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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
PACKAGING CORPORATION OF AMERICA
DAHLONEGA PACKAGING CORPORATION
DIXIE CONTAINER CORPORATION
PCA HYDRO, INC.
PCA TOMAHAWK CORPORATION
PCA VALDOSTA CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 2631 36-4277050
DELAWARE 2631 76-0302048
VIRGINIA 2631 54-0193683
DELAWARE 2631 76-0328424
DELAWARE 2631 76-0328421
DELAWARE 2631 76-0328422
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
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1900 WEST FIELD COURT
LAKE FOREST, ILLINOIS 60045
TELEPHONE: (847) 482-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------------
Copy to:
RICHARD B. WEST JAMES S. ROWE
PACKAGING CORPORATION OF AMERICA KIRKLAND & ELLIS
1900 WEST FIELD COURT 200 EAST RANDOLPH DRIVE
LAKE FOREST, ILLINOIS 60045 CHICAGO, ILLINOIS 60601
TELEPHONE: (847) 482-2000 TELEPHONE: (312) 861-2000
(Name, address, including zip code,
and telephone
number, including area code, of agent
for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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9 5/8% Series B Senior Subordinated Notes
due 2009.......................................... $550,000,000 100% $550,000,000 $152,900
Guarantees of Series B Senior Subordinated Notes due
2009.............................................. $550,000,000 (2) (2) None
12 3/8% Series B Senior Exchangeable Preferred Stock
due 2010.......................................... $182,280,000(3) 100% $182,280,000(3) $50,674
12 3/8% Subordinated Exchange Debentures
due 2010.......................................... $182,280,000(3) (4) (4) None
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f).
(2) No further fee is payable pursuant to Rule 457(n).
(3) Includes the maximum amount of pay-in-kind dividends payable over the entire
period in which pay-in-kind dividends may be paid.
(4) No further fee is payable pursuant to Rule 457(i).
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED MAY 28, 1999.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE ARE NOT OFFERING TO SELL, OR ASKING YOU TO BUY, ANY SECURITIES. WE
WILL NOT MAKE ANY OFFER TO SELL THESE SECURITIES OR ACCEPT OFFER TO BUY THEM
UNTIL WE HAVE DELIVERED THIS PROSPECTUS IN ITS FINAL FORM. WE ALSO WILL NOT SELL
THESE SECURITIES IN ANY JURISDICTION WHERE IT WOULD BE ILLEGAL TO OFFER OR SELL
THEM, OR SOLICIT PURCHASERS, PRIOR TO REGISTERING OR QUALIFYING THEN UNDER THAT
JURISDICTION'S SECURITIES LAWS.
<PAGE>
PRELIMINARY PROSPECTUS
[LOGO]
PACKAGING CORPORATION OF AMERICA
OFFER TO EXCHANGE ALL OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES DUE 2009
($550,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING) FOR
9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2009 AND
OFFER TO EXCHANGE ALL OUTSTANDING
12 3/8% SENIOR EXCHANGEABLE PREFERRED STOCK DUE 2010
($100,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING) FOR
12 3/8% SERIES B SENIOR EXCHANGEABLE PREFERRED STOCK DUE 2010
INTEREST ON THE EXCHANGE NOTES PAYABLE APRIL 1 AND OCTOBER 1
DIVIDENDS ON THE NEW PREFERRED STOCK PAYABLE APRIL 1 AND OCTOBER 1
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TERMS OF THE EXCHANGE OFFER
- The exchange offer will expire at 5:00 p.m. New York City time,
, 1999, unless extended.
- We will exchange all notes and preferred stock that you validly tender and
do not validly withdraw.
- You may withdraw your tender of notes or preferred stock any time prior to
the expiration of the exchange offer.
- The exchange offer is not subject to any condition, other than that it not
violate any applicable law or interpretation of the staff of the
Securities and Exchange Commission.
- We will not receive any proceeds from the exchange offer.
- The exchange of notes and preferred stock will not be a taxable exchange
for U.S. federal income tax purposes.
- The terms of the exchange notes and new preferred stock are substantially
identical to the outstanding notes and preferred stock, except for certain
transfer restrictions and registration rights relating to the outstanding
notes and preferred stock.
- There is no existing market for the exchange notes or new preferred stock,
and we do not intend to apply for their listing on any securities
exchange.
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SEE "RISK FACTORS" BEGINNING ON PAGE 21 FOR A DISCUSSION OF CERTAIN RISKS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN
THE EXCHANGE NOTES AND THE NEW PREFERRED STOCK.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the exchange notes or the new
preferred stock or determined that this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is , 1999
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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PROSPECTUS SUMMARY
THIS SUMMARY CONTAINS BASIC INFORMATION ABOUT PACKAGING CORPORATION OF AMERICA
AND THE EXCHANGE OFFER. IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO YOU. YOU SHOULD READ THIS ENTIRE PROSPECTUS, INCLUDING THE
FINANCIAL DATA AND RELATED NOTES AND THE DOCUMENTS TO WHICH WE HAVE REFERRED
YOU, BEFORE MAKING AN INVESTMENT DECISION. UNLESS THE CONTEXT OTHERWISE
INDICATES, REFERENCES IN THIS PROSPECTUS TO "PCA," "WE," "OUR" AND "US" REFER TO
PACKAGING CORPORATION OF AMERICA AND ITS SUBSIDIARIES AS A COMBINED ENTITY, AND
REFERENCES TO "TPI" REFER TO TENNECO PACKAGING, INC. UNLESS THE CONTEXT
OTHERWISE REQUIRES, REFERENCES TO THE "GROUP" ARE TO THE CONTAINERBOARD GROUP OF
TPI AS DESCRIBED IN THE NOTES TO THE AUDITED FINANCIAL STATEMENTS INCLUDED
ELSEWHERE IN THIS PROSPECTUS.
COMPANY OVERVIEW
PCA is a leading integrated producer of containerboard and corrugated packaging
products in North America. We manufacture a broad range of linerboard and
corrugating medium in our four mills, each of which is located near its primary
fiber supply. In 1998, our mills produced 2.1 million tons of containerboard,
ranking us as the sixth largest containerboard producer in North America.
Through our nationwide network of 67 converting plants, consisting of 39
corrugator plants and 28 sheet/specialty and other plants, we convert
approximately 75% to 80% of the containerboard produced at our mills into
corrugated packaging products for sale to both local and national customers. In
1998, our converting plants shipped approximately 25 billion square feet of
corrugated packaging products, including shipping boxes, point-of-sale packages,
point-of-purchase displays and other advertising and promotional products,
ranking us as one of the top six integrated producers of corrugated packaging
products in North America.
Based on two cost studies performed by Jacobs-Sirrine, an industry consultant,
in 1998, we have one of the lowest cash cost containerboard mill systems in the
industry, with from 70% to 85% of our production capacity ranked in the
lowest-cost quartile of the industry. The Jacobs-Sirrine study ranked our two
largest mills, Counce and Tomahawk, among the lowest cash cost kraft linerboard
and semi-chemical corrugating medium mills, respectively, in North America. As a
result of our low cost operations and the implementation of our differentiated
business strategy, we have historically been able to generate EBITDA margins
that are relatively more stable and higher than industry averages. For the
fiscal year ended December 31, 1998, PCA's revenues and adjusted EBITDA (as
defined below) were $1,571.0 million and $327.4 million, respectively, on a pro
forma basis. For the three months ended March 31, 1999, PCA's revenues and
EBITDA were $391.3 million and $70.0 million respectively, on a pro forma basis.
In addition to our mills and converting plants, we own or control approximately
950,000 acres of timberland located in close proximity to our mills, providing
favorable access to our primary fiber requirements. We also own three sawmills,
three recycling facilities, a 50% interest in a wood chipping venture and an
air-dry yard operation.
INDUSTRY OVERVIEW
Corrugated containers are a safe and economical means of transporting industrial
and consumer goods and products. More goods and products are shipped in
corrugated containers than in any other type of packaging. Since 1975, the
demand for corrugated containers has grown at a compound annual rate of 3.1%,
with demand for corrugated containers increasing in all but four years during
this 23-year period. At no time during this period did demand for corrugated
containers decrease in consecutive years.
Containerboard, consisting of linerboard and corrugating medium, is the
principal raw material used to manufacture corrugated containers. Linerboard is
used as the inner and outer facing (liner) of a corrugated container.
Corrugating medium is fluted and laminated to linerboard in corrugator plants to
produce corrugated sheets. The sheets are subsequently printed, cut, folded and
glued in corrugator plants or sheet plants to produce corrugated containers.
1
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The market for containerboard is highly cyclical. Historically, prices for
containerboard have generally reflected changes in supply, which is primarily
determined by additions and reductions to industry capacity and inventory levels
and, to a lesser extent, changes in demand. Containerboard demand is dependent
upon both the demand for corrugated packaging products, which closely tracks
industrial production, and export activity. Domestic demand for corrugated
packaging products is more stable than export demand and generally corresponds
to changes in the rate of growth in the U.S. economy.
COMPETITIVE STRENGTHS AND BUSINESS STRATEGY
The key elements of our competitive strengths and business strategy are the
following:
- LOW-COST PRODUCER. We are a leading low-cost producer of containerboard
and corrugated packaging products in North America. According to two cost
studies performed by Jacobs-Sirrine in 1998, our mills are among the
lowest cash cost integrated containerboard mills in the industry, with
from approximately 70% to 85% of our production capacity ranked in the
lowest-cost quartile of the industry. The Jacobs-Sirrine study ranked our
two largest mills, Counce and Tomahawk, among the lowest cash cost kraft
linerboard and semi-chemical corrugating medium mills, respectively, in
North America. Management attributes our low-cost status to (1) our
productivity enhancement programs, which resulted in more than $80 million
in annual mill cost savings from late-1996 through 1998, (2) strategic
capital investments over the past five years designed to enhance mill
efficiency and improve our manufacturing processes, and (3) substantial
reductions in our fiber cost (the single largest cost in containerboard
production) since 1996 (up to $15 per ton) by increasing the amount of
low-cost hardwood and recycled fiber in our fiber mix and achieving
greater yield from softwood in our production of linerboard.
- INTEGRATED OPERATIONS. We are a highly integrated producer of
containerboard and corrugated packaging products. The relative earnings
stability of our converting plants acts to partially offset the more
cyclical earnings of our mills. Because each of our converting plants
seeks to maximize its own profitability by selecting the appropriate
customers, product mix and production levels for its operations, our
converting plants have been able to generate strong and consistent cash
flow despite fluctuations in containerboard prices. Rather than using our
converting plants as captive outlets for our mill production, we pursue a
"demand pull" strategy by which our converting plants generally purchase
from our mills only the amount of containerboard which they believe is
necessary to support their respective customers' requirements and to
maximize plant profitability. Since the price of corrugated containers
tends to fluctuate in direct proportion to containerboard prices, our
converting plants generally are able to earn a relatively stable spread
over the price of containerboard.
- FOCUS ON VALUE-ADDED PRODUCTS AND SERVICES. We have pursued a strategy of
providing our customers with value-added products such as custom die cut
and specialty boxes, point-of-sale packaging and point-of-purchase
displays and superior customer service through shorter production runs,
faster turnaround times and enhanced graphics capabilities. Since 1995, we
have acquired four graphics plants and five sheet/specialty plants to
augment our existing graphics and manufacturing capabilities. We have also
created a nationwide network of five graphic design centers to meet
sophisticated customer needs. Through our nationwide network of 67
converting facilities, including our large number of sheet/specialty
plants, we are able to offer coast-to-coast "local" coverage and provide
additional services and converting capabilities. As a result, our selling
price per thousand square feet ("MSF") has consistently exceeded the
industry average since 1995.
- DIVERSIFIED CUSTOMER BASE. With over 8,000 active customers and over
13,000 shipping locations, our customer base is broadly diversified across
industries and geographic locations, reducing our dependence on any single
customer or market. No customer represents more than 5% of our total sales
and our top ten customers represent less than 20% of our total sales. We
have focused our sales efforts on smaller, local accounts, which usually
demand more customized products and services than higher volume national
accounts. Approximately 75% of our current revenues are derived from local
accounts.
2
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- PROVEN AND EXPERIENCED MANAGEMENT. We have an experienced management team
with an average of 23 years of industry experience, including an average
of 15 years of service with PCA. Upon the closing of the Transactions,
Paul T. Stecko resigned from his post as President and Chief Operating
Officer of Tenneco in order to become our Chairman and Chief Executive
Officer. In addition, William J. Sweeney, formerly Executive Vice
President of TPI, now serves as our Executive Vice President. Mr. Sweeney
has over 30 years of experience in the paperboard packaging industry.
Since 1993, TPI has recruited a number of seasoned, technically-skilled
industry veterans to PCA's management.
EQUITY SPONSOR
Madison Dearborn Partners, LLC ("Madison Dearborn" or "MDP"), the financial
sponsor for the Transactions, is a leading private equity investment firm. MDP,
through limited partnerships of which it is the general partner, has
approximately $4 billion of assets under management. Madison Dearborn focuses on
investments in several specific sectors including natural resources,
communications, consumer, health care and industrial. MDP's objective is to
invest, in partnership with outstanding management teams, in companies which
have the potential for significant long-term equity appreciation. Since 1980,
MDP's principals have invested approximately $2 billion in more than 100
management buyout and private equity transactions in which the firm acted as a
leading investor. Previous investments sponsored by Madison Dearborn include
Buckeye Cellulose Corporation, Nextel Communications, Reiman Publications, The
Georgia Marble Company, Spectrum Healthcare, Hines Horticulture and Tuesday
Morning Corporation. PCA is Madison Dearborn's largest equity investment to
date.
THE TRANSACTIONS
On April 12, 1999, TPI, a wholly owned subsidiary of Tenneco Inc., sold its
containerboard and corrugated packaging products business to PCA for $2.2
billion. PCA Holdings LLC, an entity organized and controlled by MDP and its
coinvestors, acquired a 55% common equity interest in PCA, and TPI contributed
its containerboard and corrugated packaging products business to PCA in exchange
for cash, the assumption of debt and a 45% common equity interest in PCA (in
each case before giving effect to the issuances of common equity to
management expected to be made in June 1999).
The financing of the Transactions consisted of (1) borrowings under a new $1.46
billion senior credit facility for which J.P. Morgan Securities Inc. and BT
Alex. Brown Incorporated are co-lead arrangers, (2) the offering of the notes
and the preferred stock, (3) a cash equity investment of $236.5 million by
Madison Dearborn and its coinvestors and (4) a rollover equity investment by TPI
valued at $193.5 million.
3
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The following sets forth the ownership of PCA, after giving effect to purchases
of common stock by management that are expected to occur in June 1999:
[LOGO]
- --------------
* PCA also intends to issue options to management in June 1999 to purchase
common stock, which when issued would result in management owning in the
aggregate up to approximately 8.8% of the common equity of PCA on a
fully-diluted basis.
4
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THE EXCHANGE OFFER
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THE EXCHANGE NOTES
NOTES REGISTRATION RIGHTS
AGREEMENT....................... You are entitled to exchange your outstanding notes for
registered notes with terms that are identical in all
material respects. This exchange offer is intended to
satisfy these rights. After this exchange offer is
complete, you will no longer be entitled to the benefits
of the exchange or registration rights granted under the
notes registration rights agreement which we entered
into as part of the offering of the notes.
THE EXCHANGE OFFER................ We are offering to exchange $1,000 principal amount of
9 5/8% Series B Senior Subordinated Notes due 2009 which
have been registered under the Securities Act for each
$1,000 principal amount of our outstanding 9 5/8% Senior
Subordinated Notes due 2009 which were issued on April
12, 1999 in a transaction exempt from registration under
the Securities Act in accordance with Rule 144A and
Regulation S. Your outstanding notes must be properly
tendered and accepted in order to be exchanged. All
outstanding notes that are validly tendered and not
validly withdrawn will be exchanged.
$550,000,000 in aggregate principal amount of our notes
is currently outstanding.
We will issue the exchange notes, which have been
registered under the Securities Act, on or promptly
after the expiration of this exchange offer.
EXPIRATION DATE................... This exchange offer will expire at 5:00 p.m., New York
City time, on , 1999, unless we decide to extend
the expiration date.
CONDITIONS TO THE EXCHANGE
OFFER........................... This exchange offer is subject to the condition that it
does not violate applicable law or staff interpretations
of the Securities and Exchange Commission. If we
determine that this exchange offer is not permitted by
applicable federal law, we may terminate the exchange
offer. This exchange offer is not conditioned upon any
minimum principal amount of our outstanding notes being
tendered. The holders of our outstanding notes have
certain rights against us under the notes registration
rights agreement should we fail to consummate this
exchange offer.
RESALE OF THE EXCHANGE NOTES...... We believe that the exchange notes issued pursuant to
this exchange offer in exchange for our outstanding
notes may be offered for resale, resold and otherwise
transferred by you without compliance with the
registration and prospectus delivery provisions of the
Securities Act. We have based this belief on letters
issued in connection with past offerings of this kind in
which the staff of the Securities and Exchange
Commission has interpreted the laws and regulations
relating to the resale of notes to the public without
the requirement of further registration under the
Securities Act. In order for the exchange notes to be
offered for resale, resold or otherwise transferred:
- you must acquire the exchange notes in the ordinary
course of your business;
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5
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- you must not intend to participate, and have no
arrangement or understanding with any person to
participate, in the distribution of the exchange notes
issued to you pursuant to this exchange offer;
- you must not be a broker-dealer who purchased your
outstanding notes directly from us for resale pursuant
to Rule 144A or any other available exemption under
the Securities Act; and
- you must not be an "affiliate" of ours within the
meaning of Rule 405 under the Securities Act.
If our belief is inaccurate and you transfer any
exchange note issued to you in pursuant to this exchange
offer in violation of the prospectus delivery provisions
of the Securities Act or without an exemption from
registration thereunder, you may incur liability under
the Securities Act. We do not assume or indemnify you
against any such liability.
Each broker-dealer that is issued exchange notes
pursuant to this exchange offer for its own account in
exchange for outstanding notes which were acquired by
such broker-dealer as a result of market-making or other
trading activities must acknowledge that it will deliver
a prospectus meeting the requirements of the Securities
Act in connection with any resale of such exchange
notes. The letter of transmittal relating to the
exchange notes states that a broker-dealer who makes
this acknowledgment and delivers such a prospectus will
not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. A
broker-dealer may use this prospectus for an offer to
resell, resale or other transfer of the exchange notes
issued to it pursuant to this exchange offer. We have
agreed that, for a period of 180 days after the date
this exchange offer is completed, we will make this
prospectus and any amendment or supplement to this
prospectus available to any such broker-dealer for use
in connection with any such resales. We believe that no
registered holder of the outstanding notes is an
affiliate of PCA within the meaning of Rule 405 under
Securities Act.
This exchange offer is not being made to, nor will we
accept surrenders for exchange from, holders of
outstanding notes in any jurisdiction in which this
exchange offer or its acceptance would not comply with
the securities or blue sky laws of such jurisdiction.
Furthermore, persons who acquire the exchange notes are
responsible for compliance with these securities or blue
sky laws regarding resales. We assume no responsibility
for compliance with these requirements.
ACCRUED INTEREST ON THE EXCHANGE
NOTES AND THE OUTSTANDING
NOTES........................... Each exchange note will bear interest from its issuance
date. The holders of notes that are accepted for
exchange will receive, in cash, accrued interest on such
notes to, but not including, the issuance date of the
exchange notes. Such interest will be paid with the
first interest payment on the exchange notes. Interest
on the notes accepted for exchange will cease to accrue
upon issuance of the exchange notes.
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Consequently, those holders who exchange their
outstanding notes for exchange notes will receive the
same interest payment on October 1, 1999, which is the
first interest payment date with respect to the
outstanding notes and the exchange notes to be issued
pursuant to this exchange offer, that they would have
received had they not accepted this exchange offer.
PROCEDURES FOR TENDERING NOTES.... If you wish to tender your notes for exchange pursuant
to this exchange offer, you must transmit to United
States Trust Company of New York, as notes exchange
agent, on or prior to the expiration date either:
- a properly completed and duly executed copy of the
letter of transmittal accompanying this prospectus, or a
facsimile of such letter of transmittal, together with
your outstanding notes and any other documentation
required by such letter of transmittal, at the address
set forth on the cover page of the letter of
transmittal; or
- if you are effecting delivery by book-entry transfer,
a computer-generated message transmitted by means of the
Automated Tender Offer Program System of The
Depository Trust Company in which you acknowledge and
agree to be bound by the terms of the letter of
transmittal and which, when received by the notes
exchange agent, forms a part of a confirmation of
book-entry transfer.
In addition, you must deliver to the notes exchange
agent on or prior to the expiration date:
- if you are effecting delivery by book-entry transfer,
a timely confirmation of book-entry transfer of your
outstanding notes into the account of the notes
exchange agent at The Depository Trust Company
pursuant to the procedures for book-entry transfers
described in this prospectus under the heading "The
Exchange Offer-Procedures for Tendering;" or
- if necessary, the documents required for compliance
with the guaranteed delivery procedures described in
this prospectus under the heading "The Exchange
Offer-Guaranteed Delivery Procedures."
By executing and delivering the accompanying letter of
transmittal or effecting delivery by book-entry
transfer, you are representing to us that, among other
things:
- the person receiving the exchange notes pursuant to
this exchange offer, whether or not such person is the
holder, is receiving them in the ordinary course of
business;
- neither the holder nor any such other person has an
arrangement or understanding with any person to
participate in the distribution of such exchange notes
and that such holder is not engaged in, and does not
intend to engage in, a distribution of the exchange
notes; and
- neither the holder nor any such other person is an
"affiliate" of ours within the meaning of Rule 405 under
the Securities Act.
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SPECIAL PROCEDURES FOR BENEFICIAL
OWNERS.......................... If you are a beneficial owner of the notes and your name
does not appear on a security position listing of The
Depository Trust Company as the holder of such notes or
if you are a beneficial owner of notes that are
registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and you wish to
tender such notes in this exchange offer, you should
promptly contact the person in whose name your notes are
registered and instruct such person to tender on your
behalf. If you, as a beneficial holder, wish to tender
on your own behalf you must, prior to completing and
executing the letter of transmittal and delivering your
outstanding notes, either make appropriate arrangements
to register ownership of the outstanding notes in your
name or obtain a properly completed bond power from the
registered holder. The transfer of record ownership may
take considerable time.
GUARANTEED DELIVERY PROCEDURES.... If you wish to tender your outstanding notes and time
will not permit the letter of transmittal or any of the
documents required by the letter of transmittal to reach
the notes exchange agent by the expiration date, or the
procedure for book-entry transfer cannot be completed on
time or certificates for your notes cannot be delivered
on time, you may tender your notes pursuant to the
guaranteed delivery procedures described in this
prospectus under the heading "The Exchange
Offer-Guaranteed Delivery Procedures."
SHELF REGISTRATION STATEMENT...... If any changes in law or of the applicable
interpretation of the staff of the Securities and
Exchange Commission do not permit us to effect this
exchange offer or upon the request of any holder of our
outstanding notes under certain circumstances, we have
agreed to register the notes on a shelf registration
statement and use our best efforts to cause such shelf
registration statement to be declared effective by the
Securities and Exchange Commission. We have agreed to
maintain the effectiveness of the shelf registration
statement for, under certain circumstances, at least two
years from the date of the original issuance of the
outstanding notes to cover resales of such notes held by
such holders.
WITHDRAWAL RIGHTS................. You may withdraw the tender of your outstanding notes at
any time prior to 5:00 p.m., New York City time, on the
expiration date.
ACCEPTANCE OF OUTSTANDING NOTES
AND DELIVERY OF EXCHANGE
NOTES........................... Subject to certain conditions, we will accept for
exchange any and all outstanding notes which are
properly tendered and not validly withdrawn prior to
5:00 p.m., New York City time, on the expiration date.
The exchange notes issued pursuant to this exchange
offer will be delivered promptly following the
expiration date.
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES.................... The exchange of your outstanding notes for the exchange
notes will not be a taxable exchange for United States
federal income tax purposes. See "Certain United States
Federal Tax Considerations."
NOTES EXCHANGE AGENT.............. United States Trust Company of New York is serving as
the notes exchange agent in connection with the exchange
offer.
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THE NEW PREFERRED STOCK
PREFERRED STOCK REGISTRATION
RIGHTS AGREEMENT................ You are entitled to exchange your outstanding preferred
stock for registered preferred stock with terms that are
identical in all material respects. This exchange offer
is intended to satisfy these rights. After this exchange
offer is complete, you will no longer be entitled to the
benefits of the exchange or registration rights granted
under the preferred stock registration rights agreement
which we entered into as part of the offering of the
preferred stock.
THE EXCHANGE OFFER................ We are offering to exchange $100 liquidation preference
of 12 3/8% Series B Senior Exchangeable Preferred Stock
due 2010 which has been registered under the Securities
Act for each $100 liquidation preference of our
outstanding 12 3/8% Senior Exchangeable Preferred Stock
due 2010 which was issued on April 12, 1999 in a
transaction exempt from registration under the
Securities Act in accordance with Rule 144A. Your
outstanding preferred stock must be properly tendered
and accepted in order to be exchanged. All outstanding
preferred stock that is validly tendered and not validly
withdrawn will be exchanged.
$100,000,000 in aggregate liquidation preference of our
preferred stock is currently outstanding.
We will issue the new preferred stock, which has been
registered under the Securities Act, on or promptly
after the expiration of this exchange offer.
EXPIRATION DATE................... This exchange offer will expire at 5:00 p.m., New York
City time, on , 1999, unless we decide to extend
the expiration date.
CONDITIONS TO THE EXCHANGE
OFFER........................... This exchange offer is subject to the condition that it
does not violate applicable law or staff interpretations
of the Securities and Exchange Commission. If we
determine that this exchange offer is not permitted by
applicable federal law, we may terminate the exchange
offer. This exchange offer is not conditioned upon any
minimum principal amount of our outstanding preferred
stock being tendered. The holders of our outstanding
preferred stock have certain rights against us under the
preferred stock registration rights agreement should we
fail to consummate this exchange offer.
RESALE OF THE NEW PREFERRED
STOCK........................... We believe that the new preferred stock issued pursuant
to this exchange offer in exchange for our outstanding
preferred stock may be offered for resale, resold and
otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the
Securities Act. We have based this belief on letters
issued in connection with past offerings of this kind in
which the staff of the Securities and Exchange
Commission has interpreted the laws and regulations
relating to the resale of preferred stock to the public
without the requirement of further registration under
the Securities Act. In order for the new preferred stock
to be offered for resale, resold or otherwise
transferred:
- you must acquire the new preferred stock in the
ordinary course of your business;
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- you must not intend to participate, and have no
arrangement or understanding with any person to
participate, in the distribution of the new preferred
stock issued to you pursuant to this exchange offer;
- you must not be a broker-dealer who purchased your
outstanding preferred stock directly from us for resale
pursuant to Rule 144A or any other available exemption
under the Securities Act; and
- you must not be an "affiliate" of ours within the
meaning of Rule 405 under the Securities Act.
If our belief is inaccurate and you transfer new
preferred stock issued to you in pursuant to this
exchange offer in violation of the prospectus delivery
provisions of the Securities Act or without an exemption
from registration thereunder, you may incur liability
under the Securities Act. We do not assume or indemnify
you against any such liability.
Each broker-dealer that is issued new preferred stock
pursuant to this exchange offer for its own account in
exchange for outstanding preferred stock which was
acquired by such broker-dealer as a result of
market-making or other trading activities must
acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection
with any resale of such new preferred stock. The letter
of transmittal relating to the new preferred stock
states that a broker-dealer who makes this
acknowledgment and delivers such a prospectus will not
be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. A broker-dealer may
use this prospectus for an offer to resell, resale or
other transfer of the new preferred stock issued to it
pursuant to this exchange offer. We have agreed that,
for a period of 180 days after the date this exchange
offer is completed, we will make this prospectus and any
amendment or supplement to this prospectus available to
any such broker-dealer for use in connection with any
such resales. We believe that no registered holder of
the outstanding preferred stock is an affiliate of PCA
within the meaning of Rule 405 under Securities Act.
This exchange offer is not being made to, nor will we
accept surrenders for exchange from, holders of
outstanding preferred stock in any jurisdiction in which
this exchange offer or its acceptance would not comply
with the securities or blue sky laws of such
jurisdiction. Furthermore, persons who acquire the new
preferred stock are responsible for compliance with
these securities or blue sky laws regarding resales. We
assume no responsibility for compliance with these
requirements.
ACCRUED DIVIDENDS ON THE NEW
PREFERRED STOCK AND THE
OUTSTANDING PREFERRED STOCK..... New preferred stock will bear dividends from its
issuance date. The holders of preferred stock that is
accepted for exchange will receive accrued dividends on
such preferred stock to, but not including, the issuance
date of the new preferred stock. Such dividends will be
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paid with the first dividend payment on the new
preferred stock. Dividends on the preferred stock
accepted for exchange will cease to accrue upon issuance
of the new preferred stock.
Consequently, those holders who exchange their
outstanding preferred stock for new preferred stock will
receive the same dividend payment on October 1, 1999,
which is the first dividend payment date with respect to
the outstanding preferred stock and the new preferred
stock to be issued pursuant to this exchange offer, that
they would have received had they not accepted this
exchange offer.
PROCEDURES FOR TENDERING PREFERRED
STOCK........................... If you wish to tender your preferred stock for exchange
pursuant to this exchange offer, you must transmit to
United States Trust Company of New York, as preferred
stock exchange agent, on or prior to the expiration date
either:
- a properly completed and duly executed copy of the
letter of transmittal accompanying this prospectus, or a
facsimile of such letter of transmittal, together with
your outstanding preferred stock and any other
documentation required by such letter of transmittal,
at the address set forth on the cover page of the
letter of transmittal; or
- if you are effecting delivery by book-entry transfer,
a computer-generated message transmitted by means of the
Automated Tender Offer Program System of The
Depository Trust Company in which you acknowledge and
agree to be bound by the terms of the letter of
transmittal and which, when received by the preferred
stock exchange agent, forms a part of a confirmation
of book-entry transfer.
In addition, you must deliver to the preferred stock
exchange agent on or prior to the expiration date:
- if you are effecting delivery by book-entry transfer,
a timely confirmation of book-entry transfer of your
outstanding preferred stock into the account of the
preferred stock exchange agent at The Depository Trust
Company pursuant to the procedures for book-entry
transfers described in this prospectus under the
heading "The Exchange Offer-Procedures for Tendering;"
or
- if necessary, the documents required for compliance
with the guaranteed delivery procedures described in
this prospectus under the heading "The Exchange
Offer-Guaranteed Delivery Procedures."
By executing and delivering the accompanying letter of
transmittal or effecting delivery by book-entry
transfer, you are representing to us that, among other
things:
- the person receiving the new preferred stock pursuant
to this exchange offer, whether or not such person is
the holder, is receiving them in the ordinary course
of business;
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- neither the holder nor any such other person has an
arrangement or understanding with any person to
participate in the distribution of such new preferred
stock and that such holder is not engaged in, and does
not intend to engage in, a distribution of the new
preferred stock; and
- neither the holder nor any such other person is an
"affiliate" of ours within the meaning of Rule 405 under
the Securities Act.
SPECIAL PROCEDURES FOR BENEFICIAL
OWNERS.......................... If you are a beneficial owner of the preferred stock and
your name does not appear on a security position listing
of The Depository Trust Company as the holder of such
preferred stock or if you are a beneficial owner of
preferred stock that is registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee and you wish to tender such preferred stock in
this exchange offer, you should promptly contact the
person in whose name your preferred stock is registered
and instruct such person to tender on your behalf. If
you, as a beneficial holder, wish to tender on your own
behalf you must, prior to completing and executing the
letter of transmittal and delivering your outstanding
preferred stock, either make appropriate arrangements to
register ownership of the outstanding preferred stock in
your name or obtain a properly completed bond power from
the registered holder. The transfer of record ownership
may take considerable time.
GUARANTEED DELIVERY PROCEDURES.... If you wish to tender your outstanding preferred stock
and time will not permit the letter of transmittal or
any of the documents required by the letter of
transmittal to reach the preferred stock exchange agent
by the expiration date, or the procedure for book-entry
transfer cannot be completed on time or certificates for
your preferred stock cannot be delivered on time, you
may tender your preferred stock pursuant to the
guaranteed delivery procedures described in this
prospectus under the heading "The Exchange
Offer-Guaranteed Delivery Procedures."
SHELF REGISTRATION STATEMENT...... If any changes in law or of the applicable
interpretation of the staff of the Securities and
Exchange Commission do not permit us to effect this
exchange offer or upon the request of any holder of our
outstanding preferred stock under certain circumstances,
we have agreed to register the preferred stock on a
shelf registration statement and use our best efforts to
cause such shelf registration statement to be declared
effective by the Securities and Exchange Commission. We
have agreed to maintain the effectiveness of the shelf
registration statement for, under certain circumstances,
at least two years from the date of the original
issuance of the outstanding preferred stock to cover
resales of such preferred stock held by such holders.
WITHDRAWAL RIGHTS................. You may withdraw the tender of your outstanding
preferred stock at any time prior to 5:00 p.m., New York
City time, on the expiration date.
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ACCEPTANCE OF OUTSTANDING
PREFERRED STOCK AND DELIVERY OF
NEW PREFERRED STOCK............. Subject to certain conditions, we will accept for
exchange any and all outstanding preferred stock which
is properly tendered and not validly withdrawn prior to
5:00 p.m., New York City time, on the expiration date.
The new preferred stock issued pursuant to this exchange
offer will be delivered promptly following the
expiration date.
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES.................... The exchange of your outstanding preferred stock for the
new preferred stock will not be a taxable exchange for
United States federal income tax purposes. See "Certain
United States Federal Tax Considerations."
PREFERRED STOCK EXCHANGE AGENT.... United States Trust Company of New York is serving as
the preferred stock exchange agent in connection with
the exchange offer.
USE OF PROCEEDS
USE OF PROCEEDS................... We will not receive any proceeds from the issuance of
the exchange notes or the new preferred stock pursuant
to this exchange offer. We will pay all of our and our
subsidiary guarantors' expenses relating to this
exchange offer.
</TABLE>
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THE EXCHANGE NOTES AND THE NEW PREFERRED STOCK
<TABLE>
<S> <C>
ISSUER............................ Packaging Corporation of America.
THE EXCHANGE NOTES
GENERAL........................... The form and terms of the exchange notes are identical
in all material respects to the form and terms of the
outstanding notes except that:
- the exchange notes will bear a Series B designation;
- the exchange notes have been registered under the
Securities Act and, therefore, will generally not bear
legends restricting their transfer; and
- the holders of exchange notes will not be entitled to
rights under the notes registration rights agreement.
The exchange notes will evidence the same debt as the
outstanding notes and will be entitled to the benefits
of the indenture under which the notes were issued.
TOTAL AMOUNT OF EXCHANGE NOTES
OFFERED......................... $550 million in aggregate principal amount of 9 5/8%
Series B Senior Subordinated Notes due 2009.
MATURITY.......................... April 1, 2009.
INTEREST.......................... Annual fixed rate of 9 5/8%, payable every six months,
beginning October 1, 1999.
SUBSIDIARY GUARANTORS............. Each of our current and future domestic subsidiaries
(other than any receivables subsidiaries) will be a
guarantor of the exchange notes. If we create any
foreign subsidiaries, they will not be guarantors of the
exchange notes. If we cannot make payments on the
exchange notes when they are due, the guarantor
subsidiaries must make them instead.
RANKING........................... The exchange notes and the subsidiary guarantees will be
senior subordinated debts. They will rank behind all
current and future indebtedness (other than trade
payables) of PCA and the guarantor subsidiaries, except
indebtedness that expressly provides that it is not
senior to the exchange notes and the subsidiary
guarantees. They will also effectively rank behind all
current and future liabilities (including trade
payables) of our future foreign subsidiaries, if any. As
of May 1, 1999, the exchange notes and the subsidiary
guarantees would have been subordinated to $1,219
million of senior debt (and $250 million would have been
available for borrowings under the senior credit
facility), and would have ranked equally with no other
senior subordinated debt.
OPTIONAL REDEMPTION............... We may redeem some or all of the exchange notes at any
time after April 1, 2004, at the redemption prices
listed in "Description of Exchange Notes" under the
heading "Optional Redemption."
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Before April 1, 2002, we may redeem up to 35% of the
exchange notes with the proceeds of certain offerings of
our equity or equity of our parent or certain timberland
sales at the price listed in "Description of Exchange
Notes" under the heading "Optional Redemption."
In addition, before April 1, 2004, if we undergo
specific kinds of changes in control, we may also redeem
all, but not part, of the exchange notes at the price
described in "Description of Exchange Notes" under the
heading "Optional Redemption."
MANDATORY OFFER TO REPURCHASE..... If we sell certain assets or undergo specific kinds of
changes of control, we must offer to repurchase the
exchange notes at the prices listed in "Description of
Exchange Notes."
BASIC COVENANTS OF INDENTURE...... We will issue the exchange notes under an indenture
among us, our subsidiary guarantors and United States
Trust Company of New York. The notes indenture, among
other things, imposes certain specified restrictions
upon our ability and the ability of certain of our
subsidiaries to:
- borrow money;
- pay dividends on or purchase stock;
- make investments;
- use assets as security in other transactions; and
- sell certain assets or merge with or into other
companies.
These covenants are subject to important exceptions and
qualifications which are described in "Description of
Exchange Notes" under the heading "Certain Covenants."
THE NEW PREFERRED STOCK
GENERAL........................... The form and terms of the new preferred stock are
identical in all material respects to the form and terms
of the outstanding preferred stock except that:
-the new preferred stock will bear a Series B
designation;
-the new preferred stock has been registered under the
Securities Act and, therefore, will generally not bear
legends restricting its transfer; and
-the holders of new preferred stock will not be entitled
to rights under the preferred stock registration rights
agreement.
The new preferred stock will evidence the same equity as
the outstanding preferred stock and will be entitled to
the benefits of the certificate of designation under
which the preferred stock was issued.
TOTAL AMOUNT OF NEW PREFERRED
STOCK OFFERED................... $100 million of 12 3/8% Series B Senior Exchangeable
Preferred Stock due 2010.
LIQUIDATION PREFERENCE............ $100 per share plus accrued and unpaid dividends.
DIVIDENDS......................... Cumulative from the date of issuance.
</TABLE>
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Annual fixed rate of 12 3/8%, payable every six months,
beginning October 1, 1999.
Through April 1, 2004, payable in cash or additional
shares of new preferred stock at our option. After April
1, 2004, payable only in cash.
MANDATORY REDEMPTION.............. On April 1, 2010, we must redeem all of the new
preferred stock outstanding.
OPTIONAL REDEMPTION............... We may redeem some or all of the new preferred stock at
any time after April 1, 2004, at the redemption prices
listed in "Description of New Preferred Stock" under the
heading "New Preferred Stock-Optional Redemption."
Before April 1, 2002, we may redeem all, or if less than
all, up to 35% of the new preferred stock with the
proceeds of certain offerings of our equity or equity of
our parent or certain timberland sales at the price
listed in "Description of New Preferred Stock" under the
heading "New Preferred Stock-Optional Redemption."
In addition, before April 1, 2004, if we undergo
specific kinds of changes in control, we may also redeem
all, but not part, of the new preferred stock at the
price described in "Description of New Preferred Stock"
under the heading "New Preferred Stock-Optional
Redemption."
RANKING........................... The new preferred stock will rank senior to all other
classes of our capital stock that do not expressly
provide that they rank on a parity with the new
preferred stock as to dividends and distributions upon
our liquidation, winding up and dissolution. It will
rank on a parity with any of our future capital stock
which expressly provides that such class or series will
rank on a parity with the new preferred stock as to
dividends and distributions upon our liquidation,
winding up and dissolution. The new preferred stock will
be subordinated to all of our current and future
liabilities (including trade payables), including the
exchange notes.
MANDATORY OFFER TO REDEEM......... If we sell certain assets or undergo specific kinds of
changes of control, we must offer to redeem the new
preferred stock at the prices listed in "Description of
New Preferred Stock."
BASIC COVENANTS OF CERTIFICATE OF
DESIGNATION..................... We will issue the new preferred stock under a
certificate of designation that is part of our
certificate of incorporation. The certificate of
designation, among other things, imposes certain
specified restrictions upon our ability and the ability
of certain of our subsidiaries to:
- borrow money;
- pay dividends on stock or purchase stock;
- make investments; and
- sell certain assets or merge with or into other
companies.
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These covenants are subject to important exceptions and
qualifications which are described in "Description of
New Preferred Stock" under the heading "New Preferred
Stock-Certain Covenants."
VOTING RIGHTS..................... The new preferred stock will have no voting rights
except as required by law and as specified in the
certificate of designation. If we fail to pay dividends
or meet our obligations under the covenants contained in
the certificate of designation, the holders of the new
preferred stock will be entitled to elect two additional
members to our board of directors.
EXCHANGE FEATURE.................. We may exchange all but not less than all of the shares
of the new preferred stock for subordinated exchange
debentures on any date on which dividends are scheduled
to be paid.
THE SUBORDINATED EXCHANGE DEBENTURES
THE SUBORDINATED EXCHANGE
DEBENTURES...................... 12 3/8% Subordinated Exchange Debentures due 2010.
MATURITY.......................... April 1, 2010.
INTEREST.......................... Annual fixed rate of 12 3/8%, payable every six months,
beginning the first April 1 or October 1 after the
exchange date.
Through April 1, 2004, payable in cash or additional
subordinated exchange debentures at our option. After
April 1, 2004 payable only in cash.
RANKING........................... The subordinated exchange debentures will be
subordinated debts. They will rank behind all of our
current and future indebtedness (other than trade
payables), including the exchange notes, except
indebtedness that expressly provides that it is not
senior to the subordinated exchange debentures. They
will not be guaranteed by any of our subsidiaries. As a
result, they will also effectively rank behind all
current and future liabilities (including trade
payables) of our subsidiaries.
OPTIONAL REDEMPTION............... We may redeem some or all of the subordinated exchange
debentures at any time after April 1, 2004 at the
redemption prices listed in "Description of New
Preferred Stock" under the heading "Subordinated
Exchange Debentures-Optional Redemption."
Before April 1, 2002, we may redeem all, or if less than
all, up to 35% of the subordinated exchange debentures
with the proceeds of certain offerings of our equity or
equity of our parent or certain timberland sales at the
price listed in "Description of New Preferred Stock"
under the heading "Subordinated Exchange
Debentures-Optional Redemption."
In addition, before April 1, 2004, if we undergo
specific kinds of changes in control, we may also redeem
all, but not part, of the subordinated exchange
debentures at the price described in "Description of New
Preferred Stock" under the heading "Subordinated
Exchange Debentures-Optional Redemption."
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MANDATORY OFFER TO REPURCHASE..... If we sell certain assets or experience specific kinds
of changes of control, we must offer to repurchase the
subordinated exchange debentures at the prices listed in
"Description of New Preferred Stock."
BASIC COVENANTS OF INDENTURE...... The subordinated exchange debentures indenture contains
covenants substantially identical to those contained in
the certificate of designation for the new preferred
stock.
</TABLE>
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 1900 West Field Court, Lake
Forest, Illinois 60045 and our telephone number is (847) 482-2000.
18
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
Set forth below are the summary historical and pro forma financial data of PCA.
The historical financial data as of and for the years ended December 31, 1996,
1997 and 1998 has been derived from the audited combined financial statements of
the Group and the related notes thereto included elsewhere in this prospectus.
The historical financial data as of and for the years ended December 31, 1994
and 1995 has been derived from the unaudited financial statements of the Group.
