Illinois (the "CHOSEN
COURTS") and: (i) irrevocably submits to the exclusive jurisdiction of the
Chosen Courts; (ii) waives any objection to laying venue in any such action or
proceeding in the Chosen Courts; (iii) waives any objection that the Chosen
Courts are an inconvenient forum or do not have jurisdiction over any party
hereto; and (iv) agrees that service of process upon such party in any such
action or proceeding shall be effective if notice is given in accordance with
SECTION 9.1 of this Agreement.
9.8 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same Agreement.
9.9 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof or
thereof. If any provision of this Agreement, or the application thereof to any
Person or any circumstance, is invalid or unenforceable: (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision; and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
-22-
<PAGE> 24
9.10 HEADINGS. The heading references and the table of contents
herein are for convenience purposes only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
9.11 EQUITABLE RELIEF. Each party acknowledges that money
damages would be inadequate to protect against any actual or threatened breach
of this Agreement by any party and that each party shall be entitled to
equitable relief, including specific performance and/or injunction, without
posting bond or other security in order to enforce or prevent any violations of
the provisions of this Agreement.
9.12 NO PARTNERSHIP. This Agreement shall not constitute an
appointment of any party as the agent of any other party, nor shall any party
have any right or authority to assume, create or incur in any manner any
obligation or other liability of any kind, express or implied, against, in the
name or on behalf of, any other party. Nothing herein or in the transactions
contemplated by this Agreement shall be construed as, or deemed to be, the
formation of a partnership by or among the parties hereto.
* * * *
-23-
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
TENNECO PACKAGING INC.
By: /s/ James V. Faulkner, Jr.
-------------------------------
Name: James V. Faulkner, Jr.
Title: Vice President
PCA HOLDINGS LLC
By: /s/ Samuel M. Mencoff
-------------------------------
Name: Samuel M. Mencoff
Title: Managing Director
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
-------------------------------
Name: Richard B. West
Title: Secretary
-24-
<PAGE> 1
EXHIBIT 10.33
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("AGREEMENT") is made as of
this 12th day of April, 1999 by and among Tenneco Packaging Inc., a Delaware
corporation ("TPI"), PCA Holdings LLC, a Delaware limited liability company
("PCA"), and Packaging Corporation of America, a Delaware corporation ("NEWCO").
PRELIMINARY RECITALS
1. TPI, PCA and Newco are parties to that certain
Contribution Agreement, dated as of January 25, 1999, as amended (the
"CONTRIBUTION AGREEMENT"), relating to the organization, ownership and
management of Newco and certain other matters.
2. As an inducement to TPI and PCA to enter into and
consummate the transactions contemplated by the Contribution Agreement, Newco
has agreed to provide certain registration rights to TPI and PCA and transferees
(to the extent provided herein) of their equity securities of Newco as provided
herein.
NOW, THEREFORE, the parties hereto AGREE as follows:
1. CERTAIN DEFINITIONS.
"COMMON STOCK" means the common stock, par value $.01 per
share, of Newco.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company or other unincorporated organization, and a governmental
entity or any department, agency or political subdivision thereof.
"PIK SECURITIES" means the preferred stock of Newco with a
pay-in-kind feature, as described in the Commitment Letters (as such term is
defined in the Contribution Agreement).
"REGISTRABLE SECURITIES" means, as of any date: (i) Common
Stock and PIK Securities issued pursuant to the Contribution Agreement to TPI,
PCA or any of their respective Affiliates on the date hereof; and (ii) any
Common Stock or PIK Securities issued or issuable with respect to the Common
Stock or PIK Securities in the preceding clause (i) by way of or in connection
with a stock dividend, stock split, combination of shares, share subdivision,
share exchange, recapitalization, merger, consolidation or other reorganization
or transaction (including without limitation any PIK Securities issued pursuant
to the terms of PIK Securities). As of any date, Registrable Securities owned by
TPI or any of its Affiliates are sometimes referred to herein as "TPI
REGISTRABLE SECURITIES." As of any date, Registrable Securities owned by PCA, by
its members which are members of PCA as of the date hereof or by any of their
Affiliates are sometimes referred to herein as "PCA REGISTRABLE SECURITIES." As
of any date, Registrable Securities owned by any direct or indirect transferee
of TPI (other than an Affiliate of TPI) or by any direct or indirect transferee
of PCA (other than an Affiliate of PCA or member of PCA as of the date hereof)
are sometimes referred to herein as "TRANSFEREE REGISTRABLE SECURITIES." As to
any particular
<PAGE> 2
Registrable Securities, such securities will cease to be Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act of 1933, as amended from time to time (the "SECURITIES
ACT"), or distributed to the public in compliance with Rule 144 under the
Securities Act. For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon conversion or exercise
in connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of, or compliance with any registration of securities pursuant to,
this Agreement, including, without limitation: (i) the fees, disbursements and
expenses of Newco's counsel and accountants; (ii) the fees, disbursements and
expenses of one or more firms, as applicable pursuant to the terms of this
Agreement, selected as counsel for the holders of the Registrable Securities in
connection with the registration of the securities to be disposed of; (iii) all
expenses, including registration and filing fees, in connection with the
preparation, printing, filing and distribution of the registration statement,
any preliminary prospectus or final prospectus, term sheets and any other
offering documents, and amendments and supplements thereto, and the mailing and
delivering of copies thereof to any underwriters and dealers; (iv) the cost of
printing or producing any underwriting agreements and blue sky or legal
investment memoranda, and any other documents in connection with the offering,
sale or delivery of the securities to be disposed of; (v) all expenses in
connection with the qualification of the securities to be disposed of for
offering and sale under state securities laws, including the fees, disbursements
and expenses of counsel for the underwriters or the holders of the Registrable
Securities in connection with such qualification and in connection with any blue
sky and legal investment surveys; (vi) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the securities to be disposed of; (vii) transfer agents'
and registrars' fees and expenses and the fees and expenses of any other agent
or trustee appointed in connection with such offering; (viii) all security
engraving and security printing expenses; (ix) all fees, disbursements and
expenses payable in connection with the listing of the securities on any
securities exchange or automated interdealer quotation system and the rating of
such securities; (x) any other fees, disbursements and expenses of underwriters
customarily paid by the sellers of securities (excluding underwriting discounts
and commissions); (xi) all liability insurance expense; and (xii) other
out-of-pocket expenses of the holders of the Registrable Securities
participating in such registration. Notwithstanding the foregoing, each holder
of the Registrable Securities and Newco shall be responsible for its own
internal administrative and similar costs.