The historical financial data as of and for the quarters ended March 31, 1998
and 1999 has been derived from the unaudited condensed combined financial
statements of the Group included elsewhere in this prospectus. The unaudited pro
forma financial data as of and for the three months ended March 31, 1999 and as
of and for the year ended December 31, 1998 was derived from the unaudited pro
forma financial information included elsewhere in this prospectus. The
information in the following table should be read in conjunction with "The
Transactions," "Unaudited Pro Forma Financial Information," "Selected Financial
and Other Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the historical combined financial statements of
the Group and the related notes contained elsewhere in this prospectus.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
THREE MONTHS ENDED
PRO FORMA
YEAR ENDED DECEMBER 31, YEAR ENDED MARCH 31,
---------------------------------------------------------- DECEMBER 31, --------------------
1994 1995 1996 1997 1998 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DOLLARS IN THOUSANDS
STATEMENT OF INCOME DATA:
Net sales................... $1,441,673 $1,844,708 $1,582,222 $1,411,405 $1,571,019 $ 1,571,019 $ 432,901 $ 391,279
Cost of sales............... (1,202,996) (1,328,838) (1,337,410) (1,242,014) (1,289,644) (1,270,184) (354,855) (332,117)
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
Gross profit.............. 238,677 515,870 244,812 169,391 281,375 300,835 78,046 59,162
Selling and administrative
expenses.................. (71,312) (87,644) (95,283) (102,891) (108,944) (102,568) (26,841) (28,759)
Corporate overhead
allocation (1)............ (34,678) (38,597) (50,461) (61,338) (63,114) (63,114) (14,326) (13,283)
Restructuring/impairment
charge (2)................ - - - - (14,385) (14,385) -- (230,112)
Other income (expense)...... (4,701) (16,915) 56,243 44,681 26,818 41,592 (2,742) (1,377)
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
Income (loss) before
interest, income taxes
and extraordinary item... 127,986 372,714 155,311 49,843 121,750 162,360 34,137 (214,369)
Interest expense, net....... (740) (1,485) (5,129) (3,739) (2,782) (159,851) (741) (221)
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
Income (loss) before income
taxes and extraordinary
item...................... 127,246 371,229 150,182 46,104 118,968 2,509 33,396 (214,590)
Income tax expense.......... (50,759) (147,108) (59,816) (18,714) (47,529) (366) (13,315) 88,362
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
Income (loss) before
extraordinary item....... 76,487 224,121 90,366 27,390 71,439 2,143 20,081 (126,228)
Extraordinary loss.......... - - - - - - - (6,327)
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
Net Income (loss)......... $ 76,487 $ 224,121 $ 90,366 $ 27,390 $ 71,439 $ 2,143 $ 20,081 $(132,555)
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
---------- ---------- ---------- ---------- ---------- ------------- --------- ---------
OTHER DATA:
EBITDA (3).................. $ 276,449 $ 547,435 $ 272,498 $ 166,814 $ 264,832 $ 269,309 $ 79,569 $(167,800)
Adjusted pro forma EBITDA
(4)....................... - - - - - 327,448 - -
Cash interest expense (5)... - - - - - 151,515 - -
Ratio of adjusted pro forma
EBITDA to cash interest
expense................... - - - - - 2.2x - -
Ratio of debt to adjusted
pro forma EBITDA.......... - - - - - 5.4x - -
Ratio of earnings to fixed
charges (6)............... 4.3x 10.3x 4.4x 2.3x 4.4x 1.0x 5.0x N/A
Ratio of earnings to
combined fixed charges and
preferred stock dividends
(6)....................... 4.3x 10.3x 4.4x 2.3x 4.4x N/A 5.0x N/A
Capital expenditures........ $ 110,853 $ 252,745 $ 168,642 $ 110,186 $ 103,429 $ 103,429 $ 16,339 $ 19,460
BALANCE SHEET DATA:
Working capital (7)......... $(163,204)
Total assets................ 1,372,523
Total long-term obligations
(8)....................... 466
Total stockholders'
equity.................... 666,438
<CAPTION>
PRO FORMA
THREE MONTHS
ENDED
MARCH 31,
1999
-------------
<S> <C>
DOLLARS IN THOUSANDS
STATEMENT OF INCOME DATA:
Net sales................... $ 391,279
Cost of sales............... (328,545)
-------------
Gross profit.............. 62,734
Selling and administrative
expenses.................. (27,574)
Corporate overhead
allocation (1)............ (13,283)
Restructuring/impairment
charge (2)................ -
Other income (expense)...... 992
-------------
Income (loss) before
interest, income taxes
and extraordinary item... 22,869
Interest expense, net....... (39,486)
-------------
Income (loss) before income
taxes and extraordinary
item...................... (16,617)
Income tax expense.......... 9,304
-------------
Income (loss) before
extraordinary item....... (7,313)
Extraordinary loss.......... (6,327)
-------------
Net Income (loss)......... $ (13,640)
-------------
-------------
OTHER DATA:
EBITDA (3).................. $ 69,956
Adjusted pro forma EBITDA
(4)....................... -
Cash interest expense (5)... -
Ratio of adjusted pro forma
EBITDA to cash interest
expense................... -
Ratio of debt to adjusted
pro forma EBITDA.......... -
Ratio of earnings to fixed
charges (6)............... N/A
Ratio of earnings to
combined fixed charges and
preferred stock dividends
(6)....................... N/A
Capital expenditures........ $ 19,460
BALANCE SHEET DATA:
Working capital (7)......... $ 229,376
Total assets................ 2,387,863
Total long-term obligations
(8)....................... 1,869,000
Total stockholders'
equity.................... 294,452
</TABLE>
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NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS)
1) The corporate overhead allocation represents the amounts charged by Tenneco
and TPI to the Group for its share of Tenneco's and TPI's corporate
expenses. On a stand-alone basis, management estimates that PCA's overhead
expense will be $30,160 for the first twelve months following the
Acquisition.
2) This line item consists of non-recurring charges recorded in the fourth
quarter of 1998 and the first quarter of 1999 pertaining to a restructuring
charge and an impairment charge, respectively. For further information about
these charges, refer to Notes 7 and 14 to the Group's combined financial
statements.
3) "EBITDA" represents income before interest and income taxes plus (a)
depreciation, depletion and amortization and (b) lease expense relating to
the operating leases for which the related assets were purchased in
connection with the Transactions; and plus or minus (c) other income
(expense), which is excluded because it is not reflective of recurring
earnings. PCA's EBITDA is included in this prospectus because it is a basis
upon which PCA assesses its financial performance and debt service
capabilities, and because certain covenants in PCA's borrowing arrangements
are tied to similar measures. However, EBITDA should not be considered in
isolation or viewed as a substitute for cash flow from operations, net
income or other measures of performance as defined by generally accepted
accounting principles or as a measure of a company's profitability or
liquidity. PCA understands that while EBITDA is frequently used by
securities analysts, lenders and others in their evaluation of companies,
EBITDA as used herein is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in the
method of calculation.
4) Adjusted pro forma EBITDA for 1998 represents EBITDA plus adjustments to
eliminate the effect of non-recurring items and to adjust for certain other
stand-alone considerations, as follows:
<TABLE>
<S> <C>
Pro forma EBITDA for 1998......................................... $269,309
Adjustments:
Non-recurring restructuring charge.............................. 14,385
Reduction in corporate overhead................................. 32,954
Cost savings from restructuring................................. 10,800
---------
Adjusted pro forma EBITDA for 1998................................ $327,448
---------
---------
</TABLE>
5) Cash interest expense is defined as interest expense excluding amortization
of (a) debt issuance costs and (b) the settlement payment on the interest
rate protection agreement related to the outstanding notes.
6) The ratio of earnings to fixed charges has been calculated by dividing (a)
income before income taxes plus fixed charges by (b) fixed charges. Fixed
charges are equal to interest expense (including amortization of deferred
financing costs) plus the portion of rent expense estimated to represent
interest. The ratio of earnings to combined fixed charges and preferred
stock dividends has been calculated by dividing (a) income before income
taxes plus fixed charges by (b) fixed charges and preferred stock dividends
(grossed-up to obtain a "pre-tax" equivalent).
On an actual basis for the three months ended March 31, 1999, earnings were
insufficient to cover fixed charges by $214,590. On a pro forma basis for
the three months ended March 31, 1999, earnings were insufficient to cover
(i) fixed charges by $16,642 and (ii) fixed charges and preferred stock
dividends by $19,586. On a pro forma basis for the year ended December 31,
1998, earnings were insufficient to cover fixed charges and preferred stock
dividends by $18,116.
7) Working capital represents (a) total current assets excluding cash and cash
equivalents less (b) total current liabilities excluding the current
maturities of long-term debt.
8) Total long-term obligations includes long-term debt, the current maturities
of long-term debt, and redeemable preferred stock. The amount excludes
amounts due to TPI or other Tenneco affiliates as part of the Group's
interdivision account.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN ADDITION TO THE OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE DECIDING WHETHER TO MAKE AN
INVESTMENT IN THE EXCHANGE NOTES OR THE NEW PREFERRED STOCK.
LEVERAGE-OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL
HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE EXCHANGE NOTES
AND THE NEW PREFERRED STOCK OR, IF ISSUED, THE SUBORDINATED EXCHANGE DEBENTURES.
To finance the Transactions, we have incurred a significant amount of
indebtedness. The following chart shows certain important credit statistics and
is presented assuming we had completed the Transactions as of the date or at the
beginning of the period specified below and applied the proceeds as intended:
<TABLE>
<CAPTION>
--------------
AT MARCH 31,
1999
--------------
<S> <C>
DOLLARS IN MILLIONS
Total indebtedness....................................................... $1,769.0
Preferred stock.......................................................... $100.0
Stockholders' equity..................................................... $294.5
</TABLE>
For the three months ended March 31, 1999 on a pro forma basis, earnings were
insufficient to cover fixed charges by $16.6 million, and earnings were
insufficient to cover combined fixed charges and preferred stock dividends by
$19.6 million.
From the date of issuance until April 1, 2004, we will be permitted to pay
dividends on the new preferred stock in cash or in kind. Thereafter, we will be
required to pay dividends on the new preferred stock in cash. After giving
effect to the payment-in-kind dividends permitted through April 1, 2004, and
assuming that all dividends are paid in kind, the new preferred stock
outstanding upon which we would be required to pay cash dividends would equal
$182.3 million. Furthermore, subject to certain conditions, the new preferred
stock will be exchangeable, at our option, for subordinated exchange debentures.
Our substantial indebtedness and our future cash dividend obligations could have
important consequences to you. For example, it could:
- make it more difficult for us to satisfy our obligations with respect to
the exchange notes or the new preferred stock or, if issued, the
subordinated exchange debentures;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to fund future working capital, capital expenditures,
research and development costs and other general corporate requirements;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness and preferred stock, thereby
reducing the availability of our cash flow to fund working capital,
capital expenditures, research and development efforts and other general
corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- limit our ability to make strategic acquisitions or take other corporate
action;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit, along with the financial and other restrictive covenants contained
in the agreements governing our indebtedness and preferred stock, our
ability to borrow additional funds and increase the cost of any such
borrowings. Our failure to comply with such covenants could result in an
event of default which, if not cured or waived, could have a material
adverse effect on us.
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See "Description of Exchange Notes," "Description of New Preferred Stock" and
"Description of Senior Credit Facility."
ADDITIONAL BORROWINGS AVAILABLE-DESPITE OUR CURRENT LEVELS OF INDEBTEDNESS, WE
AND OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS
COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional indebtedness
in the future. The terms of the notes indenture and the certificate of
designation and, if the subordinated exchange debentures are issued, the
subordinated exchange debentures indenture, do not fully prohibit us or our
subsidiaries from doing so. The senior credit facility permits additional
borrowings of up to $250.0 million, and all of those borrowings would be senior
to the exchange notes, the subsidiary guarantees of the exchange notes, the new
preferred stock and, if issued, the subordinated exchange debentures. If new
debt is added to our and our subsidiaries' current debt levels, the related
risks that we and they now face could intensify.
See "Capitalization," "Selected Financial and Other Data," "Description of
Exchange Notes," "Description of New Preferred Stock" and "Description of Senior
Credit Facility."
ABILITY TO SERVICE DEBT AND NEW PREFERRED STOCK-TO MAKE PAYMENTS ON THE EXCHANGE
NOTES, SERVICE OUR OTHER INDEBTEDNESS AND MAKE CASH PAYMENTS ON THE NEW
PREFERRED STOCK AND, IF ISSUED, THE SUBORDINATED EXCHANGE DEBENTURES, WE WILL
REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON
MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on the exchange notes and the new preferred stock
and, if issued, the subordinated exchange debentures, to refinance our
indebtedness, including the exchange notes and, if issued, the subordinated
exchange debentures, and to fund planned capital expenditures and research and
development efforts will depend on our ability to generate cash in the future.
This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our
control.
Based on our current level of operations and anticipated cost savings and
operating improvements, we believe our cash flow from operations, available cash
and available borrowings under the senior credit facility will be adequate to
meet our future liquidity needs for at least the next few years.
We cannot assure you, however, that our business will generate sufficient cash
flow from operations, that currently anticipated cost savings and operating
improvements will be realized on schedule or at all or that future borrowings
will be available to us under the senior credit facility in amounts sufficient
to enable us to pay our indebtedness, including the exchange notes and, if
issued, the subordinated exchange debentures, pay dividends on the new preferred
stock, redeem the new preferred stock or to fund our other liquidity needs. We
may need to refinance all or a portion of our indebtedness, including the
exchange notes and if issued, the subordinated exchange debentures, and redeem
the new preferred stock on or before maturity. We cannot assure you that we will
be able to redeem the new preferred stock or refinance any of our indebtedness,
including the senior credit facility, the exchange notes, and, if issued, the
subordinated exchange debentures, on commercially reasonable terms or at all.
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SUBORDINATION-YOUR RIGHT TO RECEIVE CASH PAYMENTS ON THE EXCHANGE NOTES, THE NEW
PREFERRED STOCK AND, IF ISSUED, THE SUBORDINATED EXCHANGE DEBENTURES IS JUNIOR
TO OUR EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. FURTHER,
THE SUBSIDIARY GUARANTEES OF THE EXCHANGE NOTES ARE JUNIOR TO ALL OUR SUBSIDIARY
GUARANTORS' EXISTING INDEBTEDNESS AND POSSIBLY TO ALL THEIR FUTURE BORROWINGS.
The exchange notes and the subsidiary guarantees rank behind all of our and our
subsidiary guarantors' existing indebtedness (other than trade payables) and all
of our and their future borrowings (other than trade payables), except any
future indebtedness (such as the subordinated exchange debentures) that
expressly provides that it ranks equal with, or subordinated in right of payment
to, the exchange notes and the subsidiary guarantees. The new preferred stock
ranks junior in right of payment to all of our existing and future liabilities
or obligations (including trade payables), other than our common stock and any
preferred stock which by its terms is on parity with or junior to the new
preferred stock. The subordinated exchange debentures, if issued, will rank
behind all of our existing and future indebtedness that is senior to the
subordinated exchange debentures, including the exchange notes. As a result,
upon any distribution to our creditors or, in the case of the subsidiary
guarantees, the creditors of our subsidiary guarantors, in a bankruptcy,
liquidation or reorganization or similar proceeding relating to us or our
subsidiary guarantors or our or their property:
- the holders of our and our subsidiary guarantors' debt senior to the
exchange notes will be entitled to be paid in full in cash before any
payment may be made with respect to the exchange notes or the subsidiary
guarantees; and
- payments may be made with respect to the new preferred stock only after
our assets have been used to satisfy all of our obligations to our
creditors, including holders of the exchange notes, or if the subordinated
exchange debentures have been issued, only after all of the debt that is
senior to the subordinated exchange debentures, including the exchange
notes, has been paid in full.
In addition, all payments on the exchange notes and the subsidiary guarantees
will be blocked in the event of a payment default on designated senior debt and
may be blocked for up to 179 of 360 consecutive days in the event of certain
non-payment defaults on senior debt. Furthermore, all payments on the
subordinated exchange debentures will be blocked in the event of a payment
default on any designated debt that is senior to the subordinated exchange
debentures and may be blocked for up to 179 of 360 consecutive days in the event
of certain non-payment defaults on debt that is senior to the subordinated
exchange debentures.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or, in the case of the subsidiary guarantees, our
subsidiary guarantors:
- holders of the exchange notes will participate with trade creditors and
all other holders of subordinated indebtedness of us and our subsidiary
guarantors that is deemed to be of the same class as the exchange notes in
the assets remaining after we and our subsidiary guarantors have paid all
of the debt senior to the exchange notes;
- holders of the subordinated exchange debentures, if issued, will
participate with all holders of subordinated indebtedness of us that is
deemed to be of the same class as the subordinated exchange debentures,
and potentially with all other general creditors of PCA, in our remaining
assets; and
- holders of the new preferred stock will receive assets only after we have
paid all other indebtedness.
However, because the notes indenture and the subordinated exchange debentures
indenture require that amounts otherwise payable to holders of the exchange
notes, in the case of the notes indenture or holders of the subordinated
exchange debentures, in the case of the subordinated exchange debentures
indenture, in a bankruptcy or similar proceeding be paid to holders of debt
senior to such security instead, holders of the exchange notes and holders of
the subordinated exchange debentures may receive less, ratably, than holders of
trade payables in any such proceeding. In any of these cases, we and, in the
case of the exchange notes, our
23
<PAGE>
subsidiary guarantors may not have sufficient funds to pay all of our creditors
and holders of exchange notes and holders of subordinated exchange debentures
may receive less, ratably, than the holders of debt senior to such security.
Assuming we had completed the Transactions on March 31, 1999:
- the exchange notes and the subsidiary guarantees would have been
subordinated to $1.219 billion of debt senior to the exchange notes, and
$241 million would have been available for borrowing as additional senior
debt under the senior credit facility;
- the new preferred stock would have been subordinated to all $1.77 billion
of our outstanding debt, including the exchange notes; and
- the subordinated exchange debentures, if issued, would have been
subordinated to all $1.77 billion of our outstanding debt, including the
exchange notes.
We are and will continue to be permitted to borrow substantial additional
indebtedness, including senior debt, in the future under the terms of the notes
indenture, the certificate of designation and the subordinated exchange
debentures indenture.
DIVIDEND RESTRICTIONS-OUR ABILITY TO PAY CASH DIVIDENDS ON THE NEW PREFERRED
STOCK OR REDEEM THE NEW PREFERRED STOCK OR, IF ISSUED, REPURCHASE THE
SUBORDINATED EXCHANGE DEBENTURES FOR CASH, IS LIMITED IN MANY WAYS.
The senior credit facility generally prohibits the payment of cash dividends on
the new preferred stock and the redemption, repurchase or other acquisition of
any new preferred stock or subordinated exchange debentures by us for cash.
In addition, the notes indenture generally restricts our ability to pay cash
dividends on the new preferred stock, and redeem, repurchase or otherwise
acquire the new preferred stock or, if issued, subordinated exchange debentures
for cash. Moreover, under Delaware law, we may only pay a dividend on the new
preferred stock out of our surplus or net profits for the fiscal year in which
the dividend is declared and/or the preceding year. In addition, our board of
directors must approve the payment of any such dividend.
There can be no assurances that we will be able to generate a surplus or net
profits after making our payments under the senior credit facility or the
exchange notes, to other creditors or for any other reason. As a result, we do
not expect to be able to pay cash dividends on the new preferred stock or
redeem, purchase or otherwise acquire any new preferred stock or, if issued,
subordinated exchange debentures for cash in the foreseeable future.
RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITY, THE NOTES INDENTURE AND THE
CERTIFICATE OF DESIGNATION-THE SENIOR CREDIT FACILITY, THE NOTES INDENTURE AND
THE CERTIFICATE OF DESIGNATION LIMIT US IN CERTAIN SIGNIFICANT RESPECTS.
Our senior credit facility and the notes indenture impose certain restrictions
on our ability, among other things, to:
- incur additional indebtedness;
- pay dividends and make distributions;
- issue stock of subsidiaries;
- make certain investments;
- repurchase stock; and
- create liens;
- enter into transactions with affiliates;
- enter into sale and leaseback transactions;
- merge or consolidate our company;
- transfer and sell assets.
The certificate of designation governing the new preferred stock and the
subordinated exchange debentures indenture, if the subordinated exchange
debentures are issued, contain similar restrictions.
24
<PAGE>
In addition, we must maintain minimum debt service, minimum net worth and
maximum leverage ratios under the senior credit facility. A failure to comply
with the restrictions contained in the senior credit facility could lead to an
event of default, which could result in an acceleration of such indebtedness.
Such an acceleration would also constitute an event of default under the notes
indenture or the subordinated exchange debentures indenture, if the subordinated
exchange debentures are issued, and could cause a voting rights triggering event
under the certificate of designation. See "Description of Senior Credit
Facility."
INDUSTRY AND CYCLICAL FACTORS-THE CYCLICALITY OF OUR INDUSTRY, WHICH IS IMPACTED
BY BOTH THE SUPPLY AND DEMAND FOR CONTAINERBOARD, COULD ADVERSELY IMPACT OUR
FINANCIAL RESULTS.
The market for containerboard is highly cyclical. Historically, prices for
containerboard have generally reflected changes in supply, which is primarily
determined by additions and reductions to industry capacity and inventory
levels, and, to a lesser extent, changes in demand.
Containerboard demand is dependent upon both the demand for corrugated packaging
products, which closely tracks industrial production, and export activity.
Domestic demand for corrugated packaging products is more stable, and generally
corresponds to changes in the rate of growth in the U.S. economy.
During the period from 1994 to 1996, capacity additions outpaced domestic and
export demand, leading to lower industry operating rates and generally declining
prices from late-1995 until mid-1997. Although prices generally improved from
mid-1997 through mid-1998, the containerboard markets were adversely affected by
weaker containerboard exports, particularly to Asia in the second half of 1998.
These factors contributed to higher inventories, lower operating rates and lower
prices during this period.
Although industry fundamentals have improved in recent months, industry
conditions may deteriorate in the future. Any deterioration in industry
conditions is likely to substantially reduce our cash flow and could have a
material adverse effect on our financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
COMPETITION-WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY AGAINST A NUMBER OF
LARGE, VERTICALLY INTEGRATED COMPANIES.
The containerboard and corrugated packaging products industries are highly
competitive. Containerboard is largely a commodity, resulting in substantial
price competition. Our competitors include large, vertically integrated
containerboard and corrugated packaging products companies and numerous smaller
companies. Although no company enjoys a dominant position in the industry, some
of our competitors are less leveraged and have greater financial and other
resources than we do and are able to better withstand the cyclicality within our
industry.
We may also face increased competition from new or existing producers of
containerboard. Although containerboard mills generally require approximately
two years to construct and require substantial capital investment, we believe
that some of our competitors have idle machines that could potentially be
restarted and used in containerboard production in a shorter period and with
less significant capital investment.
Competition in the corrugated packaging industry is based on innovation, price,
design, quality and service, to varying degrees depending on the product line.
We cannot assure you that we will be able to compete successfully with respect
to any of these factors. We compete with national, regional and local corrugated
products manufacturers, as well as manufacturers of other types of packaging
products in each of our geographic and product markets. Our failure to compete
successfully could have a material adverse effect on our business, financial
position and results of operations.
COST OF RAW MATERIALS-AN UNEXPECTED INCREASE IN THE COST OF FIBER OR LACK OF
CONTINUED ACCESS TO VIRGIN FIBER MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.
The average cost of virgin fiber has been increasing due to greater demand for
wood chips from timberland located in the Southern United States. It is possible
that virgin fiber costs will increase further in the future. We
25
<PAGE>
are considering the possible sale of a significant portion of our timberland. A
sale of timberland could increase our susceptibility to volatile fiber costs. We
cannot assure you that we will have continued access to sufficient quantities of
virgin fiber, the largest component we use in producing containerboard. The loss
of a stable supply of virgin fiber could have a material adverse effect on us.
See "Business-Raw Materials."
DEPENDENCE UPON KEY PERSONNEL-A LOSS OF KEY PERSONNEL COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.
Our success is largely dependent on the skills, experience and efforts of our
senior management. The loss of services of one or more members of our senior
management could have a material adverse effect on our company. In addition, as
our business develops and expands, we believe that our future success will
depend on our continued ability to attract and retain highly skilled and
qualified personnel. We cannot assure you that we will be able to continue to
employ key personnel or that we will be able to attract and retain qualified
personnel in the future. Failure to retain or attract such key personnel could
have a material adverse effect on our business, financial condition and results
of operations.
LACK OF OPERATING HISTORY AS A STAND-ALONE ENTITY--THE ABILITY OF OUR MANAGEMENT
TO EFFECT THE TRANSITION FROM OPERATING AS A DIVISION OF A LARGE, INVESTMENT
GRADE COMPANY TO OPERATING AS A HIGHLY-LEVERAGED STAND-ALONE BUSINESS IS KEY TO
OUR SUCCESS.
Prior to consummation of the Transactions, PCA operated as a division of TPI,
which is currently a subsidiary of Tenneco. As such, PCA was not responsible for
financing its operations and complying with the related financial covenants and
other debt agreement restrictions. In addition, PCA participated in Tenneco's
extensive business and support service network, which afforded PCA leverage with
respect to purchasing goods and services and leasing office facilities and
eliminated the need for its management to focus on such matters. We have entered
into various agreements with TPI to assist us with this transition, but these
agreements are of a limited duration. See "Certain Transactions-Transition
Agreements" and "-Purchase/Supply Agreements." There can be no assurance that we
will be able to complete the transition on a cost-effective basis or at all,
particularly after the termination of the transition agreements.
In addition, TPI and certain of its affiliates have entered into purchase/supply
agreements whereby they have agreed to purchase containerboard and corrugated
packaging products from us for a period of five years from the closing of the
Transactions at prices based on market rates with no volume discount. As a
result of these agreements, TPI and its affiliates are our largest customer and
second largest customer of corrugated products. There can be no assurance that
these agreements will be extended beyond five years, and the loss of TPI and its
affiliates as customers could have a material impact on our operations.
CONTROLLING STOCKHOLDERS; POTENTIAL CONFLICTS-THE INTERESTS OF OUR CONTROLLING
STOCKHOLDERS COULD CONFLICT WITH THOSE OF THE HOLDERS OF THE EXCHANGE NOTES, THE
NEW PREFERRED STOCK AND, IF ISSUED, THE SUBORDINATED EXCHANGE DEBENTURES.
As of May 1, 1999, PCA Holdings and TPI beneficially owned 55% and 45%,
respectively, of the outstanding common stock of PCA on a fully diluted basis
and have entered into a stockholders agreement governing the composition of our
board of directors and restricting their ability to transfer their shares to
third parties. As a result, PCA Holdings and TPI have the ability to elect all
of the members of our board of directors, appoint new management and approve any
action requiring the approval of our stockholders. The directors have the
authority to make decisions affecting our capital structure, including the
issuance of additional indebtedness and the declaration of dividends. There can
be no assurance that the interests of PCA Holdings and TPI do not and will not
conflict with the interests of the holders of the exchange notes or the new
preferred stock or, if issued, the subordinated exchange debentures. See
"Security Ownership" and "Certain Transactions-Stockholders Agreement."
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ENVIRONMENTAL MATTERS-ENVIRONMENTAL LAWS WILL REQUIRE US TO INCUR SIGNIFICANT
COSTS TO MAINTAIN COMPLIANCE AND COULD IMPOSE LIABILITY TO REMEDY THE EFFECTS OF
HAZARDOUS SUBSTANCE CONTAMINATION.
Compliance with environmental requirements is a significant factor in our
company's operations, and we must occasionally commit substantial resources to
maintaining environmental compliance and managing environmental risk. We are
subject to, and must comply with, a variety of federal, state and local
environmental laws, particularly those relating to air and water quality, waste
disposal and the cleanup of contaminated soil and groundwater. Because
environmental regulations are constantly evolving, we have incurred, and will
continue to incur, significant costs to maintain compliance with those laws.
The United States Environmental Protection Agency recently adopted a set of
comprehensive rules, often referred to as the Cluster Rules, governing all pulp
and paper mill operations, including those at our mills. Over the next several
years, the Cluster Rules will affect our allowable discharges of air and water
pollutants, and require us and our competitors to spend money to ensure
compliance with these new rules. We currently project future costs for
compliance with the Cluster Rules at our four mills at approximately $63.6
million for all of our mill operations. We expect to incur these costs from 1999
through 2005. (From 1997 through 1998, we spent approximately $3 million on
Cluster Rule compliance.) However, actual costs of such compliance may exceed
this amount, in part because it is inherently difficult to predict future
environmental expenditures and in part because not all of the regulations
relating to the Cluster Rules have been finalized.
We have, in the past, incurred costs associated with the remediation of soil or
groundwater contamination and expect that, from time to time, we will incur
similar remedial obligations in the future. Cleanup requirements arise with
respect to properties we currently own or operate, former facilities and
off-site properties where we have disposed of hazardous substances. While we
maintain reserves for environmental remediation liability, and we currently
believe those reserves are adequate, we could, in light of the retroactive
nature of the environmental laws, incur unanticipated environmental liabilities
in the future and those liabilities could be material.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations-Environmental Matters" and "Business-Environmental Matters."
YEAR 2000 ISSUE-OUR FAILURE, OR THE FAILURE OF OUR THIRD PARTY SUPPLIERS OR
RETAILER CUSTOMERS, TO ADDRESS INFORMATION TECHNOLOGY ISSUES RELATED TO THE YEAR
2000 COULD ADVERSELY AFFECT OUR OPERATIONS.
Year 2000 issues are the result of computer programs that were written using
two-digits rather than four to define the applicable year. Any of our computer
programs that use two digits rather than four digits to specify the year will be
unable to interpret dates belonging to the year 2000. PCA has substantially
completed an inventory of its systems to identify and assess Year 2000 issues
and is in the process of installing a comprehensive Year 2000 compliant,
upgraded customer and management system. This system includes remediation,
replacement and alternative procedures for non-compliant Year 2000 issues,
including upgrades to the mill system as well as compliance and remediation
measures with respect to the order entry, corrugator scheduling, converting
scheduling, shop floor manufacturing, shipping, inventory management and
invoicing systems at our converting plants. Installation of our Year 2000
compliant system was completed at certain locations in 1998. We expect to
complete the installation of this system at all of our locations prior to the
end of the third quarter of 1999 although we cannot be assured of such
completion. In addition, we are in the process of identifying those customers,
suppliers and others with whom we conduct business to determine whether such
persons will be able to resolve in a timely manner any Year 2000 problems that
may affect PCA. Our failure or failure of our suppliers or customers to achieve
Year 2000 compliance could materially and adversely affect our business and
results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000."
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CERTAIN TAX CONSIDERATIONS-HOLDERS OF NEW PREFERRED STOCK SHOULD BE AWARE OF
CERTAIN TAX CONSEQUENCES THAT MAY APPLY TO THEM AS A RESULT OF THEIR OWNING THE
NEW PREFERRED STOCK.
If we make distributions on the new preferred stock out of current or
accumulated earnings and profits, as determined under U.S. federal income tax
principles, such distributions will be taxable as ordinary income whether paid
in cash or in additional shares of new preferred stock. In addition, to the
extent that there is more than a de minimis redemption premium, representing the
difference between the redemption price and issue price of the new preferred
stock, holders may be required to treat the difference as constructive
distributions that are includable in income on an economic accrual basis. If
shares of new preferred stock (including additional shares of new preferred
stock distributed by us in lieu of cash dividend payments) bear a redemption
premium, such shares generally will have different tax characteristics than
other shares of preferred stock not having such premium and might trade
separately, which might adversely affect the liquidity of such shares. See
"Certain United States Federal Tax Considerations-Tax Consequences to United
States Holders-New Preferred Stock-Redemption Premium."
Holders should also note that if shares of new preferred stock are exchanged for
subordinated exchange debentures with a stated redemption price at maturity that
exceeds their issue price by more than a de minimis amount, the subordinated
exchange debentures will be treated as having original issue discount equal to
the entire amount of such excess. Subordinated exchange debentures issued on or
before April 1, 2004, the date through which we have the option to pay interest
on the subordinated exchange debentures in additional subordinated exchange
debentures, will have original issue discount and subordinated exchange
debentures issued thereafter may have original issue discount. Each holder of
subordinated exchange debentures with original issue discount will be required
to include in gross income an amount equal to the sum of the daily portions of
the original issue discount for all days during the taxable year in which such
holder holds the subordinated exchange debentures, regardless of the holder's
regular method of accounting and regardless of whether interest is paid by us in
cash or in additional subordinated exchange debentures. See "Certain United
States Federal Tax Considerations-Tax Consequences to United States
Holders-Subordinated Exchange Debentures-Original Issue Discount."
FINANCING CHANGE OF CONTROL OFFER-WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS
NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE NOTES
INDENTURE, THE CERTIFICATE OF DESIGNATION AND THE SUBORDINATED EXCHANGE
DEBENTURES INDENTURE.
Upon the occurrence of certain specific kinds of change of control events, we
will be required to offer to repurchase all outstanding exchange notes and
redeem the new preferred stock, or, if issued, repurchase the subordinated
exchange debentures. However, it is possible that we will not have sufficient
funds at the time of the change of control to make the required repurchase of
exchange notes and redemption of new preferred stock, or, if issued, repurchase
of the subordinated exchange debentures, or that restrictions in the senior
credit facility will not allow such repurchases and redemptions. In addition,
certain important corporate events, such as leveraged recapitalizations that
would increase the level of our indebtedness, would not constitute a "Change of
Control" under the notes indenture, the certificate of designation or the
subordinated exchange debentures indenture. See "Description of Exchange
Notes-Repurchase at the Option of Holders," "Description of New Preferred
Stock-New Preferred Stock-Repurchase at the Option of Holders" and
"-Subordinated Exchange Debentures-Repurchase at the Option of Holders."
FRAUDULENT CONVEYANCE MATTERS-FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER
SPECIFIC CIRCUMSTANCES, TO VOID THE EXCHANGE NOTES AND THE SUBSIDIARY GUARANTEES
AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM US OR OUR SUBSIDIARY
GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state fraudulent
transfer laws, the exchange notes and the subsidiary guarantees could be voided,
or claims in respect of the exchange notes or the subsidiary
28
<PAGE>
guarantees could be subordinated to all other debts of PCA or any subsidiary
guarantor if, among other things, PCA or such subsidiary guarantor, at the time
it incurred the indebtedness evidenced by the exchange notes or its subsidiary
guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such indebtedness; and
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which PCA's or such
subsidiary guarantor's remaining assets constituted unreasonably small
capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by us or such subsidiary guarantor pursuant to the
exchange notes or a subsidiary guarantee could be voided and required to be
returned to us or such subsidiary guarantor, or to a fund for the benefit of the
creditors of us or such subsidiary guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws will
vary depending upon the law applied in any proceeding to determine whether a
fraudulent transfer has occurred. Generally, however, PCA or a subsidiary
guarantor would be considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater than
the fair saleable value of all of its assets, or
- if the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature, or
- it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history and
other factors, neither PCA nor any of our subsidiary guarantors believes that,
after giving effect to the issuance of the exchange notes, the subsidiary
guarantees and the new preferred stock, it will be insolvent, will have
unreasonably small capital for the business in which it is engaged or will have
incurred debts beyond its ability to pay such debts as they mature. There can be
no assurance, however, as to what standard a court would apply in making such
determinations or that a court would agree with our or our subsidiary
guarantors' conclusions in this regard.
NO PRIOR MARKET FOR THE EXCHANGE NOTES, THE NEW PREFERRED STOCK OR THE
SUBORDINATED EXCHANGE DEBENTURES-YOU CANNOT BE SURE THAT AN ACTIVE TRADING
MARKET WILL DEVELOP.
The exchange notes and the new preferred stock are each a new issue of
securities for which no market currently exists. J.P. Morgan Securities Inc. and
BT Alex. Brown Incorporated, the initial purchasers of the outstanding notes and
preferred stock, have informed us that they intend to make a market in the
exchange notes and new preferred stock. However, they are not obligated to do so
and the initial purchasers may cease their market-making at any time without
notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the exchange notes or the new preferred stock. The
exchange notes and the new preferred stock are expected to be eligible for
trading by qualified buyers in the PORTAL market. We do not intend to apply for
listing of the exchange notes or the new preferred stock on any securities
exchange or for quotation through The Nasdaq National Market. In addition, the
liquidity of the trading market in the exchange notes and the new preferred
stock, and the market price quoted for the exchange notes and the new preferred
stock, may be adversely affected by changes in the overall market for high yield
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, you cannot be
sure that an active trading market will develop for the exchange notes, the new
preferred stock or the subordinated exchange debentures, if issued.
29
<PAGE>
FAILURE TO EXCHANGE OUTSTANDING NOTES AND PREFERRED STOCK--YOUR ABILITY TO
RESELL YOUR NOTES AND PREFERRED STOCK WILL REMAIN RESTRICTED IF YOU FAIL TO
EXCHANGE THEM IN THE EXCHANGE OFFER.
Untendered outstanding notes and preferred stock that are not exchanged for the
registered exchange notes and new preferred stock pursuant to the exchange offer
will remain restricted securities, subject to the following restrictions on
transfer:
- the notes and the preferred stock may be resold only if registered
pursuant to the Securities Act or if an exemption from registration is
available;
- the notes and the preferred stock will bear a legend restricting transfer
in the absence of registration or an exemption; and
- a holder of the notes or the preferred stock who wants to sell or
otherwise dispose of all or any part of its notes or preferred stock under
an exemption from registration under the Securities Act, if requested by
us, must deliver to us an opinion of independent counsel experienced in
Securities Act matters, reasonably satisfactory in form and substance to
us, stating that such exemption is available.
30
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements regarding, among other
things, our financial condition and business strategy. We have based these
forward-looking statements on our current expectations and projections about
future events. While we believe these expectations and projections are
reasonable, such forward-looking statements are inherently subject to risks,
uncertainties and assumptions about us, including, among other things, those
risks identified under the caption "Risk Factors."
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
31
<PAGE>
THE TRANSACTIONS
On January 25, 1999, TPI entered into a definitive agreement (the "Contribution
Agreement") to sell its containerboard and corrugated packaging products
business to PCA for $2.2 billion (the "Acquisition"). Under the terms of the
Contribution Agreement, PCA Holdings, an entity organized and controlled by MDP
and its coinvestors, acquired a 55% common equity interest in PCA, and TPI
contributed the containerboard business to PCA in exchange for cash, the
assumption of debt and a 45% common equity interest in PCA (in each case before
giving effect to issuances of common equity to management).
The financing of the Transactions consisted of (1) borrowings under the senior
credit facility, (2) the offering of the notes, (3) the offering of the
preferred stock, (4) a cash equity investment of $236.5 million by PCA Holdings
(the "PCA Holdings Equity Investment") and (5) a rollover equity investment by
TPI valued at $193.5 million (the "TPI Equity Investment").
The transactions and financings described above are collectively referred to
herein as the "Transactions." The PCA Holdings Equity Investment and the TPI
Equity Investment are collectively referred to herein as the "Equity
Investments."
The following table sets forth the estimated sources and uses of funds for the
Transactions.
<TABLE>
<S> <C>
DOLLARS IN THOUSANDS
---------
---------
SOURCES OF FUNDS:
Senior Credit Facility
Revolving Credit Facility (a)............................... $ 9,000
Tranche A Term Loan......................................... 460,000
Tranche B Term Loan......................................... 375,000
Tranche C Term Loan......................................... 375,000
Notes......................................................... 550,000
Preferred stock............................................... 100,000
PCA Holdings Equity Investment................................ 236,500
TPI Equity Investment......................................... 193,500
---------
Total....................................................... $2,299,000
---------
---------
USES OF FUNDS:
Acquisition consideration (b)................................. $2,200,000
Estimated fees, expenses and working capital (c).............. 99,000
---------
Total....................................................... $2,299,000
---------
---------
</TABLE>
- --------------
(a) Immediately subsequent to the closing of the Transactions, we had $241
million in additional availability under our new revolving credit facility.
See "Description of Senior Credit Facility." As of May 1, 1999, we had $250
million in availability under the revolving credit facility.
(b) The Acquisition consideration is subject to adjustment based on changes to
the net working capital of the containerboard business since September 30,
1998. The amount of the adjustment, if any, has not yet been determined.
(c) Includes a fee paid to Madison Dearborn at the closing of the Transactions
of $15 million plus out-of-pocket expenses incurred in connection with the
Transactions. See "Certain Transactions-The Transactions."
In June 1999, certain members of management of PCA will be offered the right to
purchase up to 3.5% of the common stock of PCA at the same price per share paid
by PCA Holdings in the PCA Holdings Equity Investment. PCA intends to issue to
management or reserve for future issuance to management options to purchase
additional shares representing 6.5% of the common stock of PCA. On a fully
diluted basis, management will be entitled to purchase up to 9.8% of PCA's
common stock.
Prior to the closing of the Transactions, TPI agreed under the terms of the
Contribution Agreement to purchase certain timberland that was leased by TPI for
use by the containerboard business and buy-out all remaining mill operating
leases (collectively, the "Lease Buy-out"). As a result of the Lease Buy-out,
PCA owns approximately 805,000 acres of timberland and continues to control
145,000 acres under lease or long-term cutting rights arrangements, and owns all
of its mills.
32
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the exchange notes and the
new preferred stock in the exchange offer.
We received net proceeds of $530.9 million from the sale of the outstanding
notes and net proceeds of $95.1 million from the sale of the outstanding
preferred stock. We used the net proceeds from the sale of the notes and the
preferred stock, the PCA Holdings Equity Investment, the TPI Equity Investment
and borrowings under the senior credit facility to finance the Acquisition and
to pay related fees and expenses of the Transactions. See "The Transactions."
33
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of PCA as of March 31, 1999,
and as adjusted on a pro forma basis to give effect to the Transactions,
including the offerings of the notes and the preferred stock, as if they had
occurred on that date. The information in this table should be read in
conjunction with "Unaudited Pro Forma Financial Information," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited combined financial statements, including the notes thereto, which
appear elsewhere in this prospectus.
<TABLE>
<CAPTION>
------------------------------------------
MARCH 31, 1999 MARCH 31, 1999
(ACTUAL) (PRO FORMA)
-------------------- --------------------
<S> <C> <C>
DOLLARS IN THOUSANDS
Cash................................................................. $ 1 $4,820
-------------------- --------------------
-------------------- --------------------
Debt:
Senior Credit Facility
Revolving Credit Facility (a).................................... - 9,000
Tranche A Term Loan.............................................. - 460,000
Tranche B Term Loan.............................................. - 375,000
Tranche C Term Loan.............................................. - 375,000
Notes.............................................................. - 550,000
Other.............................................................. 466 -
-------------------- --------------------
Total debt....................................................... 466 1,769,000
Preferred stock...................................................... - 100,000
Stockholders' equity (b)............................................. 666,438 294,452
-------------------- --------------------
Total capitalization............................................. $666,904 $2,163,452
-------------------- --------------------
-------------------- --------------------
</TABLE>
- --------------
(a) As of March 31, 1999 on a pro forma basis, we had $241 million in additional
availability under our new revolving credit facility. See "Description of
Senior Credit Facility."
(b) Stockholders' equity includes 100 shares of junior preferred stock, having a
liquidation preference of $1.00 per share. Any references to "preferred
stock" contained in this prospectus do not include the 100 shares of junior
preferred stock unless otherwise indicated. PCA Holdings and TPI
collectively hold all of the shares of the junior preferred stock. Holders
of the junior preferred stock are not entitled to receive any dividends or
distributions thereon. Holders of junior preferred stock have the right to
elect one director to PCA's board of directors. Pursuant to the stockholders
agreement, such holders have agreed to elect the individual serving as PCA's
chief executive officer to fill such vacancy. Shares of junior preferred
stock may not be reissued after being reacquired in any manner by PCA.
34
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information has been derived by the
application of pro forma adjustments, which give effect to the Transactions, to
the historical combined financial statements of the Group included elsewhere in
this prospectus. The Transactions include the following related events:
- Borrowings under the senior credit facility;
- The Lease Buy-out;
- TPI's contribution of the containerboard and corrugated packaging products
business to PCA in exchange for the TPI Equity Investment and cash;
- Issuance of PCA common stock to PCA Holdings in exchange for cash; and
- PCA's issuance of the outstanding notes and preferred stock in the
offerings.
The unaudited pro forma balance sheet gives effect to the Transactions as if the
Transactions had occurred on March 31, 1999. The unaudited pro forma statements
of income for the year ended December 31, 1998 and the three months ended March
31, 1999 give effect to the Transactions as if the Transactions had been
consummated on January 1, 1998. The pro forma adjustments exclude the impacts,
if any, on cash, debt and stockholders' equity resulting from (a) a post-closing
adjustment based on working capital, (b) a sale of stock to PCA management and
(c) the potential effect of interest rate hedges on the senior credit facility.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Market Risk and Risk Management Policies."
The unaudited pro forma financial information is for comparative purposes only
and does not purport to represent what PCA's financial position or results of
operations would actually have been had the Transactions in fact occurred on the
assumed dates or to project PCA's financial position or results of operations
for any future date or future period. The unaudited pro forma financial
information should be read in conjunction with the Group's historical combined
financial statements and related notes, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and other financial information
included elsewhere in this prospectus.
The Transactions represented a series of related transactions that fall within
the scope of EITF Issue No. 88-16 ("EITF 88-16"), BASIS IN LEVERAGED BUY-OUT
TRANSACTIONS. However, in accordance with the guidance in EITF 88-16, because a
change in control was deemed not to have occurred due to the existence of
certain participating veto rights held by PCA directors designated by TPI, the
Transactions are considered a recapitalization-restructuring for which a change
in accounting basis is not appropriate. Accordingly, PCA has recorded the Group
net assets contributed by TPI at their historical values.
The pro forma and other adjustments, as described in the accompanying notes to
the unaudited pro forma balance sheet and statement of income, are based on
available information and certain assumptions that management believes are
reasonable.
35
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1999
<TABLE>
<CAPTION>
---------------------------------------------------
GROUP PRO FORMA PCA
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ ------------
<S> <C> <C> <C> <C>
DOLLARS IN THOUSANDS
ASSETS
Current assets:
$ (1) (a)
3,700 (c)
Cash and cash equivalents.................................... $ 1 1,120 (l) $ 4,820
(27,122) (a)
Accounts and notes receivable................................ 74,661 150,987 (b) 198,526
Inventories.................................................. 151,583 151,583
Deferred income taxes........................................ 13,362 (13,362) (a) --
Prepaids and other current assets............................ 14,816 14,816
------------ ------------ ------------
Total current assets....................................... 254,423 115,322 369,745
1,100,000 (d)
Property, plant and equipment, net............................. 998,178 (183,906) (e) 1,914,272
(46,206) (e)
(38,231) (a)
Other assets, net.............................................. 119,922 68,361 (f) 103,846
------------ ------------ ------------
Total assets................................................... $ 1,372,523 $ 1,015,340 $ 2,387,863
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
$ (216) (a)
Current portion of debt...................................... $ 216 40,625 (g) $ 40,625
Accounts payable............................................. 118,956 (39,779) (a) 79,177
Loss reserve................................................. 230,112 (230,112) (e) --
1,120 (l)
Other current liabilities.................................... 68,558 (13,306) (a) 56,372
------------ ------------ ------------
Total current liabilities.................................. 417,842 (241,668) 176,174
(250) (a)
(40,625) (g)
Long-term debt................................................. 250 1,769,000 (h) 1,728,375
(263,936) (a)
Deferred income taxes.......................................... 263,936 76,400 (i) 76,400
Other non-current liabilities.................................. 24,057 (11,595) (a) 12,462
------------ ------------ ------------
Total liabilities.......................................... 706,085 1,283,326 1,993,411
Redeemable preferred stock..................................... -- 100,000 (j) 100,000
Stockholders' equity........................................... 666,438 (371,986) (k) 294,452
------------ ------------ ------------
Total liabilities and stockholders' equity..................... $ 1,372,523 $ 1,015,340 $ 2,387,863
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
36
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) To reflect the elimination of the following Group assets not acquired and
Group liabilities not assumed by PCA in connection with the Transactions:
<TABLE>
<S> <C> <C>
Cash..................................................... $ 1
Notes receivable-Caraustar sale.......................... 27,122
Current deferred income tax asset........................ 13,362
Other assets:
Prepaid pension asset....................... 34,727
Lease prepayments and deferred financing
costs...................................... 3,504
---------
38,231
Accounts Payable:
Non-trade payables to TPI or affiliates..... 13,085
Outstanding Checks and Disbursements........ 26,694
---------
39,779
Other current liabilities:
Employee Deductions--Insurance and Taxes.... 8,904
Severance accruals.......................... 2,942
OPEB liability-current portion.............. 1,460
---------
13,306
Current portion of debt.................................. 216
Long-term debt, less current portion..................... 250
Non-current deferred tax liability....................... 263,936
Other non-current liabilities:
OPEB liability, less current portion........ 7,589
Environmental reserves...................... 4,006
---------
11,595
---------
$ 250,366(included
in item
Net increase to equity.................... k)
---------
---------
</TABLE>
(b) To record $150,987 of uncollected Group trade accounts receivable generally
sold without recourse to Tenneco financing affiliates. Because they have
been sold, those factored receivables are not included in the Group's
historical balance sheet. However, as part of the Transactions, uncollected
factored receivables are part of TPI's contribution to PCA.
37
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED)
(DOLLARS IN THOUSANDS)
(c) To reflect the net effect on cash of the Transactions, as follows:
<TABLE>
<S> <C> <C>
Proceeds from borrowings under the
Senior Credit Facility................ $1,219,000
Proceeds from the Notes................. 550,000
Proceeds from the Preferred Stock....... 100,000
Proceeds from the issuance of common
stock................................. 236,500
----------
$2,105,500
Acquisition Consideration to TPI........ (2,200,000)
Less Equity Rollover Component........ 193,500
----------
(2,006,500)*
Estimated transaction fees and
expenses.............................. (95,300)
----------
Net effect on cash.............................. $ 3,700
----------
----------
</TABLE>
------------------
* TPI received total consideration of $2,200,000, which includes
approximately $1,100,000 used for the Lease Buy-out after March 31, 1999,
a roll-over common equity investment in PCA valued at $193,500, and net
cash of $906,500. Net cash to TPI consists of $246,500 received for its
contribution of the containerboard and corrugated packaging products
business to PCA, and $660,000 of term debt proceeds retained by TPI
($1,760,000) in excess of the Lease Buy-out cost paid after March 31,
1999 ($1,100,000). This adjustment does not reflect any adjustment to the
Acquisition consideration based on changes to the net working capital of
the containerboard business since September 30, 1998. The amount of that
adjustment, if any, has not yet been determined.
(d) Represents approximately $1,100,000 paid by TPI after March 31, 1999 to
buy-out certain timber and mill asset operating leases in the Lease Buy-out.
(e) As a result of the contributed net assets having a carrying value greater
than their fair value (as determined by the value of the acquisition
consideration), an asset impairment was recorded by TPI in connection with
the Transactions relating to the Group's fixed and intangible assets. The
pre-tax impairment charge, which has been excluded from the pro forma
statement of income due to its non-recurring impact, was reflected in the
Group's separate financial statements in the first quarter of 1999 and
consists of the following components:
<TABLE>
<S> <C> <C>
Write-off remaining goodwill $ 46,206
Reduction in property, plant and equipment 183,906
---------
$ 230,112
---------
---------
</TABLE>
The $230,112 is recorded as a loss reserve liability on the Group's
historical March 31, 1999 balance sheet because the allocation to specific
assets is still being finalized. For pro forma purposes, the components to
the impaired asset categories have been reclassified.
(f) To record the component of the transaction costs that represents (1) the
estimated $60,000 of capitalizable debt issuance costs and (2) the $8,361
paid by PCA in settlement of the interest rate protection agreement related
to the outstanding notes. For purposes of the pro forma balance sheet, the
$68,361 total is shown as part of other assets. For purposes of the pro
forma statement of income, the $60,000 is amortized over the weighted
average life of the debt issued under the senior credit facility and the
outstanding notes
38
<PAGE>
(approximately 8 years), and the $8,361 interest rate protection settlement
payment is amortized over the 10 year term of the outstanding notes, both of
which are materially consistent with using the effective interest method.
The remaining $26,939 of transaction costs has been recorded as a charge to
equity (i.e., a reduction to the new capital investment). See (k) below.
(g) To reclassify the principal of the term loan borrowings due within the first
year ($31,625) and the balance outstanding under the revolver ($9,000) as
current portion of debt.
(h) To record the new debt resulting from the Transactions, as follows:
<TABLE>
<S> <C> <C>
Senior Credit Facility:
Revolving Credit Facility ($250,000 limit).... $ 9,000
Tranche A Term Loan........................... 460,000
Tranche B Term Loan........................... 375,000
Tranche C Term Loan........................... 375,000
---------
</TABLE>
<TABLE>
<S> <C> <C>
1,219,000
Senior Subordinated Notes.................................... 550,000
---------
Total new debt....................................... $1,769,000
---------
---------
</TABLE>
(i) To record the estimated deferred taxes resulting from the Transactions.
(j) To record the issuance of the outstanding preferred stock as part of the
Transactions. The outstanding preferred stock has a fixed redemption date
and, therefore, is classified outside of stockholders' equity.
(k) To record the impact on stockholders' equity of the Transactions, as
follows:
<TABLE>
<S> <C> <C>
Net impact of Group net liabilities not assumed (see
a)................................................... $ 250,366
Sold receivables included in TPI contribution (see
b)................................................... 150,987
Issuance of common stock to PCA Holdings for cash (see
c)................................................... 236,500
Net cash payments to TPI (see c)....................... (906,500)*
Transaction costs (see f)................... $ (95,300)
Less portion capitalized as financing
costs.................................... 68,361
---------
(26,939)
Deferred income taxes recorded for PCA (see i)......... (76,400)
---------
Pro forma adjustment................................... $(371,986)
---------
---------
</TABLE>
------------------
* There is no other equity adjustment with respect to TPI's contributed
equity because such amount is recorded at TPI's historical cost. TPI will
receive total consideration of $2,200,000, which includes the $1,100,000
used for the Lease Buy-out after March 31, 1999, a roll-over common
equity investment in PCA valued at $193,500, and net cash of $906,500.
Net cash to TPI consists of $246,500 received for its contribution of the
containerboard and corrugated packaging products business to PCA, and
$660,000 of term debt proceeds retained by TPI ($1,760,000) in excess of
the Lease Buy-out cost paid after March 31, 1999 ($1,100,000).
(l) To record funding by TPI of $1,120 in deferred compensation liabilities
transferred to PCA as required under the Transactions.
39
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
----------------------------------------------------
GROUP PRO FORMA
HISTORICAL ADJUSTMENTS PCA PRO FORMA
------------- ----------- -------------
<S> <C> <C> <C> <C>
DOLLARS IN THOUSANDS
Net sales..................................................... $ 1,571,019 $ $ 1,571,019
7,200 (a)
Cost of sales................................................. (1,289,644) 12,260 (b) 1,270,184
------------- ----------- -------------
Gross profit................................................ 281,375 19,460 300,835
1,449 (b)
(1,973) (c)
2,500 (d)
Selling and administrative expenses........................... (108,944) 4,400 (e) (102,568)
Corporate overhead allocation................................. (63,114) (63,114)
Non-recurring restructuring charge............................ (14,385) (14,385)
Other income.................................................. 26,818 14,774 (f) 41,592
------------- ----------- -------------
Income before interest and income taxes..................... 121,750 40,610 162,360
Interest expense, net......................................... (2,782) 157,069 (g) 159,851
------------- ----------- -------------
Income before income taxes.................................. 118,968 116,459 2,509
Income tax (expense) benefit.................................. (47,529) 47,163 (h) (366)
------------- ----------- -------------
Net income.................................................... $ 71,439 $ (69,296) $ 2,143
------------- ----------- -------------
------------- ----------- -------------
OTHER DATA:
Income before interest and income taxes....................... $ 121,750 $ 40,610 $ 162,360
Deduct other income (i)....................................... (26,818) (14,774) (f) (41,592)
(13,709) (b)
Add:Depreciation, depletion, and amortization................. 96,950 65,300 (a) 148,541
Lease expense (i)......................................... 72,500 (72,500) (a) --
------------- ----------- -------------
169,450 20,909 148,541
------------- ----------- -------------
EBITDA (i).................................................... $ 264,382 $ 4,927 $ 269,309(j)
------------- ----------- -------------
------------- ----------- -------------
</TABLE>
40
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------
GROUP PRO FORMA
HISTORICAL ADJUSTMENTS PCA PRO FORMA
------------- ----------- -------------
<S> <C> <C> <C> <C>
DOLLARS IN THOUSANDS
Net sales..................................................... $ 391,279 $ -- $ 391,279
507 (a)
Cost of sales................................................. (332,117) 3,065 (b) (328,545)
------------- ----------- -------------
Gross profit................................................ 59,162 3,572 64,027
329 (b)
(493) (c)
625 (d)
Selling and administrative expenses........................... (28,759) 724 (e) (27,574)
Corporate overhead allocation................................. (13,283) -- (13,283)
Non-recurring impairment charge............................... (230,112) 230,117 --
Other income.................................................. (1,377) 2,369 (f) 992
------------- ----------- -------------
Income (loss) before interest, income taxes and
extraordinary item......................................... (214,369) 237,238 22,869
Interest expense, net......................................... (221) (39,265) (g) (39,486)
------------- ----------- -------------
Loss before income taxes.................................... (214,590) 197,973 (16,617)
Income tax benefit............................................ 88,362 (79,058) (h) 9,304
------------- ----------- -------------
Loss before extraordinary item................................ $ (126,228) $ 118,915 $ (7,313)
------------- ----------- -------------
------------- ----------- -------------
OTHER DATA:
Income (Loss) before interest, income taxes and extraordinary
item........................................................ $ (214,369) $ 237,238 $ 23,869
Deduct other income (i)....................................... 1,377 (2,369) (f) (992)
3,394 (b)
Add: Depreciation, depletion, and amortization................ 28,360 16,325 (a) 48,079
Lease expense (i)......................................... 16,832 (16,832) --
------------- ----------- -------------
45,192 2,887 48,079
------------- ----------- -------------
EBITDA (i).................................................... $ (167,800) $ 238,206 $ 69,956
------------- ----------- -------------
------------- ----------- -------------
</TABLE>
41
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(a) To record the estimated depletion/depreciation on the timber and mill assets
acquired in the Lease Buy-out, and to remove the operating lease expense
related to those leases, resulting in a net decrease to cost of sales as
follows:
<TABLE>
<CAPTION>
----------------------------------------
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 MARCH 31, 1999
------------------- -------------------
<S> <C> <C>
New depreciation/depletion....................... $ 65,300 16,325
Eliminate lease expense.......................... (72,500) (16,832)
-------- --------
(7,200) (507)
-------- --------
-------- --------
</TABLE>
(b) The following adjustment reflects reduced depreciation and amortization
resulting from the impairment charge recorded by the Group in connection
with the Transactions as follows. See note (e) to pro forma balance sheet.
<TABLE>
<CAPTION>
----------------------------------------
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 MARCH 31, 1999
------------------- -------------------
<S> <C> <C>
Goodwill amortization............................. $ 1,449 $ 329
Property, plant and equipment depreciation........ 12,260 3,065
------- ------
$ 13,709 3,394
------- ------
------- ------
</TABLE>
In addition, because the impairment loss is directly related to the
transaction, it is excluded from the pro forma statement of income.
(c) To eliminate the deferred gain amortization related to the Meridian lease
that is part of the Lease Buy-out.
(d) To reduce OPEB expense relating to the portion of the Group post-retirement
health care benefit obligations being retained by TPI as part of the
Transactions and not assumed by PCA.
(e) To eliminate specialty rebates provided by the Group on boxes sold to
Tenneco affiliates. As part of the Transactions, TPI has agreed that PCA
will no longer provide such rebates.
(f) To eliminate the discount expense recognized on the sale of factored
receivables because such receivables will be acquired by PCA in connection
with the Transactions.
42
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME (CONTINUED)
(DOLLARS IN THOUSANDS)
(g) To record interest expense and amortization of deferred financing costs on
<TABLE>
<CAPTION>
the debt incurred to finance the Transactions, calculated as follows:
----------------------------------------
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 MARCH 31, 1999
------------------- -------------------
<S> <C> <C>
Revolving Credit Facility
($9,000 @7.75%)................................. $ 698 $ 174
Tranche A Term Loan
($460,000 @ 7.75%).............................. 35,185 8,409
Tranche B Term Loan
($375,000 @ 8.25%).............................. 30,879 7,676
Tranche C Term Loan
($375,000 @ 8.50%).............................. 31,815 7,909
Senior Subordinated Notes
($550,000 @ 9.625%)............................. 52,938 13,234
-------- -------
151,515 37,402
-------- -------
Eliminate interest on debt not assumed............ (2,782) (221)
Amortization of deferred financing costs.......... 7,500 1,875
Amortization of settlement payment on interest
rate protection agreement related to the
Notes........................................... 836 209
-------- -------
Pro forma interest adjustment................. $ 157,069 39,265
-------- -------
-------- -------
</TABLE>
The above interest amounts on the Revolver and Term Loans assume a
Eurodollar rate (equivalent to LIBOR) of 5% and give effect to the principal
payments required on the Term Loans during the first 15 months. The effect
on interest expense pertaining to the variable rate Revolver and Term Loans
of a 1/8(th) of one percent variance in interest rates would be $1,515 and
$371 for the year ended December 31, 1998 and the three months ended March
31, 1999, respectively.
(h) To record the 40% effective income tax effect on all of the above pro forma
adjustments, except for the non-deductible goodwill amortization adjustment.
(i) "EBITDA" represents income before interest and income taxes plus (a)
depreciation, depletion and amortization and (b) lease expense relating to
the operating leases for which the related assets were purchased in the
Lease Buy-out; and minus (c) other income, which is excluded because it is
not reflective of recurring earnings. PCA's EBITDA is included in this
prospectus because it is a basis upon which PCA assesses its financial
performance and debt service capabilities, and because certain covenants in
PCA's borrowing arrangements are tied to similar measures. However, EBITDA
should not be considered in isolation or viewed as a substitute for cash
flow from operations, net income, or other measures of performance as
defined by generally accepted accounting principles or as a measure of a
company's profitability or liquidity. PCA understands that while EBITDA is
frequently used by securities analysts, lenders, and others in their
evaluation of companies, EBITDA as used herein is not necessarily comparable
to other similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.
43
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME (CONTINUED)
(DOLLARS IN THOUSANDS)
(j) The following other adjustments to 1998 EBITDA do not qualify as pro forma
adjustments under the SEC's and its staff's published rules (principally
Article 11 of Regulation S-X), but are included to eliminate the effect of
non-recurring items and to adjust for certain other stand-alone
considerations:
<TABLE>
<S> <C>
Pro forma EBITDA for 1998..................................... $ 269,309
Adjustments:
Non-recurring restructuring charge (1)...................... 14,385
Reduction in corporate overhead (2)......................... 32,954
Cost savings from restructuring (3)......................... 10,800
---------
Adjusted pro forma EBITDA for 1998............................ $ 327,448
---------
---------
</TABLE>
------------------
(1) During 1998, TPI adopted a restructuring plan to eliminate certain
personnel and close down certain facilities associated with the Group's
business. As of December 31, 1998, substantially all actions specified in
the plan had been completed. A charge of $14,385 was recorded for
severance benefits, exit costs, and asset impairments, and is reflected
in the Group's 1998 operating profit. PCA believes that this
non-recurring charge is not relevant in analyzing recurring EBITDA.
(2) As part of Tenneco, the Group was allocated $63,114 of corporate and TPI
overhead expenses based on a variety of allocation methods. In analyzing
the Group business on a stand-alone basis, PCA estimates that these costs
will be approximately $30,160 for the first twelve months following the
Acquisition. The determination of that estimate is based on detailed
analyses that consider (a) compensation and benefits for TPI and new
employees who are employed by PCA in the corporate functions (e.g.,
information technology, human resources, finance and legal) and (b)
non-payroll costs incurred by these departments. Where applicable, the
estimates consider the terms of transition service arrangements between
PCA and Tenneco.
(3) The restructuring referred to in footnote 1 above will result in reduced
cost of sales and selling and administrative expenses. This adjustment
represents the Group's estimate of the cost savings that would have been
achieved in 1998 if the restructuring had been in effect for all of 1998.
44
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The following table sets forth the selected historical financial and other data
of PCA as of and for the five years ended December 31, 1998, and certain pro
forma financial and other data as of and for the year ended December 31, 1998.
The selected historical financial and other data as of and for the years ended
December 31, 1996, 1997 and 1998 was derived from the audited combined financial
statements of the Group and the related notes thereto included elsewhere in this
prospectus. The selected historical financial and other data as of and for the
years ended December 31, 1994 and 1995 was derived from the unaudited combined
financial statements of the Group not contained herein. The historical financial
data as of and for the three months ended March 31, 1998 and 1999 was derived
from the unaudited condensed combined financial statements of the Group included
elsewhere in this prospectus. The pro forma financial and other data as of and
for the three months ended March 31, 1999 and for the year ended December 31,
1998 was derived from the unaudited pro forma financial information included
elsewhere in this prospectus. The pro forma financial data does not purport to
represent what PCA's financial position or results of operations would actually
have been had the Transactions in fact occurred on the assumed dates or to
project PCA's financial position or results of operations for any future date or
period. The information contained in the following table also should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Unaudited Pro Forma Financial Information," and the
historical combined financial statements of the Group including the notes
thereto, contained elsewhere in this prospectus.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
THREE
MONTHS
PRO FORMA ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED MARCH 31,
---------------------------------------------------------- DECEMBER 31, ---------
1994 1995 1996 1997 1998 1998 1998
---------- ---------- ---------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
DOLLARS IN THOUSANDS
STATEMENT OF INCOME DATA:
Net sales................................. $1,441,673 $1,844,708 $1,582,222 $1,411,405 $1,571,019 $ 1,571,019 $ 432,901
Cost of sales............................. (1,202,996) (1,328,838) (1,337,410) (1,242,014) (1,289,644) (1,270,184) (354,855)
---------- ---------- ---------- ---------- ---------- ------------- ---------
Gross profit............................ 238,677 515,870 244,812 169,391 281,375 300,835 78,046
Selling and administrative expenses....... (71,312) (87,644) (95,283) (102,891) (108,944) (102,568) (26,841)
Corporate overhead allocation (1)......... (34,678) (38,597) (50,461) (61,338) (63,114) (63,114) (14,326)
Restructuring/impairment charge (2)....... - - - - (14,385) (14,385) -
Other income (expense) (3)................ (4,701) (16,915) 56,243 44,681 26,818 41,592 (2,742)
---------- ---------- ---------- ---------- ---------- ------------- ---------
Income (loss) before interest, income
taxes and extraordinary item........... 127,986 372,714 155,311 49,843 121,750 162,360 34,137
Interest expense, net..................... (740) (1,485) (5,129) (3,739) (2,782) (159,851) (741)
---------- ---------- ---------- ---------- ---------- ------------- ---------
Income (loss) before income taxes and
extraordinary item..................... 127,246 371,229 150,182 46,104 118,968 2,509 33,396
Income tax expense........................ (50,759) (147,108) (59,816) (18,714) (47,529) (366) (13,315)
---------- ---------- ---------- ---------- ---------- ------------- ---------
Income (loss) before extraordinary
item................................... 76,487 224,121 90,366 27,390 71,439 2,143 20,081
Extraordinary Loss...................... - - - - - - -
---------- ---------- ---------- ---------- ---------- ------------- ---------
Net income (loss)....................... $ 76,487 $ 224,121 $ 90,366 $ 27,390 $ 71,439 $ 2,143 $ (20,081)
---------- ---------- ---------- ---------- ---------- ------------- ---------
---------- ---------- ---------- ---------- ---------- ------------- ---------
OTHER DATA:
EBITDA (4)................................ $ 276,449 $ 547,435 $ 272,498 $ 166,814 $ 264,382 $ 269,309 $ 79,736
Adjusted pro forma EBITDA (5)............. - - - - - 327,448 -
Depreciation, depletion, amortization, and
lease expense (6)....................... 143,762 157,806 173,430 161,652 169,450 148,541 42,690
Capital expenditures...................... 110,853 252,745 168,642 110,186 103,429 103,429 16,339
Cash interest expense (7)................. - - - - - 151,515 -
Ratio of adjusted pro forma EBITDA to cash
interest expense........................ - - - - - 2.2x -
Ratio of debt to adjusted pro forma
EBITDA.................................. - - - - - 5.4x -
BALANCE SHEET DATA:
Working capital (deficit) (8)............. $ (101,281) $ (150,429) $ (102,278) $ 34,314 $ 80,027 $ - $ 54,689
Total assets.............................. 863,568 1,202,536 1,261,051 1,317,263 1,367,403 - 1,314,275
Total long-term obligations (9)........... 20,267 21,739 20,316 27,864 17,552 - 27,767
Total stockholders' equity (10)........... 389,981 640,483 784,422 854,060 908,392 - 843,060
<CAPTION>
PRO FORMA
THREE MONTHS
ENDED
1999 MARCH 31, 1999
--------- ---------------
<S> <C> <C>
DOLLARS IN THOUSANDS
STATEMENT OF INCOME DATA:
Net sales................................. $ 391,279 $ 391,279
Cost of sales............................. (332,117) (328,545)
--------- ---------------
Gross profit............................ 59,162 62,734
Selling and administrative expenses....... (28,759) (27,574)
Corporate overhead allocation (1)......... (13,283) (13,283)
Restructuring/impairment charge (2)....... (230,112)
Other income (expense) (3)................ (1,377) 992
--------- ---------------
Income (loss) before interest, income
taxes and extraordinary item........... (214,369) 22,869
Interest expense, net..................... (221) (39,486)
--------- ---------------
Income (loss) before income taxes and
extraordinary item..................... (214,590) (16,617)
Income tax expense........................ 88,362 9,304
--------- ---------------
Income (loss) before extraordinary
item................................... (126,228) (7,313)
Extraordinary Loss...................... (6,327) (6,327)
--------- ---------------
Net income (loss)....................... $ 132,555 $ (13,640)
--------- ---------------
--------- ---------------
OTHER DATA:
EBITDA (4)................................ $(167,800) $ 69,956
Adjusted pro forma EBITDA (5)............. - -
Depreciation, depletion, amortization, and
lease expense (6)....................... 45,192 48,079
Capital expenditures...................... 19,460 19,460
Cash interest expense (7)................. - -
Ratio of adjusted pro forma EBITDA to cash
interest expense........................ - -
Ratio of debt to adjusted pro forma
EBITDA.................................. - -
BALANCE SHEET DATA:
Working capital (deficit) (8)............. $(163,204) $ 229,376
Total assets.............................. 1,372,523 2,387,863
Total long-term obligations (9)........... 466 1,869,000
Total stockholders' equity (10)........... 666,438 294,452
</TABLE>
45
<PAGE>
NOTES TO SELECTED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
1) The corporate overhead allocation represents the amounts charged by
Tenneco and TPI to the Group for its share of Tenneco's and TPI's
corporate expenses. On a stand-alone basis, management estimates that
PCA's overhead expense will be $30,160 for the first twelve months
following the Acquisition.
2) This line item consists of non-recurring charges recorded in the fourth
quarter of 1998 and first quarter of 1999 pertaining to a restructuring
charge and an impairment charge, respectively. For further information
about these charges, refer to Notes 7 and 14 to the Group's combined
financial statements.
3) Other income, net consists of nonrecurring items, the largest components
of which are as follows:
<TABLE>
<C> <S>
Fiscal year 1994 No individually significant items that are
considered non- recurring.
Fiscal year 1995 No individually significant items that are
considered non-recurring.
Fiscal year 1996 A $50,000 gain on the sale of recycled mills.
Fiscal year 1997 A $37,730 gain on the refinancing of operating
leases.
Fiscal year 1998 A $16,944 gain on the sale of non-strategic
woodlands and a $15,060 gain on the sale of the
Caraustar recycling joint venture interest.
Fiscal quarter No individually significant items that are
1998 considered non-recurring.
Fiscal quarter No individually significant items that are
1999 considered non-recurring.
</TABLE>
4) "EBITDA" represents income before interest and income taxes plus (a)
depreciation, depletion and amortization and (b) lease expense relating
to the operating leases for which the related assets were purchased in
the Lease Buy-out; and plus or minus (c) other income (expense), which is
excluded because it is not reflective of recurring earnings. PCA's EBITDA
is included in this prospectus because it is a basis upon which PCA
assesses its financial performance and debt service capabilities, and
because certain covenants in PCA's borrowing arrangements are tied to
similar measures. However, EBITDA should not be considered in isolation
or viewed as a substitute for cash flow from operations, net income, or
other measures of performance as defined by generally accepted accounting
principles or as a measure of a company's profitability or liquidity. PCA
understands that while EBITDA is frequently used by securities analysts,
lenders, and others in their evaluation of companies, EBITDA as used
herein is not necessarily comparable to other similarly titled captions
of other companies due to potential inconsistencies in the method of
calculation.
5) Adjusted pro forma EBITDA for 1998 represents EBITDA plus adjustments to
eliminate the effect of non-recurring items and to adjust for certain
other stand-alone considerations, as follows:
<TABLE>
<S> <C>
Pro forma EBITDA for 1998................................. $ 269,309
Adjustments:
Non-recurring restructuring charge (a).................. 14,385
Reduction in corporate overhead (b)..................... 32,954
Cost savings from restructuring (c)..................... 10,800
---------
Adjusted pro forma EBITDA for 1998........................ $ 327,448
---------
---------
</TABLE>
(a) During 1998, TPI adopted a restructuring plan to eliminate certain
personnel and close down certain facilities associated with the Group
business. As of December 31, 1998, substantially all
46
<PAGE>
NOTES TO SELECTED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
actions specified in the plan had been completed. A charge of $14,385
was recorded for severance benefits, exit costs and asset
impairments, and is reflected in the Group's 1998 operating profit.
PCA believes that this non-recurring charge is not relevant in
analyzing recurring EBITDA.
(b) As part of Tenneco, the Group was allocated $63,114 of corporate and
TPI overhead expenses based on a variety of allocation methods. In
analyzing the carved-out business on a stand-alone basis, PCA
estimates that these costs will be approximately $30,160 for the
first year. The determination of that estimate is based on detailed
analyses that consider (1) compensation and benefits for TPI and new
employees who are employed by PCA in the corporate functions (e.g.,
information technology, human resources, finance, legal, etc.) and
(2) non-payroll costs incurred by these departments. Where
applicable, the estimates consider the terms of transition service
arrangements between PCA and Tenneco.
(c) The restructuring referred to in footnote 4(a) above will result in
reduced cost of sales and selling and administrative expenses. This
adjustment represents the Group's estimate of the cost savings that
would have been achieved in 1998 if the restructuring had been in
effect for all of 1998.
6) The lease expense included with depreciation, depletion and amortization
relates to certain timber and mill operating leases that were bought-out
in connection with the Transactions in the Lease Buy-out (with the
previously leased property being acquired). Accordingly, the relevant
operating lease expense has been treated like depreciation and depletion
expense for purposes of the EBITDA calculation, and consists of the
following amounts for the periods indicated:
<TABLE>
<S> <C>
Fiscal year 1994 $ 93,600
Fiscal year 1995 94,900
Fiscal year 1996 94,700
Fiscal year 1997 73,900
Fiscal year 1998 72,500
First quarter
1998 17,958
First quarter
1999 16,832
</TABLE>
7) Cash interest expense is defined as interest expense excluding
amortization of (a) debt issuance costs and (b) the settlement payment on
the interest rate protection agreement related to the outstanding notes.
8) Working capital represents (a) total current assets excluding cash and
cash equivalents less (b) total current liabilities excluding the current
maturities of long-term debt.
9) Total long-term obligations includes long-term debt, the current
maturities of long-term debt, and redeemable preferred stock. The amount
excludes amounts due to TPI or other Tenneco affiliates as part of the
containerboard business' interdivision account or other financing
arrangement.
10) Represents the Group's interdivision account with TPI for the historical
period.
47
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of historical results of operations and financial
condition should be read in conjunction with the audited combined financial
statements and the notes thereto which appear elsewhere in this prospectus.
OVERVIEW
In connection with the Acquisition, PCA acquired substantially all of the assets
and operations of The Containerboard Group of TPI (as described in the notes to
audited financial statements included elsewhere in this prospectus, the
"Group"). See "The Transactions." Since its formation in January 1999 and
through the closing of the Acquisition on April 12, 1999, PCA did not have any
significant operations. Accordingly, the historical financial results described
below are those of the Group.
The Group has historically operated as a division of TPI, and has not
historically operated as a separate, stand-alone entity. As a result, the
historical financial information included in this prospectus does not
necessarily reflect what the Group's financial position and results of
operations would have been had the Group been operated as a separate,
stand-alone entity during the periods presented.
As a division of TPI, the Group was allocated corporate overhead expenses in the
amounts of $50.5 million, $61.3 million and $63.1 million for the years ended
December 31, 1996, 1997 and 1998, respectively. PCA estimates that these
expenses will be approximately $30.2 million on a stand-alone basis for the
first twelve months following the Acquisition, based on detailed analyses of
compensation benefits for employees who are now employed by PCA as a result of
the Acquisition and related non-payroll costs incurred after the Acquisition. In
addition, future operating results are expected to be affected by changes in
depreciation and amortization expense related to impaired assets, elimination of
certain lease financing costs and intercompany transactions with affiliates of
Tenneco, and other items resulting from the Transactions. See "Unaudited Pro
Forma Financial Information" included elsewhere in this prospectus. We cannot
assure you that we will be able to realize all of the benefits we expect as a
stand-alone entity.
The Acquisition was accounted for using historical values for the contributed
assets. Complete or partial new basis accounting (I.E., purchase accounting) was
not applied because, under the applicable accounting guidance, a change of
control was deemed not to have occurred as a result of the participating veto
rights held by TPI after the closing of the Transactions under the terms of the
stockholders agreement. See "Certain Transactions-Stockholders Agreement."
GENERAL
The market for containerboard is highly cyclical. Historically, prices for
containerboard have generally reflected changes in supply, which is primarily
determined by additions and reductions to industry capacity and inventory
levels, and, to a lesser extent, changes in demand.
Containerboard demand is dependent upon both the demand for corrugated packaging
products, which closely tracks industrial production, and export activity.
Domestic demand for corrugated packaging products is more stable, and generally
corresponds to changes in the rate of growth in the U.S. economy.
During the period from 1994 to 1996, capacity additions outpaced domestic and
export demand, leading to lower industry operating rates and generally declining
prices from late-1995 until mid-1997. Although prices generally improved from
mid-1997 through mid-1998, the containerboard markets were adversely affected by
weaker containerboard exports, particularly to Asia in the second half of 1998.
Those factors contributed to higher inventories, lower operating rates and lower
prices during this period.
48
<PAGE>
In recent months, several major containerboard manufacturers have announced
production curtailments and mill shutdowns, and only minimal capacity additions
have been publicly announced through 2001 according to the American Forest &
Paper Association.
Industry-wide containerboard price declines during the second half of 1998
adversely affected the Group's financial performance in the first three months
of 1999 in comparison to the comparable period in 1998. For the three months
ended March 31, 1999, the Group's sales prices of corrugated products and
containerboard shipped to third parties fell 7% and 14%, respectively. These
price declines were partially offset by increases in the Group's shipments of
corrugated products and containerboard to third parties, which increased 12% and
3%, respectively, for the period. The net impact of these factors was a 10%
decrease in net sales and a decrease in earnings before interest expense and
taxes from approximately $34.1 million for the three months ended March 31, 1998
to approximately $15.7 million for the three months ended March 31, 1999 before
accounting for extraordinary items and the non-recurring impairment charge.
Pulp & Paper Week, an industry publication, reported in March 1999 that major
containerboard manufacturers had implemented price increases for kraft
linerboard and corrugating medium of $50 and $60 per ton, respectively.
According to Pulp & Paper Week, after giving effect to the price increase,
average industry list prices in 1999 for linerboard and corrugating medium were
1% and 3%, respectively, lower than the list prices in March 1998. Both
integrated and independent box producers announced price increases for
corrugated products of 10% to 13% in February 1999.
RESULTS OF OPERATIONS
The historical results of operations of the Group are set forth below:
<TABLE>
<CAPTION>
-----------------------------------------------------
FOR THE YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DOLLARS IN MILLIONS
Net Sales............................ $ 1,582.2 $ 1,411.4 $ 1,571.0 432.9 391.3
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Operating Income..................... $ 155.3 $ 49.8 $ 121.7 34.1 (214.4)
Interest Expense..................... 5.1 3.7 2.8 .7 .2
Income Before Taxes.................. 150.2 46.1 118.9 33.4 (214.6)
Provision for Income Taxes........... 59.8 18.7 47.5 13.3 (88.4)
--------- --------- --------- --------- ---------
Income Before Extraordinary Loss..... $ 90.4 $ 27.4 $ 71.4 20.1 (126.2)
--------- --------- --------- --------- ---------
Extraordinary Loss................... -- -- -- -- 6.3
--------- --------- --------- --------- ---------
Net Income........................... 90.4 27.4 71.4 20.1 (132.6)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
49
<PAGE>
Operating income included several significant unusual or non-recurring items for
each of the periods presented. Excluding these items, operating income would
have been as follows (dollars in millions):
<TABLE>
<CAPTION>
-----------------------------------------------------
THREE MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31,
MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DOLLARS IN MILLIONS
Operating Income as Reported.................. $ 155.3 $ 49.8 $ 121.7 34.1 (214.4)
Recycled Paperboard Mills Divestiture
Divestiture Gain (1)........................ (50.0) - (15.1) - -
Earnings.................................... (4.0) - - - -
Joint Venture Income (1).................... (0.6) (1.7) (0.3) (0.3) -
Non-Strategic Woodlands Divestitures (1)...... - (4.4) (16.9) - -
Mill Lease Refinancing (1).................... - (37.7) - - -
Restructuring Charge.......................... - - 14.4 - -
Impairment Charge............................. - - - - 230.1
--------- --------- --------- --------- ---------
Adjusted Operating Income..................... $ 100.7 $ 6.0 $ 103.8 33.8 15.7
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- --------------
(1) Included in other income as part of the audited financial statements.
RECYCLED PAPERBOARD MILLS DIVESTITURE
In 1996, the Group sold two recycled paperboard mills (located in Rittman, Ohio
and Tama, Iowa) and a recycling center and brokerage operation to a joint
venture with Caraustar Industries. The Group received cash and a 20 percent
interest in the joint venture as a result of the transaction and recognized a
gain of $50.0 million in the second quarter as a result of the transaction.
In 1998, the Group divested its 20 percent interest in the joint venture with
Caraustar and recognized a $15.1 million gain in the second quarter on the
divestiture.
Operating income for the recycling business reported in 1996 prior to the
formation of the joint venture was approximately $4.0 million.
The Group's share of operating income from the joint venture was $0.6 million,
$1.7 million and $0.3 million, respectively, for the years ended December 31,
1996, 1997 and 1998.
NON-STRATEGIC WOODLANDS DIVESTITURES
In the third quarter of 1998, the Group recognized a $16.9 million gain on the
sale of approximately 18,500 acres of woodlands used as a fiber source for the
Counce mill, which were not considered as a strategic fiber source for the
Counce operation.
In the third quarter of 1997, the Group recognized a $4.4 million gain on the
sale of non-strategic woodlands located near the Tomahawk mill (known as the
Willow Flowage property).
MILL LEASE REFINANCING
On January 31, 1997, TPI entered into an operating lease agreement with Credit
Suisse Leasing 92A, L.P., as Lessor, and a group of financial institutions led
by Citibank, N.A., as Agent. The agreement refinanced previous operating leases
between General Electric Credit Corporation ("GECC") and TPI, which were entered
into at the same time as GECC's purchase of certain assets from Georgia-Pacific
Corporation in January 1991. Through this
50
<PAGE>
refinancing, several capital lease obligations were extinguished as the assets
were incorporated into the new operating lease. In connection with this
refinancing, certain fixed assets and deferred credits were eliminated,
resulting in a net gain recognized in the first quarter of 1997 of approximately
$37.7 million.
RESTRUCTURING CHARGE
In the fourth quarter of 1998, the Group recorded a pre-tax restructuring charge
of $14.4 million. This charge was recorded following the approval by Tenneco's
board of directors of a comprehensive restructuring plan for all of Tenneco's
operations, including those of the Group. In connection with this restructuring
plan, the Group has or will eliminate a total of 109 positions, including the
closing of four converting facilities. The following table reflects the
components of this charge:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
1999
RESTRUCTURING FOURTH QUARTER DECEMBER 31, 1998 FIRST QUARTER MARCH 31, 1999
CHARGE ACTIVITY BALANCE ACTIVITY BALANCE
-------------- --------------- -------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
DOLLARS IN MILLIONS
Cash Charges:
Severance............ $ 5.1 $(0.8) $4.3 (1.4) 2.9
Facility Exit Costs
and Other........... 3.8 (0.4) 3.4 (0.9) 2.5
-------------- --------------- -------------------- --------------- ---------------
Total Cash Charges... 8.9 (1.2) 7.7 (2.3) 5.4
Non-cash Charges:
Asset Impairments.... 5.5 (3.9) 1.6 (.9) 0.7
-------------- --------------- -------------------- --------------- ---------------
$14.4 $(5.1) $9.3 (3.2) 6.1
-------------- --------------- -------------------- --------------- ---------------
-------------- --------------- -------------------- --------------- ---------------
</TABLE>
The fixed assets at the closed facilities were written down to their estimated
fair value. No significant cash proceeds are expected from the ultimate disposal
of these assets. Of the $7.7 million remaining cash charges at December 31,
1998, approximately $7.3 million is expected to be spent in 1999.
IMPAIRMENT CHARGE
As a result of the Transactions, the Group recorded a non-cash impairment charge
of $230.1 million in the first quarter of 1999. Refer to Note 14 of the Group's
combined financial statements.
EXTRAORDINARY LOSS
In the first quarter of 1999, the Group incurred a loss of $6.3 million (net of
tax) in extinguishing certain debt. See Note 15 to the Group's combined
financial statements.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
NET SALES
Net sales decreased by $41.6 million, or 9.6%, for the three months ended March
31, 1999 from the comparable period in 1998. The decrease was primarily the
result of decreases in prices of corrugated products and containerboard shipped
to third parties.
Average prices for corrugated products decreased by 6.6% for the three months
ended March 31, 1999 from the comparable period in 1998, while corrugated volume
increased by 12.1%, from 5.9 billion square feet in 1998 to 6.7 billion square
feet in 1999.
Average containerboard prices for third party sales decreased by 13.6% for the
three months ended March 31, 1999 from the comparable period in 1998, while
volume to external domestic and export customers increased 3.1%, to 131,839 tons
in 1999 from 127,938 tons in 1998.
51
<PAGE>
According to Pulp & Paper Week, an industry publication, average linerboard and
semi-chemical medium prices for 42 lb. Liner-East and 26 lb. Medium-East (which
are representative benchmark grades) were $368 and $305, respectively, per ton
in the first quarter of 1999. This compares to $390 and $340, respectively, per
ton in the first quarter of 1998. According to the Fibre Box Association,
average sales prices for corrugated products decreased by 4.5% in the first
quarter of 1999 from the first quarter of 1998.
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES (OPERATING INCOME)
Adjusted operating income decreased by $18.1 million for the three months ended
March 31, 1999 from the comparable period in 1998 as a result of both lower
sales prices and partially offset by increased sales volume.
Gross margins decreased $18.9 million for the three months ended March 31, 1999
from the comparable period in 1998. Gross margins declined from 18.0% of sales
in the first quarter of 1998 to 15.1% of sales in the first quarter of 1999,
primarily due to the price decrease described above.
Selling and administrative expenses increased by $1.9 million, or 7.2%, for the
three months ended March 31, 1999 from the comparable period in 1998 primarily
as a result of salary increases and fringe benefit costs related to the timing
of 1998 incentive payments which were paid in the first quarter of 1999.
Corporate allocations for the three months ended March 31, 1999 decreased by
$1.0 million, or 7.3%, primarily due to a change in allocation rates from the
prior year.
INTEREST EXPENSE AND INCOME TAXES
Interest expense decreased by $0.5 million for the three months ended March 31,
1999 from the comparable period in 1998, primarily due to the repayment of debt.
The Group's effective tax rate was 41.2% for the three months ended March 31,
1999 and 39.9% for the comparable period in 1998. The tax rate was higher than
the federal statutory rate of 35% due to state income taxes.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
NET SALES
Net sales increased by $159.6 million, or 11.3%, from 1997 to 1998. The increase
was primarily the result of increases in prices for both corrugated products and
containerboard and, to a lesser extent, increases in shipments of corrugated
products.
Average prices for corrugated products increased by 7.3% in 1998 from 1997,
while corrugated volume increased by 4.6% in 1998, from 23.9 billion square feet
in 1997 to 25.0 billion square feet in 1998.
Average containerboard prices for external third party sales increased by 11.7%
in 1998 from 1997, while volume to external domestic and export customers
decreased 8.4%, to 527,000 tons in 1998 from 575,000 tons in 1997.
According to Pulp & Paper Week, an industry publication, average linerboard and
semi-chemical medium prices for 42 lb. Liner-East and 26 lb. Medium-East (which
are representative benchmark grades) were $373 and $315, respectively, per ton
in 1998. This compares to $333 and $268, respectively, per ton in 1997.
According to the Fibre Box Association, average sale prices for corrugated
products increased by 4.5% in 1998 from 1997.
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES (OPERATING INCOME)
Adjusted operating income increased by $97.8 million, from 1997 to 1998 as a
result of both higher sales prices and sales volumes, which primarily
contributed to the gross margin improvement of $112.0 million.
52
<PAGE>
Gross margins improved from 12.0% of sales in 1997 to 17.9% of sales in 1998,
primarily due to the price increases described above. These price increases were
partially offset by a higher level of depreciation attributable to the Group's
capital expenditure program and to higher costs incurred as a result of changes
in product mix.
Selling and administrative expenses increased by $6.1 million, or 5.9%, from
1997 to 1998, primarily as a result of costs incurred to support the increased
focus on graphics design and other value added product services in corrugated
products.
Corporate allocations increased by $1.8 million, or 2.9%, primarily as a result
of the Group's increased use of the Tenneco shared services center located in
The Woodlands, Texas.
INTEREST EXPENSE AND INCOME TAXES
The Group's interest expense for 1998 and 1997 primarily related to the interest
cost of debt incurred to finance a boiler at the Counce mill. The interest
expense declined by approximately $1.0 million in 1998, as a portion of this
debt was retired during the year.
The Group's effective tax rate was 40.0% in 1998 and 40.6% in 1997. The tax rate
is higher than the federal statutory rate of 35% due to state income taxes.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
NET SALES
Net sales decreased by $170.8 million, or 10.8%, from 1996 to 1997.
Approximately $48.3 million of the decrease was the result of the divestiture in
June 1996 of two recycled paperboard mills. The balance of the decrease was
primarily the result of decreases in prices for both corrugated products and
containerboard, partially offset by increases in shipments of corrugated
products and containerboard to external third parties.
Average prices for corrugated products decreased by 8.4% in 1997 from 1996,
while corrugated volume increased by 1.3% in 1998 from 23.6 billion square feet
in 1996 to 23.9 billion square feet in 1997.
Average containerboard prices for external third party sales decreased by 10.2%
in 1997 from 1996, while volume to external domestic and export customers
increased 30.4% to 575,000 tons in 1997 from 441,000 tons in 1996.
According to Pulp & Paper Week, average linerboard and semi-chemical medium
prices for 42 lb. Liner-East and 26 lb. Medium-East (which are representative
benchmark grades) were $333 and $268, respectively, per ton in 1997. This
compares to $382 and $315, respectively, per ton in 1996. According to the Fibre
Box Association, average sale prices for corrugated products decreased by 10.3%
in 1997 from 1996.
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES (OPERATING INCOME)
Excluding one-time transactions and the reported income from recycled mill
operations in 1996, adjusted operating income declined $94.7 million from 1996
to 1997. This decline was primarily the result of the lower pricing described
above, partially offset by variable cost reductions at the mills resulting in a
net decline in gross profit of $75.4 million.