2. DEMAND REGISTRATIONS.
(a) GENERAL. At any time and from time to time, upon
written notice from either the holders of at least 75% of the TPI Registrable
Securities or the holders of at least 75% of the PCA Registrable Securities
requesting that Newco effect the registration under the Securities Act of any or
all the TPI Registrable Securities or the PCA Registrable Securities,
respectively, Newco shall effect the registration (under the Securities Act and
applicable state securities laws) of such securities (and other Registrable
Securities subject to Sections 2(c) and 2(d) below) in accordance with such
notice, Section 5 below and the other provisions of this Agreement. The notice
shall
-2-
<PAGE> 3
specify the approximate number of Registrable Securities to be registered and
the expected per share price range for the offering. A registration pursuant to
this Section 2 is sometimes referred to herein as a "DEMAND REGISTRATION."
(b) LIMITATIONS ON DEMAND REGISTRATIONS; DEMAND
REGISTRATION FORMS AND EXPENSES. The holders of the TPI Registrable Securities,
on the one hand, and the holders of the PCA Registrable Securities, on the other
hand, each shall be entitled to separately request pursuant to this Section 2:
(i) three (3) effected registrations on Form S-1
or any similar or successor long form
registration including, without limitation,
Form A contemplated by the Securities and
Exchange Commission ("SEC") in Release No.
33-7606 dated October 15, 1998 (the
"AIRCRAFT CARRIER RELEASE") ("LONG-FORM
REGISTRATIONS") in which Newco shall pay all
Registration Expenses;
(ii) an unlimited number of registrations on Form
S-2 or S-3 or any similar or successor short
form registration including, without
limitation, Form B contemplated by the SEC
in the Aircraft Carrier Release ("SHORT-FORM
REGISTRATIONS") in which Newco shall pay all
Registration Expenses; and
(iii) an unlimited number of Long-Form
Registrations in which the holders of the
Registrable Securities participating in such
registration shall pay all Registration
Expenses.
For purposes of clause (iii) above, each holder of securities included in
accordance with this Agreement in any registration pursuant to clause (iii)
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
will be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
Newco shall pay and be solely responsible for Registration Expenses with respect
to registrations effected under clause (i) and (ii) above.
After Newco has become subject to the Securities Exchange Act
of 1934, as amended from time to time ("EXCHANGE ACT"), Newco will use its
reasonable best efforts to make Short-Form Registrations available for the sale
of Registrable Securities. Demand Registrations will be Short-Form Registrations
whenever Newco is permitted to use any applicable short form; provided, however,
that Newco shall nevertheless use a Long-Form Registration Statement in the
event that both: (i) the use of a Short-Form Registration Statement would limit
the offering to existing security holders, qualified institutional buyers or
other classes of offerees or would otherwise, in the opinion of the managing
underwriters, have an adverse effect on the offering under the Securities Act
and regulations thereunder as then in effect; and (ii) the holders of 90% of the
TPI Registrable Securities or PCA Registrable Securities, as the case may be,
initially requesting the Demand Registration direct in such request that Newco
utilize a Long-Form Registration Statement.