These factors, combined with the impact of the 1996 divestiture of the recycled
mills, contributed to a decline in gross margins from 15.5% in 1996 to 12.0% in
1997.
Selling and administrative expenses increased by $7.6 million, or 8.0%, from
1996 to 1997. This increase was primarily the result of greater expenses
incurred to increase the number of sales and design personnel for the corrugated
products business.
Corporate allocations increased by $10.9 million, or 21.6%, from 1996 to 1997.
The increase was the result of an overall increase in TPI's overhead, and
consequently higher allocations to the Group.
53
<PAGE>
INTEREST EXPENSE AND INCOME TAXES
The Group's interest expense declined by $1.4 million from 1996 to 1997,
primarily as a result of the termination of capital leases that were
extinguished when the new mill operating lease agreement was entered into in
January 1997.
The Group's effective tax was 40.6% in 1997 and 39.8% in 1996. The tax rate was
higher than the federal statutory rate of 35% due to state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL
As a division of TPI, the Group did not maintain separate cash accounts other
than for petty cash. The Group's disbursements for payroll, capital projects,
operating supplies and expenses were processed and funded by TPI through
centrally managed accounts. In addition, cash receipts from the collection of
accounts receivable and the sales of assets were remitted directly to bank
accounts controlled by TPI.
Because of TPI's centrally managed cash system, in which the cash receipts and
disbursements of TPI's various divisions were commingled, it was not feasible to
segregate cash received from TPI (E.G., as financing for the business) from cash
transmitted to TPI (E.G., as a distribution). Accordingly, the net effect of
these cash transactions with TPI is represented as a single line item within the
financing section of the statement of cash flows. Similarly, the activity of the
interdivision account presents the net transfer of funds and charges between TPI
and the Group as a single line item.
The following table sets forth the Group's cash flows for the periods shown:
<TABLE>
<CAPTION>
-----------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DOLLARS IN MILLIONS
CASH PROVIDED (USED) BY:
Operating Activities...................... $ 55.8 $ 107.2 $ 195.4 34.7 145.3
Investing Activities...................... (74.2) (111.9) (177.7) (21.1) (15.4)
Financing Activities...................... 16.8 3.7 (17.7) (13.5) (129.9)
--------- --------- --------- --------- ---------
Net Cash Change........................... $ (1.6) $ (1.0) $ - - -
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
OPERATING ACTIVITIES
Cash flow provided by operating activities increased $110.6 million for the
three months ended March 31, 1999 from the comparable period in 1998. The
increase was primarily attributable to the tax asset related to the impairment,
which was effectively distributed to TPI (see financing activities).
Cash flow provided by operating activities increased by $88.2 million from 1997
to 1998. The increase was due primarily to higher net income of $44.0 million,
collection of a higher level of receivables and increased non-cash charges for
restructuring and depreciation.
Cash provided by operating activities increased by $51.4 million from 1996 to
1997. The lower net income of $63.0 million resulting from lower pricing was
more than offset by a deferred tax increase of $76.8 million resulting from
accelerated depreciation on tax owned assets and higher depreciation, depletion
and amortization.
INVESTING ACTIVITIES
Net cash used for investing activities decreased $5.7 million for the three
months ended March 31, 1999 from the comparable period in 1998.
54
<PAGE>
Cash used for investing activities increased by $65.8 million from 1997 to 1998.
The increase was primarily attributable to a prepaid lease payment made in
late-December 1998 of $84.2 million to acquire timberland as part of the Lease
Buy-out. Proceeds from assets sales were $15.8 million higher in 1998, due to
the 1998 timberland sale transaction previously described. During 1997 and 1998,
additions to plant, property and equipment totaled $110.2 million and $103.4
million, respectively.
Net cash used for investing activities increased by $37.7 million from 1996 to
1997. During 1996 and 1997, additions to property, plant and equipment totaled
$168.6 million and $110.2 million, respectively. The higher level of capital
expenditures in 1996 was attributable to the rebuild of a machine at the Counce
mill, for which a total of $78.4 million in capital expenditures was spent, with
the majority of the spending occurring in 1996. Included in the 1996 investing
activities are $122.7 million of proceeds from disposals (primarily the sale of
the 80% interest in the recycled paperboard assets to Caraustar Industries)
compared to $10.5 million in 1997. Cash expended for other long-term assets
decreased $16.5 million, primarily due to lower cash funding of pension assets.
FINANCING ACTIVITIES
Cash used for financing activities increased $116.4 million for the three months
ended March 31, 1999 from the comparable period in 1998. The increase was
primarily attributable to the tax asset related to the impairment, which was
effectively distributed to TPI (see operating activities) and the repayment of
the debt related to the boiler at the Counce mill.
Cash provided by financing activities decreased by $21.4 million from 1997 to
1998, primarily reflecting the change in the net transfer of funds between the
Group and TPI. The Group also retired $10.3 million of debt during 1998, which
related to the financing of a boiler at the Counce mill.
Cash provided by financing activities decreased by $13.1 million from 1996 to
1997, primarily due to changes in the net transfer of funds between the Group
and TPI.
AFTER THE TRANSACTIONS
Following the Transactions, PCA's primary sources of liquidity are cash flow
from operations and borrowings under PCA's new revolving credit facility. PCA's
primary uses of cash are for debt service and capital expenditures, which PCA
expects to be able to fund from these sources.
PCA incurred substantial indebtedness in connection with the Transactions. On a
pro forma basis, after giving effect to the Transactions as if they had occurred
on March 31, 1999, PCA would have had approximately $1,769.0 million of
indebtedness outstanding as compared to historical indebtedness outstanding of
approximately $0.5 million. PCA's significant debt service obligations following
the Transactions could, under certain circumstances, have material consequences
to PCA's securityholders, including holders of the exchange notes and the new
preferred stock. See "Risk Factors."
Concurrently with the Transactions, PCA issued the outstanding notes and
preferred stock and entered into the senior credit facility. The senior credit
facility provides for three tranches of term loans in an aggregate amount of
$1,210.0 million and a revolving credit facility with up to $250.0 million in
availability. Upon the closing of the Acquisition, PCA borrowed the full amount
available under the term loans and $9.0 million under the revolving credit
facility. The borrowings under the revolving credit facility are available to
fund PCA's working capital requirements, capital expenditures and other general
corporate purposes. The Tranche A Term Loan will mature in quarterly
installments from September 1999 through 2005. The Tranche B Term Loan will
mature in quarterly installments from September 1999 through 2007. The Tranche C
Term Loan will mature in quarterly installments from September 1999 through
2008. The revolving credit facility will terminate in 2005. See "Description of
Senior Credit Facility."
On May 18, 1999, PCA prepaid $75.0 million on the term loans using excess cash.
In addition, the $9.0 million drawn on the revolver as of the closing of the
Acquisition, has been repaid using excess cash.
55
<PAGE>
The instruments governing PCA's indebtedness and the new preferred stock,
including the senior credit facility, the notes indenture and the certificate of
designation governing the new preferred stock, contain financial and other
covenants that restrict, among other things, the ability of PCA and its
subsidiaries to incur additional indebtedness, pay dividends or make certain
other restricted payments, consummate certain asset sales, incur liens, enter
into certain transactions with affiliates, or merge or consolidate with any
other person or sell or otherwise dispose of all or substantially all of the
assets of PCA. These limitations, together with the highly leveraged nature of
PCA, could limit corporate and operating activities. See "Risk
Factors-Leverage."
PCA estimates that it will make approximately $118 million in capital
expenditures in 1999. These expenditures will be used primarily for cost
reduction, business growth, maintenance and environmental and other regulatory
compliance.
PCA is currently contemplating the possible sale of a significant portion of its
timberland. The net proceeds of these sales, if any, would be used to reduce
borrowings under the senior credit facility. PCA is permitted under the terms of
the senior credit facility, the notes indenture and the certificate of
designation, subject to certain limitations, to use net proceeds in excess of
$500.0 million, if any, to redeem up to $100.0 million of the exchange notes, to
repurchase or redeem up to $100.0 million of the new preferred stock or the
subordinated exchange debentures, or to pay a dividend on or repurchase its
equity interests. See "Description of Senior Credit Facility," "Description of
Exchange Notes" and "Description of New Preferred Stock."
PCA believes that cash generated from operations and amounts available under the
revolving credit facility will be adequate to meet its anticipated debt service
requirements, capital expenditures and working capital needs for the foreseeable
future. There can be no assurance, however, that PCA's business will generate
sufficient cash flow from operations or that future borrowings will be available
under the senior credit facility or otherwise to enable it to service its
indebtedness, including the senior credit facility, the exchange notes and, if
issued, the subordinated exchange debentures, to pay cash dividends on the new
preferred stock beginning in 2004, to retire or redeem the exchange notes or the
new preferred stock or, if issued, the subordinated exchange debentures when
required or to make anticipated capital expenditures. PCA's future operating
performance and its ability to service or refinance the exchange notes and, if
issued, the subordinated exchange debentures, to service, extend or refinance
the senior credit facility and to pay cash dividends, redeem or refinance the
new preferred stock will be subject to future economic conditions and to
financial, business and other factors, many of which are beyond PCA's control.
See "Risk Factors."
ENVIRONMENTAL MATTERS
We are subject to, and must comply with, a variety of federal, state and local
environmental laws, particularly those relating to air and water quality, waste
disposal and the cleanup of contaminated soil and groundwater. Because
environmental regulations are constantly evolving, we have incurred, and will
continue to incur, costs to maintain compliance with those laws. In particular,
the United States Environmental Protection Agency recently finalized the Cluster
Rules which govern pulp and paper mill operations, including those at the
Counce, Filer City, Valdosta and Tomahawk mills. Over the next several years,
the Cluster Rules will affect our allowable discharges of air and water
pollutants, and require us to spend money to ensure compliance with those new
rules. See "Business-Environmental Matters."
As is the case with any industrial operation, we have, in the past, incurred
costs associated with the remediation of soil or groundwater contamination, as
required by the federal Comprehensive Environmental Response, Compensation and
Liability Act (the federal "Superfund" law) and analogous state laws. Cleanup
requirements arise with respect to properties we currently own or operate,
former facilities and off-site facilities where we have disposed of hazardous
substances. However, because liability under such laws is retroactive (imposing
future liability for past conduct), we could receive notifications of cleanup
liability in the future and such liability could be material. Under the terms of
the Contribution Agreement, TPI has agreed to retain all liability for all
former facilities and all sites associated with pre-closing off-site waste
disposal, and TPI has retained certain environmentally impaired real property in
Filer City, Michigan unrelated to current mill operations. See
"Business-Environmental Matters."
56
<PAGE>
YEAR 2000 ISSUE
Many of our computer software systems, as well as certain hardware and equipment
utilizing date-sensitive data, were structured to use a two-digit data field,
meaning that these systems will not be able to properly recognize dates in the
Year 2000. PCA has substantially completed an inventory of its systems to
identify and assess Year 2000 issues and is in the process of installing a
comprehensive Year 2000 compliant, upgraded customer and management system. This
system includes remediation, replacement and alternative procedures for non-
compliant Year 2000 issues, including upgrades to the mill system as well as
compliance and remediation measures with respect to the order entry, corrugator
scheduling, converting scheduling, shop floor manufacturing, shipping, inventory
management and invoicing systems at our converting plants. Installation of our
Year 2000 compliant system was completed at certain locations in 1998. We expect
to complete the installation of this system at all of our locations prior to the
end of the third quarter of 1999 although we cannot be assured of such
completion. In addition, we are in the process of identifying those customers,
suppliers and others with whom we conduct business to determine whether such
persons will be able to resolve in a timely manner any Year 2000 problems that
may affect PCA. Our failure or the failure of our suppliers or customers to
achieve Year 2000 compliance could materially and adversely affect our business
and results of operations.
Based on current estimates, PCA believes it will incur costs that may range from
approximately $5 million to $7 million to address Year 2000 issues, of which
approximately $2 million has been incurred as of March 31, 1999. Approximately
20% to 30% of the remaining costs will be reimbursed by TPI under the Transition
Services Agreement. See "Certain Transactions-Transition Agreements." These
costs are being expensed as they are incurred, except that in certain instances
PCA may determine that replacing existing computer systems or equipment may be
more effective and efficient, particularly where additional functionality is
available.
In the event PCA is unable to complete the remediation, replacement or
alternative procedures for critical systems and equipment in a timely manner or
if those with whom PCA conducts business are unsuccessful in implementing timely
solutions, Year 2000 issues could have a material adverse effect on PCA's
results of operations. At this time, the potential effect in the event PCA
and/or third parties are unable to timely resolve Year 2000 problems is not
determinable; however, PCA believes it will be able to resolve its own Year 2000
issues.
IMPACT OF INFLATION
PCA does not believe that inflation has had a material impact on its financial
position or results of operations during the past three years.
MARKET RISK AND RISK MANAGEMENT POLICIES
Historically, PCA has not had any material market risk due to the fact that its
debt financing and risk management activities were conducted by TPI or Tenneco.
Under the terms of the senior credit facility, PCA is required to maintain for
at least two years after the closing of the Transactions interest rate
protection agreements establishing a fixed maximum interest rate with respect to
at least 50% of the outstanding term loans under the senior credit facility.
On March 5, 1999, PCA entered into an interest rate protection agreement with
J.P. Morgan Securities Inc. to lock in then current interest rates on 10-year
U.S. Treasury notes. PCA entered into this agreement to protect it against
increases in the 10-year U.S. Treasury note rate, which served as a reference in
determining the interest rate applicable to the notes, which have a comparable
term. The agreement has a notional amount of $450.0 million and a 10-year U.S.
Treasury note reference rate of 5.41%. As a result of a decrease in the interest
rate on 10-year U.S. Treasury notes, PCA was obligated to make a single payment
of approximately $8.4 million to the counterparty upon settlement of the
agreement which was made on the date of the closing of the notes offering.
NEW ACCOUNTING STANDARDS
For a description of changes in accounting principles affecting PCA, see Note 2
to the audited financial statements included elsewhere in this prospectus.
57
<PAGE>
BUSINESS
GENERAL
PCA is a leading integrated producer of containerboard and corrugated packaging
products in North America. We manufacture a broad range of linerboard and
corrugating medium in our four mills, each of which is located near its primary
fiber supply. In 1998, our mills produced 2.1 million tons of containerboard,
ranking us as the sixth largest containerboard producer in North America.
Through our nationwide network of 67 converting plants, consisting of 39
corrugator plants and 28 sheet/specialty and other plants, we convert
approximately 75% to 80% of the containerboard produced at our mills into
corrugated packaging products for sale to both local and national customers. In
1998, our converting plants shipped approximately 25 billion square feet of
corrugated packaging products, including shipping boxes, point-of-sale packages,
point-of-purchase displays and other advertising and promotional products,
ranking us as one of the top six integrated producers of corrugated packaging
products in North America.
Based on two cost studies performed by Jacobs-Sirrine, an industry consultant,
in 1998, we have one of the lowest cash cost containerboard mill systems in the
industry, with from 70% to 85% of our production capacity ranked in the
lowest-cost quartile of the industry. The Jacobs-Sirrine study ranked our two
largest mills, Counce and Tomahawk, among the lowest cash cost kraft linerboard
and corrugating medium mills, respectively, in North America. As a result of our
low cost operations and the implementation of our differentiated business
strategy, we have historically been able to generate EBITDA margins that are
relatively more stable and higher than industry averages. For the fiscal year
ended December 31, 1998, PCA's revenues and adjusted EBITDA (as defined below)
were $1,571.0 million and $327.4 million, respectively, on a pro forma basis.
For the three months ended March 31, 1999, PCA's revenues and EBITDA were $391.3
million and $70.0 million respectively, on a pro forma basis.
In addition to our mills and converting plants, we own or control approximately
950,000 acres of timberland located in close proximity to our mills, providing
favorable access to our primary fiber requirements. We also own three sawmills,
three recycling facilities, a 50% interest in a wood chipping venture and an
air-dry yard operation.
INDUSTRY OVERVIEW
Corrugated containers are a safe and economical means of transporting industrial
and consumer goods and products. More goods and products are shipped in
corrugated containers than in any other type of packaging. Since 1975, the
demand for corrugated containers has grown at a compound annual rate of 3.1%,
with demand for corrugated containers increasing in all but four years during
this 23-year period. At no time during this period did demand for corrugated
containers decrease in consecutive years.
The primary end-use markets for corrugated containers are food, beverage and
agricultural products; paper and fiber products; petroleum, petrochemical
resins, plastics and rubber products; glass and metal containers; electronic
appliances; and electrical and other machinery. National customer accounts seek
suppliers with wide geographic coverage that can service most of their locations
with long-run, low-cost products. Local customer accounts tend to place a
greater emphasis on a reliable source of supply on a timely and, in some cases,
just-in-time basis. Both types of consumers focus on price and quality and place
a strong emphasis on access to steady supplies.
Containerboard is manufactured from softwood and hardwood fibers and, in some
cases, recycled fibers, such as old corrugated containers and clippings from
converting operations. Virgin fiber is obtained in the form of wood chips or
pulp wood from company-owned timberland or acquired through open market
purchases. These chips are chemically treated to form softwood and hardwood
pulp, which are then blended (together, in some cases, with recycled fibers).
The pulp is then processed through paper machines, which consist of a
paper-forming section, a press section (where water is removed by pressing the
wet containerboard between rolls), and a drying section. The containerboard is
then wound into rolls, which are then shipped to company-owned converting box
plants or to outside converters.
58
<PAGE>
Containerboard, consisting of linerboard and corrugating medium, is the
principal raw material used to manufacture corrugated containers. Linerboard is
used as the inner and outer facing (liner) of a corrugated container.
Corrugating medium is fluted and laminated to linerboard in corrugator plants to
produce corrugated sheets. The sheets are subsequently printed, cut, folded and
glued in corrugator plants or sheet plants to produce corrugated containers.
Generally, corrugated containers are delivered by truck due to the large number
of customers and demand for timely service. The dispersion of customers and the
high bulk, low density and low value of corrugated containers make shipping
costs a relatively high percentage of total costs. As a result, corrugator
plants tend to be located in proximity to customers to minimize freight costs.
Most corrugator plants serve markets within a 150-mile radius of the plant and
employ a local sales force to service the market area.
There are primarily two types of converting plants: corrugator plants (612 in
the United States) which have a corrugator on site and manufacture and convert
corrugated sheets into corrugated containers and sheet plants (860 in the United
States) which purchase corrugated sheets from corrugator plants and convert them
into finished corrugated containers. According to the Fibre Box Association,
corrugator plants account for 84% of the industry's corrugated container
shipments, while sheet plants contribute the remaining 16%.
Most major North American containerboard manufacturers maintain a high degree of
integration with converting plants. Approximately 75% of containerboard produced
in the United States (excluding exports) is consumed by converters owned or
otherwise controlled by containerboard producers.
To reduce the cost of shipping containerboard from mills to widely dispersed
corrugator plants, vertically integrated containerboard manufacturers routinely
enter into agreements with other containerboard manufacturers to exchange
containerboard from mills in one location for containerboard having a similar
value from mills located elsewhere in the United States, thus reducing freight
costs. Producers also exchange containerboard to take advantage of manufacturing
efficiencies resulting from operating paper machines in their most efficient
basis weight ranges and trim widths and to obtain paper grades they do not
produce.
The United States is the largest kraft linerboard producer in the world.
Unbleached kraft linerboard is produced at large, integrated facilities
utilizing primarily virgin fiber sources. Unbleached kraft linerboard is
produced primarily from softwood fibers which are longer than hardwood fibers
and give the sheet superior strength characteristics. The abundant supply of
softwood in North America provides U.S. companies a distinct advantage in
linerboard production.
Most linerboard produced in the U.S. is unbleached, but grades with a solid
white or mottled white printing surface are growing in importance. White
linerboard, produced in mottled, white top and solid bleached grades, has
experienced significant growth due to increased demand for improved graphic
quality boxes. White linerboard sells at a premium relative to unbleached
linerboard.
Corrugating medium is made from semi-chemical pulp using hardwood and recycled
fiber. Approximately 60% of the corrugating medium produced in the United States
is made primarily from semi-chemical pulp supplemented with a growing percentage
of recycled fiber. Approximately 40% of corrugating medium is now produced
entirely from recycled fiber. Recycled corrugating medium mills are typically
located near major urban areas and are generally located near recovered paper
suppliers and box converters, thus reducing their transportation costs.
Recycled linerboard production has grown rapidly in recent years due to
favorable economics, customer demand for recycled packaging, producer efforts to
cut fiber costs and new technology that has made recycled materials more
comparable in quality to virgin linerboard. Recycled linerboard accounted for
approximately 18% of total U.S. linerboard production in 1998. A recycled
linerboard mill is typically smaller, less capital intensive and located near
major East and Midwest urban areas where the supply of recycled materials is
abundant and a customer base is within a short shipping distance.
U.S. linerboard producers export almost 20% of their production. The top three
markets are Europe, Asia and Latin America, which, together, consumed 85% of the
United States linerboard exports during the first half of 1998. Linerboard
exports have grown at an average of 6.3% a year during the last 15 years,
reaching a record
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4.5 million tons in 1997. Due to the strong U.S. dollar and weak Asian markets,
exports were significantly lower in 1998. The export market is considerably
smaller for corrugating medium than linerboard, with only about 4% of
corrugating medium produced in the United States sold as exports.
The market for containerboard is highly cyclical. Historically, prices for
containerboard have generally reflected changes in supply, which is primarily
determined by additions and reductions to industry capacity and inventory levels
and, to a lesser extent, changes in demand. Containerboard demand is dependent
upon both the demand for corrugated packaging products, which closely tracks
industrial production, and export activity. Domestic demand for corrugated
packaging products is more stable than export demand and generally corresponds
to changes in the rate of growth in the U.S. economy. During the period from
1994 to 1996, capacity additions outpaced domestic and export demand, leading to
lower industry operating rates and generally declining prices from late-1995
until mid-1997. Although prices generally improved from mid-1997 through
mid-1998, the containerboard markets were adversely affected by weaker
containerboard exports, particularly to Asia in the second half of 1998. These
factors contributed to higher inventories, lower operating rates and lower
prices during this period.
In recent months, several major containerboard manufacturers have announced
production curtailments and mill shut downs, and only minimal capacity additions
have been publicly announced through 2001 according to the American Forest &
Paper Association.
Current inventory levels further support the positive industry dynamics.
According to the Fibre Box Association, total containerboard inventories at
mills and converting plants declined by 122,000 tons to 2.6 million tons or 4.6
weeks of supply by the end of December 1998, the lowest level in 13 months, and
the lowest inventory for the month of December since 1994. This is the first
time in 25 years of monthly inventory data that inventories have declined in the
month of December.
COMPETITIVE STRENGTHS AND BUSINESS STRATEGY
The key elements of our competitive strengths and business strategy are the
following:
- LOW-COST PRODUCER. We are a leading low-cost producer of containerboard
and corrugated packaging products in North America. According to two cost
studies performed by Jacobs-Sirrine, our mills are among the lowest cash
cost integrated containerboard mills in the industry, with from
approximately 70% to 85% of our production capacity ranked in the
lowest-cost quartile of the industry. The Jacobs-Sirrine study ranked our
two largest mills, Counce and Tomahawk, among the lowest cash cost kraft
linerboard and corrugating medium mills, respectively, in North America.
Management attributes our low-cost status to (1) our productivity
enhancement programs, which resulted in more than $80 million in annual
mill cost savings from late-1996 through 1998, (2) strategic capital
investments over the past five years designed to enhance mill efficiency
and improve our manufacturing processes, and (3) substantial reductions in
our fiber cost (the single largest cost in containerboard production)
since 1996 (up to $15 per ton) by increasing the amount of low-cost
hardwood and recycled fiber in our fiber mix and achieving greater yield
from softwood in our production of linerboard.
- INTEGRATED OPERATIONS. We are a highly integrated producer of
containerboard and corrugated packaging products. The relative earnings
stability of our converting plants acts to partially offset the more
cyclical earnings of our mills. Because each of our converting plants
seeks to maximize its own profitability by selecting the appropriate
customers, product mix and production levels for its operations, our
converting plants have been able to generate strong and consistent cash
flow despite fluctuations in containerboard prices. Rather than using our
converting plants as captive outlets for our mill production, we pursue a
"demand pull" strategy by which our converting plants generally purchase
from our mills only the amount of containerboard which they believe is
necessary to support their respective customers' requirements and to
maximize plant profitability. Since the price of corrugated containers
tends to fluctuate in direct proportion to containerboard prices, our
converting plants generally are able to earn a relatively stable spread
over the price of containerboard.
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- FOCUS ON VALUE-ADDED PRODUCTS AND SERVICES. We have pursued a strategy of
providing our customers with value-added products such as custom die cut
and specialty boxes, point-of-sale packaging and point-of-purchase
displays and superior customer service through shorter production runs,
faster turnaround times and enhanced graphics capabilities. Since 1995, we
have acquired four graphics plants and five sheet/specialty plants to
augment our existing graphics and manufacturing capabilities. We have also
created a nationwide network of five graphic design centers to meet
sophisticated customer needs. Through our nationwide network of 67
converting facilities, including our large number of sheet/specialty
plants, we are able to offer coast-to-coast "local" coverage and provide
additional services and converting capabilities. As a result, our selling
price per thousand square feet ("MSF") has consistently exceeded the
industry average since 1995.
- DIVERSIFIED CUSTOMER BASE. With over 8,000 active customers and over
13,000 shipping locations, our customer base is broadly diversified across
industries and geographic locations, reducing our dependence on any single
customer or market. No customer represents more than 5% of our total sales
and our top ten customers represent less than 20% of our total sales. We
have focused our sales efforts on smaller, local accounts, which usually
demand more customized products and services than higher volume national
accounts. Approximately 75% of our current revenues are derived from local
accounts.
- PROVEN AND EXPERIENCED MANAGEMENT. We have an experienced management team
with an average of 23 years of industry experience, including an average
of 15 years of service with PCA. Upon the closing of the Transactions,
Paul T. Stecko resigned from his post as President and Chief Operating
Officer of Tenneco in order to become our Chairman and Chief Executive
Officer. In addition, William J. Sweeney, formerly Executive Vice
President of TPI, now serves as our Executive Vice President. Mr. Sweeney
has over 30 years of experience in the paperboard packaging industry.
Since 1993, TPI has recruited a number of seasoned, technically-skilled
industry veterans to PCA's management.
OPERATIONS AND PRODUCTS
MILLS
Our mills manufacture a broad range of linerboard (26 lb. to 96 lb.) grades
including high-performance and lightweight grades at our two linerboard mills
and corrugating medium (21 lb. to 47 lb.) grades including high-performance and
lightweight grades at our two corrugating medium mills. All four of our mills
are ISO 9002 certified.
We have focused on improving our premium grade capabilities, including the
production of mottled white, wet strength, high rings, tare weights,
lightweights and super heavyweights. In comparison to non-premium grades, these
grades typically maintain better pricing over a cycle due to their more limited
availability and greater manufacturing complexity. From 1994 to 1998, premium
grades increased from 31% to 45% based on total tons produced.
COUNCE. Our Counce mill, located in Tennessee, is one of the largest linerboard
mills in the world, with production capacity of approximately 937,000 tons per
year. In 1998, we produced approximately 880,600 tons of kraft linerboard on two
paper machines at our Counce mill, which produce a broad range of basis weights
from 26 lb. to 96 lb. Our Counce mill machines also produce a variety of
performance and specialty grades of linerboard including, among other things,
high-ring crush, full and half wet strength, high mullen, high porosity, tare
weight, recycled content (up to 30%) and super heavyweight. In 1998, we
developed the capability to produce linerboard grades with a mottled white
printing surface. Mottled white (which has a marble-like coloration) is
typically priced from $130 to $175 per ton higher than kraft linerboard, but is
more expensive to produce. We have the capacity to produce up to 75,000 tons of
mottled white linerboard grades per year.
VALDOSTA. Our Valdosta mill, located in southern Georgia, is a kraft linerboard
mill and has a production capacity of approximately 450,000 tons per year. In
1998, our single paper machine at our Valdosta mill
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produced approximately 424,500 tons of linerboard, which included a broad range
of 41 linerboard grades and 20 basis weights. Our Valdosta mill machine
primarily produces medium weight linerboard ranging from 42 lb. to 56 lb., and
heavyweight linerboard ranging from 57 lb. to 96 lb.
TOMAHAWK. Our Tomahawk mill, located in north-central Wisconsin, is the second
largest corrugating medium mill in the world, with a production capacity of
533,000 tons per year. In 1998, we produced approximately 503,900 tons of
semi-chemical medium at Tomahawk using three paper machines, one of which is the
third largest corrugating medium machine in the world. These machines produce a
broad range of basis weights (from 23 lb. to 47 lb.), and also produce a variety
of performance and specialty grades of corrugating medium including, among other
things, high-ring crush, wet strength, tare weight and super heavyweight.
FILER CITY. Our Filer City mill, located in west central Michigan, is the
fourth largest corrugating medium mill in the United States, with a production
capacity of 355,000 tons per year. In 1998, we produced approximately 295,500
tons of heavyweight and lightweight semi-chemical medium using three paper
machines at our Filer City mill. One of the three machines at Filer City was
shut down on July 1, 1998, but can be restarted if we require additional
capacity. Our Filer City mill produces lightweight corrugating medium grades (21
lb. to 23 lb.) as well as 100% recycled linerboard in basis weights from 21 lb.
to 38 lb. We also have the capability to manufacture 100% recycled corrugating
medium and to produce a variety of specialty corrugating medium grades
including, among other things, high-ring crush, wet strength and tare weight.
CORRUGATED PRODUCTS
We operate 39 corrugator plants, 28 sheet/specialty and other plants (which do
not have corrugators on-site) and five major design centers. Our 67 converting
facilities are located in 26 states, enabling us to offer coast-to-coast "local"
coverage. Of these facilities, our 28 sheet/specialty and other plants are
generally located in close proximity to our larger corrugating facilities,
enabling us to offer additional services and converting capabilities. Currently,
we consume, directly or through exchange arrangements with other containerboard
producers, approximately 75% to 80% of the linerboard and corrugating medium
produced at our mills. Our corrugated converting plants combine the linerboard
and corrugating medium into corrugated sheets that are converted into corrugated
shipping containers, point-of-sale graphics packaging, point-of-purchase
displays and other specialized packaging such as wax coated boxes for the
agriculture and meat industries. Each of our corrugator plants operates as a
profit center with its own general manager and sales force, whose compensation
is tied to profitability rather than volume. We currently operate our corrugator
plants at approximately 65% to 70% of their available manufacturing capacity.
Each corrugator plant serves a market radius that typically averages 100 miles.
Over 90% of our corrugator plants are ISO 9000 certified.
TIMBERLAND
We own, lease, manage or have cutting rights with respect to approximately
950,000 acres of timberland located near our Counce, Valdosta and Tomahawk
mills. Our timberland is generally located within 100 miles of our mills,
resulting in lower wood transportation costs and favorable access to our virgin
fiber requirements. In 1998, wood supplied from timberland under our control
accounted for approximately 25% of our total virgin fiber requirements. The
timberland under our control consists of approximately 54% softwood, which is
primarily pine, and 46% hardwood. Our Filer City mill is located in a "wood
basket" where timber growth exceeds harvest rates, thus providing a stable
source of wood without the need to own or control acreage. From time to time, we
may acquire or dispose of timberland in the ordinary course of business.
In addition to the timberland under our control, our Forest Management
Assistance Program ("FMAP") provides management assistance to nearby private
landowners (who own over 228,000 acres of timberland) in return for a right of
first refusal over timber sales from those lands. These private lands are
expected to generate approximately 165,000 cords of pulpwood per year under
FMAP.
We also participate in the Sustainable Forestry Initiative ("SFI"), which is
aimed at ensuring the long-term health and conservation of the forestry
resources. SFI-related activities include limiting tree harvest sizes,
replanting harvested acreage, preserving biodiversity, participating in flora
and fauna research and protecting water streams.
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SOLID WOOD AND RECYCLING FACILITIES
We own sawmills in Ackerman, Mississippi; Selmer, Tennessee; and Fulton,
Mississippi, a recycling facility in Jackson, Tennessee and two recycling
facilities in Nashville, Tennessee. We also have a 50% interest in a wood
chipping joint venture in Fulton, Mississippi and own an air-dry yard operation
in Burnsville, Mississippi.
PERSONNEL
Each of our mills is managed by an individual mill manager. In addition to the
papermaking and timberland operations personnel, each of our mills has
operational support groups that include: scheduling and shipping; technical
services and process control; maintenance and reliability; and engineering and
technology. Our administrative support groups include accounting, information
systems, payroll and human resources. All of the groups mentioned above report
to each respective mill manager. Our corporate support includes a containerboard
sales and production scheduling group which processes customer orders and a
14-member corporate mill engineering staff that provides engineering,
procurement, construction and start-up services for capital and defined
maintenance projects.
Each of our converting plants is serviced by a management team which usually
includes a general manager, a sales manager, a production manager, a controller
and a customer service manager. Our converting plants are collectively serviced
by a 14-member technical support group, comprised of packaging engineers and
technicians, that provides services to our operating locations including
testing, engineering, manufacturing and technical support. Our technical support
group also administers technical support, joint improvement teams and performs
process analysis at our customers' sites to assure that our customers' quality
and performance standards are consistently met. Our converting plants are
grouped into seven geographic areas, each reporting to an area general manager.
SALES AND MARKETING
Our containerboard sales group provides all of the sales-related services for
domestic and export sales of linerboard and corrugating medium, as well as order
processing for all integrated shipments of containerboard from our mills to our
converting plants. These personnel also coordinate and execute all
containerboard trade agreements.
We maintain a direct sales and marketing organization of approximately 350 sales
personnel for our corrugated products, serving both local and national accounts.
The sales organization consists primarily of sales representatives and a sales
manager at each manufacturing facility serving local and regional accounts, a
dedicated graphics sales force at our design centers and corporate account
managers who serve large national accounts at multiple customer locations. We
maintain general marketing support at our corporate headquarters.
As a part of our direct sales and marketing organization, we have established a
nationwide network of new product development and creative packaging design
centers to develop and manufacture product packaging and product display
solutions to meet more sophisticated, complex customer needs. This network
includes five graphic design centers, 11 primary and 11 secondary graphics
facilities, and almost 100 additional support personnel, including new product
development engineers and product graphics and design specialists. These centers
offer state-of-the-art computers and equipment that are capable of 24-hour
design turnaround and reduced product delivery times.
DISTRIBUTION
Finished goods produced in our mills are usually shipped by rail or truck. Our
individual mills do not own or maintain outside warehousing facilities, although
we use several third-party warehouses for short-term storage, which is generally
30 days or less, for cross docking or for customer convenience purposes.
In general, each of our converting plants has a dedicated carrier which
transports 60% to 90% of its shipments. Our corrugated containers are usually
delivered by truck due to our large number of customers and their demand for
timely service. The dispersion of our customers and the high bulk and low value
of corrugated containers
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make shipping costs a relatively high percentage of our total costs. As a
result, we have generally positioned our converting plants in proximity to our
customers to minimize our freight costs. Most of our converting plants serve
customers within a 100-mile radius.
CUSTOMERS
Our converting plants, either directly or through exchange agreements with
trading partners, consume approximately 75% to 80% of our mills' containerboard
production. These agreements, which are common in the industry, enable a company
to achieve two key objectives: (1) supply company-owned corrugator plants from
mills that are geographically closer, thus reducing freight costs; and (2)
enhance each mill's grade mix by trading for grades which the mill can run more
profitably and efficiently. To the extent our mill production is not consumed by
our converting plants or traded pursuant to exchange arrangements with other
containerboard producers, our mill containerboard production is sold primarily
to independent domestic and export box converters, as well as to customers who
manufacture fiber drums, air bags, protective packaging and other specialty
products. In 1998, 9% of our containerboard shipments were to the export market
and 16% were to independent domestic converters.
We have over 8,000 active customers for our corrugated products and ship to over
13,000 locations. Our customer base consists primarily of smaller, local
accounts and is broadly diversified across a number of industries and geographic
locations. Based on an internal customer survey conducted in 1998, we estimate
that nearly 40% of our customers have purchased corrugated packaging products
from us for over five years. Our top ten corrugated products customers generated
approximately 18% of our total 1998 gross revenues. No single unaffiliated
customer represented over 5% of our gross revenues.
In connection with the Transactions, TPI and its affiliates, Tenneco Automotive
Inc. and Tenneco Packaging Speciality and Consumer Products Inc., which account
for approximately 6% of our sales, each entered into five-year purchase/supply
agreements with us under which TPI and its affiliates agreed to purchase from us
a substantial percentage of their requirements for linerboard, corrugating
medium and other containerboard products and various types of corrugated
products used in TPI's business as conducted as of the closing of the
Transactions. See "Certain Transactions-Purchase/Supply Agreements."
RAW MATERIALS
FIBER SUPPLY. Fiber is the single largest cost in the manufacture of
containerboard. As of December 31, 1998, we owned, leased, managed or had
cutting rights with respect to approximately 950,000 acres of timberland in
Alabama, Florida, Georgia, Mississippi, Tennessee and Wisconsin. In 1996, 1997
and 1998, approximately 37%, 35% and 36%, respectively, of the virgin fiber used
in our mill operations or sold to the open market was harvested from timberland
that we owned or controlled. We currently satisfy our remaining fiber
requirements through purchases from open market wood sellers. The average cost
of wood chips has been increasing due to greater demand for wood chips from
timberland located in the Southern United States, and it is possible that wood
chip costs will continue to increase.
To reduce our fiber costs, we have invested in processes and equipment to ensure
a high degree of fiber flexibility. Our mills have the capability to shift a
portion of their fiber consumption between softwood, hardwood and recycled
sources in order to optimize fiber costs and, with the exception of our Valdosta
mill, all of our mills can utilize recycled fiber in their containerboard
production. Our ability to use various types of virgin fiber and recycled fiber
in our containerboard production mitigates the impact on our operations of
changes in the price of fiber.
ENERGY SUPPLY. We receive energy from both internal and external sources. A
significant portion of our mills' energy requirements is generated from internal
sources, including recovered fuel materials and bark from processed wood. In
addition, each of our mills has boilers which produce steam to generate
electricity. Purchased sources include coal, natural gas, oil supplied by
contract, bark, black liquor, tire-derived fuel and electricity.
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Our two kraft linerboard mills at Counce and Valdosta use internal fuel sources
such as bark and black liquor for approximately 70% and 60%, respectively, of
their fuel requirements. Electricity produced internally accounted for 55% of
our total electricity consumption in 1998.
COMPETITION
The containerboard and corrugated packaging products industries are highly
competitive. Containerboard is largely a commodity, resulting in substantial
price competition. To the extent that we sell linerboard and corrugating medium
not used by our own converting plants, we compete directly with a number of
large, diversified paper companies, including Georgia-Pacific Corporation,
International Paper Company, MacMillan Bloedel Limited, Smurfit-Stone Container
Corporation, Temple-Inland Inc., Union Camp Corporation, Weyerhaeuser Company
and Willamette Industries, Inc., as well as other regional manufacturers. Many
of our competitors are less leveraged and have greater financial and other
resources than we do and may therefore be better able to withstand the
cyclicality within our industry.
We may also face increased competition from new or existing producers of
containerboard. Although containerboard mills generally require approximately
two years to construct and require substantial capital investment, some of our
competitors have idle machines that could potentially be restarted and used in
containerboard production in a shorter period and with less significant capital
investment.
Competition in the corrugated products industry is based on innovation, price,
design, quality and service, to varying degrees depending on the product line.
We compete with national, regional and local corrugated products manufacturers,
as well as with manufacturers of other types of packaging products in each of
our geographic and product markets. On a national level, our competitors include
Four M Corporation, Gaylord Container Corporation, Georgia-Pacific Corporation,
International Paper Company, Smurfit-Stone Container Corporation, Temple-Inland
Inc., Union Camp Corporation, Weyerhaeuser Company and Willamette Industries,
Inc. However, due to our focus on smaller, regional accounts, we believe we more
frequently compete with regional or local independent converters rather than
with national, integrated producers.
EMPLOYEES
As of March 31, 1999, we had approximately 7,500 employees, of which
approximately 2,100 were salaried and approximately 5,400 were hourly employees.
Approximately 76% of our hourly employees are represented by unions. Our
unionized employees are represented primarily by the United Paperworkers
International Union, the Graphic Communications International Union and the
United Steel Workers of America. Our union contracts for our unionized mill
employees expire between October 2000 and September 2003. Our union contracts
for unionized converting plant employees expire between May 1999 and March 2005.
We are currently in negotiations to renew or extend any union contracts expiring
in the near future. None of our material union contracts expire prior to October
2000. Although we anticipate renewing or extending our union contracts prior to
the expiration of the respective contract, there can be no assurance that this
will occur. We have not experienced any labor problems resulting in a
significant work stoppage, and we believe we have satisfactory relations with
our employees.
ENVIRONMENTAL MATTERS
Compliance with environmental requirements is a significant factor in our
business operations, and we commit substantial resources to maintaining
environmental compliance and managing environmental risk. We are subject to, and
must comply with, a variety of federal, state and local environmental laws,
particularly those relating to air and water quality, waste disposal and the
cleanup of contaminated soil and groundwater. We believe that we are currently
in material compliance with all applicable environmental rules and regulations.
Because environmental regulations are constantly evolving, we have incurred, and
will continue to incur, costs to maintain compliance with those laws. We work
diligently to anticipate and budget for the impact of applicable environmental
regulations and do not currently expect that future environmental compliance
obligations will materially affect our business or financial condition.
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In April 1998, the United States Environmental Protection Agency finalized the
Cluster Rules which govern all pulp and paper mill operations, including those
at our mills. Over the next several years, the Cluster Rules will affect our
allowable discharges of air and water pollutants, and require us and our
competitors to spend money to ensure compliance with these new rules. We
currently project future costs for compliance with the Cluster Rules at our four
mills at approximately $63.6 million. We expect to incur these costs from 1999
through 2005. (From 1997 through 1998, we spent approximately $3 million on
Cluster Rule compliance.) We currently estimate total capital costs for
environmental matters (including Cluster Rule compliance) at $16 million for the
1999 fiscal year and $22 million for the 2000 fiscal year.
As is the case with any industrial operation, we have, in the past, incurred
costs associated with the remediation of soil or groundwater contamination. We
are currently addressing such conditions at several sites and expect that, from
time to time, we will incur similar remedial obligations in the future. Cleanup
requirements arise with respect to properties we currently own or operate,
former facilities and off-site properties where we have disposed of hazardous
substances. We do not believe that any ongoing remedial projects are material in
nature. We maintain reserves for environmental remediation liability and
currently believe those reserves are adequate. Under the terms of the
Contribution Agreement, TPI agreed to retain all liability for all former
facilities and all sites associated with pre-closing off-site waste disposal,
and TPI retained certain environmentally impaired real property in Filer City,
Michigan unrelated to current mill operations.
PROPERTIES
The table below provides a summary of the location of our mills, their general
use and the principal products produced. All of our mills are owned.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
LOCATION FUNCTION CAPACITY (TONS)
- ------------------------------- -------------------------------- -------------------------------
<S> <C> <C>
Counce, TN Kraft Linerboard Mill 937,000
Filer City, MI Semi-chemical Medium Mill 355,000
Tomahawk, WI Semi-chemical Medium Mill 533,000
Valdosta, GA Kraft Linerboard Mill 450,000
</TABLE>
OTHER FACILITIES. In addition to our mills, we own or lease 39 corrugator
plants, 28 sheet/specialty and other plants and five major design centers. We
also own three sawmills, an air-drying yard and three recycling facilities.
TIMBERLAND. We own or control approximately 950,000 acres of timberland. We own
or control approximately 400,000 acres of timberland in Tennessee, Alabama and
Mississippi in proximity to our Counce mill, approximately 160,000 acres of
timberland in Wisconsin in proximity to our Tomahawk mill, and approximately
390,000 acres of timberland in Georgia and Florida in proximity to our Valdosta
mill.
HEADQUARTERS. We currently lease and will continue to lease our executive and
general and administrative offices in Lake Forest, Illinois for a period of up
to four years under the terms of a facilities use agreement that was entered
into with TPI as of the closing of the Transactions. See "Certain
Transactions--Transition Agreements."
We currently believe that our facilities and properties are sufficient to meet
our operating requirements for the foreseeable future.
LEGAL PROCEEDINGS
We are party to various legal actions arising in the ordinary course of our
business. These legal actions cover a broad variety of claims spanning our
entire business. We believe that the resolution of these legal actions will not,
individually or in the aggregate, have a material adverse effect on our
financial condition or results of operations.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of the persons who are the directors and executive
officers of PCA are set forth below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NAME AGE POSITION
- -------------------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Paul T. Stecko 54 Chairman of the Board and Chief Executive Officer
William J. Sweeney 58 Executive Vice President-Paperboard Packaging
Richard B. West 46 Chief Financial Officer, Secretary and Treasurer
Mark W. Kowlzan 44 Vice President-Containerboard/Wood Products
Andrea L. Davey 42 Vice President-Human Resources, Paperboard Packaging
Dana G. Mead 63 Director
Theodore R. Tetzlaff 55 Director
Samuel M. Mencoff 42 Director and Vice President
Justin S. Huscher 45 Director and Assistant Secretary
Thomas S. Souleles 30 Director and Assistant Secretary
</TABLE>
PAUL T. STECKO has served as Chief Executive Officer of PCA since January 1999
and Chairman of the Board of PCA since March 1999. From November 1998 to April
1999, Mr. Stecko served as President and Chief Operating Officer of Tenneco.