-3-
<PAGE> 4
Notwithstanding any other provision of this Agreement to the
contrary, a registration requested hereunder shall not be deemed to have been
effected: (i) unless it has become and remains effective for the period
specified in Section 5(b); (ii) if after it has become effective such
registration is interfered with by any stop order, injunction or other order or
requirement of the Securities and Exchange Commission ("SEC") or other
governmental agency or court for any reason other than due solely to the fault
of the holders of the Registrable Securities participating therein and, as a
result thereof, the Registrable Securities requested to be registered cannot be
completely distributed in accordance with the plan of distribution set forth in
the registration statement; or (iii) if the conditions to closing specified in
any purchase agreement or underwriting agreement entered into in connection with
any such registration are not satisfied or waived other than due solely to the
fault of the holders of the Registrable Securities participating therein. In
addition, a Demand Registration initially requested by the holders of the TPI
Registrable Securities shall not be deemed to have been effected if the holders
of the TPI Registrable Securities are unable, as a result of the priority
provisions in Section 2(d) below, to sell at least 90% of the TPI Registrable
Securities initially requested to be included in such registration. Similarly, a
Demand Registration initially requested by the holders of the PCA Registrable
Securities shall not be deemed to have been effected if the holders of the PCA
Registrable Securities are unable, as a result of the priority provisions in
Section 2(d) below, to sell at least 90% of the PCA Registrable Securities
initially requested to be included in such registration.
(c) NOTICE TO OTHER HOLDERS; SELECTION OF UNDERWRITER
AND HOLDER'S COUNSEL. Within five (5) days after receipt of a request for a
Demand Registration, Newco will give prompt written notice (in any event within
five (5) days after its receipt of notice of any exercise of Demand Registration
rights under this Agreement) of such request to all other holders of Registrable
Securities, and subject to Section 2(d) below, will include within such
registration all Registrable Securities with respect to which Newco has received
written requests for inclusion therein within fifteen (15) days after receipt of
Newco's notice. The holders of a majority of the TPI Registrable Securities or
PCA Registrable Securities, as applicable, submitting the initial request (i.e.
excluding the holders submitting requests after Newco's notice) shall have the
right to select the investment bankers and managers for the offering, subject to
the approval of the other holders of the TPI Registrable Securities and PCA
Registerable Securities, if any, participating in such registration pursuant to
this Agreement, which approval shall not be unreasonably withheld.
Counsel for all holders of Registrable Securities in
connection with such registration shall be selected: (i) by the holders of a
majority of the TPI Registrable Securities, if holders of the TPI Registrable
Securities make the initial registration request; or (ii) by the holders of a
majority of the PCA Registrable Securities, if the holders of the PCA
Registrable Securities make the initial registration request; provided, however,
if the holders of a majority of the PCA Registrable Securities, on the one hand,
and a majority of the TPI Registrable Securities, on the other hand, reasonably
conclude, after consultation with the other, that such representation is likely
to result in a conflict of interest or materially adversely affect either
group's rights in connection with such registration, then the holders of a
majority of the PCA Registrable Securities and the holders of a majority of the
TPI Registrable Securities, respectively, shall each be entitled to select a
separate firm to represent them as counsel in connection with such registration.
The fees and expenses of such firm or firms acting as counsel for the holders of
the Registrable Securities shall be paid by
-4-
<PAGE> 5
Newco.
(d) PRIORITY ON DEMAND REGISTRATIONS. Newco shall not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of at least 90% of
the Registrable Securities included in such registration. If a Demand
Registration is an underwritten offering and the managing underwriters advise
Newco in writing that in their opinion the number of Registrable Securities and,
if permitted hereunder, other securities requested to be included in such
offering exceeds the number of Registrable Securities and other securities, if
any, which can be sold in an orderly manner in such offering within a price
range acceptable to the holders of a majority of the TPI Registrable Securities
or PCA Registrable Securities, as applicable, initially requesting registration,
Newco will include in such registration:
(A) if requested by the holders of the TPI
Registrable Securities or by the holders of the PCA
Registrable Securities at any time during the 14-month period
commencing on the date hereof (the "SPECIAL PRIORITY PERIOD"),
only the number of Registrable Securities which such
underwriters advise in writing can be sold in such manner and
within such price range in the following order of priority:
(i) first, the TPI Registrable Securities, if
any, requested to be included therein,
pro-rata among the holders of such TPI
Registrable Securities on the basis of the
number of shares requested to be included by
each such holder;
(ii) second, the PCA Registrable Securities, if
any, requested to be included therein,
pro-rata among the holders of such PCA
Registrable Securities on the basis of the
number of shares requested to be included by
each such holder;
(iii) third, the Transferee Registrable
Securities, if any, requested to be included
therein, pro-rata among the holders of such
Transferee Registrable Securities on the
basis of the number of shares requested to
be included by each such holder; and
(iv) fourth, any other securities requested to be
included in such registration; and
(B) if requested by the holders of the TPI
Registrable Securities or by the holders of the PCA
Registrable Securities at any time after the Special Priority
Period, only the number of Registrable Securities which such
underwriters advise in writing can be sold in such manner and
within such price range in the following order of priority:
-5-
<PAGE> 6
(i) first, the TPI Registrable Securities and
the PCA Registrable Securities requested to
be included therein, pro-rata among the
holders of such Registrable Securities on
the basis of the number of shares requested
to be included by each such holder;
(ii) second, the Transferee Registrable
Securities, if any, requested to be included
therein, pro-rata among the holders of such
Transferee Registrable Securities on the
basis of the number of shares requested to
be included by each such holder; and
(iii) third, any other securities requested to be
included in such registration.
(e) RESTRICTIONS ON DEMAND REGISTRATIONS. Newco will not
be obligated to effect any Demand Registration within 90 days after the
effective date of a previous Demand Registration or previous registration in
which holders of Registrable Securities were given piggyback rights pursuant to
Section 3 at an offering price acceptable to the holders of the Registrable
Securities and in which there was no reduction in the number of Registrable
Securities requested to be included. Additionally, Newco may postpone for up to
90 days (on not more than one occasion during any 12-month period) the filing or
the effectiveness of a registration statement for a Demand Registration if,
based on the advice of counsel, Newco reasonably determines that such Demand
Registration would likely have an adverse effect on any proposal or plan by
Newco to engage in any acquisition of assets (other than in the ordinary course
of business) or any merger, consolidation, tender offer or similar transaction;
provided, however, that in such event, the holders of Registrable Securities
initially requesting such Demand Registration will be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration will not
count as one of the permitted Demand Registrations hereunder and Newco will pay
all Registration Expenses in connection with such registration.
(f) OTHER REGISTRATION RIGHTS. Newco will not register
for the benefit of any Person other than TPI, PCA or their respective direct or
indirect transferees, or grant to any such other Person the right to request
Newco to register or to participate in Piggyback Registrations with respect to,
any equity securities of Newco, or any securities convertible or exchangeable
into or exercisable for such securities, without the prior written consent of
both (i) TPI, as long as it or any of its Affiliates owns any TPI Registrable
Securities and (ii) PCA, as long as it or any of its Affiliates owns any PCA
Registrable Securities.
3. PIGGYBACK REGISTRATIONS.
(a) GENERAL; NOTICE TO HOLDERS. In addition to the
registration rights in Section 2 above, whenever Newco proposes to register any
of its securities under the Securities Act (other than pursuant to a Demand
Registration hereunder) and the registration form to be used may be used for the
registration of Registrable Securities, Newco will give prompt written notice
(in any event within five (5) days after its receipt of notice of any exercise
of demand registration rights other than under this Agreement) to all holders of
Registrable Securities of its intention to effect such a registra-
-6-
<PAGE> 7
tion. Subject to Sections 3(c) and 3(d) below, Newco shall include in such
registration all Registrable Securities with respect to which Newco has received
written requests for inclusion therein within fifteen (15) days after the
receipt of Newco's notice. Registrations under this Section 3 are sometimes
referred to herein as "PIGGYBACK REGISTRATIONS."
(b) NUMBER OF PIGGYBACK REGISTRATIONS; PIGGYBACK
REGISTRATION EXPENSES. The holders of the Registrable Securities shall be
entitled to participate in an unlimited number of Piggyback Registrations. The
Registration Expenses of the holders of Registrable Securities will be paid by
Newco in all Piggyback Registrations.
(c) PRIORITY ON PRIMARY PIGGYBACK REGISTRATIONS. SUBJECT
To Section 3(f) below, if a Piggyback Registration is an underwritten primary
registration on behalf of Newco, and the managing underwriters advise Newco in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to Newco, Newco will include in
such registration:
(A) in the case of a registration with respect to
which Newco has provided notice under Section 3(a) above at
any time during the Special Priority Period, only the number
of securities (including Registrable Securities) which such
underwriters advise in writing can be sold in such manner and
within such price range in the following order of priority:
(i) first, the securities Newco proposes to sell;
(ii) second, the TPI Registrable Securities, if
any, requested to be included therein,
pro-rata among the holders of such TPI
Registrable Securities on the basis of the
number of shares requested to be included by
each such holder;
(iii) third, the PCA Registrable Securities, if
any, requested to be included therein,
pro-rata among the holders of such PCA
Registrable Securities on the basis of the
number of shares requested to be included by
each such holder;
(iv) fourth, the Transferee Registrable
Securities, if any, requested to be included
therein, pro-rata among the holders of such
Transferee Registrable Securities on the
basis of the number of shares requested to be
included by each such holder; and
(v) fifth, any other securities requested to be
included in such registration; and
(B) in the case of a registration with respect to
which Newco has provided notice under Section 3(a) above at
any time after the Special Priority Period, only the
-7-
<PAGE> 8
number of securities (including Registrable Securities) which
such underwriters advise in writing can be sold in such manner
and within such price range in the following order of
priority:
(i) first, the securities Newco proposes to sell;
(ii) second, the TPI Registrable Securities and
the PCA Registrable Securities, if any,
requested to be included therein, pro-rata
among the holders of such Registrable
Securities on the basis of the number of
shares requested to be included by each such
holder;
(iii) third, the Transferee Registrable Securities,
if any, requested to be included therein,
pro-rata among the holders of such Transferee
Registrable Securities on the basis of the
number of shares requested to be included by
each such holder; and
(iv) fourth, any other securities requested to be
included in such registration.
(d) PRIORITY ON SECONDARY PIGGYBACK REGISTRATIONS.