From January 1997 to that time, Mr. Stecko served as Chief Operating Officer of
Tenneco. From December 1993 through January 1997, Mr. Stecko served as President
and Chief Executive Officer of TPI. Prior to joining Tenneco, Mr. Stecko spent
16 years with International Paper Company. Mr. Stecko currently serves on the
board of directors of Tenneco.
WILLIAM J. SWEENEY has served as Executive Vice President-Paperboard Packaging
of PCA since April 1999. From May 1997 to April 1999, Mr. Sweeney served as
Executive Vice President-Paperboard Packaging of TPI. From May 1990 to May 1997,
Mr. Sweeney served as Senior Vice President and General Manager- Containerboard
Products of TPI. From 1983 to that time, Mr. Sweeney served as General Manager
and Vice President of Stone Container Corporation. From 1978 to 1983, Mr.
Sweeney served as Sales Manager, Operations Manager and Division Vice President
at Continental Group and from 1967 to that time, as Sales Manager and General
Manager of Boise Cascade Corporation.
RICHARD B. WEST has served as Chief Financial Officer and Treasurer of PCA since
March 1999 and as Chief Financial Officer, Secretary and Treasurer since April
1999. Mr. West served as Vice President of Finance of TPI's containerboard group
from 1995 to April 1999. Prior to joining Tenneco, Mr. West spent 20 years with
International Paper where he served as an Internal Auditor, Internal Audit
Manager and Manufacturing Controller for the Printing Papers Group.
MARK W. KOWLZAN has served as Vice President-Containerboard/Wood Products of PCA
since April 1999. From 1998 to April 1999, Tenneco employed Mr. Kowlzan as Vice
President and General Manager-Containerboard/ Wood Products and from May 1996 to
1998, as Operations Manager and Mill Manager of the Counce mill. Prior to
joining Tenneco, Mr. Kowlzan spent 15 years at International Paper, where he
held a series of operational positions within its mill organization.
ANDREA L. DAVEY has served as Vice President-Human Resources, Paperboard
Packaging of PCA since April 1999. From 1994 to April 1999 Ms. Davey was
employed principally by Tenneco where she held the positions of Director of
Field Employee Relations, Director of Training and Development, Director of
Compensation and Benefits, and Project Manager of HRIS project and also served
in the capacity of Vice President-Human Resources, Paperboard Packaging from May
1997 to April 1999. From 1992 to joining Tenneco in 1994, Ms. Davey served as
Director of Human Resources for the Bakery division of Sara Lee Corporation.
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From 1989 to that time, she served as Human Resource Manager for the Converting
Group of International Paper. Prior to that time, Ms. Davey spent five years
with ITT Corporation, where she served as Human Resources Manager.
DANA G. MEAD has served as a director of PCA since March 1999. Mr. Mead is also
Chairman and Chief Executive Officer of Tenneco and has served as a director and
an executive officer of Tenneco since April 1992, when he joined Tenneco as
Chief Operating Officer. Prior to joining Tenneco, Mr. Mead served as an
Executive Vice President of International Paper Company, a manufacturer of
paper, pulp and wood products, from 1988, and served as Senior Vice President of
that company from 1981. He is also a director of Textron, Inc., Zurich Allied AG
and Pfizer Inc.
THEODORE R. TETZLAFF has served as a director of PCA since March 1999. Mr.
Tetzlaff has been a Partner in the law firm of Jenner & Block, Chicago, since
1976 and Chairman of its Executive Committee and Operations & Finance Committee
since July 1997. Mr. Tetzlaff is also General Counsel of Tenneco, serving in
that capacity since June 1992. Mr. Tetzlaff has served as a director of Case
Corp. since 1994. He was formerly Vice President, Legal and External Affairs, of
Cummins Engine Company, Inc. from 1980 to 1982. Mr. Tetzlaff is also a director
of Continental Materials Corp. and a Commissioner of the Public Building
Commission of Chicago.
SAMUEL M. MENCOFF has served as a director and Vice President of PCA since
January 1999. Mr. Mencoff has been employed principally by Madison Dearborn
Partners, Inc. since 1993 and currently serves as a Managing Director. From 1987
until 1993, Mr. Mencoff served as Vice President of First Chicago Venture
Capital. Mr. Mencoff is a member of the operating committee of the general
partner of Golden Oak Mining Company, L.P. and a member of the board of
directors of Bay State Paper Holding Company, Buckeye Technologies, Inc.,
Huntway Refining Company and Riverwood Holding, Inc.
JUSTIN S. HUSCHER has served as a director of PCA since March 1999 and also as
an Assistant Secretary of PCA since April 1999. Mr. Huscher has been employed
principally by Madison Dearborn Partners, Inc. since 1993 and currently serves
as a Managing Director. From 1990 until 1993, Mr. Huscher served as Senior
Investment Manager of First Chicago Venture Capital. Mr. Huscher is a member of
the operating committee of the general partner of Golden Oak Mining Company,
L.P. and a member of the board of directors of Bay State Paper Holding Company
and Huntway Refining Company.
THOMAS S. SOULELES has served as a director of PCA since March 1999 and also as
an Assistant Secretary of PCA since April 1999. From January 1999 to April 1999,
Mr. Souleles served as a Vice President and Secretary of PCA. Mr. Souleles has
been employed principally by Madison Dearborn Partners, Inc. since 1995 and
currently serves as a Director. Prior to joining Madison Dearborn Partners,
Inc., Mr. Souleles attended Harvard Law School and Harvard Graduate School of
Business Administration where he received a J.D. and an M.B.A. Mr. Souleles is a
member of the board of directors of Bay State Paper Holding Company.
Each director of PCA listed above was elected pursuant to the terms of a
stockholders agreement among TPI, PCA and PCA Holdings that was entered into in
connection with the Transactions. See "Certain Transactions-- Stockholders
Agreement."
COMPENSATION OF EXECUTIVE OFFICERS
None of the executive officers of PCA received compensation from PCA prior to
the closing of the Transactions. Prior to the closing of the Transactions, each
of PCA's executive officers (other than those affiliated with Madison Dearborn)
was employed by, and received compensation from, Tenneco Inc. or its affiliates.
Each of the executive officers is currently receiving substantially the same
base salary and annual perquisite allowance, and is entitled to the same annual
cash bonus target from PCA, as they were receiving from Tenneco or its
affiliates prior to the closing of the Transactions. For fiscal year 1999, the
annual base salaries of Mr. Sweeney, Mr. West, Mr. Kowlzan and Ms. Davey
(together with Mr. Stecko, the "Named Executive Officers") are $350,575,
$198,018, $194,800
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and $150,496, respectively; the corresponding annual bonus targets are $175,000,
$80,000, $115,000 and $65,000, respectively, and the annual perquisite
allowances are $30,000, $12,000, $20,000, and $12,000, respectively.
Pursuant to letter agreements entered into with Mr. Stecko on January 25, 1999
and on May 19, 1999, PCA pays Mr. Stecko a base salary of $600,000 per annum,
subject to increases approved by the Board, and has agreed to pay Mr. Stecko an
annual bonus of not less than $500,000 with respect to each of the fiscal years
1999, 2000 and 2001, and an annual perquisite allowance of not less than $60,000
payable in cash. In addition, upon commencement of Mr. Stecko's employment with
us, we paid Mr. Stecko a signing bonus payment of $1 million, the net proceeds
of which, pursuant to the letter agreement, will be invested in common stock of
PCA. If Mr. Stecko leaves PCA before the earlier of (1) two years from the date
he purchases PCA common stock or (2) an initial public offering or sale of the
company, he will be required to return the $1 million signing bonus. If PCA
terminates Mr. Stecko without cause, he is entitled to receive an amount equal
to three times the sum of his base salary plus the amount of the highest annual
bonus paid to him during the previous three year period.
COMPENSATION OF DIRECTORS
PCA does not currently compensate directors for serving as a director or on
committees of the board of directors or pay directors any fees for attendance at
meetings of the board, although PCA may elect to compensate directors in the
future. All directors will be reimbursed for reasonable out-of-pocket expenses
incurred in connection with their attendance at board and committee meetings.
MANAGEMENT EQUITY SALE
PCA intends to enter into option and stock purchase agreements in June 1999,
which we refer to as management stock agreements, with certain of its
management-level employees, including the Named Executive Officers, pursuant to
which an aggregate of up to 15,050 shares of PCA's common stock will be sold to
such employees at $1,000 per share, the same price per share at which PCA
Holdings purchased equity in connection with the Transactions. PCA has
guaranteed bank financing in the amount of $5,000,000 in the aggregate to enable
certain members of PCA's management to purchase equity under their respective
management stock agreements. The amount of such bank financing to be guaranteed
by PCA with respect to any such employee shall not exceed 50% of the purchase
price to be paid by such employee under his or her management stock agreement.
PCA anticipates that the capital stock purchased under the management stock
agreements will be subject to vesting and will be subject to repurchase upon a
termination of employment by PCA. PCA expects that the management stock
agreements will also provide for the grant of options to purchase up to an
aggregate of approximately 29,240 shares of PCA's common stock, which options
will vest over time.
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CERTAIN TRANSACTIONS
THE TRANSACTIONS
As a result of the Transactions, PCA Holdings owns approximately 55% of the
common stock outstanding of PCA (without giving effect to contemplated issuances
to management). PCA Holdings is controlled by Madison Dearborn. Pursuant to the
terms of the Contribution Agreement, PCA paid to Madison Dearborn at closing a
transaction fee in the amount of $15.0 million plus reimbursement of
out-of-pocket expenses. TPI owns approximately 45% of the common stock
outstanding of PCA (without giving effect to issuances to management). Pursuant
to the terms of the Contribution Agreement, PCA paid $2.0 million of the legal
and accounting fees and expenses of TPI incurred in connection with the
Transactions.
TPI has agreed to indemnify PCA, PCA Holdings and their respective affiliates
for any breaches of certain representations, warranties and covenants it has
made in the Contribution Agreement relating to, among other things, the
condition of the business as of the closing of the Transactions, and for
liabilities of the containerboard and corrugated packaging products business
which it has agreed to retain. TPI's indemnification obligation in respect of
breaches of its representations and warranties generally will survive for 18
months following the closing, and will be subject to a $12.5 million deductible
and a $150.0 million cap. PCA has agreed to assume certain liabilities of TPI's
containerboard and corrugated packaging products business in connection with the
Transactions and will indemnify TPI and its affiliates in respect of such
assumed liabilities.
TPI has agreed in the Contribution Agreement, subject to certain exceptions, (i)
not to engage in the business conducted by PCA's containerboard and corrugating
packaging products business as of the closing anywhere in the United States and
(ii) not to induce any customer of PCA to terminate its relationship with PCA,
in each case, for a period of five years from the closing of the Transactions.
PURCHASE/SUPPLY AGREEMENTS
Each of TPI and its affiliates, Tenneco Automotive Inc. and Tenneco Packaging
Speciality and Consumer Products Inc., have entered into five year
purchase/supply agreements with PCA under which each such entity agreed to
purchase a substantial percentage of its requirements for containerboard and
corrugated packaging products used in TPI's business as of the closing, at the
prices charged by PCA to TPI and these affiliates as of the closing (which are
expected to fluctuate to accommodate changes in market prices). As a result of
these agreements, TPI and its affiliates are PCA's largest customer and PCA's
second largest customer of corrugated products. Net sales to TPI and its
subsidiaries for the year ended December 31, 1998 and for the three months ended
March 31, 1999, were approximately $76.9 million and $19.2 million,
respectively. Net sales to other Tenneco entities for the year ended December
31, 1998 and for the three months ended March 31, 1999, were approximately $14.2
million and $3.0 million, respectively.
TRANSITION AGREEMENTS
TPI has entered into a facilities use agreement which provides for PCA's use of
a designated portion of TPI's headquarters located in Lake Forest, Illinois for
a period of four years. Under the facilities use agreement, PCA is required to
pay TPI base rent (calculated based on PCA's proportionate square footage usage
of the property) plus additional rent and charges for building and business
services provided by TPI and other items.
TPI has also entered into a transition services agreement with PCA which
provides for the performance of certain transitional services by TPI and its
affiliates which are currently required by PCA to operate the containerboard and
corrugated packaging products business. Generally, TPI is charging PCA an amount
equal to the actual cost of the services provided by TPI thereunder, determined
on a fully-loaded basis without allocation of corporate overhead ("Actual
Cost"). The charge to PCA will be the lesser of (1) TPI's Actual Cost and (2)
105% of the cost as forecasted by TPI with respect to services within the
following categories of services to be provided under the transition services
agreement: payroll, general accounting, tax support, treasury/cash management,
insurance/risk management, procurement and T&E card administration, human
resources and telecommunication and information services. The initial term of
the transition services agreement is one year, but may be extended by PCA for
additional one year terms for an upcharge of 15% per year, and PCA may terminate
any service on
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90 days notice to TPI. In addition, TPI has agreed in the transition services
agreement, to reimburse PCA for up to $10.0 million in expenditures by PCA
relating to Year 2000 compliance. Under the transition services agreement, PCA
has agreed to provide TPI certain administrative and transitional services to
its folding carton business.
TPI, Tenneco and PCA have entered into a human resources agreement pursuant to
which TPI transferred the employment of all of its active employees engaged in
the containerboard and corrugated packaging products business to PCA as of the
closing at the same rate of pay. Under the human resources agreement, such
employees are entitled to continue their participation in certain TPI and
Tenneco welfare and pension plans until the fifth anniversary of the closing of
the Transactions. PCA has agreed to reimburse Tenneco for associated costs. In
addition, PCA has agreed to pay Tenneco an annualized fee of $5.2 million for
such participation (subject to upward adjustment in certain circumstances). PCA
adopted certain compensation and benefit plans and assumed all of the collective
bargaining agreements existing with respect to containerboard business employees
as of the closing.
STOCKHOLDERS AGREEMENT
PCA, PCA Holdings and TPI are parties to a stockholders agreement which provides
for, among other things, certain restrictions on the transfer of the common
stock held by each of them, the right of PCA to sell or cause to be sold all or
a portion of the common stock held by them in connection with a sale of PCA and
certain preemptive rights upon future issuances of common stock. Pursuant to the
stockholders agreement, the PCA board of directors consists of six
individuals-three directors designated by PCA Holdings (Messrs. Mencoff, Huscher
and Souleles), two directors designated by TPI (Messrs. Mead and Tetzlaff) and
the Chief Executive Officer of PCA (Mr. Stecko), who was designated as a
director by the holders of the junior preferred stock. Each of TPI and PCA
Holdings has agreed to vote their shares in future elections to maintain this
board composition. The stockholders agreement also identifies certain company
actions which TPI and PCA Holdings have agreed shall be subject to approval by
at least four of the five directors designated by TPI and PCA Holdings as
described above, including, among other things, (1) the approval of the adoption
of, or any material change to, PCA's annual business plan, (2) the purchase or
sale of assets having a fair market value in excess of $32.5 million (other than
in the ordinary course of business or in connection with a sale of timberland),
(3) the acquisition of another business or participation in any joint venture
involving consideration in excess of $32.5 million, and (4) the taking of
certain actions that would have a disproportionate impact on TPI or would
otherwise be outside of the ordinary course of business.
REGISTRATION RIGHTS AGREEMENT
PCA, PCA Holdings and TPI are parties to a registration rights agreement which
provides TPI and PCA Holdings and their respective affiliates and transferees
with certain "demand" registration rights, entitling them to cause PCA to
register all or part of the common stock and or other securities of PCA held by
them under the Securities Act, as well as certain "piggyback" registration
rights. TPI and its affiliates, on the one hand, and PCA Holdings and its
affiliates, on the other hand, are each entitled to demand (1) three "long form"
registrations in which PCA will pay the registration expenses (other than
underwriting discounts and commissions), (2) an unlimited number of "short form"
registrations in which PCA will pay the registration expenses (other than
underwriting discounts and commissions) and (3) an unlimited number of "long
form" registrations in which the requesting holders will pay the registration
expenses. The registration rights agreement further provides that TPI and its
affiliates have first priority to participate in any registration of PCA's
securities during the 14-month period following the closing of the Transactions
and, thereafter, PCA Holdings and TPI and their respective affiliates have equal
priority before all other holders of PCA's securities in any such registration.
SERVICES AGREEMENTS
PCA has entered into a holding company support agreement with PCA Holdings
pursuant to which PCA has agreed to reimburse PCA Holdings for all fees, costs
and expenses up to in the aggregate $250,000 per annum arising out of or related
to PCA Holdings' investment in PCA.
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SECURITY OWNERSHIP
The following table sets forth certain information as of May 1, 1999 regarding
the beneficial ownership of the common stock of PCA by each person who
beneficially owns more than 5% of such common stock, by the directors and Named
Executive Officers of PCA and by all directors and executive officers as a
group.
<TABLE>
<CAPTION>
----------------------------
BENEFICIAL OWNERSHIP (1)
----------------------------
NUMBER OF PERCENT OF
SHARES CLASS
------------- -------------
<S> <C> <C>
FIVE PERCENT OR MORE SECURITY HOLDERS
PCA Holdings LLC (2)................................................................. 236,500 55.0%
c/o Madison Dearborn Partners, LLC
Three First National Plaza
Chicago, IL 60602
Tenneco Packaging Inc................................................................ 193,500 45.0%
1900 West Field Court
Lake Forest, IL 60045
DIRECTORS AND EXECUTIVE OFFICERS
Paul T. Stecko....................................................................... -- --
William J. Sweeney................................................................... -- --
Richard B. West...................................................................... -- --
Mark W. Kowlzan...................................................................... -- --
Andrea L. Davey...................................................................... -- --
Dana G. Mead......................................................................... -- --
Theodore R. Tetzlaff................................................................. -- --
Samuel M. Mencoff (3)................................................................ 208,277.5 48.4%
Justin S. Huscher (4)................................................................ 208,277.5 48.4%
Thomas S. Souleles (5)............................................................... 208,277.5 48.4%
All directors and executive officers as a group (10 persons)......................... 208,277.5 48.4%
</TABLE>
- --------------
(1) "Beneficial ownership" generally means any person who, directly or
indirectly, has or shares voting or investment power with respect to a
security. PCA, PCA Holdings and TPI are parties to a stockholders agreement
which provides for, among other things, certain agreements of PCA Holdings
and TPI as to the composition of PCA's board of directors. The number of
shares indicated in the table by each party does not include shares of
common stock held by the other party to the stockholders agreement. See
"Certain Transactions-Stockholders Agreement."
(2) The members of PCA Holdings are Madison Dearborn Capital Partners III, L.P.
("MDCP III"), together with its coinvestors, J.P. Morgan Capital Corporation
("JP Morgan") and BT Capital Investors, L.P. ("BT"). MDCP III may be deemed
to have beneficial ownership of 208,277.5 shares of common stock of PCA held
by PCA Holdings, JP Morgan may be deemed to have beneficial ownership of
22,222.5 shares of common stock of PCA and BT may be deemed to have
beneficial ownership of 4,000 shares of common stock of PCA. Shares
beneficially owned by MDCP III may be deemed to be beneficially owned by
Madison Dearborn Partners III, L.P., its general partner ("MDP III"), and by
Madison Dearborn, the general partner of MDP III.
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(3) Mr. Mencoff is a Managing Director of Madison Dearborn and may therefore be
deemed to share beneficial ownership of the shares beneficially owned by
Madison Dearborn. Mr. Mencoff expressly disclaims beneficial ownership of
such shares.
(4) Mr. Huscher is a Managing Director of Madison Dearborn and may therefore be
deemed to share beneficial ownership of the shares beneficially owned by
Madison Dearborn. Mr. Huscher expressly disclaims beneficial ownership of
such shares.
(5) Mr. Souleles is a Director of Madison Dearborn and may therefore be deemed
to share beneficial ownership of the shares beneficially owned by Madison
Dearborn. Mr. Souleles expressly disclaims beneficial ownership of such
shares.
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DESCRIPTION OF SENIOR CREDIT FACILITY
In connection with the Transactions, PCA entered into a senior credit facility
on April 12, 1999 with various banks and financial institutions, including J.P.
Morgan Securities Inc. and BT Alex. Brown Incorporated as co-lead arrangers,
Bankers Trust Company, an affiliate of BT Alex. Brown Incorporated, as
syndication agent and Morgan Guaranty Trust Company of New York, an affiliate of
J.P. Morgan Securities Inc., as administrative agent for the lenders' syndicate
thereto. The senior credit facility consists of (1) the Tranche A facility of
$460.0 million in term loans, (2) the Tranche B facility of $375.0 million in
term loans, (3) the Tranche C facility of $375.0 million in term loans, and (4)
the revolving credit facility of up to $250.0 million in revolving credit loans
and letters of credit.
The proceeds of the loans made under the senior credit facility (1) were used to
finance a portion of the Acquisition and related transaction expenses and to
refinance certain outstanding indebtedness and other liabilities and (2) have
been and will be used for general corporate purposes including working capital.
The senior credit facility is (1) jointly and severally guaranteed by each of
PCA's domestic subsidiaries and (2) secured by a first priority lien on certain
real property and substantially all of the tangible and intangible personal
property of PCA and its domestic subsidiaries and by a pledge of all of the
capital stock of PCA's domestic subsidiaries and will be secured by a pledge of
65% of the capital stock of its first tier foreign subsidiaries (if any). PCA's
future domestic subsidiaries will guarantee the senior credit facility and
secure that guarantee with certain of their real property and substantially all
of their tangible and intangible personal property.
The senior credit facility requires PCA to meet certain financial tests,
including maximum leverage ratio, minimum interest coverage and minimum net
worth tests. In addition, the senior credit facility contains certain negative
covenants limiting, among other things, additional liens, indebtedness, capital
expenditures, transactions with affiliates, mergers and consolidations,
liquidations and dissolutions, sales of assets, dividends, investments, loans
and advances, prepayments and modifications of debt instruments, lines of
business, creation of new subsidiaries, restrictions on the ability of
subsidiaries to pay dividends, make loans or transfer assets to PCA or other
subsidiaries and other matters customarily restricted in such agreements. The
senior credit facility contains customary events of default, including payment
defaults, breaches of representations and warranties, covenant defaults,
cross-default and cross-acceleration to certain other indebtedness, certain
events of bankruptcy and insolvency, certain events under the Employee
Retirement Income Security Act of 1974, as amended, material judgments, actual
or asserted failure of any guaranty or security document supporting the senior
credit facility to be in full force and effect and change of control of PCA.
The Tranche A Term Loan will mature in quarterly installments from September
1999 through 2005. The Tranche B Term Loan will mature in quarterly installments
from September 1999 through 2007. The Tranche C Term Loan will mature in
quarterly installments from September 1999 through 2008. The revolving credit
facility will terminate in 2005.
The borrowings under the senior credit facility bear interest at a floating rate
and may be maintained as base rate loans or as Eurodollar loans. Base rate loans
bear interest at the base rate (defined as the higher of (1) the applicable
prime lending rate of the administrative agent or (2) the Federal Reserve
reported overnight funds rate plus 1/2 of 1%), plus the applicable margin (as
defined in the senior credit facility). Eurodollar loans bear interest at the
Eurodollar rate (as described in the senior credit facility) plus the applicable
margin.
The applicable margin with respect to the revolving credit facility and the
Tranche A Term Loan varies from time to time in accordance with the terms
thereof and an agreed upon pricing grid based on PCA's leverage ratio. The
initial applicable margin with respect to the revolving credit facility and the
Tranche A Term Loan is (1) 1.75%, in the case of base rate loans and (2) 2.75%
in the case of Eurodollar loans. The applicable margin with respect to the
Tranche B Term Loan is (1) 2.25% in the case of base rate loans and (2) 3.25% in
the case of Eurodollar loans. The applicable margin with respect to the Tranche
C Term Loan is (1) 2.50% in the case of base rate loans and (2) 3.50% in the
case of Eurodollar loans.
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With respect to letters of credit (which are to be issued as a part of the
revolving loan commitment) the revolver lenders will receive a commission equal
to the applicable margin which applies from time to time to Eurodollar loans
under the revolving credit facility. In addition, the issuing banks will receive
a fronting fee of 0.25% per annum plus its other standard and customary
processing charges. These commission and fronting fees will be payable quarterly
in arrears based on the aggregate undrawn amount of each letter of credit issued
from time to time under the revolver.
An initial commitment fee of 0.50% applies to the unused portion of the
revolving loan commitments. This commitment fee is subject to decrease and will
vary from time to time in accordance with an agreed upon pricing grid based upon
PCA's leverage ratio.
The senior credit facility provides that certain amounts must be used to prepay
the term loan facilities and reduce commitments under the revolving credit
facility, including (1) 100% of the net proceeds of any issuance of indebtedness
after the closing date by PCA and its subsidiaries, subject to certain
exceptions for permitted debt, (2) 50% of the net proceeds of any issuance of
equity by PCA and its subsidiaries, subject to certain exceptions, (3) 100% of
the net proceeds of any sale or other disposition by PCA and its subsidiaries of
any assets, subject to certain exceptions, unless (with certain exceptions and
subject to certain agreed dollar limitations) such proceeds are reinvested in
"eligible assets" (as defined in the senior credit facility), (4) 75% (50% upon
satisfaction of certain financial ratios) of excess cash flow (as defined in the
senior credit facility) and (5) 100% of the net proceeds of casualty insurance,
condemnation awards or other recoveries, to the extent such proceeds are not
applied to the repair, restoration or replacement of the affected assets or
reinvested in other "eligible assets" and subject to certain other negotiated
exceptions. Voluntary prepayments of the senior credit facility are permitted at
any time, subject to certain notice requirements and to the payment of certain
losses and expenses suffered by the lenders as a result of the prepayment of
Eurodollar loans prior to the end of the applicable interest period.
In general, the mandatory prepayments described above will be applied first, to
prepay the term loan facilities and second, to reduce commitments under the
revolving credit facility (and if the amount of revolving loans then outstanding
exceeds the commitments as so reduced, then that excess amount must be prepaid).
Prepayments of the term loan facilities, optional or mandatory, will be applied
pro rata to the Tranche A Term Loan, the Tranche B Term Loan and the Tranche C
Term Loan, and ratably to the respective installments thereof (subject to the
right of PCA to apply prepayments in direct order of maturity to the remaining
scheduled repayments due on each tranche within the 24 months following the
optional or mandatory prepayment and to the right in certain circumstances of
the lenders of the Tranche B Term Loan and the Tranche C Term Loan to waive
mandatory prepayments to which they would otherwise be entitled, in which case
the amount waived will be applied to the Tranche A Term Loan).
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DESCRIPTION OF EXCHANGE NOTES
You can find the definitions of certain terms used in this description under the
subheading "Certain Definitions." In this description, the word "PCA" refers
only to Packaging Corporation of America and not to any of its Subsidiaries.
PCA will issue the exchange notes under a notes indenture among itself, the
Guarantors and United States Trust Company of New York, as trustee. The terms of
the exchange notes include those stated in the notes indenture and those made
part of the notes indenture by reference to the Trust Indenture Act of 1939.
The form and terms of the exchange notes are identical in all material respects
to the form and terms of the outstanding notes except that:
- the exchange notes will bear a Series B designation;
- the exchange notes have been registered under the Securities Act and,
therefore, will generally not bear legends restricting their transfer; and
- the holders of the exchange notes will not be entitled to certain rights
under the notes registration rights agreement, including the provision
providing for liquidated damages in certain circumstances relating to the
timing of this exchange offer.
The exchange notes will evidence the same debt as the outstanding notes and will
be entitled to the benefits of the notes indenture. The exchange notes will be
PARI PASSU with the outstanding notes if all of such outstanding notes are not
exchanged pursuant to this exchange offer.
The following description is a summary of the material provisions of the notes
indenture, which is filed as an exhibit to the registration statement of which
this prospectus forms a part. The description does not restate the notes
indenture in its entirety. We urge you to read the notes indenture because it,
and not this description, defines your rights as holders of the exchange notes.
Copies of the notes indenture are available as set forth below under
"-Additional Information." Certain defined terms used in this description but
not defined below under "-Certain Definitions" have the meanings assigned to
them in the notes indenture.
BRIEF DESCRIPTION OF THE EXCHANGE NOTES AND THE GUARANTEES
THE EXCHANGE NOTES
The exchange notes:
- are general unsecured obligations of PCA;
- are subordinated in right of payment to all existing and future Senior
Debt of PCA;
- are senior to the subordinated exchange debentures;
- are PARI PASSU in right of payment with any future senior subordinated
Indebtedness of PCA; and
- are unconditionally guaranteed by the Guarantors.
THE GUARANTEES
The exchange notes are guaranteed by all of the Domestic Subsidiaries of PCA
(other than any Receivables Subsidiaries).
Each Guarantee of the exchange notes:
- is a general unsecured obligation of the Guarantor;
- is subordinated in right of payment to all existing and future Senior Debt
of the Guarantor; and
- is PARI PASSU in right of payment with any future senior subordinated
Indebtedness of the Guarantor.
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As of the date of the notes indenture, all of our subsidiaries were "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "-Certain Covenants-Designation of Restricted and Unrestricted
Subsidiaries," we are permitted to designate certain of our subsidiaries as
"Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject
to many of the restrictive covenants in the notes indenture. Our Unrestricted
Subsidiaries will not guarantee the exchange notes.
PRINCIPAL, MATURITY AND INTEREST
The notes indenture provides for the issuance by PCA of exchange notes with a
maximum aggregate principal amount of $750.0 million, of which $550.0 million
are expected to be issued in this exchange offer. PCA may issue additional
exchange notes from time to time after this exchange offer. Any offering of
additional exchange notes is subject to the covenant described below under the
caption "-Certain Covenants-Incurrence of Indebtedness and Issuance of Preferred
Stock." The exchange notes and any additional exchange notes subsequently issued
under the notes indenture would be treated as a single class for all purposes
under the notes indenture, including, without limitation, waivers, amendments,
redemptions and offers to purchase. PCA will issue exchange notes in
denominations of $1,000 and integral multiples of $1,000. The exchange notes
will mature on April 1, 2009.
Interest on the exchange notes will accrue at the rate of 9 5/8% per annum and
will be payable semi-annually in arrears on April 1 and October 1, commencing on
October 1, 1999. PCA will make each interest payment to the Holders of record on
the immediately preceding March 15 and September 15.
Interest on the exchange notes will accrue from the date of original issuance
or, if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE EXCHANGE NOTES
If a Holder of at least $1.0 million in aggregate principal amount of the
exchange notes has given wire transfer instructions to PCA, PCA will pay all
principal, interest and premium and Liquidated Damages, if any, on that Holder's
exchange notes in accordance with those instructions. All other payments on
exchange notes will be made at the office or agency of the paying agent and
registrar within the City and State of New York unless PCA elects to make
interest payments by check mailed to the Holders at their addresses set forth in
the register of Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. PCA may change the
paying agent or registrar without prior notice to the Holders, and PCA or any of
its Subsidiaries may act as paying agent or registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange exchange notes in accordance with the notes
indenture. The registrar and the trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and PCA may
require a Holder to pay any taxes and fees required by law or permitted by the
notes indenture. PCA is not required to transfer or exchange any exchange note
selected for redemption. Also, PCA is not required to transfer or exchange any
exchange note for a period of 15 days before a selection of exchange notes to be
redeemed.
The registered Holder of an exchange note will be treated as the owner of it for
all purposes.
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee on a senior subordinated
basis PCA's obligations under the exchange notes. Each Subsidiary Guarantee will
be subordinated to the prior payment in full in cash and Cash
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Equivalents (other than Cash Equivalents of the type referred to in clauses (3)
and (4) of the definition thereof) of all Senior Debt of that Guarantor. The
subordination provisions applicable to the Subsidiary Guarantees are the same as
the subordination provisions applicable to the exchange notes as set forth below
under "-Subordination." The obligations of each Guarantor under its Subsidiary
Guarantee are limited as necessary to prevent that Subsidiary Guarantee from
constituting a fraudulent conveyance under applicable law. See "Risk
Factors-Fraudulent Conveyance Matters."
A Guarantor may not sell or otherwise dispose of all or substantially all of its
assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than PCA or another
Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event
of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or disposition or
the Person formed by or surviving any such consolidation or merger
assumes all the obligations of that Guarantor under the notes
indenture, its Subsidiary Guarantee and the note registration rights
agreement pursuant to a supplemental notes indenture satisfactory to
the trustee; or
(b) the Net Proceeds of such sale or other disposition are applied in
accordance with the "Asset Sale" provisions of the notes indenture.
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially
all of the assets of that Guarantor (including by way of merger or
consolidation) to a Person that is not (either before or after giving
effect to such transaction) a Subsidiary of PCA, if the Guarantor
applies the Net Proceeds of that sale or other disposition in accordance
with the "Asset Sale" provisions of the notes indenture;
(2) in connection with any sale of all of the Capital Stock of a Guarantor
to a Person that is not (either before or after giving effect to such
transaction) a Subsidiary of PCA, if PCA applies the Net Proceeds of
that sale in accordance with the "Asset Sale" provisions of the notes
indenture; or
(3) if PCA properly designates any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary.
See "-Repurchase at the Option of Holders-Asset Sales."
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if any,
and any other Obligations on, or relating to the exchange notes will be
subordinated to the prior payment in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (3) and (4) of the
definition thereof) of all Senior Debt of PCA.
The holders of Senior Debt will be entitled to receive payment in full in cash
or Cash Equivalents (other than Cash Equivalents of the type referred to in
clauses (3) and (4) of the definition thereof) of all Obligations due in respect
of Senior Debt (including interest after the commencement of any bankruptcy
proceeding at the rate specified in the applicable Senior Debt, whether or not
such interest is an allowable claim) before the Holders of exchange notes will
be entitled to receive any payment or distribution of any kind or character with
respect to any Obligations on, or relating to, the exchange notes (except that
Holders of exchange notes may receive and retain Permitted Junior Securities and
payments made from the trust described under "-Legal Defeasance and Covenant
Defeasance" so long as the trust was created in accordance with all relevant
conditions specified in the notes indenture at the time it was created), in the
event of any distribution to creditors of PCA:
(1) in a liquidation or dissolution of PCA;
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(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to PCA or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of PCA's assets and liabilities.
PCA also may not make any payment or distribution of any kind or character with
respect to any Obligations on, or with respect to, the exchange notes or acquire
any exchange notes for cash or property or otherwise (except in Permitted Junior
Securities or from the trust described under "-Legal Defeasance and Covenant
Defeasance" so long as the trust was created in accordance with all relevant
conditions specified in the notes indenture at the time it was created) if:
(1) a payment default on Designated Senior Debt occurs and is continuing; or
(2) any other default occurs and is continuing on any Designated Senior Debt
that permits holders of that Designated Senior Debt to accelerate its
maturity and the trustee receives a notice of such default (a "Payment
Blockage Notice") from the Representative of that Designated Senior
Debt.
Payments on and distributions with respect to any Obligations on, or with
respect to, the exchange notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which the default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of (a) the date on which
all nonpayment defaults are cured or waived, (b) 179 days after the date
of delivery of the applicable Payment Blockage Notice or (c) the trustee
receives notice from the Representative for such Designated Senior Debt
rescinding the Payment Blockage Notice, unless the maturity of any
Designated Senior Debt has been accelerated.
No new Payment Blockage Notice will be effective unless and until at least 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice.
No nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured or
waived for a period of not less than 90 consecutive days.
If the trustee or any Holder of the exchange notes receives any payment or
distribution of assets of any kind or character, whether in cash, properties or
securities, in respect of any Obligations with respect to the exchange notes
(except in Permitted Junior Securities or from the trust described under "-Legal
Defeasance and Covenant Defeasance" so long as the trust was created in
accordance with all relevant conditions specified in the notes indenture at the
time it was created) at a time when such payment is prohibited by these
subordination provisions, the trustee or the Holder, as the case may be, shall
hold the payment in trust for the benefit of the holders of Senior Debt. Upon
the proper written request of the holders of Senior Debt, the trustee or the
Holder, as the case may be, shall forthwith deliver the amounts in trust to the
holders of Senior Debt (on a pro rata basis based on the aggregate principal
amount of the Senior Debt) or their proper Representative.
PCA must promptly notify holders of Senior Debt if payment of the exchange notes
is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of a
bankruptcy, liquidation or reorganization of PCA, Holders of exchange notes may
recover less ratably than creditors of PCA who are holders of Senior Debt. See
"Risk Factors-Subordination."
OPTIONAL REDEMPTION
At any time prior to April 1, 2002, PCA may on any one or more occasions redeem
up to 35% of the aggregate principal amount of exchange notes issued under the
notes indenture at a redemption price of 109.625% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption
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date, with the net cash proceeds of one or more offerings of common stock of PCA
or a capital contribution to PCA's common equity made with the net cash proceeds
of an offering of common stock of PCA's direct or indirect parent or with
Timberlands Net Proceeds (which amount shall be reduced on a dollar for dollar
basis by the amount of Timberlands Net Proceeds used to make a Timberlands
Repurchase in accordance with the fifth paragraph described under the caption
"-Repurchase at the Option of Holders-Asset Sales"); PROVIDED that:
(1) at least 65% of the aggregate principal amount of exchange notes issued
under the notes indenture remains outstanding immediately after the
occurrence of such redemption (excluding exchange notes held by PCA and
its Subsidiaries); and
(2) the redemption must occur within 60 days of the date of the closing of
such offering, the making of such capital contribution or the
consummation of a Timberlands Sale.
Prior to April 1, 2004, PCA may also redeem the exchange notes, as a whole but
not in part, upon the occurrence of a Change of Control, upon not less than 30
nor more than 60 days' prior written notice, at a redemption price equal to 100%
of the principal amount thereof plus the Applicable Premium as of, and accrued
and unpaid interest and Liquidated Damages, if any, thereon, to, the date of
redemption.
Except pursuant to the preceding paragraphs, the exchange notes will not be
redeemable at PCA's option prior to April 1, 2004. Nothing in the notes
indenture prohibits PCA from acquiring the exchange notes by means other than a
redemption, whether pursuant to an issuer tender offer or otherwise, assuming
such acquisition does not otherwise violate the terms of the notes indenture.
After April 1, 2004, PCA may redeem all or a part of the exchange notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on April 1 of the
years indicated below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
YEAR PERCENTAGE
- -------------------------------------------------------------------------------- ------------
<S> <C>
2004............................................................................ 104.8125%
2005............................................................................ 103.2083%
2006............................................................................ 101.6042%
2007 and thereafter............................................................. 100.0000%
</TABLE>
MANDATORY REDEMPTION
PCA is not required to make mandatory redemption or sinking fund payments with
respect to the exchange notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of exchange notes will have the right
to require PCA to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of that Holder's exchange notes pursuant to a Change of
Control Offer on the terms set forth in the notes indenture. In the Change of
Control Offer, PCA will offer a Change of Control Payment in cash equal to 101%
of the aggregate principal amount of exchange notes repurchased plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the date of
purchase. Within 30 days following any Change of Control, PCA will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase exchange notes on the Change of
Control Payment Date specified in such notice, which date shall be no earlier
than 30 days and no later than 60 days from the date such notice is mailed,
pursuant to the procedures required by the notes indenture and described in such
notice. PCA will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
exchange notes as a result of a Change of Control. To the extent that the
provisions of any securities laws or regulations conflict with the Change of
Control provisions of
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the notes indenture, PCA will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Change of Control provisions of the notes indenture by virtue of such conflict.
On the Change of Control Payment Date, PCA will, to the extent lawful:
(1) accept for payment all exchange notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all exchange notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the trustee the exchange notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of exchange notes or portions thereof being purchased
by PCA.
The paying agent will promptly mail to each Holder of exchange notes so tendered
the Change of Control Payment for such exchange notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new exchange note equal in principal amount to any unpurchased
portion of the exchange notes surrendered, if any; PROVIDED that each such new
exchange note will be in a principal amount of $1,000 or an integral multiple
thereof.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, PCA
will either repay all outstanding Senior Debt or obtain the requisite consents,
if any, under all agreements governing outstanding Senior Debt to permit the
repurchase of exchange notes required by this covenant. PCA will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
PCA shall first comply with the covenant in the first sentence in the
immediately preceding paragraph before it shall be required to repurchase
exchange notes pursuant to the provisions described above. PCA's failure to
comply with the covenant described in the immediately preceding sentence may
(with notice and lapse of time) constitute an Event of Default described in
clause (3) but shall not constitute an Event of Default described under clause
(2) under the caption "-Events of Defaults and Remedies."
The provisions described above that require PCA to make a Change of Control
Offer following a Change of Control will be applicable regardless of whether any
other provisions of the notes indenture are applicable. Except as described
above with respect to a Change of Control, the notes indenture does not contain
provisions that permit the Holders of the exchange notes to require that PCA
repurchase or redeem the exchange notes in the event of a takeover,
recapitalization or similar transaction.
PCA will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the notes
indenture applicable to a Change of Control Offer made by PCA and purchases all
exchange notes validly tendered and not withdrawn under such Change of Control
Offer.
The definition of Change of Control includes a phrase relating to the direct or
indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the properties or assets of PCA and its Restricted
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of exchange notes to require PCA to repurchase such exchange notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than
all of the assets of PCA and its Restricted Subsidiaries taken as a whole to
another Person or group may be uncertain.
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ASSET SALES
PCA will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) PCA (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale which, taken as a whole, is
at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(2) such fair market value is determined by PCA's Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the trustee; and
(3) at least 75% of the consideration therefor received by PCA or such
Restricted Subsidiary is in the form of cash or Cash Equivalents or
Marketable Securities. For purposes of this provision, each of the
following shall be deemed to be cash:
(a) any liabilities (as shown on PCA's or such Restricted Subsidiary's
most recent balance sheet), of PCA or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their
terms subordinated to the exchange notes or any Subsidiary Guarantee)
that are assumed by the transferee of any such assets;
(b) any securities, notes or other obligations received by PCA or any
such Restricted Subsidiary from such transferee that are converted,
sold or exchanged by PCA or such Restricted Subsidiary into cash
within 30 days of the related Asset Sale (to the extent of the cash
received in that conversion); and
(c) any Designated Noncash Consideration received by PCA or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate fair
market value, taken together with all other Designated Noncash
Consideration received since the date of the Indenture pursuant to
this clause (c) that is at that time outstanding, not to exceed 10%
of Total Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated
Noncash Consideration being measured at the time received and without
giving effect to subsequent changes in value).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale, PCA
may apply such Net Proceeds at its option:
(1) to repay Senior Debt and, if the Senior Debt repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect
thereto;
(2) to invest in or to acquire other properties or assets to replace the
properties or assets that were the subject of the Asset Sale or that
will be used in businesses of PCA or its Restricted Subsidiaries, as the
case may be, existing at the time such assets are sold;
(3) to make a capital expenditure or commit, or cause such Restricted
Subsidiary to commit, to make a capital expenditure (such commitments to
include amounts anticipated to be expended pursuant to PCA's capital
investment plan as adopted by the Board of Directors of PCA) within 24
months of such Asset Sale;
(4) to make a Timberlands Repurchase in accordance with the first paragraph
described under the caption "-Optional Redemption."
Pending the final application of any such Net Proceeds, PCA may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by the notes indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as provided
in the preceding two paragraphs will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $25.0 million, PCA will make an
Asset Sale Offer to all Holders of exchange notes and all holders of other
Indebtedness that is PARI PASSU with the exchange notes containing provisions
similar to those set forth in the notes indenture with respect
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to offers to purchase or redeem with the proceeds of sales of assets to purchase
the maximum principal amount of exchange notes and such other PARI PASSU
Indebtedness that may be purchased out of the Excess Proceeds. The offer price
in any Asset Sale Offer will be equal to 100% of principal amount plus accrued
and unpaid interest and Liquidated Damages, if any, to the date of purchase, and
will be payable in cash. If any Excess Proceeds remain after consummation of an
Asset Sale Offer, PCA may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of exchange notes
and such other PARI PASSU Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the trustee shall select the exchange
notes and such other PARI PASSU Indebtedness to be purchased on a pro rata basis
based on the principal amount of exchange notes and such other PARI PASSU
Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
Notwithstanding the four preceding paragraphs, PCA will be permitted to apply
Timberlands Net Proceeds (which amount shall be reduced on a dollar for dollar
basis by the amount of Timberlands Net Proceeds used to make a Timberlands
Repurchase in accordance with the first paragraph described under the caption
"-Optional Redemption") to repurchase or redeem, or pay a dividend on, or a
return of capital with respect to, any Equity Interests of PCA, or repurchase or
redeem subordinated exchange debentures, if:
(1) the repurchase, redemption, dividend or return of capital is consummated
within 90 days of the final sale of such Timberlands Sale;
(2) PCA's Debt to Cash Flow Ratio at the time of such Timberlands
Repurchase, after giving pro forma effect to (a) such repurchase,
redemption, dividend or return of capital, (b) the Timberlands Sale and
the application of the net proceeds therefrom and (c) any increase or
decrease in fiber, stumpage or similar costs as a result of the
Timberlands Sale, as if the same had occurred at the beginning of the
most recently ended four full fiscal quarter period of PCA for which
internal financial statements are available, would have been no greater
than 4.5 to 1; and
(3) in the case of a repurchase or redemption of all of the then outstanding
preferred stock, new preferred stock or subordinated exchange
debentures, no Timberlands Net Proceeds have previously been applied to
redeem exchange notes or repurchase or redeem, or pay a dividend on, or
a return of capital with respect to, any other Equity Interests of PCA.