Subject to Section 3(f) below, if a Piggyback Registration is an underwritten
secondary registration on behalf of holders of Newco's securities, and the
managing underwriters advise Newco in writing that in their opinion the number
of securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, Newco will
include in such registration:
(A) in the case of a registration with respect to
which Newco has provided notice under Section 3(a) above at
any time during the Special Priority Period, only the number
of securities (including Registrable Securities) which can be
sold in such manner and within such price range in the
following order of priority:
(i) first, the securities requested to be
included therein by the holders requesting
such registration and the TPI Registrable
Securities, if any, requested to be included
therein, pro-rata among the holders of such
securities (including Registrable Securities)
on the basis of the number of shares
requested to be included by each such holder;
(ii) second, the PCA Registrable Securities, if
any, requested to be included therein,
pro-rata among the holders of such PCA
Registrable Securities on the basis of the
number of shares requested to be included by
each such holder;
(iii) third, the Transferee Registrable Securities,
if any, requested to be included therein,
pro-rata among the holders of such Transferee
Registrable Securities on the basis of the
number of shares requested
-8-
<PAGE> 9
to be included by each such holder; and
(iv) fourth, any other securities requested to be
included in such registration; and
(B) in the case of a registration with respect to
which Newco has provided notice under Section 3(a) above at
any time after the Special Priority Period, only the number of
securities (including Registrable Securities) which can be
sold in such manner and within such price range in the
following order of priority:
(i) first, the securities requested to be
included therein by the holders requesting
such registration, the TPI Registrable
Securities, if any, requested to be included
therein, and the PCA Registrable Securities,
if any, requested to be included therein,
pro-rata among the holders of such securities
(including Registrable Securities) on the
basis of the number of shares requested to be
included by each such holder;
(ii) second, the Transferee Registrable
Securities, if any, requested to be included
therein, pro-rata among the holders of such
Transferee Registrable Securities on the
basis of the number of shares requested
to be included by each such holder; and
(iii) third, any other securities requested to be
included in such registration.
(e) SELECTION OF UNDERWRITER AND HOLDER'S COUNSEL. If any
Piggyback Registration is an underwritten offering, the selection of investment
bankers and managers for the offering must be approved by the holders of a
majority of the Registrable Securities included in such Piggyback Registration.
Such approval will not be unreasonably withheld. The holders of the TPI
Registrable Securities and the PCA Registrable Securities shall have the right
to select one or two firms as counsel as provided in Section 2(c) above, the
fees and expenses of which shall be paid by Newco.
(f) OTHER REGISTRATIONS. If Newco has been requested by
the holders of Registrable Securities to file a registration statement pursuant
to Section 2 above or if it has filed a Registration Statement pursuant to this
Section 3, and if such previous request or registration has not been withdrawn
or abandoned, Newco will not file or cause to be effected any other registration
of any of its equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the Securities Act (except on
Form S-8 or any successor form), whether on its own behalf or at the request of
any holder or holders of such securities, until the expiration of the
effectiveness period required under Section 5(b) below.
-9-
<PAGE> 10
4. HOLDBACK AGREEMENTS.
(a) AGREEMENT BY HOLDERS. Each holder of Registrable
Securities agrees not to effect any public sale or distribution (including sales
pursuant to Rule 144 under the Securities Act) of equity securities of Newco, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 180-day period beginning on
the effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration in which Registrable Securities are included (except as
part of such underwritten registration), unless the underwriters managing the
registered public offering otherwise agree.
(b) AGREEMENTS BY NEWCO. Newco agrees: (i) not to effect
or facilitate any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities,
during the thirty days prior to and during the 180-day period beginning on the
effective date of any underwritten Demand Registration or Piggyback Registration
(except as part of such underwritten Piggyback Registration or pursuant to
registrations on Form S-8 or any successor form), unless the underwriters
managing the registered public offering (and in the case of a Demand
Registration, the holders of a majority of the Registrable Securities included
therein) otherwise agree; and (ii) to cause Newco's directors, officers and
affiliates not to effect or facilitate any public sale or distribution
(including sales pursuant to Rule 144 under the Securities Act) of any equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering, the holders of a majority of the TPI Registrable
Securities participating in such registration and the holders of a majority of
the PCA Registrable Securities participating in such registration otherwise
agree.
5. REGISTRATION AND QUALIFICATION. If and whenever
Newco is required to effect the registration of any Registrable Securities,
Newco shall as promptly as possible:
(a) prepare, file and use its reasonable best efforts to
cause to become effective a registration statement under the Securities Act
relating to the Registrable Securities to be offered and effect the sale of such
Registrable Securities, in each case in accordance with the intended method of
disposition thereof (Newco shall cause such registration statement to be
effective as promptly as possible but in any event within 120 days of the
request);
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities included therein until the earlier of:
(i) such time as all of such Registrable Securities included therein have been
disposed of in accordance with the intended methods of disposition; and (ii) the
expiration of 180 days after such registration statement becomes effective;
provided, that such 180-day period shall be extended for such number of days
that equals the number of days elapsing from (x) the date the written notice
contemplated by paragraph 5(g) below is given by Newco to (y) the date on which
Newco delivers to the holders of the Registrable Securities included in such
registration statement the supplement or amendment contemplated by paragraph
5(g) below;
-10-
<PAGE> 11
(c) provide copies of all registration statements,
prospectus and amendments and supplements to each firm selected by the holders
of the Registrable Securities in accordance with this Agreement at least ten
days prior to the filing thereof (if practicable, at least one day in the case
of an amendment or supplement prepared pursuant to Section 5(g) below), with
such counsel being provided with the opportunity (but not the obligation) to
review and comment on such documents;
(d) furnish to the holders of the Registrable Securities
included in such registration statement and to any underwriter of such
Registrable Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus and any
summary prospectus) in conformity with the requirements of the Securities Act,
such documents incorporated by reference in such registration statement or
prospectus, such number of other offering documents, copies of any and all
transmittal letters or other correspondence to or received from, the SEC or any
other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering, and such other documents, as the holders of such Registrable
Securities or such underwriter may reasonably request;
(e) use its reasonable best efforts to register or
qualify all Registrable Securities covered by such registration statement under
the securities or blue sky laws of such jurisdictions as the holders of the
Registrable Securities included in such registration statement or any
underwriter of such Registrable Securities shall request, and use its reasonable
best efforts to obtain all appropriate registrations, permits and consents in
connection therewith, and do any and all other acts and things which may be
necessary or advisable to enable such holders of such Registrable Securities or
any such underwriter to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement;
(f) furnish to the holders of the Registrable Securities
included in such registration statement and to any underwriter of such
Registrable Securities: (i) an opinion of counsel for Newco addressed to the
holders of such Registrable Securities and dated the date of the closing under
the underwriting agreement (if any) (or if such offering is not underwritten,
dated the effective date of the registration statement); and (ii) a "cold
comfort" letter addressed to the holders of such Registrable Securities and
signed by the independent public accountants who have audited the financial
statements of Newco included in such registration statement, in each such case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the holders of such Securities may reasonably request and, in the
case of such accountants' letter, with respect to events subsequent to the date
of such financial statements;
(g) as promptly as practicable, notify the holders of the
Registrable Securities included in such registration statement in writing: (i)
at any time when a prospectus relating to a registration statement hereunder is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact
-11-
<PAGE> 12
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and (ii)
of any request by the SEC or any other regulatory body or other body having
jurisdiction for any amendment of or supplement to any registration statement or
other document relating to such offering, and in either such case, prepare and
furnish to the holders of such Registrable Securities a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading;
(h) cause all such Registrable Securities included in
such registration statement to be listed on each securities exchange on which
similar securities issued by Newco are then listed and, if not so listed, to be
listed on the New York Stock Exchange;
(i) furnish for delivery in connection with the closing
of any offering of Registrable Securities pursuant to a registration hereunder
unlegended certificates representing ownership of the Registrable Securities
being sold in such denominations as shall be requested by the holders of the
Registrable Securities or the underwriters;
(j) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(k) enter into such customary agreements and take all
such other actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities (including
effecting a stock split or a combination of shares);
(l) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first day of Newco's first
full calendar quarter after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(m) permit any holder of Registrable Securities which
holder, in its sole and exclusive judgment, might be deemed to be an underwriter
or a controlling person of Newco, to participate in the preparation of such
registration statement and to require the insertion therein of material,
furnished to Newco in writing, which in the reasonable judgment of such holder
and its counsel should be included; and
(n) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Common Stock included in such registration statement for
sale in any jurisdiction, Newco will use its reasonable best efforts promptly to
obtain the withdrawal of
-12-
<PAGE> 13
such order.
If any such registration or comparable statement refers to any
holder of Registrable Securities by name or otherwise as the holder of any
securities of Newco and if in its sole and exclusive judgment, such holder is or
might be deemed to be a controlling person of Newco, such holder will have the
right to require: (i) the insertion therein of language, in form and substance
satisfactory to such holder and presented to Newco in writing, to the effect
that the holding by such holder of such securities is not to be construed as a
recommendation by such holder of the investment quality of Newco's securities
covered thereby and that such holding does not imply that such holder will
assist in meeting any future financial requirements of Newco; or (ii) in the
event that such reference to such holder by name or otherwise is not required by
the Securities Act or any similar federal statute then in force, the deletion of
the reference to such holder; provided that with respect to this clause (ii)
such holder will furnish to Newco an opinion of counsel to such effect.
6. RECAPITALIZATION; UNDERWRITING; DUE DILIGENCE.
(a) For any Piggyback Registration or Demand Registration
prior to the time Newco becomes subject to the Exchange Act with respect to
Registrable Securities, Newco shall effect a stock split, stock dividend or
stock combination which in the opinion of the underwriters is desirable for the
sale and marketing of the Registrable Securities to the public.
(b) If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration requested under
this Agreement, Newco shall enter into an underwriting agreement with such
underwriters for such offering, which agreement will contain such
representations and warranties by Newco and such other terms and provisions as
are customarily contained in underwriting agreements of Newco to the extent
relevant and as are customarily contained in underwriting agreements generally
with respect to secondary distributions to the extent relevant, including,
without limitation, indemnification and contribution provisions substantially to
the effect and to the extent provided in Section 7(a), and agreements as to the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 5(f). Subject to Section 9 below, the holders of
the Registrable Securities included in such registration shall be parties to any
such underwriting agreement and the representations and warranties by, and the
other agreements on the part of, Newco to and for the benefit of such
underwriters, shall also be made to and for the benefit of the holders of such
Registrable Securities.