PCA will comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with each repurchase of exchange notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sales provisions of the
notes indenture, PCA will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Asset Sale provisions of the notes indenture by virtue of such conflict.
The agreements governing PCA's outstanding Senior Debt currently prohibit PCA
from purchasing any exchange notes, and also provides that certain change of
control or asset sale events with respect to PCA would constitute a default
under these agreements. Any future credit agreements or other agreements
relating to Senior Debt to which PCA becomes a party may contain similar
restrictions and provisions. In the event a Change of Control or Asset Sale
occurs at a time when PCA is prohibited from purchasing exchange notes, PCA
could seek the consent of its senior lenders to the purchase of exchange notes
or could attempt to refinance the borrowings that contain such prohibition. If
PCA does not obtain such a consent or repay such borrowings, PCA will remain
prohibited from purchasing exchange notes. In such case, PCA's failure to
purchase tendered exchange notes would constitute an Event of Default under the
notes indenture which would, in turn, constitute a default under such Senior
Debt. In such circumstances, the subordination provisions in the notes indenture
would likely restrict payments to the Holders of exchange notes.
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SELECTION AND NOTICE
If less than all of the exchange notes are to be redeemed at any time, the
trustee will select exchange notes for redemption as follows:
(1) if the exchange notes are listed, in compliance with the requirements of
the principal national securities exchange on which the exchange notes
are listed; or
(2) if the exchange notes are not so listed, on a pro rata basis, by lot or
by such method as the trustee shall deem fair and appropriate.
No exchange notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of exchange notes to be redeemed
at its registered address. Notices of redemption may not be conditional.
If any exchange note is to be redeemed in part only, the notice of redemption
that relates to that exchange note shall state the portion of the principal
amount thereof to be redeemed. A new exchange note in principal amount equal to
the unredeemed portion of the original exchange note will be issued in the name
of the Holder thereof upon cancellation of the original exchange note. Exchange
notes called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on exchange notes or
portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of PCA's or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any
merger or consolidation involving PCA or any of its Restricted
Subsidiaries) or to the direct or indirect holders of PCA's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable (a) in Equity Interests
(other than Disqualified Stock) of PCA or (b) to PCA or a Restricted
Subsidiary of PCA);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving PCA) any Equity Interests of PCA or any direct or indirect
parent of PCA;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is by its
terms expressly subordinated to the exchange notes or the Subsidiary
Guarantees, except a payment of interest or principal at the Stated
Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) PCA would, at the time of such Restricted Payment and after giving pro
forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption "-Incurrence of Indebtedness
and Issuance of Preferred Stock;" and
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(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by PCA and its Restricted Subsidiaries after
the date of the notes indenture (excluding Restricted Payments permitted
by clauses (2), (3), (4) and (5) of the next succeeding paragraph), is
less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of PCA for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the notes indenture to the end of PCA's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), PLUS
(b) 100% of the aggregate net cash proceeds received by PCA since the
date of the notes indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of PCA (other
than Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of PCA that have been converted into or exchanged for such
Equity Interests (other than Equity Interests (or Disqualified Stock
or debt securities) sold to a Subsidiary of PCA), together with the
net proceeds received by PCA upon such conversion or exchange, if
any, PLUS
(c) to the extent that any Restricted Investment that was made after the
date of the notes indenture is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (i) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition,
if any) and (ii) the initial amount of such Restricted Investment.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied
with the provisions of the notes indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness of PCA or any Guarantor or of any
Equity Interests of PCA in exchange for, or out of the net cash proceeds
of the substantially concurrent sale (other than to a Restricted
Subsidiary of PCA) of, Equity Interests of PCA (other than Disqualified
Stock); PROVIDED that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (3)(b) of the preceding
paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of PCA or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(4) so long as no Default has occurred and is continuing or would be caused
thereby, any Timberlands Repurchase pursuant to and in accordance with
the fifth paragraph described under the caption "-Repurchase at the
Option of Holders--Asset Sales;"
(5) the payment of any dividend by a Restricted Subsidiary of PCA to the
holders of its common Equity Interests on a pro rata basis;
(6) so long as no Default has occurred and is continuing or would be caused
thereby, the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of PCA or any Restricted Subsidiary of
PCA held by any current or former officers, directors or employees of
PCA (or any of its Restricted Subsidiaries') pursuant to any management
equity subscription agreement, stock option agreement or stock plan
entered into in the ordinary course of business; PROVIDED that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $5.0 million in any calendar
year;
(7) repurchases of Equity Interests of PCA deemed to occur upon exercise of
stock options to the extent Equity Interests represent a portion of the
exercise price of such options;
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(8) cash payments, advances, loans or expense reimbursements made to PCA
Holdings to permit PCA Holdings to pay its general operating expenses
(other than management, consulting or similar fees payable to Affiliates
of PCA), franchise tax obligations, accounting, legal, corporate
reporting and administrative expenses incurred in the ordinary course of
its business in an amount not to exceed $1.0 million in the aggregate in
any fiscal year; and
(9) so long as no Default has occurred and is continuing or would be caused
thereby, other Restricted Payments in an aggregate amount not to exceed
$25.0 million since the date of the notes indenture.
The amount of all Restricted Payments (other than cash) shall be the fair market
value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by PCA or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by the Board of Directors whose resolution with respect thereto
shall be conclusive. The Board of Directors' determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the fair market value exceeds $25.0 million.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and PCA will
not issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that PCA
may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock,
and the Guarantors may incur Indebtedness or issue preferred stock, if the Fixed
Charge Coverage Ratio for PCA's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock or preferred stock is issued would have been at least 2.0 to 1 or, if a
Timberlands Repurchase has occurred pursuant to and in accordance with the fifth
paragraph described under the caption "-Repurchase at the Option of
Holders-Asset Sales," 2.25 to 1, in either case determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the preferred stock or Disqualified
Stock had been issued, as the case may be, at the beginning of such four-quarter
period.
The first paragraph of this covenant will not prohibit the incurrence of any of
the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by PCA and any Guarantor of additional Indebtedness under
Credit Facilities and letters of credit under Credit Facilities in an
aggregate principal amount at any one time outstanding under this clause
(1) (with letters of credit being deemed to have a principal amount
equal to the face amount) not to exceed $1.51 billion LESS the aggregate
amount of all Net Proceeds of Asset Sales that have been applied by PCA
or any of its Restricted Subsidiaries since the date of the notes
indenture to permanently repay Indebtedness under a Credit Facility
pursuant to the covenant described above under the caption "-Repurchase
at the Option of Holders-Asset Sales" and LESS the amount of
Indebtedness outstanding under clause (18) below; PROVIDED that the
amount of Indebtedness permitted to be incurred pursuant to Credit
Facilities in accordance with this clause (1) shall be in addition to
any Indebtedness permitted to be incurred pursuant to Credit Facilities,
in reliance on, and in accordance with, clauses (4) and (19) below or in
the first paragraph of this covenant;
(2) the incurrence by PCA and its Restricted Subsidiaries of the Existing
Indebtedness;
(3) the incurrence by PCA and the Guarantors of Indebtedness represented by
the outstanding notes and the related Subsidiary Guarantees issued on
the date of the notes indenture, these exchange notes issued in exchange
for such outstanding notes and the related Subsidiary Guarantees
thereof;
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(4) the incurrence by PCA or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of PCA or such Restricted Subsidiary, in an aggregate principal
amount (which amount may, but need not be, incurred in whole or in part
under Credit Facilities), including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate,
modify or renew, in whole or in part, any Indebtedness incurred pursuant
to this clause (4), not to exceed the greater of 7.5% of Total Assets as
of the date of incurrence and $50.0 million at any time outstanding;
(5) the incurrence by PCA or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to refund, refinance, replace, amend, restate, modify or renew,
in whole or in part, Indebtedness (other than intercompany Indebtedness)
that was permitted by the notes indenture to be incurred under the first
paragraph of this covenant or clauses (2), (3), (4), (15) or (19) of
this paragraph;
(6) the incurrence by PCA or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among PCA and any of its Restricted
Subsidiaries; PROVIDED, HOWEVER, that each of the following shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by PCA or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (6):
(a) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than PCA or a
Restricted Subsidiary thereof; and
(b) any sale or other transfer of any such Indebtedness to a Person that
is not either PCA or a Restricted Subsidiary thereof;
(7) the incurrence by PCA or any of the Guarantors of Hedging Obligations
that are incurred for the purpose of fixing or hedging interest rate
risk with respect to any floating or fixed rate Indebtedness that is
permitted by the terms of the notes indenture to be outstanding and the
incurrence of Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values or in the price of
energy, commodities and raw materials in connection with PCA's or any of
its Restricted Subsidiaries' operations so long as management of PCA or
such Restricted Subsidiary, as the case may be, has determined that the
entering into of such Other Hedging Agreements are bona fide hedging
activities;
(8) the guarantee by PCA or any of the Guarantors of Indebtedness of PCA or
a Restricted Subsidiary of PCA that was permitted to be incurred by
another provision of this covenant;
(9) the incurrence by PCA's Unrestricted Subsidiaries of Non-Recourse Debt,
PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of PCA that was not permitted by this clause (9);
(10) the accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of
this covenant; PROVIDED, in each such case, that the amount thereof is
included in Fixed Charges and Consolidated Indebtedness of PCA as
accrued;
(11) the incurrence by PCA of Indebtedness and the issuance by PCA of
preferred stock, in each case, that is deemed to be incurred or issued,
as the case may be, in connection with the Contribution;
(12) the incurrence by PCA or any Guarantor of obligations pursuant to
foreign currency agreements entered into in the ordinary course of
business and not for speculative purposes;
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(13) Indebtedness arising from agreements of PCA or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; PROVIDED, HOWEVER, that (a) such
Indebtedness is not reflected on the balance sheet of PCA or any
Restricted Subsidiary (contingent obligations referred to in a footnote
to financial statements and not otherwise reflected on the balance sheet
will not be deemed to be reflected on such balance sheet for purposes of
this clause (a)) and (b) the maximum assumable liability in respect of
all such Indebtedness shall at no time exceed the gross proceeds
including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect
to any subsequent changes in value) actually received by PCA and its
Restricted Subsidiaries in connection with such disposition;
(14) the incurrence of obligations in respect of performance and surety bonds
and completion guarantees provided by PCA or any of its Restricted
Subsidiaries in the ordinary course of business;
(15) the incurrence of Indebtedness by any Restricted Subsidiary in
connection with the acquisition of assets or a new Restricted Subsidiary
in an aggregate principal amount, including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate,
modify or renew, in whole or in part, any Indebtedness incurred pursuant
to this clause (15), not to exceed $25.0 million at any one time
outstanding; PROVIDED that such Indebtedness was incurred by the prior
owner of such asset or such Restricted Subsidiary prior to such
acquisition by the Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such acquisition by the
Restricted Subsidiary;
(16) the incurrence of Indebtedness consisting of guarantees of loans made to
management for the purpose of permitting management to purchase Equity
Interests of PCA, in an amount not to exceed $7.5 million at any one
time outstanding;
(17) Indebtedness of PCA that may be deemed to exist under the Contribution
Agreement as a result of PCA's obligation to pay purchase price
adjustments; PROVIDED that the incurrence of Indebtedness to pay the
purchase price adjustment shall be deemed to constitute an incurrence of
Indebtedness that was not permitted by this clause (17);
(18) the incurrence of Indebtedness by a Receivables Subsidiary in a
Qualified Receivables Transaction that is not recourse to PCA or any of
its Subsidiaries (except for Standard Securitization Undertakings);
PROVIDED that the aggregate principal amount of Indebtedness outstanding
under this clause (18) and clause (1) above does not exceed $1.51
billion LESS the aggregate amount of all Net Proceeds of Asset Sales
that have been applied by PCA or any of its Restricted Subsidiaries
since the date of the notes indenture to permanently repay Indebtedness
under a Credit Facility pursuant to the covenant described above under
the caption "--Repurchase at the Option of Holders--Asset Sales;" and
(19) the incurrence by PCA of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) (which amount may,
but need not be, incurred in whole or in part under the Credit
Facilities) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate,
modify or renew, in whole or in part, any Indebtedness incurred pursuant
to this clause (19), not to exceed $75.0 million.
For purposes of determining compliance with this "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (19) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, PCA will be permitted to
classify or later reclassify such item of Indebtedness in any manner that
complies with this covenant. Indebtedness under Credit Facilities outstanding on
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the date on which exchange notes are first issued and authenticated under the
notes indenture shall be deemed to have been incurred on such date in reliance
on the exception provided by clause (1) of the definition of Permitted Debt.
NO SENIOR SUBORDINATED DEBT
PCA will not incur, create, issue, assume, guarantee or otherwise become liable
for any Indebtedness that is subordinate or junior in right of payment to any
Senior Debt of PCA and senior in any respect in right of payment to the exchange
notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to the Senior Debt of such Guarantor and senior in any respect in right
of payment to such Guarantor's Subsidiary Guarantee.
LIENS
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind on any asset now owned or hereafter acquired securing Indebtedness,
Attributable Debt or trade payables, except Permitted Liens.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
PCA or any of its Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to PCA or any of its Restricted Subsidiaries;
(2) make loans or advances to PCA or any of its Restricted Subsidiaries; or
(3) transfer any of its properties or assets to PCA or any of its Restricted
Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the notes indenture;
(2) the notes indenture, the exchange notes and the Subsidiary Guarantees;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a Person
acquired by PCA or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, PROVIDED that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of
the notes indenture to be incurred;
(5) non-assignment provisions in leases, licenses or similar agreements
entered into in the ordinary course of business and consistent with past
practices;
(6) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions on the property so acquired of the
nature described in clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
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(8) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(9) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, assets sale agreements, stock sale
agreements and other similar agreements entered into in the ordinary
course of business;
(10) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(11) the Credit Agreement as in effect on the date of the notes indenture;
(12) restrictions on the transfer of assets subject to any Lien permitted
under the Indenture imposed by the holder of such Lien;
(13) any Purchase Money Note or other Indebtedness or other contractual
requirements of a Receivables Subsidiary in connection with a Qualified
Receivables Transaction; PROVIDED that such restrictions apply only to
such Receivables Subsidiary;
(14) encumbrances or restrictions existing under or arising pursuant to
Credit Facilities entered into in accordance with the notes indenture;
PROVIDED that the encumbrances or restrictions in such Credit Facilities
are not materially more restrictive than those contained in the Credit
Agreement as in effect on the date hereof; and
(15) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments
or obligations referred to in clauses (1) through (14) above; PROVIDED,
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good
faith judgment of the Board of Directors of PCA, not materially more
restrictive with respect to such dividend and other payment restrictions
than those contained in the dividends or other payment restrictions
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.
MERGER, CONSOLIDATION OR SALE OF ASSETS
PCA may not, directly or indirectly: (1) consolidate or merge with or into
another Person (whether or not PCA is the surviving corporation); or (2) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of PCA and its Restricted Subsidiaries taken as a whole, in
one or more related transactions, to another Person; unless:
(1) either: (a) PCA is the surviving corporation; or (b) the Person formed
by or surviving any such consolidation or merger (if other than PCA) or
to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District
of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than PCA) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the
obligations of PCA under the exchange notes, the notes indenture and the
note registration rights agreement pursuant to agreements reasonably
satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) PCA or the Person formed by or surviving any such consolidation or
merger (if other than PCA), or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made will, on the date
of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to
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incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "-Incurrence of Indebtedness
and Issuance of Preferred Stock."
In addition, PCA may not, directly or indirectly, lease all or substantially all
of the properties or assets of PCA and its Restricted Subsidiaries, taken as a
whole, in one or more related transactions, to any other Person. This "Merger,
Consolidation or Sale of Assets" covenant will not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among PCA and any
of its Wholly Owned Restricted Subsidiaries.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by PCA and its Restricted
Subsidiaries in the Subsidiary so designated will be deemed to be an Investment
made as of the time of such designation and will either reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "-Restricted Payments" or reduce the amount
available for future Investments under one or more clauses of the definition of
Permitted Investments, as PCA shall determine. That designation will only be
permitted if such Investment would be permitted at that time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
TRANSACTIONS WITH AFFILIATES
PCA will not, and will not permit any of its Restricted Subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms taken as a whole that are no less
favorable to PCA or the relevant Restricted Subsidiary than those that
could have been obtained in a comparable transaction by PCA or such
Restricted Subsidiary with an unrelated Person; and
(2) PCA delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$25.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal, investment banking or advisory firm of
national standing; PROVIDED that this clause (b) shall not apply to
transactions with TPI and its subsidiaries in the ordinary course of
business at a time when Madison Dearborn Partners, LLC and its
Affiliates are entitled, directly or indirectly, to elect a majority
of the Board of Directors of PCA.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the first paragraph of this
covenant:
(1) any employment agreement entered into by PCA or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the
past practice of PCA or such Restricted Subsidiary;
(2) transactions between or among PCA and/or its Restricted Subsidiaries;
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(3) transactions with a Person that is an Affiliate of PCA solely because
PCA owns an Equity Interest in such Person;
(4) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of PCA;
(5) sales of Equity Interests (other than Disqualified Stock) to Affiliates
of PCA;
(6) the payment of transaction, management, consulting and advisory fees and
related expenses to Madison Dearborn Partners, LLC and its Affiliates;
PROVIDED that such fees shall not, in the aggregate, exceed $15.0
million (plus out-of-pocket expenses) in connection with the
Contribution or $2.0 million in any twelve-month period commencing after
the date of the Contribution;
(7) the payment of fees and expenses related to the Contribution other than
fees and expenses paid to Madison Dearborn Partners, LLC and its
Affiliates;
(8) Restricted Payments that are permitted by the provisions of the notes
indenture described above under the caption "-Restricted Payments;"
(9) transactions described in clause (11) of the definition of Permitted
Investments;
(10) reasonable fees and expenses and compensation paid to, and indemnity
provided on behalf of, officers, directors or employees of PCA or any
Subsidiary as determined in good faith by the Board of Directors of PCA
or senior management;
(11) payments made to PCA Holdings for the purpose of allowing PCA Holdings
to pay its general operating expenses, franchise tax obligations,
accounting, legal, corporate reporting and administrative expenses
incurred in the ordinary course of its business in an amount not to
exceed $1.0 million in the aggregate in any fiscal year;
(12) transactions contemplated by the Contribution Agreement and the
Transaction Agreements as the same are in effect on the date of the
notes indenture;
(13) transactions in connection with a Qualified Receivables Transaction; and
(14) transactions with either of the Initial Purchasers or any of their
respective Affiliates.
ADDITIONAL SUBSIDIARY GUARANTEES
If PCA or any of its Restricted Subsidiaries acquires or creates another
Domestic Subsidiary or if any Restricted Subsidiary becomes a Domestic
Subsidiary of PCA after the date of the notes indenture, then that newly
acquired or created Domestic Subsidiary (other than a Receivables Subsidiary)
must become a Guarantor and execute a supplemental notes indenture and deliver
an Opinion of Counsel to the trustee within 10 Business Days of the date on
which it was acquired or created.
SALE AND LEASEBACK TRANSACTIONS
PCA will not, and will not permit any of its Restricted Subsidiaries to, enter
into any sale and leaseback transaction; PROVIDED that PCA or any Restricted
Subsidiary may enter into a sale and leaseback transaction if:
(1) either (a) PCA or that Restricted Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under the Fixed Charge
Coverage Ratio test in the first paragraph of the covenant described
above under the caption "-Incurrence of Indebtedness and Issuance of
Preferred Stock" or (b) the Net Proceeds of such sale and leaseback
transaction are applied to repay outstanding Senior Debt; and
(2) the transfer of assets in that sale and leaseback transaction is
permitted by, and PCA applies the net proceeds of such transaction in
compliance with, the covenant described above under the caption
"-Repurchase at the Option of Holders-Asset Sales."
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BUSINESS ACTIVITIES
PCA will not, and will not permit any Restricted Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to PCA and its Restricted Subsidiaries taken as a whole.
REPORTS
Whether or not required by the Commission, so long as any exchange notes are
outstanding, PCA will furnish to the Holders of exchange notes, within the time
periods specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if
PCA were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report
on the annual financial statements by PCA's certified independent
accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if PCA were required to file such reports.
In addition, whether or not required by the Commission, PCA will file a copy of
all of the information and reports referred to in clauses (1) and (2) above with
the Commission for public availability within the time periods specified in the
Commission's rules and regulations (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. In addition, PCA and the Subsidiary
Guarantors have agreed that, for so long as any exchange notes remain
outstanding, they will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
If PCA has designated any of its Subsidiaries as Unrestricted Subsidiaries, then
the quarterly and annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of PCA and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of PCA.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the exchange notes, whether or not
prohibited by the subordination provisions of the notes indenture;
(2) default in payment when due of the principal of, or premium, if any, on
the exchange notes, whether or not prohibited by the subordination
provisions of the notes indenture;
(3) failure by PCA or any of its Restricted Subsidiaries to comply with the
provisions described under the captions "-Repurchase at the Option of
Holders-Asset Sales" or "-Certain Covenants-Merger, Consolidation or
Sale of Assets;"
(4) failure by PCA or any of its Restricted Subsidiaries for 30 days after
notice by the trustee or by the Holders of at least 25% in principal
amount of the exchange notes to comply with any of the other agreements
in the notes indenture;
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(5) default under any mortgage, indenture or instrument under which there is
issued and outstanding any Indebtedness for money borrowed by PCA or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by
PCA or any of its Restricted Subsidiaries), if that default:
(a) is caused by a failure to pay principal at the final stated maturity
of such Indebtedness (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its express
maturity,
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more;
(6) failure by PCA or any of its Restricted Subsidiaries to pay final
nonappealable judgments aggregating in excess of $25.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days;
(7) except as permitted by the notes indenture, any Subsidiary Guarantee by
a Guarantor that is a Significant Subsidiary shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for
any reason to be in full force and effect or any Guarantor that is a
Significant Subsidiary, or any Person acting on behalf of any Guarantor
that is a Significant Subsidiary, shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to PCA or any of
its Significant Subsidiaries.
In the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to PCA, all outstanding exchange notes will become due
and payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the trustee (upon request of Holders of at
least 25% in principal amount of the exchange notes then outstanding) or the
Holders of at least 25% in principal amount of the then outstanding exchange
notes may declare all the exchange notes to be due and payable by notice in
writing to PCA and the trustee specifying the respective Event of Default and
that such notice is a "notice of acceleration" (the "Acceleration Notice"), and
the same (1) shall become immediately due and payable or (2) if there are any
amounts outstanding under the Credit Agreement, shall become immediately due and
payable upon the first to occur of an acceleration under the Credit Agreement or
five Business Days after receipt by PCA and the Representative under the Credit
Agreement of such Acceleration Notice but only if such Event of Default is then
continuing.
Holders of the exchange notes may not enforce the notes indenture or the
exchange notes except as provided in the notes indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
exchange notes may direct the trustee in its exercise of any trust or power. The
trustee may withhold from Holders of the exchange notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest or Liquidated Damages) if it determines
that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the exchange notes
then outstanding by notice to the trustee may on behalf of the Holders of all of
the exchange notes waive any existing Default or Event of Default and its
consequences under the notes indenture except a continuing Default or Event of
Default in the payment of interest or Liquidated Damages on, or the principal
of, the exchange notes.
In the case of any Event of Default occurring by reason of any willful action or
inaction taken or not taken by or on behalf of PCA in bad faith with the
intention of avoiding payment of the premium that PCA would have had to pay if
PCA then had elected to redeem the exchange notes pursuant to the optional
redemption provisions of the notes indenture, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law upon
the acceleration of the exchange notes. If an Event of Default occurs prior to
April 1, 2004, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of PCA in bad faith with
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the intention of avoiding the prohibition on redemption of the exchange notes
prior to April 1, 2004, then the premium specified in the notes indenture shall
also become immediately due and payable to the extent permitted by law upon the
acceleration of the exchange notes.
PCA is required to deliver to the trustee annually a statement regarding
compliance with the notes indenture. Upon becoming aware of any Default or Event
of Default, PCA is required to deliver to the trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of PCA or any
Guarantor, as such, shall have any liability for any obligations of PCA or the
Guarantors under the exchange notes, the notes indenture, the Subsidiary
Guarantees, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of exchange notes by accepting an
exchange note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the exchange notes. The waiver may not
be effective to waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
PCA may, at its option and at any time, elect to have all of its obligations
discharged with respect to the outstanding exchange notes and all obligations of
the Guarantors discharged with respect to their Subsidiary Guarantees ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding exchange notes to receive payments
in respect of the principal of, or interest or premium and Liquidated
Damages, if any, on such exchange notes when such payments are due from
the trust referred to below;
(2) PCA's obligations with respect to the exchange notes concerning issuing
temporary exchange notes, registration of exchange notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
PCA's and the Guarantor's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the notes indenture.
In addition, PCA may, at its option and at any time, elect to have the
obligations of PCA and the Guarantors released with respect to certain covenants
that are described in the notes indenture ("Covenant Defeasance") and thereafter
any omission to comply with those covenants shall not constitute a Default or
Event of Default with respect to the exchange notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
exchange notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) PCA must irrevocably deposit with the trustee, in trust, for the benefit
of the Holders of the exchange notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest and
premium and Liquidated Damages, if any, on the outstanding exchange
notes on the stated maturity or on the applicable redemption date, as
the case may be, and PCA must specify whether the exchange notes are
being defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, PCA shall have delivered to the trustee
an Opinion of Counsel reasonably acceptable to the trustee confirming
that (a) PCA has received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the date of the notes
indenture, there
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has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding exchange notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, PCA shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that the Holders of the outstanding exchange notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than the notes indenture but in any event including
the Credit Agreement) to which PCA or any of its Subsidiaries is a party
or by which PCA or any of its Subsidiaries is bound;
(6) PCA must have delivered to the trustee an Opinion of Counsel to the
effect that, assuming no intervening bankruptcy of PCA or any Guarantor
between the date of deposit and the 91st day following the deposit and
assuming that no Holder is an "insider" of PCA under applicable
bankruptcy law, after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) PCA must deliver to the trustee an Officers' Certificate stating that
the deposit was not made by PCA with the intent of preferring the
Holders of exchange notes over the other creditors of PCA with the
intent of defeating, hindering, delaying or defrauding creditors of PCA
or others; and
(8) PCA must deliver to the trustee an Officers' Certificate and an Opinion
of Counsel, each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the notes indenture
or the exchange notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the exchange notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, exchange notes), and any
existing default or compliance with any provision of the notes indenture or the
exchange notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding exchange notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, exchange notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any exchange notes held by a non-consenting Holder):
(1) reduce the principal amount of exchange notes whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any exchange
note or alter the provisions with respect to the redemption of the
exchange notes (other than provisions relating to the covenants
described above under the caption "-Repurchase at the Option of
Holders");
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(3) reduce the rate of or change the time for payment of interest on any
exchange note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, or Liquidated Damages, if any, on the exchange
notes (except a rescission of acceleration of the exchange notes by the
Holders of at least a majority in aggregate principal amount of the
exchange notes and a waiver of the payment default that resulted from
such acceleration);
(5) make any exchange note payable in money other than that stated in the
exchange notes;
(6) make any change in the provisions of the notes indenture relating to
waivers of past Defaults or the rights of Holders of exchange notes to
receive payments of principal of, or interest or premium or Liquidated
Damages, if any, on the exchange notes;
(7) waive a redemption payment with respect to any exchange note (other than
a payment required by one of the covenants described above under the
caption "-Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under its Subsidiary
Guarantee or the notes indenture, except in accordance with the terms of
the notes indenture; or
(9) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the notes
indenture relating to subordination that adversely affects the rights of the
Holders of the exchange notes will require the consent of the Holders of at
least 75% in aggregate principal amount of exchange notes then outstanding.
Notwithstanding the preceding, without the consent of any Holder of exchange
notes, PCA, the Guarantors and the trustee may amend or supplement the notes
indenture or the exchange notes:
(1) to cure any ambiguity, defect, error or inconsistency;
(2) to provide for uncertificated exchange notes in addition to or in place
of certificated exchange notes;
(3) to provide for the assumption of PCA's or any Guarantor's obligations to
Holders of exchange notes in the case of a merger or consolidation or
sale of all or substantially all of PCA's or any Guarantor's assets;
(4) to make any change that would provide any additional rights or benefits
to the Holders of exchange notes or that does not adversely affect the
legal rights under the notes indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the notes indenture under the Trust
Indenture Act.
SATISFACTION AND DISCHARGE
The notes indenture will be discharged and will cease to be of further effect as
to all exchange notes issued thereunder, when:
(1) either:
(a) all exchange notes that have been authenticated (except lost, stolen
or destroyed exchange notes that have been replaced or paid and
exchange notes for whose payment money has theretofore been deposited
in trust and thereafter repaid to PCA) have been delivered to the
trustee for cancellation; or
(b) all exchange notes that have not been delivered to the trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as
will be sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire
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indebtedness on the exchange notes not delivered to the trustee for
cancellation for principal, premium and Liquidated Damages, if any,
and accrued interest to the date of maturity or redemption;
(2) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute
a default under, any other instrument to which PCA or any Guarantor is a
party or by which PCA or any Guarantor is bound;
(3) PCA or any Guarantor has paid or caused to be paid all sums payable by
it under the notes indenture; and
(4) PCA has delivered irrevocable instructions to the trustee under the
notes indenture to apply the deposited money toward the payment of the
exchange notes at maturity or the redemption date, as the case may be.
In addition, PCA must deliver an Officers' Certificate and an Opinion of Counsel
to the trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of PCA or any Guarantor, the notes indenture
limits its right to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as security or otherwise.
The trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding exchange
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The notes indenture provides that in case an Event of
Default shall occur and be continuing, the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of his or her own affairs. Subject to such provisions, the trustee will
be under no obligation to exercise any of its rights or powers under the notes
indenture at the request of any Holder of exchange notes, unless such Holder
shall have offered to the trustee security and indemnity satisfactory to it
against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the notes indenture
without charge by writing to Packaging Corporation of America, 1900 West Field
Court, Lake Forest, Illinois 60045, Attention: Chief Financial Officer.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the exchange notes will be issued in fully
registered form, without coupons. Except as described below, the exchange notes
will be deposited with, or on behalf of, The Depository Trust Company ("DTC"),
in New York, New York, and registered in the name of DTC or its nominee in the
form of one or more global certificates (the "Global Notes") or will remain in
the custody of the trustee pursuant to a FAST Balance Certificate Agreement
between DTC and the trustee.
Except as set forth below, the Global Notes may be transferred, in whole and not
in part, only to DTC or another nominee of DTC or to a successor of DTC or its
nominee. Except in the limited circumstances described below, owners of
beneficial interests in the Global Notes will not be entitled to receive
physical delivery of Certificated Notes (as defined below). See "--Exchange
Notes of Global Notes for Certificated Notes." In addition, transfers
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of beneficial interests in the Global Notes will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants, including,
if applicable, those of Euroclear and Cedel, which rules and procedures may
change from time to time.
Initially, the trustee will act as paying agent and registrar. The exchange
notes may be presented for registration of transfer and exchange at the offices
of the registrar.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC, Euroclear and
Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them. PCA takes no responsibility for these
operations and procedures and urges investors to contact the system or their
participants directly to discuss these matters.
DTC has advised PCA that DTC is a limited-purpose trust company created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised PCA that, pursuant to procedures established by it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by DTC, with respect to the Participants, or by the
Participants and the Indirect Participants, with respect to other owners
of beneficial interest in the Global Notes.
All interests in a Global Note may be subject to the procedures and requirements
of DTC. The laws of some states require that certain Persons take physical
delivery in definitive form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Note to such Persons will
be limited to that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants, the ability of a Person
having beneficial interests in a Global Note to pledge such interests to Persons
that do not participate in the DTC system, or otherwise take actions in respect
of such interests, may be affected by the lack of a physical certificate
evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT HAVE
EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR "HOLDERS" THEREOF UNDER THE NOTES INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium and Liquidated
Damages, if any, on a Global Note registered in the name of DTC or its nominee
will be payable to DTC in its capacity as the registered Holder under the notes
indenture. Under the terms of the notes indenture, PCA and the trustee will
treat the
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Persons in whose names the exchange notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving payments and for
all other purposes. Consequently, neither PCA, the trustee nor any agent of PCA
or the trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interest in the Global Notes or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or
Indirect Participant's records relating to the beneficial ownership
interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants.
DTC has advised PCA that its current practice, upon receipt of any payment in
respect of securities such as the exchange notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of exchange
notes will be governed by standing instructions and customary practices and will
be the responsibility of the Participants or the Indirect Participants and will
not be the responsibility of DTC, the trustee or PCA. Neither PCA nor the
trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the exchange notes, and PCA and the trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee for all purposes.
DTC has advised PCA that it will take any action permitted to be taken by a
Holder of exchange notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the exchange notes
as to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the exchange notes, DTC reserves
the right to exchange the Global Notes for legended exchange notes in
certificated form, and to distribute such exchange notes to its Participants.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive exchange notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies PCA that it is unwilling or unable to continue as
depositary for the Global Notes and PCA fails to appoint a successor
depositary or (b) has ceased to be a clearing agency registered under
the Exchange Act;
(2) PCA, at its option, notifies the trustee in writing that it elects to
cause the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of
Default with respect to the exchange notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the notes indenture. In all cases, Certificated
Notes delivered in exchange for any Global Note or beneficial interests in
Global Notes will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the DTC, in accordance with its
customary procedures.
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SAME DAY SETTLEMENT AND PAYMENT
PCA will make payments in respect of the exchange notes represented by the
Global Notes, including principal, premium, if any, interest and Liquidated
Damages, if any, by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. PCA will make all payments of principal,
interest and premium and Liquidated Damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The exchange notes
represented by the Global Notes are expected to be eligible to trade in the
PORTAL market and to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such exchange notes will,
therefore, be required by DTC to be settled in immediately available funds. PCA
expects that secondary trading in any Certificated Notes will also be settled in
immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the notes indenture. Reference
is made to the notes indenture for a full disclosure of all such terms, as well
as any other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; PROVIDED that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"APPLICABLE PREMIUM" means, with respect to any Note on any redemption date, the
greater of:
(1) 1.0% of the principal amount of the Note; or
(2) the excess of:
(a) the present value at such redemption date of (i) the redemption price
of the Note at April 1, 2004 (such redemption price being set forth
in the table appearing above under the caption "-Optional
Redemption") plus (ii) all required interest payments due on the Note
through April 1, 2004 (excluding accrued but unpaid interest),
computed using a discount rate equal to the Treasury Rate as of such
Redemption Date plus 50 basis points; over
(b) the principal amount of the Note, if greater.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of
business; PROVIDED that the sale, conveyance or other disposition of all
or substantially all of the assets of PCA and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "-Repurchase at the Option
of
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Holders-Change of Control" and/or the provisions described above under
the caption "-Certain Covenants-Merger, Consolidation or Sale of Assets"
and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of PCA's Restricted Subsidiaries
or the sale of Equity Interests in any of PCA's Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $10.0 million;
(2) a transfer of assets between or among PCA and its Wholly Owned
Restricted Subsidiaries,
(3) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary
to PCA or to another Wholly Owned Restricted Subsidiary;
(4) the sale, license or lease of equipment, inventory, accounts receivable
or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents or Marketable
Securities;
(6) the transfer or disposition of assets and the sale of Equity Interests
pursuant to the Contribution;
(7) sales of accounts receivables and related assets of the type specified
in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof including cash
or Cash Equivalents or Marketable Securities in an amount at least equal
to 75% of the fair market value thereof as determined in accordance with
GAAP; and
(8) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption "-Certain
Covenants-Restricted Payments."
"ATTRIBUTABLE Debt" in respect of a sale and leaseback transaction means, at the
time of determination, the present value of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such sale and
leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"BOARD OF DIRECTORS" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and
(3) with respect to any other Person, the board or committee of such Person
serving a similar function.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
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(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(PROVIDED that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than six months from
the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding twelve months and overnight bank deposits,
in each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each
case maturing within twelve months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger, consolidation or transfer of PCA Voting
Stock), in one or a series of related transactions, of all or
substantially all of the properties or assets of PCA and its Restricted
Subsidiaries taken as a whole to any "person" (as that term is used in
Section 13(d)(3) of the Exchange Act) other than to a Principal or a
Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of PCA
(other than a plan relating to the sale or other disposition of
timberlands);
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties or a
Permitted Group, becomes the Beneficial Owner, directly or indirectly,
of more than 50% of the Voting Stock of PCA, measured by voting power
rather than number of shares; or
(4) the first day on which a majority of the members of the Board of
Directors of PCA are not Continuing Directors.
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period PLUS:
(1) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; PLUS
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(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated
Net Income; PLUS
(3) depletion, depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net
Income; PLUS
(4) all one-time charges incurred in 1999 in connection with the
Contribution (including the impairment charge described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Overview") to the extent such charges were deducted in
computing such Consolidated Net Income; PLUS
(5) all restructuring charges incurred prior to the date of the Indenture
(including the restructuring charge that was added to pro forma EBITDA
to calculate adjusted pro forma EBITDA as set forth in footnote 4 under
"Selected Combined Financial and Other Data"); MINUS
(6) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with
GAAP.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of PCA shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of PCA only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to PCA
by such Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of any date of
determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries; PLUS
(2) the total amount of Indebtedness of any other Person, to the extent that
such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries; PLUS
(3) the aggregate liquidation value of all Disqualified Stock of such Person
and all preferred stock of Restricted Subsidiaries of such Person, in
each case, determined on a consolidated basis in accordance with GAAP.
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"CONSOLIDATED NET INCOME" means, with respect to any specified Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Wholly Owned
Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) for purposes of calculating Consolidated Cash Flow to determine the Debt
to Cash Flow Ratio or the Fixed Charge Coverage Ratio, the Net Income
(but not loss) of any Unrestricted Subsidiary shall be excluded, whether
or not distributed to the specified Person or one of its Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of the
Board of Directors of PCA who:
(1) was a member of such Board of Directors on the date of the Indenture; or
(2) was nominated for election or elected to such Board of Directors either
(a) with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election or (b)
pursuant to and in accordance with the terms of the Stockholders
Agreement as in effect on the date of the Indenture.
"CONTRIBUTION" means the Contribution contemplated by the Contribution
Agreement.
"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement dated as of
January 25, 1999 among TPI, PCA Holdings and PCA as the same is in effect on the
date of the Indenture.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the date
hereof by and among PCA and Morgan Guaranty Trust Company of New York, as
administrative agent, and the other lenders party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of PCA as additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
"CREDIT FACILITIES" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables), working capital loans, swing lines, advances or
letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced, restructured or refinanced in whole or in part from time to
time.
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"DEBT TO CASH FLOW RATIO" means, as of any date of determination, the ratio of
(1) the Consolidated Indebtedness of PCA as of such date to (2) the Consolidated
Cash Flow of PCA for the four most recent full fiscal quarters ending
immediately prior to such date for which internal financial statements are
available, determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by PCA and its Restricted
Subsidiaries from the beginning of such four-quarter period through and
including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period. In addition, for purposes of making the
computation referred to above:
(1) acquisitions that have been made by PCA or any of its Restricted
Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
date of determination shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on
a pro forma basis in accordance with Regulation S-X under the Securities
Act and including those cost savings that management reasonably expects
to realize within six months of the consummation of the acquisition, but
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the date of determination, shall be excluded;
(3) for any four-quarter reference period that includes any period of time
prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions described in this prospectus
and the related corporate overhead savings and cost savings that were
added to pro forma EBITDA to calculate Adjusted pro forma EBITDA as set
forth in footnote 4 under "Selected Combined Financial and Other Data,"
all as calculated in good faith by a responsible financial or accounting
officer of PCA, as if they had occurred on the first day of such
four-quarter reference period; and
(4) the impact of the Treasury Lock shall be excluded.
"DEFAULT" means any event that is, or with the passage of time or the giving of
notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means any non-cash consideration received by
PCA or one of its Restricted Subsidiaries in connection with an Asset Sale that
is designated as Designated Noncash Consideration pursuant to an Officers'
Certificate executed by the principal executive officer and the principal
financial officer of PCA or such Restricted Subsidiary. Such Officers'
Certificate shall state the basis of such valuation, which shall be a report of
a nationally recognized investment banking firm with respect to the receipt in
one or a series of related transactions of Designated Noncash Consideration with
a fair market value in excess of $10.0 million. A particular item of Designated
Noncash Consideration shall no longer be considered to be outstanding when it
has been sold for cash or redeemed or paid in full in the case of non-cash
consideration in the form of promissory notes or equity.
"DESIGNATED SENIOR DEBT" means:
(1) any Indebtedness under or in respect of the Credit Agreement; and
(2) any other Senior Debt permitted under the Indenture the principal amount
of which is $25.0 million or more and that has been designated by PCA in
the instrument or agreement relating to the same as "Designated Senior
Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible, or for which it is exchangeable,
in each case at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature. Notwithstanding the preceding sentence, any Capital
Stock that would
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constitute Disqualified Stock solely because the holders thereof have the right
to require PCA to repurchase such Capital Stock upon the occurrence of a change
of control or an asset sale shall not constitute Disqualified Stock if the terms
of such Capital Stock provide that PCA may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the covenant described above under the caption "-Certain
Covenants-Restricted Payments." The Senior Exchangeable Preferred Stock as in
effect on the date of the Indenture will not constitute Disqualified Stock for
purposes of the Indenture.
"DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that was formed under the
laws of the United States or any state thereof or the District of Columbia or
that guarantees or otherwise provides direct credit support for any Indebtedness
of PCA.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means Indebtedness of PCA and its Subsidiaries (other
than Indebtedness under the Credit Agreement) in existence on the date of the
Indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any specified Person for any period, the
sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, excluding amortization of debt
issuance costs and net of the effect of all payments made or received
pursuant to Hedging Obligations; PLUS
(2) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; PLUS
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon; PLUS
(4) the product of (a) all dividends, whether paid or accrued and whether or
not in cash, on any series of preferred stock of such Person or any of
its Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of PCA (other than Disqualified
Stock) or to PCA or a Restricted Subsidiary of PCA, times (b) a
fraction, the numerator of which is one and the denominator of which is
one minus PCA's then current effective combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of preferred stock,
and the use of the proceeds therefrom as if the same had occurred at the
beginning of the applicable four-quarter reference period.
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In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior
to the Calculation Date shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on
a pro forma basis in accordance with Regulation S-X under the Securities
Act and including those cost savings that management reasonably expects
to realize within six months of the consummation of the acquisition, but
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded;
(3) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior
to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date;
(4) for any four-quarter reference period that includes any period of time
prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions described in this prospectus
and the related corporate overhead savings and cost savings that were
added to pro forma EBITDA to calculate Adjusted pro forma EBITDA as set
forth in footnote 4 under "Selected Combined Financial and Other Data,"
all as calculated in good faith by a responsible financial or accounting
officer of PCA, as if they had occurred on the first day of such
four-quarter reference period; and
(5) the impact of the Treasury Lock shall be excluded.
"FOREIGN SUBSIDIARY WORKING CAPITAL INDEBTEDNESS" means Indebtedness of a
Restricted Subsidiary that is organized outside of the United States under lines
of credit extended after the date of the Indenture to any such Restricted
Subsidiary by Persons other than PCA or any of its Restricted Subsidiaries, the
proceeds of which are used for such Restricted Subsidiary's working capital
purposes.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GUARANTEE" means a guarantee of all or any part of any Indebtedness (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), including, without limitation, by way of a pledge of assets or
through letters of credit or reimbursement agreements in respect thereof.
"GUARANTORS" means:
(1) each Restricted Subsidiary that is or becomes a Domestic Subsidiary of
PCA (other than a Receivables Subsidiary); and
(2) any other subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of the Indenture;
and their respective successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
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"INDEBTEDNESS" means, with respect to any specified Person, any indebtedness of
such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the deferred balance of the purchase price of any property outside of
the ordinary course of business which remains unpaid, except any such
balance that constitutes an operating lease payment, accrued expense,
trade payable or similar current liability; or
(6) any Hedging Obligations or Other Hedging Agreements,
if and to the extent any of the preceding items (other than letters of credit,
Hedging Obligations and Other Hedging Agreements) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of others secured
by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included,
the Guarantee by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof in the case of any other Indebtedness.
"INITIAL PURCHASERS" means J.P. Morgan Securities Inc. and BT Alex.Brown
Incorporated.
"INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If PCA or any
Subsidiary of PCA sells or otherwise disposes of any Equity Interests of any
direct or indirect Subsidiary of PCA such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of PCA, PCA shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of the covenant described above under the caption "-Certain Covenants-Restricted
Payments." The acquisition by PCA or any Subsidiary of PCA of a Person that
holds an Investment in a third Person shall be deemed to be an Investment by PCA
or such Subsidiary in such third Person in an amount equal to the fair market
value of the Investment held by the acquired Person in such third Person in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "-Certain Covenants-Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement.
"MARKETABLE SECURITIES" means publicly traded debt or equity securities that are
listed for trading on a national securities exchange and that were issued by a
corporation whose debt securities are rated in one of the three highest rating
categories by either Standard & Poor's Rating Services or Moody's Investors
Service, Inc.
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"NET INCOME" means, with respect to any specified Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain (or loss), together with any related provision for taxes on
such gain (or loss), realized in connection with: (a) any Asset Sale; or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (or loss), together with any related provision
for taxes on such extraordinary gain (or loss).