(c) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Agreement, Newco shall give the holders of the Registrable
Securities included in such registration and the underwriters, if any, and their
respective counsel, accountants and agents, the opportunity (but such persons
shall not have the obligation) to review the books and records of Newco and to
discuss the business of Newco with its officers and the independent public
accountants who have certified the financial statements of Newco as shall be
necessary, in the opinion of the holders of such Registrable Securities and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
-13-
<PAGE> 14
7. INDEMNIFICATION.
(a) NEWCO INDEMNIFICATION. Newco agrees to indemnify, to
the extent permitted by law, each holder of Registrable Securities, its officers
and directors and each Person who controls such holder (within the meaning of
the Securities Act) and the officers, directors, affiliates, employees and
agents of each of the foregoing (whether or not any litigation is commenced or
threatened and whether or not such indemnified Persons are parties to any
litigation commenced or threatened), against all losses, claims, damages,
liabilities and expenses including, without limitation, attorneys' fees, expert
fees and amounts paid in settlement, resulting from or arising out of any untrue
or alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to Newco by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after Newco has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, Newco will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the holders of the Registrable
Securities or any underwriter and shall survive the transfer of such securities.
The foregoing indemnity agreement is in addition to any liability that Newco may
otherwise have to the holders of the Registrable Securities or any underwriter
of the Registrable Securities or any controlling Person of the foregoing and the
officers, directors, affiliates, employees and agents of each of the foregoing.
(b) HOLDER INDEMNIFICATION. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder agrees to indemnify, to the extent permitted by
law, Newco, its directors and officers and each Person who controls Newco
(within the meaning of the Securities Act) and the officers, directors,
affiliates, employees and agents of each of the foregoing (whether or not any
litigation is commenced or threatened and whether or not such indemnified
Persons are parties to any litigation commenced or threatened), against any
losses, claims, damages, liabilities and expenses including, without limitation,
attorneys' fees, expert fees and amounts paid in settlement, resulting from or
arising out of any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing to Newco by such
holder expressly for use in such registration statement; provided, however, that
the obligation to indemnify will be individual to each such holder and will be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) RESOLUTION OF CLAIMS. Any Person entitled to
indemnification hereunder will: (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks
-14-
<PAGE> 15
indemnification hereunder; and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) CONTRIBUTION. If the indemnification provided for in
this Section 7 shall for any reason be unavailable (other than in accordance
with its terms) to an indemnified party in respect of any loss, claim, damage,
liability or expense referred to therein, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage,
liability or expense in such proportion as shall be appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other with respect to the statements or omissions which resulted in
such loss, claim, damage, liability or expense as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party on the one hand or the indemnified party on the other. The
amount paid or payable by an indemnified party as a result of the loss, cost,
claim, damage, liability or expense, or action in respect thereof, referred to
above in this Section 7(d) shall be deemed to include, for purposes of this
Section 7(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. In any
event, a holder's obligation to provide contribution pursuant to this Section
7(d) shall be limited to the net amount of proceeds received by such holder from
the sale of Registrable Securities pursuant to such registration statement.
(e) STATE SECURITIES LAWS. Indemnification and
contribution similar to that specified in the preceding paragraphs of this
Section 7 (with appropriate modifications) shall be given by Newco, the holders
of the Registrable Securities and underwriters with respect to any required
registration or other qualification of securities under any state law or
regulation or governmental authority.
(f) OTHER RIGHTS. The obligations of the parties under
this Section 7 shall be in addition to any liability which any party may
otherwise have to any other party.
-15-
<PAGE> 16
8. RULE 144. Newco shall use its reasonable best efforts
to ensure that the conditions to the availability of Rule 144 set forth in
paragraph (c) thereof shall be satisfied. Upon the request of the holders of a
majority of the TPI Registrable Securities or the holders of a majority of the
PCA Registrable Securities, Newco will deliver to such holders a written
statement as to whether it has complied with such requirements.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
holder of Registrable Securities may participate in any registration hereunder
which is underwritten unless such holder: (a) agrees to sell such holder's
securities on the basis provided in any underwriting arrangements contemplated
by such offering; and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided, however, that no
holder of Registrable Securities included in any underwritten registration will
be required to make: (i) any representations or warranties to Newco, the
underwriters or other Persons other than representations and warranties
regarding such holder and such holder's intended method of distribution; or (ii)
any indemnities to Newco, the underwriter or other Persons on terms which are
not substantially identical to the provisions in Section 7(b) above.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Newco represents and
warrants to the holders of the Registrable Securities that it has not entered
into, and agrees with the holders of the Registrable Securities that it will not
hereafter enter into, any agreement with respect to its securities which is
inconsistent or conflicts with, or violates the rights granted to the holders of
Registrable Securities in, this Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. In
addition to Newco's obligations under Section 6(a) above, Newco will not take
any action, or permit any change to occur, with respect to its securities which
would adversely affect the ability of the holders of Registrable Securities to
include such Registrable Securities in a registration undertaken pursuant to
this Agreement or which would adversely affect the marketability of such
Registrable Securities in any such registration (including effecting a stock
split or a combination of shares).