"NET PROCEEDS" means the aggregate cash proceeds received by PCA or any of its
Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, sales commissions, any relocation expenses incurred as a result
thereof, all taxes of any kind paid or payable as a result thereof and
reasonable reserves established to cover any indemnity obligations incurred in
connection therewith, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness, other than Indebtedness under a
Credit Facility, secured by a Lien on the asset or assets that were the subject
of such Asset Sale and any reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither PCA nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder
of any other Indebtedness (other than the Notes) of PCA or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its
stated maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of PCA or any of its Restricted
Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications,
expenses, reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
"OTHER HEDGING AGREEMENTS" means any foreign exchange contracts, currency swap
agreements, commodity agreements or other similar agreements or arrangements
designed to protect against the fluctuations in currency or commodity values.
"PCA HOLDINGS" means PCA Holdings LLC, a Delaware limited liability company.
"PERMITTED BUSINESS" means the containerboard, paperboard and packaging products
business and any business in which PCA and its Restricted Subsidiaries are
engaged on the date of the Indenture or any business reasonably related,
incidental or ancillary to any of the foregoing.
"PERMITTED GROUP" means any group of investors that is deemed to be a "person"
(as that term is used in Section 13(d)(3) of the Exchange Act) at any time prior
to PCA's initial public offering of common stock, by virtue of the Stockholders
Agreement, as the same may be amended, modified or supplemented from time to
time, PROVIDED that no single Person (other than the Principals and their
Related Parties) Beneficially Owns (together with its Affiliates) more of the
Voting Stock of PCA that is Beneficially Owned by such group of investors than
is then collectively Beneficially Owned by the Principals and their Related
Parties in the aggregate.
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"PERMITTED INVESTMENTS" means:
(1) any Investment in PCA or in a Restricted Subsidiary of PCA;
(2) any Investment in Cash Equivalents;
(3) any Investment by PCA or any Restricted Subsidiary of PCA in a Person,
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of PCA; or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, PCA or a Restricted Subsidiary of PCA;
(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption "-Repurchase at the Option of
Holders-Asset Sales;"
(5) any acquisition of assets to the extent acquired in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of PCA;
(6) Hedging Obligations and Other Hedging Agreements;
(7) any Investment existing on the date of the Indenture;
(8) loans and advances to employees and officers of PCA and its Restricted
Subsidiaries in the ordinary course of business;
(9) any Investment in securities of trade creditors or customers received in
compromise of obligations of such persons incurred in the ordinary
course of business, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade
creditors or customers;
(10) negotiable instruments held for deposit or collection in the ordinary
course of business;
(11) loans, guarantees of loans and advances to officers, directors,
employees or consultants of PCA or a Restricted Subsidiary of PCA not to
exceed $7.5 million in the aggregate outstanding at any time;
(12) any Investment by PCA or any of its Restricted Subsidiaries in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in
any other Person in connection with a Qualified Receivables Transaction;
PROVIDED that each such Investment is in the form of a Purchase Money
Note, an equity interest or interests in accounts receivables generated
by PCA or any of its Restricted Subsidiaries; and
(13) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (13) that are at the time
outstanding not to exceed the greater of $50.0 million or 5% of Total
Assets.
"PERMITTED JUNIOR SECURITIES" means debt or equity securities of PCA or any
successor corporation issued pursuant to a plan of reorganization or
readjustment of PCA that are subordinated to the payment of all then outstanding
Senior Debt of PCA at least to the same extent that the Notes are subordinated
to the payment of all Senior Debt of PCA on the date of the Indenture, so long
as:
(1) the effect of the use of this defined term in the subordination
provisions contained in the Indenture is not to cause the Notes to be
treated as part of:
(a) the same class of claims as the Senior Debt of PCA; or
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(b) any class of claims PARI PASSU with, or senior to, the Senior Debt of
PCA for any payment or distribution in any case or proceeding or
similar event relating to the liquidation, insolvency, bankruptcy,
dissolution, winding up or reorganization of PCA; and
(2) to the extent that any Senior Debt of PCA outstanding on the date of
consummation of any such plan of reorganization or readjustment is not
paid in full in cash or Cash Equivalents (other than Cash Equivalents of
the type referred to in clauses (3) and (4) of the definition thereof)
on such date, either:
(a) the holders of any such Senior Debt not so paid in full in cash or
Cash Equivalents (other than Cash Equivalents of the type referred to
in clauses (3) and (4) of the definition thereof) have consented to
the terms of such plan of reorganization or readjustment; or
(b) such holders receive securities which constitute Senior Debt of PCA
(which are guaranteed pursuant to guarantees constituting Senior Debt
of each Guarantor) and which have been determined by the relevant
court to constitute satisfaction in full in money or money's worth of
any Senior Debt of PCA (and any related Senior Debt of the
Guarantors) not paid in full in cash or Cash Equivalents (other than
Cash Equivalents of the type referred to in clauses (3) and (4) of
the definition thereof).
"PERMITTED LIENS" means:
(1) Liens of PCA and any Guarantor securing Senior Debt that was permitted
by the terms of the Indenture to be incurred;
(2) Liens in favor of PCA or the Guarantors;
(3) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with PCA or any Subsidiary of PCA; PROVIDED
that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with PCA or the Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by PCA or
any Subsidiary of PCA, PROVIDED that such Liens were in existence prior
to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant entitled
"-Certain Covenants-Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such Indebtedness;
(7) Liens existing on the date of the Indenture together with any Liens
securing Permitted Refinancing Indebtedness incurred under clause (5) of
the second paragraph under the caption "-Certain Covenants-Incurrence of
Indebtedness and Issuance of Preferred Stock" in order to refinance the
Indebtedness secured by Liens existing on the date of the Indenture;
PROVIDED that the Liens securing the Permitted Refinancing Indebtedness
shall not extend to property other than that pledged under the Liens
securing the Indebtedness being refinanced;
(8) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries;
(9) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
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(10) Liens to secure Foreign Subsidiary Working Capital Indebtedness
permitted by the Indenture to be incurred so long as any such Lien
attached only to the assets of the Restricted Subsidiary which is the
obligor under such Indebtedness;
(11) Liens securing Attributable Debt;
(12) Liens on assets of a Receivables Subsidiary incurred in connection with
a Qualified Receivables Transaction; and
(13) Liens incurred in the ordinary course of business of PCA or any
Subsidiary of PCA with respect to obligations that do not exceed $15.0
million at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of PCA or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of PCA or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by PCA or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PRINCIPALS" means:
(1) Madison Dearborn Partners, LLC and its Affiliates; and
(2) TPI and its Affiliates.
"PURCHASE MONEY NOTE" means a promissory note evidencing a line of credit, which
may be irrevocable, from, or evidencing other Indebtedness owed to, PCA or any
of its Restricted Subsidiaries in connection with a Qualified Receivables
Transaction, which note shall be repaid from cash available to the maker of such
note, other than amounts required to be established as reserves pursuant to
agreements, amounts paid to investors in respect of interest, principal and
other amounts owing to such investors and amounts paid in connection with the
purchase of newly generated receivables.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by PCA or any of its Restricted
Subsidiaries pursuant to which PCA or any of its Restricted Subsidiaries may
sell, convey or otherwise transfer to:
(1) a Receivables Subsidiary (in the case of a transfer by PCA or any of its
Restricted Subsidiaries); and
(2) any other Person (in the case of a transfer by a Receivables
Subsidiary),
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or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of PCA or any of its Restricted Subsidiaries,
and any assets related thereto including, without limitation, all collateral
securing such accounts receivable, all contracts and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets that are customarily transferred, or in respect of
which security interests are customarily granted, in connection with asset
securitization transactions involving accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Subsidiary of PCA that engages in
no activities other than in connection with the financing of accounts receivable
and that is designated by the Board of Directors of PCA (as provided below) as a
Receivables Subsidiary and:
(1) has no Indebtedness or other Obligations (contingent or otherwise) that:
(a) are guaranteed by PCA or any of its Restricted Subsidiaries, other
than contingent liabilities pursuant to Standard Securitization
Undertakings;
(b) are recourse to or obligate PCA or any of its Restricted Subsidiaries
in any way other than pursuant to Standard Securitization
Undertakings; or
(c) subjects any property or assets of PCA or any of its Restricted
Subsidiaries, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings;
(2) has no contract, agreement, arrangement or undertaking (except in
connection with a Purchase Money Note or Qualified Receivables
Transaction) with PCA or any of its Restricted Subsidiaries than on
terms no less favorable to PCA or such Restricted Subsidiaries than
those that might be obtained at the time from Persons that are not
Affiliates of PCA, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable; and
(3) neither PCA nor any of its Restricted Subsidiaries has any obligation to
maintain or preserve the Receivables Subsidiary's financial condition or
cause the Receivables Subsidiary to achieve certain levels of operating
results.
Any such designation by the Board of Directors of PCA shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of PCA giving effect to such designation and an Officers'
Certificate certifying, to the best of such officer's knowledge and belief after
consulting with counsel, that such designation complied with the foregoing
conditions.
"RELATED PARTY" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal;
or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or
more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding
clause (1).
"REPRESENTATIVE" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; PROVIDED that if, and
for so long as, any Designated Senior Debt lacks such a representative, then the
Representative for such Designated Senior Debt shall at all times constitute the
holders of a majority in outstanding principal amount of such Designated Senior
Debt in respect of any Designated Senior Debt.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent Person
that is not an Unrestricted Subsidiary.
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"SENIOR DEBT" means:
(1) all Indebtedness outstanding under all Credit Facilities, all Hedging
Obligations and all Other Hedging Agreements (including guarantees
thereof) with respect thereto of PCA and the Guarantors, whether
outstanding on the date of the Indenture or thereafter incurred;
(2) any other Indebtedness incurred by PCA and the Guarantors, unless the
instrument under which such Indebtedness is incurred expressly provides
that it is on a parity with or subordinated in right of payment to the
Notes or the Subsidiary Guarantees, as the case may be; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2) (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law).
Notwithstanding anything to the contrary in the preceding, Senior Debt will not
include:
(1) any liability for federal, state, local or other taxes owed or owing by
PCA or the Guarantors;
(2) any Indebtedness of PCA or any Guarantor to any of its Subsidiaries;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of the
Indenture (but only to the extent so incurred).
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by PCA or any of its Restricted
Subsidiaries that are reasonably customary in an accounts receivable
transaction.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"STOCKHOLDERS AGREEMENT" means that certain Stockholders Agreement dated as of
April 12, 1999 by and among PCA Holdings LLC, TPI and PCA, as in effect on the
date of the Indenture.
"SUBSIDIARY" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"TPI" means Tenneco Packaging Inc., a Delaware corporation.
"TIMBERLANDS NET PROCEEDS" means the Net Proceeds from Timberlands Sales in
excess of $500.0 million, up to a maximum of $100.0 million (or such larger
amount as may be necessary to repurchase or redeem all outstanding
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Preferred Stock or Subordinated Exchange Debentures in the event of a repurchase
or redemption of all outstanding Preferred Stock or Subordinated Exchange
Debentures), as long as at least $500.0 million of Net Proceeds have been
applied to repay Indebtedness under the Credit Agreement.
"TIMBERLANDS REPURCHASE" means the repurchase or redemption of, payment of a
dividend on, or return of capital with respect to any Equity Interests of PCA,
the repurchase or redemption of Subordinated Exchange Debentures or the
redemption of Notes with Timberlands Net Proceeds in accordance with the terms
of the Indenture.
"TIMBERLANDS SALE" means a sale or series of sales by PCA or a Restricted
Subsidiary of PCA of timberlands.
"TOTAL ASSETS" means the total consolidated assets of PCA and its Restricted
Subsidiaries, as set forth on PCA's most recent consolidated balance sheet.
"TRANSACTION AGREEMENTS" means:
(1) those certain Purchase/Supply Agreements between PCA and each of TPI,
Tenneco Automotive, Inc. and Tenneco Packaging Specialty and Consumer
Products, Inc., each dated the date of the Indenture;
(2) that certain Facilities Use Agreement between PCA and TPI, dated the
date of the Indenture;
(3) that certain Human Resources Agreement among PCA, TPI and Tenneco Inc.,
dated the date of the Indenture;
(4) that certain Transition Services Agreement among PCA and TPI, dated the
date of the Indenture;
(5) that certain Holding Company Support Agreement among PCA and PCA
Holdings, dated the date of the Indenture;
(6) that certain Registration Rights Agreement among PCA, PCA Holdings and
TPI, dated the date of the Indenture; and
(7) the Stockholders Agreement.
"TREASURY LOCK" means the interest rate protection agreement dated as of March
5, 1999 between PCA and J.P. Morgan Securities Inc.
"TREASURY RATE" means, as of any redemption date, the yield to maturity as of
such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to April 1, 2004; PROVIDED,
HOWEVER, that if the period from the redemption date to April 1, 2004 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of PCA that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with PCA or any Restricted Subsidiary of PCA unless the terms of any
such agreement, contract, arrangement or understanding are no less
favorable to PCA or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of PCA;
(3) is a Person with respect to which neither PCA nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified
levels of operating results; and
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(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of PCA or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of PCA as an Unrestricted Subsidiary shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the preceding conditions and was
permitted by the covenant described above under the caption "-Certain
Covenants-Restricted Payments." If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of PCA as of such date and, if such Indebtedness is
not permitted to be incurred as of such date under the covenant described under
the caption "-Certain Covenants-Incurrence of Indebtedness and Issuance of
Preferred Stock," PCA shall be in default of such covenant. The Board of
Directors of PCA may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of PCA of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under the covenant described
under the caption "-Certain Covenants-Incurrence of Indebtedness and Issuance of
Preferred Stock," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at
any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person means any Wholly
Owned Subsidiary of such Person which at the time of determination is a
Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any specified Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
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DESCRIPTION OF NEW PREFERRED STOCK
This description of the securities being offered has five parts:
- New Preferred Stock;
- Subordinated Exchange Debentures;
- Book-Entry, Delivery and Form; and
- Certain Definitions.
You should read all four parts of this Description of New Preferred Stock for a
description of the provisions of the instruments governing the securities, the
form in which the securities are expected to be issued and certain mechanics for
trading of the securities. Although this description is provided for your
reference, you are strongly encouraged to read the certificate of designation
governing the new preferred stock and the exchange indenture governing the
subordinated exchange debentures for the complete terms and provisions of the
securities being offered. In addition, you should be aware that the General
Corporation Law of the State of Delaware also governs the new preferred stock
and the ability of PCA to pay dividends on the preferred stock. See "Description
of Capital Stock" and "Risk Factors-Dividend Restrictions."
You can find the definitions of certain terms used in this description under the
subheading "-Certain Definitions." In this description, the words "we," "us,"
the "company" or "PCA" refer only to Packaging Corporation of America and not to
any of its subsidiaries.
NEW PREFERRED STOCK
PCA will issue the new preferred stock under a Certificate of Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof, which
we refer to as the certificate of designation.
The following description is a summary of the material provisions of the
certificate of designation and does not restate that document in its entirety.
We urge you to read the certificate of designation because it, and not this
description, defines your rights as holders of the new preferred stock. Copies
of the certificate of designation are available as set forth below under the
subheading "Additional Information." This description is qualified in its
entirety by reference to PCA's Amended and Restated Certificate of
Incorporation, which will include the certificate of designation and the
definitions therein of the defined terms used below.
The certificate of designation authorizes PCA to issue 3,000,000 shares of
senior exchangeable preferred stock with a liquidation preference of $100 per
share (the "Liquidation Preference") of which 1,900,000 shares are designated as
Series B senior exchangeable preferred stock, or new preferred stock. When
issued, the new preferred stock will be fully paid and nonassessable and Holders
of new preferred stock will have no preemptive rights.
On any dividend payment date, PCA may, under certain conditions, exchange all
and not less than all of the shares of new preferred stock for PCA's
subordinated exchange debentures. For a discussion of certain federal income tax
considerations relevant to the payment of dividends on the new preferred stock,
see "Certain United States Federal Tax Considerations-Senior Exchangeable
Preferred Stock-Dividends."
At or after the time of issuance, the new preferred stock will not necessarily
trade at a price equal to its Liquidation Preference. The market price of the
new preferred stock may fluctuate with changes in the financial markets and
economic conditions, the financial condition and prospects of PCA and other
factors that generally influence the market prices of securities. See "Risk
Factors."
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Currently, all of our subsidiaries are "Restricted Subsidiaries." However, under
the circumstances described below under the subheading "-Certain
Covenants-Designation of Restricted and Unrestricted Subsidiaries," we are
permitted to designate certain of our subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants in the certificate of designation.
TRANSFER AGENT
The transfer agent for the new preferred stock will be United States Trust
Company of New York unless and until a successor is selected by PCA. The offices
of the transfer agent are located at 114 West 47th Street, New York, NY, 10036.
RANKING
The new preferred stock will rank senior in right of payment to all classes or
series of PCA's capital stock as to dividends and upon liquidation, dissolution
or winding up of PCA.
Without the consent of the Holders of at least a majority in aggregate
Liquidation Preference of the then outstanding new preferred stock, PCA may not
authorize, create (by way of reclassification or otherwise) or issue:
(1) any class or series of capital stock of PCA ranking on a parity with the
new preferred stock ("Parity Securities");
(2) any obligation or security convertible or exchangeable into or
evidencing a right to purchase, any Parity Securities;
(3) any class or series of capital stock of PCA ranking senior to the new
preferred stock ("Senior Securities"); or
(4) any obligation or security convertible or exchangeable into or
evidencing a right to purchase, any Senior Securities.
DIVIDENDS
When PCA's Board of Directors declares dividends out of legally available funds,
the Holders of record of the new preferred stock as of each March 15 and
September 15 will be entitled to receive cumulative preferential dividends at
the rate per share of 12 3/8% per annum on the following dividend payment date.
Dividends on the new preferred stock will be payable semiannually in arrears on
April 1 and October 1 of each year, commencing on October 1, 1999.
On or prior to April 1, 2004, PCA may, at its option, pay dividends in cash or
in additional fully-paid and non-assessable shares of new preferred stock
(including fractional stock) having an aggregate Liquidation Preference equal to
the amount of such dividends. After April 1, 2004, PCA will pay dividends in
cash only. PCA does not expect to pay any dividends in cash before April 1,
2004. Dividends payable on the new preferred stock will be computed on the basis
of a 360-day year comprised of twelve 30-day months; and will accrue on a daily
basis.
Dividends on the new preferred stock will accrue whether or not:
(1) PCA has earnings or profits;
(2) there are funds legally available for the payment of such dividends; or
(3) dividends are declared.
Dividends will accumulate to the extent they are not paid on the dividend
payment date for the semiannual period to which they relate. Accumulated unpaid
dividends will accrue dividends at the rate of 12 3/8% per annum. PCA must take
all actions required or permitted under Delaware law to permit the payment of
dividends on the new preferred stock.
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Unless PCA has declared and paid full cumulative dividends upon, or declared and
set apart a sufficient sum for the payment of full cumulative dividends on, all
outstanding new preferred stock due for all past dividend periods, then:
(1) no dividend (other than a dividend payable solely in shares of any class
or series of capital stock ranking junior to the new preferred stock as
to the payment of dividends and as to rights in liquidation, dissolution
and winding up of the affairs of PCA (any such stock, "Junior
Securities")) shall be declared or paid upon, or any sum set apart for
the payment of dividends upon, any Junior Securities;
(2) no other distribution shall be declared or made upon, or any sum set
apart for the payment of any distribution upon, any Junior Securities;
(3) no Junior Securities shall be purchased, redeemed or otherwise acquired
or retired for value (excluding an exchange for other Junior Securities)
by PCA or any of its Restricted Subsidiaries; and
(4) no monies shall be paid into or set apart or made available for a
sinking or other like fund for the purchase, redemption or other
acquisition or retirement for value of any Junior Securities by PCA or
any of its Restricted Subsidiaries.
Holders of the new preferred stock will not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the full cumulative
dividends described above.
In addition, the Credit Agreement and the notes indenture contain restrictions
on the ability of PCA to pay cash dividends on the new preferred stock. Any
future credit agreements or other agreements relating to Indebtedness to which
PCA becomes a party may contain similar restrictions and provisions. See "Risk
Factors--Dividend Restrictions."
VOTING RIGHTS
Holders of the new preferred stock will have no voting rights, except as
required by law and as provided in the certificate of designation. Under the
certificate of designation, the number of members of PCA's Board of Directors
will immediately and automatically increase by two, and the Holders of a
majority in Liquidation Preference of the outstanding new preferred stock,
voting as a separate class, may elect two members to the Board of Directors of
PCA, upon:
(1) the accumulation of accrued and unpaid dividends on the outstanding new
preferred stock in an amount equal to three or more full semiannual
dividends (whether or not consecutive);
(2) failure by PCA or any of its Restricted Subsidiaries to comply with any
mandatory redemption obligation with respect to the new preferred stock,
the failure to make a Change of Control Offer or an Asset Sale Offer in
accordance with the provisions of the certificate of designation or the
failure to repurchase new preferred stock pursuant to such offers;
(3) failure by PCA or any of its Restricted Subsidiaries to comply with any
of the other covenants or agreements set forth in the certificate of
designation and the continuance of such failure for 30 consecutive days
or more after notice from the Holders of at least 25% in aggregate
Liquidation Preference of the new preferred stock then outstanding;
(4) default under any mortgage, indenture or instrument under which there is
issued and outstanding any Indebtedness for money borrowed by PCA or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by
PCA or any of its Restricted Subsidiaries), if that default:
(a) is caused by a failure to pay principal at the final stated maturity
of such Indebtedness (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its express
maturity,
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and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $25.0 million or more; or
(5) certain events of bankruptcy or insolvency with respect to PCA or any of
its Significant Subsidiaries (each of the events described in clauses
(1) through (5) being referred to as a "Voting Rights Triggering
Event").
Voting rights arising as a result of a Voting Rights Triggering Event will
continue until all dividends in arrears on the new preferred stock are paid in
full and all other Voting Rights Triggering Events have been cured or waived.
In addition, as provided above under "-Ranking," PCA may not authorize, create
(by way of reclassification or otherwise) or issue any Senior Securities or
Parity Securities, or any obligation or security convertible into or evidencing
a right to purchase any Senior Securities or Parity Securities, without the
affirmative vote or consent of the Holders of a majority in Liquidation
Preference of the then outstanding shares of new preferred stock.
EXCHANGE FEATURE
On any dividend payment date, PCA may exchange all and not less than all of the
shares of then outstanding new preferred stock for subordinated exchange
debentures if:
(1) on the date of the exchange, there are no accumulated and unpaid
dividends on the new preferred stock (including the dividend payable on
that date) or other contractual impediments to the exchange;
(2) the exchange does not immediately cause:
(a) a Default or Event of Default (each as defined in the subordinated
exchange debentures indenture) under the subordinated exchange
debentures indenture;
(b) a default or event of default under any Credit Facility or the notes
indenture; and
(c) a default or event of default under any material instrument governing
Indebtedness of PCA or any of its Restricted Subsidiaries that is
outstanding at the time;
(3) the subordinated exchange debentures indenture has been duly authorized,
executed and delivered by PCA and U.S. Trust Company of Texas, N.A. the
exchange trustee, and is a legal, valid and binding agreement of PCA;
(4) the subordinated exchange debentures indenture has been qualified under
the Trust Indenture Act, if qualification is required at the time of
exchange; and
(5) PCA has delivered a written opinion to the exchange trustee stating that
all conditions to the exchange have been satisfied and as to such other
matters as the exchange trustee shall reasonably request.
The Credit Agreement currently prohibits and the notes indenture currently
restricts the exchange of the new preferred stock. Agreements governing other
Indebtedness of PCA and its Subsidiaries may restrict PCA's ability to exchange
the new preferred stock in the future. See "Description of Senior Credit
Facility" and "Description of Exchange Notes."
Upon any exchange pursuant to the preceding paragraph, Holders of outstanding
new preferred stock will be entitled to receive:
(1) a principal amount of subordinated exchange debentures equal to the
aggregate Liquidation Preference of the new preferred stock held by such
Holder; PLUS
(2) without duplication, any accrued and unpaid dividends on such shares.
The subordinated exchange debentures will be:
(1) issued in registered form, without coupons; and
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(2) issued in principal amounts of $1,000 and integral multiples thereof to
the extent possible and any other principal amount to the extent
necessary, PROVIDED that PCA may pay cash in lieu of issuing
subordinated exchange debenture having a principal amount that is less
than $1,000.
For a description of the subordinated exchange debentures, see "-Description of
Subordinated Exchange Debentures."
PCA will send notice of its intention to exchange, by first class mail, postage
prepaid, to each Holder of new preferred stock at its registered address not
more than 60 days nor less than 30 days prior to the Exchange Date. In addition
to any information required by law or by the applicable rules of any exchange
upon which new preferred stock may be listed or admitted to trading, the notice
will state:
(1) the Exchange Date;
(2) the place or places where certificates for such stock are to be
surrendered for exchange, including any procedures applicable to
exchanges to be accomplished through book-entry transfers; and
(3) that dividends on the new preferred stock to be exchanged will cease to
accrue on the Exchange Date.
If notice of any exchange has been properly given, and if on or before the
Exchange Date the subordinated exchange debentures have been duly executed and
authenticated and an amount in cash or additional new preferred stock (as
applicable) equal to all accrued and unpaid dividends, if any, thereon to the
Exchange Date has been deposited with the transfer agent, then on and after the
close of business on the Exchange Date:
(1) the new preferred stock to be exchanged will no longer be considered
outstanding and may subsequently be issued in the same manner as the
other authorized but unissued preferred stock, but not as new preferred
stock; and
(2) all rights of the Holders as stockholders of PCA will cease, except
their right to receive upon surrender of their certificates the
subordinated exchange debentures and all accrued and unpaid dividends,
if any, thereon to the Exchange Date.
MANDATORY REDEMPTION
On April 1, 2010 (the "Mandatory Redemption Date"), PCA will be required to
redeem (subject to it having sufficient legally available funds and subject to
compliance with the Credit Agreement, the notes indenture, the subordinated
exchange debentures indenture and any Credit Facility entered into by PCA and
its Restricted Subsidiaries after the Issue Date) all outstanding new preferred
stock at a price in cash equal to the Liquidation Preference, plus accrued and
unpaid dividends and Liquidated Damages, if any, to the date of redemption. PCA
will not be required to make sinking fund payments with respect to the new
preferred stock.
The Credit Agreement and the notes indenture currently restrict the redemption
of the new preferred stock and agreements governing additional indebtedness may
restrict PCA's ability to redeem the new preferred stock in the future. See
"Description of Senior Credit Facility" and "Description of Exchange Notes."
OPTIONAL REDEMPTION
At any time prior to April 1, 2002, PCA may on any one occasion redeem all, or
on any one or more occasions redeem up to 35% of the then outstanding aggregate
Liquidation Preference of new preferred stock at a redemption price of 112.375%
of the Liquidation Preference thereof, plus accrued and unpaid dividends and
Liquidated Damages, if any, to the redemption date, with the net cash proceeds
of one or more offerings of common stock of PCA or a capital contribution to
PCA's common equity made with the net cash proceeds of an offering of common
stock of PCA's direct or indirect parent or with Timberlands Net Proceeds (which
amount
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shall be reduced on a dollar for dollar basis by the amount of Timberlands Net
Proceeds used to make a Timberlands Repurchase in accordance with the fifth
paragraph described under the caption "-Repurchase at the Option of
Holders-Asset Sales"); PROVIDED that
(1) except in the case of a redemption of all of the then outstanding new
preferred stock, at least 65% of the aggregate Liquidation Preference of
the new preferred stock issued under the certificate of designation
remains outstanding immediately after the occurrence of such redemption
(excluding new preferred stock held by PCA and its Subsidiaries); and
(2) the redemption must occur within 60 days of the date of the closing of
such offering or the making of such capital contribution or the
consummation of a Timberlands Sale.
Prior to April 1, 2004, PCA may also redeem the new preferred stock, as a whole
but not in part, upon the occurrence of a Change of Control, upon not less than
30 nor more than 60 days' prior written notice, at a redemption price equal to
100% of the Liquidation Preference thereof plus the Applicable Premium as of,
and accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
date of redemption.
Except pursuant to the preceding paragraphs, the new preferred stock will not be
redeemable at PCA's option prior to April 1, 2004. Nothing in the certificate of
designation prohibits PCA from acquiring the new preferred stock by means other
than a redemption, whether pursuant to an issuer tender offer or otherwise,
assuming such acquisition does not otherwise violate the terms of the
certificate of designation.
After April 1, 2004, PCA may redeem all or a part of the new preferred stock
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of the Liquidation Preference) set forth below plus
accrued and unpaid dividends and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 1 of the years indicated below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
YEAR PERCENTAGE
- ---------------------------------------------------------------- ----------
<S> <C>
2004............................................................ 106.1875%
2005............................................................ 104.6406%
2006............................................................ 103.0938%
2007............................................................ 101.5469%
2008 and thereafter............................................. 100.0000%
</TABLE>
The Credit Agreement and the notes indenture currently restrict the redemption
of the new preferred stock and the agreements governing additional indebtedness
may restrict PCA's ability to redeem the new preferred stock in the future. See
"Description of Senior Credit Facility" and "Description of Exchange Notes."
LIQUIDATION RIGHTS
Each Holder of the new preferred stock will be entitled to payment, out of the
assets of PCA available for distribution (after giving effect to the prior
payment of all Indebtedness and other claims), of an amount equal to the
Liquidation Preference of the new preferred stock held by such Holder, plus
accrued and unpaid dividends and Liquidated Damages, if any, to the date fixed
for liquidation, dissolution, winding up or reduction or decrease in capital
stock, before any distribution is made on any Junior Securities, including,
without limitation, common stock of PCA, upon any:
(1) voluntary or involuntary liquidation, dissolution or winding up of the
affairs of PCA; or
(2) reduction or decrease in PCA's capital stock resulting in a distribution
of assets to the holders of any class or series of PCA's capital stock
(a "reduction or decrease in capital stock").
After payment in full of the Liquidation Preference and all accrued and unpaid
dividends and Liquidated Damages, if any, to which Holders of new preferred
stock are entitled, such Holders may not further participate in any distribution
of assets of PCA. However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of PCA
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nor the consolidation or merger of PCA with or into one or more Persons will be
a voluntary or involuntary liquidation, dissolution or winding up of PCA or
reduction or decrease in capital stock, unless such sale, conveyance, exchange
or transfer is in connection with a liquidation, dissolution or winding up of
the business of PCA or reduction or decrease in capital stock.
The certificate of designation does not contain any provision requiring funds to
be set aside to protect the Liquidation Preference of the new preferred stock,
although such Liquidation Preference will be substantially in excess of the par
value of the new preferred stock.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of new preferred stock will have the
right to require PCA to repurchase all or any part (but not any fractional
shares) of that Holder's new preferred stock pursuant to a Change of Control
Offer on the terms set forth in the certificate of designation. In the Change of
Control Offer, PCA will offer a Change of Control Payment in cash equal to 101%
of the aggregate Liquidation Preference of new preferred stock repurchased plus
accrued and unpaid dividends and Liquidated Damages, if any, thereon, to the
date of purchase. Within 30 days following any Change of Control, PCA will mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase new preferred stock
on the Change of Control Payment Date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed, pursuant to the procedures required by the certificate of designation
and described in such notice. PCA will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the new preferred stock as a result of a Change of
Control. To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions of the certificate of
designation, PCA will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under the Change of
Control provisions of the certificate of designation by virtue of such conflict.
On the Change of Control Payment Date, PCA will, to the extent lawful:
(1) accept for payment all new preferred stock or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all new preferred stock or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the transfer agent the new preferred
stock so accepted together with an Officers' Certificate stating the
Liquidation Preference of new preferred stock or portions thereof being
purchased by PCA.
The paying agent will promptly mail to each Holder of new preferred stock so
tendered the Change of Control Payment for such new preferred stock, and the
transfer agent will promptly authenticate and mail (or cause to be transferred
by book-entry) to each Holder a new certificate representing the new preferred
stock equal in Liquidation Preference to any unpurchased portion of the new
preferred stock surrendered, if any.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, PCA
will either repay all outstanding Exchange Debenture Senior Debt or obtain the
requisite consents, if any, under all agreements governing outstanding Exchange
Debenture Senior Debt to permit the repurchase of new preferred stock required
by this covenant. PCA will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
PCA shall first comply with the covenant in the first sentence in the
immediately preceding paragraph before it shall be required to repurchase new
preferred stock pursuant to the provisions described above. PCA's failure to
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comply with the covenant described in the immediately preceding sentence may
(with notice and lapse of time) constitute a Voting Rights Triggering Event
described in clause (3) but shall not constitute a Voting Rights Triggering
Event described under clause (2) under the caption "-Voting Rights."
The provisions described above that require PCA to make a Change of Control
Offer following a Change of Control will be applicable regardless of whether any
other provisions of the Certificate of Designation are applicable. Except as
described above with respect to a Change of Control, the certificate of
designation does not contain provisions that permit the Holders of new preferred
stock to require that PCA repurchase or redeem new preferred stock in the event
of a takeover, recapitalization or similar transaction.
PCA will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the
certificate of designation applicable to a Change of Control Offer made by PCA
and purchases all new preferred stock validly tendered and not withdrawn under
such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the direct or
indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the properties or assets of PCA and its Restricted
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of new preferred stock to require PCA to repurchase such new preferred
stock as a result of a sale, lease, transfer, conveyance or other disposition of
less than all of the assets of PCA and its Restricted Subsidiaries taken as a
whole to another Person or group may be uncertain.
ASSET SALES
PCA will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) PCA (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale which, taken as a whole, is
at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(2) such fair market value is determined by PCA's Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the transfer agent; and
(3) at least 75% of the consideration therefor received by PCA or such
Restricted Subsidiary is in the form of cash or Cash Equivalents or
Marketable Securities. For purposes of this provision, each of the
following shall be deemed to be cash:
(a) any liabilities (as shown on PCA's or such Restricted Subsidiary's
most recent balance sheet) of PCA or any Restricted Subsidiary (other
than contingent liabilities) that are assumed by the transferee of
any such assets;
(b) any securities, notes or other obligations received by PCA or any
such Restricted Subsidiary from such transferee that are converted,
sold or exchanged by PCA or such Restricted Subsidiary into cash
within 30 days of the related Asset Sale (to the extent of the cash
received in that conversion); and
(c) any Designated Noncash Consideration received by PCA or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate fair
market value, taken together with all other Designated Noncash
Consideration received since the Issue Date pursuant to this clause
(c) that is at that time outstanding, not to exceed 10% of Total
Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated
Noncash Consideration being measured at the time received and without
giving effect to subsequent changes in value).
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Within 365 days after the receipt of any Net Proceeds from an Asset Sale, PCA
may apply such Net Proceeds at its option:
(1) to repay Exchange Debenture Senior Debt and, if the Exchange Debenture
Senior Debt repaid is revolving credit Indebtedness, to correspondingly
reduce commitments with respect thereto;
(2) to invest in or to acquire other properties or assets to replace the
properties or assets that were the subject of the Asset Sale or that
will be used in businesses of PCA or its Restricted Subsidiaries, as the
case may be, existing at the time such assets are sold;
(3) to make a capital expenditure or commit, or cause such Restricted
Subsidiary to commit, to make a capital expenditure (such commitments to
include amounts anticipated to be expended pursuant to PCA's capital
investment plan as adopted by the Board of Directors of PCA) within 24
months of such Asset Sale; or
(4) to make a Timberlands Repurchase in accordance with the first paragraph
described under the caption "-Optional Redemption."
Pending the final application of any such Net Proceeds, PCA may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by the certificate of designation.
Any Net Proceeds from Asset Sales that are not applied or invested as provided
in the two preceding paragraphs will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $25.0 million, PCA will make an
Asset Sale Offer to all Holders of new preferred stock and all holders of Parity
Securities containing provisions similar to those set forth in the certificate
of designation with respect to offers to purchase or redeem with the proceeds of
sales of assets to purchase the maximum amount of new preferred stock and such
other Parity Securities that may be purchased out of the Excess Proceeds. The
offer price in any Asset Sale Offer will be equal to 100% of the Liquidation
Preference plus accrued and unpaid dividends and Liquidated Damages, if any, to
the date of purchase, and will be payable in cash. If any Excess Proceeds remain
after consummation of an Asset Sale Offer, PCA may use such Excess Proceeds for
any purpose not otherwise prohibited by the certificate of designation. If the
aggregate Liquidation Preference of new preferred stock and such other Parity
Securities tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the transfer agent shall select the new preferred stock and such other
Parity Securities to be purchased on a pro rata basis based on the Liquidation
Preference of new preferred stock and such other Parity Securities tendered.
Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Notwithstanding the four preceding paragraphs, PCA will be permitted to apply
Timberlands Net Proceeds (which amount shall be reduced on a dollar for dollar
basis by the amount of Timberlands Net Proceeds used to make a Timberlands
Repurchase in accordance with the first paragraph described under the caption
"-Optional Redemption") to repurchase or redeem, or pay a dividend on, or a
return of capital with respect to, any Equity Interests of PCA, or repurchase or
redeem subordinated exchange debentures if:
(1) the repurchase, redemption, dividend or return of capital is consummated
within 90 days of the final sale of such Timberlands Sale;
(2) PCA's Debt and new preferred stock to Cash Flow Ratio at the time of
such Timberlands Repurchase, after giving pro forma effect to (a) such
repurchase, redemption, dividend or return of capital, (b) the
Timberlands Sale and the application of the net proceeds therefrom and
(c) any increase or decrease in fiber, stumpage or similar costs as a
result of the Timberlands Sale as if the same had occurred at the
beginning of the most recently ended four full fiscal quarter period of
PCA for which internal financial statements are available, would have
been no greater than 5.0 to 1; and
(3) in the case of a repurchase or redemption of all of the then outstanding
new preferred stock or subordinated exchange debentures, no Timberlands
Net Proceeds have been previously applied to repurchase or redeem, or
pay a dividend on, or return of capital with respect to, any other
Equity Interests of PCA.
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PCA will comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with each repurchase of new preferred
stock pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sales provisions of the
certificate of designation, PCA will comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under
the Asset Sale provisions of the certificate of designation by virtue of such
conflict.
The agreements governing PCA's outstanding Exchange Debenture Senior Debt
currently prohibit PCA from purchasing any new preferred stock, and also
provides that certain change of control or asset sale events with respect to PCA
would constitute a default under these agreements. Any future credit agreements
or other agreements relating to Exchange Debenture Senior Debt to which PCA
becomes a party may contain similar restrictions and provisions. In the event a
Change of Control or Asset Sale occurs at a time when PCA is prohibited from
purchasing new preferred stock, PCA could seek the consent of its senior lenders
to the purchase of new preferred stock or could attempt to refinance the
borrowings that contain such prohibition. If PCA does not obtain such a consent
or repay such borrowings, PCA will remain prohibited from purchasing new
preferred stock. In such case, PCA's failure to purchase tendered new preferred
stock would constitute a Voting Rights Triggering Event under the certificate of
designation and the Holders of a majority of the outstanding new preferred
stock, voting as a separate class, would be entitled to elect two members to the
Board of Directors of PCA.
SELECTION AND NOTICE
If less than all of the new preferred stock is to be redeemed at any time, the
transfer agent will select new preferred stock for redemption as follows:
(1) if the new preferred stock is listed, in compliance with the
requirements of the principal national securities exchange on which the
new preferred stock is listed; or
(2) if the new preferred stock is not so listed, on a pro rata basis, by lot
or by such method as the transfer agent shall deem fair and appropriate.
No shares of new preferred stock shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of new preferred stock to be
redeemed at its registered address. Notices of redemption may not be
conditional.
If any new preferred stock is to be redeemed in part only, the notice of
redemption that relates to that new preferred stock shall state the portion of
the Liquidation Preference thereof to be redeemed. A new certificate with an
aggregate Liquidation Preference equal to the unredeemed portion of the original
certificate evidencing new preferred stock presented for redemption will be
issued in the name of the Holder thereof upon cancellation of the certificate.
New preferred stock called for redemption become due on the date fixed for
redemption. On and after the redemption date, dividends cease to accrue on new
preferred stock or portions thereof called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of PCA's or any of its Restricted Subsidiaries' Equity Interests
(other than the new preferred stock) including, without limitation, any
payment in connection with any merger or consolidation involving PCA or
any of its Restricted Subsidiaries or to the direct or indirect holders
of PCA's or any of its Restricted Subsidiaries' Equity Interests (other
than the new preferred stock in their capacity as such) other than
dividends or distributions payable (a) in Equity Interests (other than
Disqualified Stock) of PCA or (b) to PCA or a Restricted Subsidiary of
PCA;
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(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving PCA) any Equity Interests of PCA or any direct or indirect
parent of PCA other than new preferred stock; or
(3) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (3) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Voting Rights Triggering Event shall have occurred and be continuing
or would occur as a consequence thereof; and
(2) PCA would, at the time of such Restricted Payment and after giving pro
forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption "-Incurrence of Indebtedness
and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by PCA and its Restricted Subsidiaries after
the Issue Date (excluding Restricted Payments permitted by clauses (2),
(3) and (4) of the next succeeding paragraph), is less than the sum,
without duplication, of:
(a) 50% of the Consolidated Net Income of PCA for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the Issue Date to the end of PCA's most recently
ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of
such deficit), PLUS
(b) 100% of the aggregate net cash proceeds received by PCA since the
Issue Date as a contribution to its common equity capital or from the
issue or sale of Equity Interests of PCA (other than Disqualified
Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of
PCA that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of PCA), together with the net
proceeds received by PCA upon such conversion or exchange, if any,
PLUS
(c) to the extent that any Restricted Investment that was made after the
Issue Date is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (i) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and
(ii) the initial amount of such Restricted Investment.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied
with the provisions of the certificate of designation;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any Equity Interests of PCA in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary of PCA) of, Equity Interests of PCA (other than
Disqualified Stock); PROVIDED that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from
clause (3) (b) of the preceding paragraph;
(3) so long as no Voting Rights Triggering Event has occurred and is
continuing or would be caused thereby, any Timberlands Repurchase
pursuant to and in accordance with the fifth paragraph described under
the caption "--Repurchase at the Option of Holders--Asset Sales;"
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(4) the payment of any dividend by a Restricted Subsidiary of PCA to the
holders of its common Equity Interests on a pro rata basis;
(5) so long as no Voting Rights Triggering Event has occurred and is
continuing or would be caused thereby, the repurchase, redemption or
other acquisition or retirement for value of any Equity Interests of PCA
or any Restricted Subsidiary of PCA held by any current or former
officers, directors or employees of PCA (or any of its Restricted
Subsidiaries') pursuant to any management equity subscription agreement,
stock option agreement or stock plan entered into in the ordinary course
of business; PROVIDED that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $5.0 million in any calendar year;
(6) repurchases of Equity Interests of PCA deemed to occur upon exercise of
stock options to the extent Equity Interests represent a portion of the
exercise price of such options;
(7) cash payments, advances, loans or expense reimbursements made to PCA
Holdings to permit PCA Holdings to pay its general operating expenses
(other than management, consulting or similar fees payable to Affiliates
of PCA), franchise tax obligations, accounting, legal, corporate
reporting and administrative expenses incurred in the ordinary course of
its business in an amount not to exceed $1.0 million in the aggregate in
any fiscal year; and
(8) so long as no Voting Rights Triggering Event has occurred and is
continuing or would be caused thereby, other Restricted Payments in an
aggregate amount not to exceed $25.0 million since the Issue Date.