(c) REMEDIES. Each holder of Registrable Securities will
have all rights and remedies set forth in this Agreement, Newco's Certificate of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement and all of the rights which such holders
have under any law. Any Person having any rights under any provision of this
Agreement will be entitled to enforce such rights specifically, without posting
a bond or other security, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
-16-
<PAGE> 17
(d) AMENDMENTS; WAIVER. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and Newco may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if Newco has obtained the written consent of both: (i)
TPI, as long as it or any of its Affiliates owns any TPI Registrable Securities;
and (ii) PCA, as long as it or any of its Affiliates owns any PCA Registrable
Securities. No other course of dealing between Newco and the holder of any
Registrable Securities or any delay in exercising any rights hereunder or under
the Certificate of Incorporation will operate as a waiver of any rights of any
such holders. For purposes of this Agreement, shares held by Newco or any of its
Subsidiaries will not be deemed to be Registrable Securities. If Newco pays any
consideration to any holder of Registrable Securities for such holder's consent
to any amendment, modification or waiver hereunder, Newco will also pay each
other holder granting its consent hereunder equivalent consideration computed on
a pro rata basis.
In the event that the Securities Act, Exchange Act and/or
regulations thereunder, respectively, are amended in a material respect and one
or more of such amendments reduce or diminish the benefits hereunder to the
holders of the Registrable Securities, including, without limitation, amendments
which may be adopted in connection with the Aircraft Carrier Release (any such
reducing or diminishing amendments being referred to herein as "SECURITIES LAW
AMENDMENTS"), Newco shall, upon the written request of both (i) TPI, as long as
it or any of its Affiliates owns any TPI Registrable Securities, and (ii) PCA,
as long as it or any of its Affiliates owns any PCA Registrable Securities,
amend this Agreement to provide the holders of the Registrable Securities with
benefits which, after giving effect to such Securities Law Amendments, are
equivalent to the benefits hereunder absent such Securities Law Amendments.
(e) HEADINGS. The headings in this Agreement are inserted
for convenience only and shall not be deemed to define or limit the scope of any
section or subsection.
(f) NOTICES. All requests, notices, demands or other
communications shall be in writing and will be deemed to have been given when
delivered to the recipient, when received by facsimile, one (1) business day
after the date when sent to the recipient by overnight courier service or five
(5) business days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such requests,
notices, demands and other communications will be sent to TPI, PCA and to Newco
at the addresses indicated below:
If to TPI:
Tenneco Packaging Inc.
1900 West Field Court
Lake Forest, Illinois 60045
Attn: General Counsel
Telecopy: 847/482-4589
-17-
<PAGE> 18
With a copy to:
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Attn: Timothy R. Donovan, Esq.
Telecopy: 312/840-7271
If to PCA:
PCA Holdings, LLC
c/o Madison Dearborn Partners, Inc.
Three First National Plaza
Suite 3800
Chicago, Illinois 60602
Attn: Samuel M. Mencoff
Justin S. Huscher
Telecopy: (312) 895-1056
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: William S. Kirsh, P.C.
Telecopy: 312/861-2200
If to Newco:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Attn: Chief Executive Officer
Telecopy: 847/482-2446
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice in accordance with the
procedures provided above. Notices to any other holders of Registrable
Securities shall be sent to the address specified by prior written notice to
Newco, TPI and PCA in accordance with the procedures provided above.
(g) NO THIRD-PARTY BENEFICIARIES. Subject to Section
10(k), this Agreement will not confer any rights or remedies upon any Person
other than Newco, TPI and PCA and their respective successors.
-18-
<PAGE> 19
(h) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the parties
and supersedes any prior understandings, agreements, or representations by or
among the parties, written or oral, that may have related in any way to the
subject matter hereof.
(i) GOVERNING LAW. The corporate law of the State of
Delaware will govern all issues concerning the relative rights of Newco and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Illinois.
(j) SEVERABILITY. In the event any provision in this
Agreement is held to be invalid as applied to any fact or circumstance, it shall
be ineffective only to the extent of such invalidity, and such invalidity shall
not affect the other provisions of this Agreement or the same provision as
applied to any other fact or circumstance.
(k) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties hereto and their respective successors and any Person
who becomes a holder of Registrable Securities. This Agreement shall inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and any Person who becomes a holder of Registrable Securities (to the
extent provided herein with respect to Registrable Securities of the type held
by such holder).
(l) COUNTERPARTS. This Agreement may be executed in
counterparts.
(m) TERMINATION. The rights of all holders of TPI
Registrable Securities under this Agreement shall terminate as of the date when
TPI, together with its Affiliates, holds Registrable Securities with a fair
market value of less than $500,000.
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
NEWCO:
Packaging Corporation of America
By /s/ Richard B. West
---------------------------------------
Its Secretary
---------------------------------------
TPI:
Tenneco Packaging Inc.
By /s/ James V. Faulkner, Jr.
---------------------------------------
Its Vice President
---------------------------------------
PCA:
PCA Holdings, LLC
By /s/ Samuel M. Mencoff
---------------------------------------
Its Managing Director
---------------------------------------
-20-