The amount of all Restricted Payments (other than cash) shall be the fair market
value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by PCA or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by the Board of Directors whose resolution with respect thereto
shall be conclusive. The Board of Directors' determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the fair market value exceeds $25.0 million.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and PCA will
not issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that PCA
may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock,
and the Restricted Subsidiaries of PCA may incur Indebtedness or issue preferred
stock, if the Fixed Charge Coverage Ratio for PCA's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock or preferred stock is issued would have been at least
2.0 to 1 or, if a Timberlands Repurchase has occurred, 2.25 to 1, in either case
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
preferred stock or Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any of
the following items of Indebtedness, which we refer to as the certificate of
designation permitted debt:
(1) the incurrence by PCA and its Restricted Subsidiaries of additional
Indebtedness under Credit Facilities and letters of credit under Credit
Facilities in an aggregate principal amount at any one time outstanding
under this clause (1) (with letters of credit being deemed to have a
principal amount equal to the face amount) not to exceed $1.51 billion
LESS the aggregate amount of all Net Proceeds of Asset Sales that have
been applied by PCA or any of its Restricted Subsidiaries since the
Issue Date to
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permanently repay Indebtedness under a Credit Facility pursuant to the
covenant described above under the caption "-Repurchase at the Option of
Holders-Asset Sales" and LESS the amount of Indebtedness outstanding
under clause (18) below; PROVIDED that the amount of Indebtedness
permitted to be incurred pursuant to Credit Facilities in accordance
with this clause (1) shall be in addition to any Indebtedness permitted
to be incurred pursuant to Credit Facilities, in reliance on, and in
accordance with, clauses (4) and (19) below or in the first paragraph of
this covenant;
(2) the incurrence by PCA and its Restricted Subsidiaries of the Existing
Indebtedness;
(3) the incurrence by PCA and its Restricted Subsidiaries of Indebtedness
represented by the exchange notes and the related subsidiary guarantees;
(4) the incurrence by PCA or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of PCA or such Restricted Subsidiary, in an aggregate principal
amount (which amount may, but need not be, incurred in whole or in part
under Credit Facilities), including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate,
modify or renew, in whole or in part, any Indebtedness incurred pursuant
to this clause (4), not to exceed the greater of 7.5% of Total Assets as
of the date of incurrence and $50.0 million at any time outstanding;
(5) the incurrence by PCA or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to refund, refinance, replace, amend, restate, modify or renew,
in whole or in part, Indebtedness (other than intercompany Indebtedness)
that was permitted by the Certificate of Designation to be incurred
under the first paragraph of this covenant or clauses (2), (3), (4),
(15) or (19) of this paragraph;
(6) the incurrence by PCA or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among PCA and any of its Restricted
Subsidiaries; PROVIDED, HOWEVER, that each of the following shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by PCA or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (6):
(a) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than PCA or a
Restricted Subsidiary thereof; and
(b) any sale or other transfer of any such Indebtedness to a Person that
is not either PCA or a Restricted Subsidiary thereof;
(7) the incurrence by PCA or any of its Restricted Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating or fixed rate
Indebtedness that is permitted by the terms of the certificate of
designation to be outstanding and the incurrence of Indebtedness under
Other Hedging Agreements providing protection against fluctuations in
currency values or in the price of energy, commodities and raw materials
in connection with PCA's or any of its Restricted Subsidiaries'
operations so long as management of PCA or such Restricted Subsidiary,
as the case may be, has determined that the entering into of such Other
Hedging Agreements are bona fide hedging activities;
(8) the guarantee by PCA or any of its Restricted Subsidiaries of
Indebtedness of PCA or a Restricted Subsidiary of PCA that was permitted
to be incurred by another provision of this covenant;
(9) the incurrence by PCA's Unrestricted Subsidiaries of Non-Recourse Debt,
PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of PCA that was not permitted by this clause (9);
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(10) the accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of
this covenant; PROVIDED, in each such case, that the amount thereof is
included in Fixed Charges and Consolidated Indebtedness of PCA as
accrued;
(11) the incurrence by PCA of Indebtedness and the issuance by PCA of
preferred stock, in each case, that is deemed to be incurred or issued,
as the case may be, in connection with the Contribution;
(12) the incurrence by PCA or any of its Restricted Subsidiaries of
obligations pursuant to foreign currency agreements entered into in the
ordinary course of business and not for speculative purposes;
(13) Indebtedness arising from agreements of PCA or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; PROVIDED, HOWEVER, that (a) such
Indebtedness is not reflected on the balance sheet of PCA or any
Restricted Subsidiary (contingent obligations referred to in a footnote
to financial statements and not otherwise reflected on the balance sheet
will not be deemed to be reflected on such balance sheet for purposes of
this clause (a)) and (b) the maximum assumable liability in respect of
all such Indebtedness shall at no time exceed the gross proceeds
including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect
to any subsequent changes in value) actually received by PCA and its
Restricted Subsidiaries in connection with such disposition;
(14) the incurrence of obligations in respect of performance and surety bonds
and completion guarantees provided by PCA or any of its Restricted
Subsidiaries in the ordinary course of business;
(15) the incurrence of Indebtedness by any Restricted Subsidiary that is
organized outside of the United States in connection with the
acquisition of assets or a new Restricted Subsidiary in an aggregate
principal amount, including all Permitted Refinancing Indebtedness
incurred to refund, refinance, replace, amend, restate, modify or renew,
in whole or in part, any Indebtedness incurred pursuant to this clause
(15), not to exceed $25.0 million at any one time outstanding; PROVIDED
that such Indebtedness was incurred by the prior owner of such asset or
such Restricted Subsidiary prior to such acquisition by the Restricted
Subsidiary and was not incurred in connection with, or in contemplation
of, such acquisition by the Restricted Subsidiary;
(16) the incurrence of Indebtedness consisting of guarantees of loans made to
management for the purpose of permitting management to purchase Equity
Interests of PCA, in an amount not to exceed $7.5 million at any one
time outstanding;
(17) Indebtedness of PCA that may be deemed to exist under the Contribution
Agreement as a result of PCA's obligation to pay purchase price
adjustments; PROVIDED that the incurrence of Indebtedness to pay the
purchase price adjustment shall be deemed to constitute an incurrence of
Indebtedness that was not permitted by this clause (17);
(18) the incurrence of Indebtedness by a Receivables Subsidiary in a
Qualified Receivables Transaction that is not recourse to PCA or any of
its Subsidiaries (except for Standard Securitization Undertakings);
PROVIDED that the aggregate principal amount of Indebtedness outstanding
under this clause (18) and clause (1) above does not exceed $1.51
billion LESS the aggregate amount of all Net Proceeds of Asset Sales
that have been applied by PCA or any of its Restricted Subsidiaries
since the Issue Date to permanently repay Indebtedness under a Credit
Facility pursuant to the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales;" and
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(19) the incurrence by PCA of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) (which amount may,
but need not be, incurred in whole or in part under the Credit
Facilities) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate,
modify or renew, in whole or in part, any Indebtedness incurred pursuant
to this clause (19), not to exceed $75.0 million.
For purposes of determining compliance with this "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the categories of
certificate of designation permitted debt described in clauses (1) through (19)
above, or is entitled to be incurred pursuant to the first paragraph of this
covenant, PCA will be permitted to classify or later reclassify such item of
Indebtedness in any manner that complies with this covenant. Indebtedness under
Credit Facilities outstanding on the Issue Date shall be deemed to have been
incurred on such date in reliance on the exception provided by clause (1) of the
definition of certificate of designation permitted debt.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
PCA will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
PCA or any of its Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to PCA or any of its Restricted Subsidiaries;
(2) make loans or advances to PCA or any of its Restricted Subsidiaries; or
(3) transfer any of its properties or assets to PCA or any of its Restricted
Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date;
(2) the notes indenture, the exchange notes and the subsidiary guarantees of
the exchange notes;
(3) the certificate of designation;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of a Person
acquired by PCA or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, PROVIDED that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of
the certificate of designation to be incurred;
(6) non-assignment provisions in leases, licenses or similar agreements
entered into in the ordinary course of business and consistent with past
practices;
(7) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions on the property so acquired of the
nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(9) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, assets sale agreements, stock sale
agreements and other similar agreements entered into in the ordinary
course of business;
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(11) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(12) the Credit Agreement as in effect on the Issue Date;
(13) restrictions on the transfer of assets subject to any Lien permitted
under the certificate of designation imposed by the holder of such Lien;
(14) any Purchase Money Note or other Indebtedness or other contractual
requirements of a Receivables Subsidiary in connection with a Qualified
Receivables Transaction; PROVIDED that such restrictions apply only to
such Receivables Subsidiary;
(15) encumbrances or restrictions existing under or arising pursuant to
Credit Facilities entered into in accordance with the certificate of
designation or the subordinated exchange debentures indenture, as
applicable; PROVIDED that the encumbrances or restrictions in such
Credit Facilities are not materially more restrictive than those
contained in the Credit Agreement as in effect on the Issue Date; and
(16) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments
or obligations referred to in clauses (1) through (15) above; PROVIDED,
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good
faith judgment of the Board of Directors of PCA, not materially more
restrictive with respect to such dividend and other payment restrictions
than those contained in the dividends or other payment restrictions
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.
MERGER, CONSOLIDATION OR SALE OF ASSETS
PCA may not, directly or indirectly: (1) consolidate or merge with or into
another Person (whether or not PCA is the surviving corporation); or (2) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of PCA and its Restricted Subsidiaries taken as a whole, in
one or more related transactions, to another Person; unless:
(1) either: (a) PCA is the surviving corporation; or (b) the Person formed
by or surviving any such consolidation or merger (if other than PCA) or
to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District
of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than PCA) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the
obligations of PCA under the new preferred stock, the certificate of
designation and the preferred stock registration rights agreement
pursuant to agreements reasonably satisfactory to the transfer agent;
(3) immediately after such transaction no Voting Rights Triggering Event
exists; and
(4) PCA or the Person formed by or surviving any such consolidation or
merger (if other than PCA), or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made will, on the date
of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
described above under the caption "-Incurrence of Indebtedness and
Issuance of Preferred Stock."
In addition, PCA may not, directly or indirectly, lease all or substantially all
of the properties or assets of PCA and its Restricted Subsidiaries, taken as a
whole, in one or more related transactions, to any other Person. This "Merger,
Consolidation or Sale of Assets" covenant will not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among PCA and any
of its Wholly Owned Restricted Subsidiaries.
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DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Voting Rights
Triggering Event. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by PCA and its Restricted Subsidiaries in the Subsidiary so designated will be
deemed to be an Investment made as of the time of such designation and will
either reduce the amount available for Restricted Payments under the first
paragraph of the covenant described above under the caption "-Restricted
Payments" or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments, as PCA shall determine.
That designation will only be permitted if such Investment would be permitted at
that time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Voting Rights Triggering Event.
TRANSACTIONS WITH AFFILIATES
PCA will not, and will not permit any of its Restricted Subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms taken as a whole that are no less
favorable to PCA or the relevant Restricted Subsidiary than those that
could have been obtained in a comparable transaction by PCA or such
Restricted Subsidiary with an unrelated Person; and
(2) PCA delivers to the transfer agent:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$25.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal, investment banking or advisory firm of
national standing; PROVIDED that this clause (b) shall not apply to
transactions with TPI and its subsidiaries in the ordinary course of
business at a time when Madison Dearborn Partners, LLC and its
Affiliates are entitled, directly or indirectly, to elect a majority
of the Board of Directors of PCA.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the first paragraph of this
covenant:
(1) any employment agreement entered into by PCA or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the
past practice of PCA or such Restricted Subsidiary;
(2) transactions between or among PCA and/or its Restricted Subsidiaries;
(3) transactions with a Person that is an Affiliate of PCA solely because
PCA owns an Equity Interest in such Person;
(4) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of PCA;
(5) sales of Equity Interests (other than Disqualified Stock) to Affiliates
of PCA;
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(6) the payment of transaction, management, consulting and advisory fees and
related expenses to Madison Dearborn Partners, LLC and its Affiliates;
PROVIDED that such fees shall not, in the aggregate, exceed $15.0
million (plus out-of-pocket expenses) in connection with the
Contribution or $2.0 million in any twelve-month period commencing after
the date of the Contribution;
(7) the payment of fees and expenses related to the Contribution other than
fees and expenses paid to Madison Dearborn Partners, LLC and its
Affiliates;
(8) Restricted Payments that are permitted by the provisions of the
certificate of designation described above under the caption
"-Restricted Payments;"
(9) transactions described in clause (11) of the definition of Permitted
Investments;
(10) reasonable fees and expenses and compensation paid to, and indemnity
provided on behalf of, officers, directors or employees of PCA or any
Subsidiary as determined in good faith by the Board of Directors of PCA
or senior management;
(11) payments made to PCA Holdings for the purpose of allowing PCA Holdings
to pay its general operating expenses, franchise tax obligations,
accounting, legal, corporate reporting and administrative expenses
incurred in the ordinary course of its business in an amount not to
exceed $1.0 million in the aggregate in any fiscal year;
(12) transactions contemplated by the Contribution Agreement and the
Transaction Agreements as the same were in effect on the Issue Date;
(13) transactions in connection with a Qualified Receivables Transaction; and
(14) transactions with either of the Initial Purchasers or any of their
respective Affiliates.
SALE AND LEASEBACK TRANSACTIONS
PCA will not, and will not permit any of its Restricted Subsidiaries to, enter
into any sale and leaseback transaction; PROVIDED that PCA or any Restricted
Subsidiary may enter into a sale and leaseback transaction if:
(1) either (a) PCA or that Restricted Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under the Fixed Charge
Coverage Ratio test in the first paragraph of the covenant described
above under the caption "-Incurrence of Indebtedness and Issuance of
Preferred Stock" or (b) the Net Proceeds of such sale and leaseback
transaction are applied to repay outstanding Exchange Debenture Senior
Debt; and
(2) the transfer of assets in that sale and leaseback transaction is
permitted by, and PCA applies the net proceeds of such transaction in
compliance with, the covenant described above under the caption
"-Repurchase at the Option of Holders-Asset Sales."
BUSINESS ACTIVITIES
PCA will not, and will not permit any Restricted Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to PCA and its Restricted Subsidiaries taken as a whole.
REPORTS
Whether or not required by the Commission, so long as any new preferred stock is
outstanding, PCA will furnish to the Holders of new preferred stock, within the
time periods specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if
PCA were required to file such Forms, including a
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"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and, with respect to the annual information only, a
report on the annual financial statements by PCA's certified independent
accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if PCA were required to file such reports.
If PCA has designated any of its Subsidiaries as Unrestricted Subsidiaries, then
the quarterly and annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of PCA and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of PCA.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange new preferred stock in accordance with the
certificate of designation if the requirements of the transfer agent for such
transfer or exchange are met. The transfer agent may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and PCA
may require a Holder to pay any taxes and fees required by law or permitted by
the certificate of designation.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the certificate of
designation or the new preferred stock may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate Liquidation
Preference of the new preferred stock then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, new preferred stock), and any existing default or
compliance with any provision of the certificate of designation or the new
preferred stock may be waived with the consent of the Holders of a majority in
aggregate Liquidation Preference of the then outstanding new preferred stock
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, new preferred stock).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any new preferred stock held by a non-consenting Holder):
(1) alter the voting rights with respect to the new preferred stock or
reduce the number of shares of new preferred stock whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the Liquidation Preference of or change the Mandatory Redemption
Date of any new preferred stock or alter the provisions with respect to
the redemption of the new preferred stock (other than provisions
relating to the covenants described above under the caption "-Repurchase
at the Option of Holders");
(3) reduce the rate of or change the time for payment of dividends on any
new preferred stock;
(4) waive a default in the payment of Liquidation Preference of, or
dividends or premium or Liquidated Damages, if any, on the new preferred
stock;
(5) make any new preferred stock payable in any form or money other than
that stated in the certificate of designation;
(6) waive a redemption payment with respect to any new preferred stock
(other than a payment required by one of the covenants described above
under the caption "-Repurchase at the Option of Holders"); or
(7) make any change in the preceding amendment and waiver provisions.
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Notwithstanding the preceding, without the consent of any Holder of new
preferred stock, PCA may (to the extent permitted by Delaware law) amend or
supplement the certificate of designation:
(1) to cure any ambiguity, defect, error or inconsistency;
(2) to provide for uncertificated new preferred stock in addition to or in
place of certificated new preferred stock;
(3) to provide for the assumption of PCA's obligations to Holders of new
preferred stock in the case of a merger or consolidation or sale of all
or substantially all of PCA's assets; or
(4) to make any change that would provide any additional rights or benefits
to the Holders of new preferred stock or that does not adversely affect
the legal rights under the certificate of designation of any such
Holder.
REISSUANCE
New preferred stock redeemed or otherwise acquired or retired by PCA will assume
the status of authorized but unissued preferred stock and may thereafter be
reissued in the same manner as the other authorized but unissued preferred
stock, but not as new preferred stock.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the certificate of
designation and subordinated exchange debentures indenture without charge by
writing to Packaging Corporation of America, 1900 West Field Court, Lake Forest,
Illinois 60045, Attention: Chief Financial Officer.
SUBORDINATED EXCHANGE DEBENTURES
The subordinated exchange debentures:
- will be general unsecured obligations of PCA; and
- will be subordinated in right of payment to all existing and future
Exchange Debenture Senior Debt of PCA.
The subordinated exchange debentures will not be guaranteed by any of PCA's
subsidiaries.
PCA will issue the subordinated exchange debentures under a subordinated
exchange debentures indenture between itself and the exchange trustee. The terms
of the subordinated exchange debentures include those stated in the subordinated
exchange debentures indenture and those made part of the subordinated exchange
debentures indenture by reference to the Trust Indenture Act.
The following description is a summary of the material provisions of the
subordinated exchange debentures indenture. It does not restate that agreement
in its entirety. We urge you to read the subordinated exchange debentures
indenture because it, and not this description, defines your rights as holders
of the subordinated exchange debentures. Copies of the subordinated exchange
debentures indenture are available as set forth below under "-Additional
Information." Certain defined terms used in this description but not defined
below under "-Certain Definitions" have the meanings assigned to them in the
subordinated exchange debentures indenture.
PRINCIPAL, MATURITY AND INTEREST
The subordinated exchange debentures indenture provides for the issuance by PCA
of subordinated exchange debentures only in exchange for new preferred stock and
to pay interest on outstanding subordinated exchange debentures as described
below. The subordinated exchange debentures will mature on April 1, 2010.
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Interest on the subordinated exchange debentures will accrue at the rate of
12 3/8% per annum and will be payable semi-annually in arrears on April 1 and
October 1, commencing on April 1, 1999. PCA will make each interest payment to
the Holders of record on the immediately preceding March 15 and September 15.
On or prior to April 1, 2004, PCA may, at its option, make interest payments:
(1) in cash; or
(2) in additional subordinated exchange debentures having an aggregate
principal amount equal to the amount of such interest.
After April 1, 2004, PCA will pay interest in cash only. PCA does not expect to
pay any interest in cash before April 1, 2004.
Interest on the subordinated exchange debentures will accrue from the date of
original issuance or, if interest has already been paid, from the date it was
most recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE SUBORDINATED EXCHANGE DEBENTURES
If a Holder of at least $1.0 million in aggregate principal amount of the
subordinated exchange debentures has given wire transfer instructions to PCA,
PCA will pay all principal, interest and premium and Liquidated Damages, if any,
on that Holder's subordinated exchange debentures in accordance with those
instructions. All other payments on subordinated exchange debentures will be
made at the office or agency of the paying agent and registrar within the City
and State of New York unless PCA elects to make interest payments by check
mailed to the Holders at their addresses set forth in the register of Holders.
PAYING AGENT AND REGISTRAR FOR THE SUBORDINATED EXCHANGE DEBENTURES
The exchange trustee will initially act as paying agent and registrar. PCA may
change the paying agent or registrar without prior notice to the Holders, and
PCA or any of its Subsidiaries may act as paying agent or registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange subordinated exchange debentures in accordance
with the subordinated exchange debentures indenture. The registrar and the
exchange trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and PCA may require a Holder to
pay any taxes and fees required by law or permitted by the subordinated exchange
debentures indenture. PCA is not required to transfer or exchange any
subordinated exchange debenture selected for redemption. Also, PCA is not
required to transfer or exchange any subordinated exchange debenture for a
period of 15 days before a selection of subordinated exchange debentures to be
redeemed.
The registered Holder of a subordinated exchange debenture will be treated as
the owner of it for all purposes.
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if any,
and any other Obligations on, or relating to the subordinated exchange
debentures will be subordinated to the prior payment in full in cash or Cash
Equivalents (other than Cash Equivalents of the type referred to in clauses (3)
and (4) of the definition thereof) of all Exchange Debenture Senior Debt of PCA,
including Exchange Debenture Senior Debt incurred after the Issue Date.
The holders of Exchange Debenture Senior Debt will be entitled to receive
payment in full in cash or Cash Equivalents (other than Cash Equivalents of the
type referred to in clauses (3) and (4) of the definition thereof) of all
Obligations due in respect of Exchange Debenture Senior Debt (including interest
after the commencement
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of any bankruptcy proceeding at the rate specified in the applicable Exchange
Debenture Senior Debt, whether or not such interest is an allowable claim)
before the Holders of subordinated exchange debentures will be entitled to
receive any payment or distribution of any kind or character with respect to any
Obligations on, or relating to, the subordinated exchange debentures (except
that Holders of subordinated exchange debentures may receive and retain
Permitted Junior Securities and payments made from the trust described under
"-Legal Defeasance and Covenant Defeasance" so long as the trust was created in
accordance with all relevant conditions specified in the subordinated exchange
debentures indenture at the time it was created), in the event of any
distribution to creditors of PCA:
(1) in a liquidation or dissolution of PCA;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to PCA or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of PCA's assets and liabilities.
PCA also may not make any payment or distribution of any kind or character with
respect to any Obligations on, or with respect to, the subordinated exchange
debentures or acquire any subordinated exchange debentures for cash or property
or otherwise (except in Permitted Junior Securities or from the trust described
under "-Legal Defeasance and Covenant Defeasance" so long as the trust was
created in accordance with all relevant conditions specified in the subordinated
exchange debentures indenture at the time it was created) if:
(1) a payment default on Designated Exchange Debenture Senior Debt occurs
and is continuing; or
(2) any other default occurs and is continuing on any Designated Exchange
Debenture Senior Debt that permits holders of that Designated Exchange
Debenture Senior Debt to accelerate its maturity and the exchange
trustee receives a notice of such default (an "Exchange Debenture
Payment Blockage Notice") from the Representative of that Designated
Exchange Debenture Senior Debt.
Payments on and distributions with respect to any Obligations on, or with
respect to, the subordinated exchange debentures may and shall be resumed:
(1) in the case of a payment default, upon the date on which the default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of (a) the date on which
all nonpayment defaults are cured or waived, (b) 179 days after the date
of delivery of the applicable Payment Blockage Notice or (c) the
exchange trustee receives notice from the Representative for such
Designated Exchange Debenture Senior Debt rescinding the Payment
Blockage Notice, unless the maturity of any Designated Exchange
Debenture Senior Debt has been accelerated.
No new Exchange Debenture Payment Blockage Notice will be effective unless and
until at least 360 days have elapsed since the effectiveness of the immediately
prior Exchange Debenture Payment Blockage Notice.
No nonpayment default that existed or was continuing on the date of delivery of
any Exchange Debenture Payment Blockage Notice to the exchange trustee shall be,
or be made, the basis for a subsequent Exchange Debenture Payment Blockage
Notice unless such default shall have been cured or waived for a period of not
less than 90 consecutive days.
If the exchange trustee or any Holder of the subordinated exchange debentures
receives any payment or distribution of assets of any kind or character, whether
in cash, properties or securities, in respect of any Obligations with respect to
the subordinated exchange debentures (except in Permitted Junior Securities or
from the trust described under "-Legal Defeasance and Covenant Defeasance" so
long as the trust was created in accordance with all relevant conditions
specified in the subordinated exchange debentures indenture at the time it was
created) at a time when such payment is prohibited by these subordination
provisions, the exchange trustee or the Holder, as the case may be, shall hold
the payment in trust for the benefit of the holders of
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Exchange Debenture Senior Debt. Upon the proper written request of the holders
of Exchange Debenture Senior Debt, the exchange trustee or the Holder, as the
case may be, shall forthwith deliver the amounts in trust to the holders of
Exchange Debenture Senior Debt (on a pro rata basis based on the aggregate
principal amount of Exchange Debenture Senior Debt) or their proper
Representative.
PCA must promptly notify holders of Exchange Debenture Senior Debt if payment of
the subordinated exchange debentures is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event of a
bankruptcy, liquidation or reorganization of PCA, Holders of subordinated
exchange debentures may recover less ratably than creditors of PCA who are
holders of Exchange Debenture Senior Debt. See "Risk Factors-Subordination."
OPTIONAL REDEMPTION
At any time prior to April 1, 2002, PCA may on any one occasion redeem all, or
on any one or more occasions redeem up to 35%, of the then outstanding aggregate
principal amount of subordinated exchange debentures issued under the
subordinated exchange debentures indenture at a redemption price of 112.375% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net cash proceeds of one or
more offerings of common stock of PCA or a capital contribution to PCA's common
equity made with the net cash proceeds of an offering of common stock of PCA's
direct or indirect parent or with Timberlands Net Proceeds (which amount shall
be reduced on a dollar for dollar basis by the amount of Timberlands Net
Proceeds used to make a Timberlands Repurchase in accordance with the fifth
paragraph described under the caption "-Repurchase at Option of Holders-Asset
Sales"); PROVIDED that
(1) except in the case of a redemption of the then outstanding subordinated
exchange debentures, at least 65% of the aggregate principal amount of
subordinated exchange debentures issued under the subordinated exchange
debentures indenture remains outstanding immediately after the
occurrence of such redemption (excluding subordinated exchange
debentures held by PCA and its Subsidiaries); and
(2) the redemption must occur within 60 days of the date of the closing of
such offering, the making of such capital contribution or the
consummation of a Timberlands Sale.
Prior to April 1, 2004, PCA may also redeem the subordinated exchange
debentures, as a whole but not in part, upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days' prior written notice, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the date of redemption.
Except pursuant to the preceding paragraphs, the subordinated exchange
debentures will not be redeemable at PCA's option prior to April 1, 2004.
Nothing in the subordinated exchange debentures indenture prohibits PCA from
acquiring the subordinated exchange debentures by means other than a redemption,
whether pursuant to an issuer tender offer or otherwise, assuming such
acquisition does not otherwise violate the terms of the subordinated exchange
debentures indenture.
After April 1, 2004, PCA may redeem all or a part of the subordinated exchange
debentures upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 1 of the years indicated below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
YEAR PERCENTAGE
- ---------------------------------------------------------------- ----------
<S> <C>
2004............................................................ 106.1875%
2005............................................................ 104.6406%
2006............................................................ 103.0938%
2007............................................................ 101.5469%
2008 and thereafter............................................. 100.0000%
</TABLE>
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MANDATORY REDEMPTION
PCA is not required to make mandatory redemption or sinking fund payments with
respect to the subordinated exchange debentures.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of subordinated exchange debentures
will have the right to require PCA to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of that Holder's subordinated exchange
debentures pursuant to a Change of Control Offer on the terms set forth in the
subordinated exchange debentures indenture, which terms are substantially
identical to those contained in the certificate of designation.
ASSET SALES
PCA will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale except in accordance with an Asset Sale covenant that
is substantially identical to the Asset Sale covenant contained in the
certificate of designation.
SELECTION AND NOTICE
If less than all of the subordinated exchange debentures are to be redeemed at
any time, the exchange trustee will select subordinated exchange debentures for
redemption as follows:
(1) if the subordinated exchange debentures are listed, in compliance with
the requirements of the principal national securities exchange on which
the subordinated exchange debentures are listed; or
(2) if the subordinated exchange debentures are not so listed, on a pro rata
basis, by lot or by such method as the exchange trustee shall deem fair
and appropriate.
No subordinated exchange debentures of $1,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each Holder of subordinated
exchange debentures to be redeemed at its registered address. Notices of
redemption may not be conditional.
If any subordinated exchange debenture is to be redeemed in part only, the
notice of redemption that relates to that subordinated exchange debenture shall
state the portion of the principal amount thereof to be redeemed. A new
subordinated exchange debenture in principal amount equal to the unredeemed
portion of the original subordinated exchange debenture will be issued in the
name of the Holder thereof upon cancellation of the original subordinated
exchange debenture. Subordinated exchange debentures called for redemption
become due on the date fixed for redemption. On and after the redemption date,
interest ceases to accrue on subordinated exchange debentures or portions of
them called for redemption.
CERTAIN COVENANTS
The subordinated exchange debentures indenture will contain covenants
substantially identical to those contained in the certificate of designation.
EVENTS OF DEFAULT AND REMEDIES
Each of the following will be an Event of Default under the subordinated
exchange debentures indenture:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the subordinated exchange
debentures, whether or not prohibited by the subordination provisions of
the subordinated exchange debentures indenture;
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(2) default in payment when due of the principal of, or premium, if any, on
the subordinated exchange debentures, whether or not prohibited by the
subordination provisions of the subordinated exchange debentures
indenture;
(3) failure by PCA or any of its Restricted Subsidiaries to comply with the
provisions described under the captions "-Repurchase at the Option of
Holders-Change of Control," "-Repurchase at the Option of Holders-Asset
Sales" or "-Certain Covenants-Merger, Consolidation or Sale of Assets;"
(4) failure by PCA or any of its Restricted Subsidiaries for 30 days after
notice by the exchange trustee or by the Holders of at least 25% in
principal amount of the subordinated exchange debentures to comply with
any of the other agreements in the subordinated exchange debentures
indenture;
(5) default under any mortgage, indenture or instrument under which there is
issued and outstanding any Indebtedness for money borrowed by PCA or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by
PCA or any of its Restricted Subsidiaries), if that default:
(a) is caused by a failure to pay principal at the final stated maturity
of such Indebtedness (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its express
maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $25.0 million or more;
(6) failure by PCA or any of its Restricted Subsidiaries to pay final
nonappealable judgments aggregating in excess of $25.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days;
and
(7) certain events of bankruptcy or insolvency with respect to PCA or any of
its Significant Subsidiaries.
In the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to PCA, all outstanding subordinated exchange debentures
will become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the exchange trustee (upon
request of Holders of at least 25% in principal amount of the subordinated
exchange debentures then outstanding) or the Holders of at least 25% in
principal amount of the then outstanding subordinated exchange debentures may
declare all the subordinated exchange debentures to be due and payable by notice
in writing to PCA and the trustee specifying the respective Event of Default and
that such notice is a "notice of acceleration" (the "Acceleration Notice"), and
the same (1) shall become immediately due and payable or (2) if there are any
amounts outstanding under the Credit Agreement, shall become immediately due and
payable upon the first to occur of an acceleration under the Credit Agreement or
five Business Days after receipt by PCA and the Representative under the Credit
Agreement of such Acceleration Notice but only if such Event of Default is then
continuing.
Holders of the subordinated exchange debentures may not enforce the subordinated
exchange debentures indenture or the subordinated exchange debentures except as
provided in the subordinated exchange debentures indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
subordinated exchange debentures may direct the exchange trustee in its exercise
of any trust or power. The exchange trustee may withhold from Holders of the
subordinated exchange debentures notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages) if it determines that withholding
notice is in their interest.
The Holders of a majority in aggregate principal amount of the subordinated
exchange debentures then outstanding by notice to the exchange trustee may on
behalf of the Holders of all of the subordinated exchange
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debentures waive any existing Default or Event of Default and its consequences
under the subordinated exchange debentures indenture except a continuing Default
or Event of Default in the payment of interest or Liquidated Damages on, or the
principal of, the subordinated exchange debentures.
In the case of any Event of Default occurring by reason of any willful action or
inaction taken or not taken by or on behalf of PCA in bad faith with the
intention of avoiding payment of the premium that PCA would have had to pay if
PCA then had elected to redeem the subordinated exchange debentures pursuant to
the optional redemption provisions of the subordinated exchange debentures
indenture, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the subordinated
exchange debentures. If an Event of Default occurs prior to April 1, 2004, by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of PCA in bad faith with the intention of avoiding the prohibition on redemption
of the subordinated exchange debentures prior to April 1, 2004 then the premium
specified in the subordinated exchange debentures indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the subordinated exchange debentures.
PCA is required to deliver to the exchange trustee annually a statement
regarding compliance with the subordinated exchange debentures indenture. Upon
becoming aware of any Default or Event of Default, PCA is required to deliver to
the exchange trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of PCA, as such,
shall have any liability for any obligations of PCA under the subordinated
exchange debentures, the subordinated exchange debentures indenture, or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of subordinated exchange debentures by accepting a
subordinated exchange debenture waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the
subordinated exchange debentures. The waiver may not be effective to waive
liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
PCA may, at its option and at any time, elect to have all of its obligations
discharged with respect to the outstanding subordinated exchange debentures
("Legal Defeasance") except for:
(1) the rights of Holders of outstanding subordinated exchange debentures to
receive payments in respect of the principal of, or interest or premium
and Liquidated Damages, if any, on such subordinated exchange debentures
when such payments are due from the trust referred to below;
(2) PCA's obligations with respect to the subordinated exchange debentures
concerning issuing temporary subordinated exchange debentures,
registration of subordinated exchange debentures, mutilated, destroyed,
lost or stolen subordinated exchange debentures and the maintenance of
an office or agency for payment and money for security payments held in
trust;
(3) the rights, powers, trusts, duties and immunities of the exchange
trustee, and PCA's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the subordinated exchange debentures
indenture.
In addition, PCA may, at its option and at any time, elect to have the
obligations of PCA released with respect to certain covenants that are described
in the subordinated exchange debentures indenture ("Covenant Defeasance") and
thereafter any omission to comply with those covenants shall not constitute a
Default or Event of Default with respect to the subordinated exchange
debentures. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the subordinated exchange debentures.
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In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) PCA must irrevocably deposit with the exchange trustee, in trust, for
the benefit of the Holders of the subordinated exchange debentures, cash
in U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, or interest and premium and Liquidated Damages, if any, on
the outstanding subordinated exchange debentures on the stated maturity
or on the applicable redemption date, as the case may be, and PCA must
specify whether the subordinated exchange debentures are being defeased
to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, PCA shall have delivered to the
exchange trustee an Opinion of Counsel reasonably acceptable to the
exchange trustee confirming that (a) PCA has received from, or there has
been published by, the Internal Revenue Service a ruling or (b) since
the Issue Date, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
subordinated exchange debentures will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, PCA shall have delivered to the
exchange trustee an Opinion of Counsel reasonably acceptable to the
exchange trustee confirming that the Holders of the outstanding
subordinated exchange debentures will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than the subordinated exchange debentures indenture
but in any event including the Credit Agreement) to which PCA or any of
its Subsidiaries is a party or by which PCA or any of its Subsidiaries
is bound;
(6) PCA must have delivered to the exchange trustee an Opinion of Counsel to
the effect that, assuming no intervening bankruptcy of PCA between the
date of deposit and the 91st day following the deposit and assuming that
no Holder is an "insider" of PCA under applicable bankruptcy law, after
the 91st day following the deposit, the trust funds will not be subject
to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally;
(7) PCA must deliver to the exchange trustee an Officers' Certificate
stating that the deposit was not made by PCA with the intent of
preferring the Holders of subordinated exchange debentures over the
other creditors of PCA with the intent of defeating, hindering, delaying
or defrauding creditors of PCA or others; and
(8) PCA must deliver to the exchange trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied
with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the subordinated
exchange debentures indenture or the subordinated exchange debentures may be
amended or supplemented with the consent of the Holders of at
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least a majority in principal amount of the subordinated exchange debentures
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, subordinated exchange
debentures), or, if no subordinated exchange debentures are outstanding, the
holders of a majority in Liquidation Preference of new preferred stock then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, new preferred stock), and
any existing default or compliance with any provision of the subordinated
exchange debentures indenture or the subordinated exchange debentures may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding subordinated exchange debentures (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, subordinated exchange debentures) or, if no subordinated
exchange debentures are outstanding, the holders of a majority in Liquidation
Preference of new preferred stock then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, new preferred stock).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any subordinated exchange debentures (a) held by a
non-consenting Holder or, (b) if no subordinated exchange debentures are
outstanding, to be received by a Holder of new preferred stock):
(1) reduce the principal amount of subordinated exchange debentures whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any subordinated
exchange debenture or alter the provisions with respect to the
redemption of the subordinated exchange debentures (other than
provisions relating to the covenants described above under the caption
"-Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any
subordinated exchange debenture;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, or Liquidated Damages, if any, on the subordinated
exchange debentures (except a rescission of acceleration of the
subordinated exchange debentures by the Holders of at least a majority
in aggregate principal amount of the subordinated exchange debentures
and a waiver of the payment default that resulted from such
acceleration);
(5) make any subordinated exchange debenture payable in money other than
that stated in the subordinated exchange debentures;
(6) make any change in the provisions of the subordinated exchange
debentures indenture relating to waivers of past Defaults or the rights
of Holders of subordinated exchange debentures to receive payments of
principal of, or interest or premium or Liquidated Damages, if any, on
the subordinated exchange debentures;
(7) waive a redemption payment with respect to any subordinated exchange
debenture (other than a payment required by one of the covenants
described above under the caption "-Repurchase at the Option of
Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the subordinated
exchange debentures indenture relating to subordination that adversely affects
the rights of the Holders of the subordinated exchange debentures will require
the consent of the Holders of at least 75% in aggregate principal amount of
subordinated exchange debentures then outstanding.
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Notwithstanding the preceding, without the consent of any Holder of subordinated
exchange debentures, PCA and the exchange trustee may amend or supplement the
subordinated exchange debentures indenture or the subordinated exchange
debentures (or, if no subordinated exchange debentures are outstanding, the
Holders of at least 75% in Liquidation Preference of new preferred stock then
outstanding):
(1) to cure any ambiguity, defect, error or inconsistency;
(2) to provide for uncertificated subordinated exchange debentures in
addition to or in place of certificated subordinated exchange
debentures;
(3) to provide for the assumption of PCA's obligations to Holders of
subordinated exchange debentures in the case of a merger or
consolidation or sale of all or substantially all of PCA's assets;
(4) to make any change that would provide any additional rights or benefits
to the Holders of subordinated exchange debentures or that does not
adversely affect the legal rights under the subordinated exchange
debentures indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the subordinated exchange debentures
indenture under the Trust Indenture Act.
SATISFACTION AND DISCHARGE
The subordinated exchange debentures indenture will be discharged and will cease
to be of further effect as to all subordinated exchange debentures issued
thereunder, when:
(1) either:
(a) all subordinated exchange debentures that have been authenticated
(except lost, stolen or destroyed subordinated exchange debentures
that have been replaced or paid and subordinated exchange debentures
for whose payment money has theretofore been deposited in trust and
thereafter repaid to PCA) have been delivered to the exchange trustee
for cancellation; or
(b) all subordinated exchange debentures that have not been delivered to
the exchange trustee for cancellation have become due and payable by
reason of the making of a notice of redemption or otherwise, cash in
U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient without consideration
of any reinvestment of interest, to pay and discharge the entire
indebtedness on the subordinated exchange debentures not delivered to
the exchange trustee for cancellation for principal, premium and
Liquidated Damages, if any, and accrued interest to the date of
maturity or redemption;
(2) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute
a default under, any other instrument to which PCA is a party or by
which PCA is bound;
(3) PCA has paid or caused to be paid all sums payable by it under the
subordinated exchange debentures indenture; and
(4) PCA has delivered irrevocable instructions to the exchange trustee under
the subordinated exchange debentures indenture to apply the deposited
money toward the payment of the subordinated exchange debentures at
maturity or the redemption date, as the case may be.
In addition, PCA must deliver an Officers' Certificate and an Opinion of Counsel
to the exchange trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
CONCERNING THE EXCHANGE TRUSTEE
If the exchange trustee becomes a creditor of PCA, the subordinated exchange
debentures indenture limits its right to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any
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such claim as security or otherwise. The exchange trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
subordinated exchange debentures will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the exchange trustee, subject to certain exceptions. The subordinated exchange
debentures indenture provides that in case an Event of Default shall occur and
be continuing, the exchange trustee will be required, in the exercise of its
power, to use the degree of care of a prudent person in the conduct of his or
her own affairs. Subject to such provisions, the exchange trustee will be under
no obligation to exercise any of its rights or powers under the subordinated
exchange debentures indenture at the request of any Holder of subordinated
exchange debentures, unless such Holder shall have offered to the exchange
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
BOOK-ENTRY, DELIVERY AND FORM
For purposes of the following description of the book-entry, delivery and form
provisions of the new preferred stock and underlying subordinated exchange
debentures, references to "Certificates" shall mean certificates representing
the new preferred stock on and prior to the Exchange Date and the subordinated
exchange debentures after the Exchange Date.
Certificates initially will be represented by one or more shares of new
preferred stock in registered, global form (collectively, the "Global
Certificates"). The Global Certificates will be deposited upon issuance with the
transfer agent or exchange trustee as custodian for The Depository Trust Company
("DTC"), in New York, New York, and registered in the name of DTC or its
nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the Global Certificates may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Certificates may not be exchanged
for securities in certificated form except in the limited circumstances
described below. See "-Exchange of Global Certificates for Certificated
Securities."
Except in the limited circumstances described below, owners of beneficial
interests in the Global Certificates will not be entitled to receive physical
delivery of securities in certificated form. In addition, transfers of
beneficial interests in the Global Certificates will be subject to the
applicable rules and procedures of DTC and its direct or indirect participants,
which may change from time to time.
The new preferred stock or the subordinated exchange debentures, as applicable,
may be presented for registration of transfer and exchange at the offices of the
transfer agent or exchange trustee, as applicable.
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DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC is provided
solely as a matter of convenience. These operations and procedures are solely
within the control of DTC and are subject to changes by it. PCA takes no
responsibility for these operations and procedures and urges investors to
contact DTC or its participants directly to discuss these matters.
DTC has advised PCA that it is a limited-purpose trust company created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised PCA that pursuant to procedures established by it:
(1) upon deposit of the Global Certificates, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Certificates; and
(2) ownership of these interests in the Global Certificates will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners
of beneficial interest in the Global Certificates).
The laws of some states require that certain Persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Certificate to such Persons will be
limited to that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants, the ability of a Person
having beneficial interests in a Global Certificate to pledge such interests to
Persons that do not participate in the DTC system, or otherwise take actions in
respect of such interests, may be affected by the lack of a physical certificate
evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL CERTIFICATES WILL
NOT HAVE NEW PREFERRED STOCK OR SUBORDINATED EXCHANGE DEBENTURES, AS APPLICABLE,
REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF NEW PREFERRED
STOCK OR SUBORDINATED EXCHANGE DEBENTURES, AS APPLICABLE, IN CERTIFICATED FORM
AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR "HOLDERS" THEREOF UNDER THE
CERTIFICATE OF DESIGNATION OR THE SUBORDINATED EXCHANGE DEBENTURES INDENTURE, AS
APPLICABLE, FOR ANY PURPOSE.
Payments in respect of Liquidation Preference, dividends, principal, interest,
premium, if any, and Liquidated Damages, if any, on a Global Certificate
registered in the name of DTC or its nominee will be payable to DTC in its
capacity as the registered Holder under the certificate of designation or the
subordinated exchange debentures indenture, as applicable. Under the terms of
the certificate of designation and the subordinated exchange debentures
indenture, PCA and the transfer agent or exchange trustee, as applicable, will
treat the Persons in whose names the new preferred stock or subordinated
exchange debentures, as applicable, including the Global
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Certificates, are registered as the owners thereof for the purpose of receiving
payments and for all other purposes. Consequently, neither PCA, the transfer
agent nor the exchange trustee nor any of their respective agents has or will
have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interest in the Global Certificates, or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the
beneficial ownership interests in the Global Certificates; or
(2) any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants.
DTC has advised PCA that its current practice, upon receipt of any payment in
respect of securities such as the new preferred stock (including dividends) or
the subordinated exchange debentures (including principal and interest), as
applicable, is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date.
Each relevant Participant is credited with an amount proportionate to its
beneficial ownership of an interest in the principal amount of the relevant
security as shown on the records of DTC. Payments by the Participants and the
Indirect Participants to the beneficial owners of new preferred stock or
subordinated exchange debentures, as applicable, will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the transfer agent, the exchange trustee or PCA. Neither PCA, the transfer
agent nor the exchange trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the new preferred stock or
subordinated exchange debentures, as applicable, and PCA, the transfer agent and
the exchange trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee for all purposes.
DTC has advised PCA that it will take any action permitted to be taken by a
Holder of new preferred stock or subordinated exchange debentures, as
applicable, only at the direction of one or more Participants to whose account
DTC has credited the interests in the Global Certificates and only in respect of
such portion of the Liquidation Preference of the new preferred stock or the
aggregate principal amount of the subordinated exchange debentures, as
applicable, as to which such Participant or Participants has or have given such
direction. However, if there is (a) a Voting Rights Triggering Event under the
new preferred stock or (b) an Event of Default under the subordinated exchange
debentures, DTC reserves the right to exchange the Global Certificates for
legended securities in certificated form, and to distribute such Certificates to
its Participants.
EXCHANGE OF GLOBAL CERTIFICATES FOR CERTIFICATED SECURITIES
A Global Certificate is exchangeable for definitive Certificates in registered
certificated form ("Certificated Securities") if:
(1) DTC:
(a) notifies PCA that it is unwilling or unable to continue as depositary
for the Global Certificate and PCA fails to appoint a successor
depositary; or
(b) has ceased to be a clearing agency registered under the Exchange Act;
(2) PCA, at its option, notifies the transfer agent or the exchange trustee,
as applicable, in writing that it elects to cause the issuance of the
new preferred stock or subordinated exchange debentures, as applicable,
in certificate form; or
(3) there shall have occurred and be continuing (a) a Voting Rights
Triggering Event with respect to the new preferred stock or (b) a
Default or Event of Default with respect to the subordinated exchange
debentures.
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In addition, beneficial interests in a Global Certificate may be exchanged for
Certificated Securities upon prior written notice given to the transfer agent or
the exchange trustee, as applicable, by or on behalf of DTC in accordance with
the certificate of designation or the subordinated exchange debentures
indenture, as applicable. In all cases, Certificated Securities delivered in
exchange for any Global Certificates or beneficial interests in Global
Certificates will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary, in accordance with
its customary procedures.
SAME DAY SETTLEMENT AND PAYMENT
PCA will make all payments of Liquidation Preference, dividends, principal,
premium, if any, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof or,
if no such account is specified, by mailing a check to each such Holder's
registered address. The Certificates represented by the Global Certificates are
expected to be eligible to trade in the PORTAL market and to trade in DTC's
Same-Day Funds Settlement System, and any permitted secondary market trading
activity in such Certificates will, therefore, be required by DTC to be settled
in immediately available funds. PCA expects that secondary trading in any
Certificated Securities will also be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the certificate of designation
and the subordinated exchange debentures indenture. You should refer to the
certificate of designation and the subordinated exchange debentures indenture
for a full disclosure of all such terms, as well as any other capitalized terms
used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Subsidiary of such s pecified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; PROVIDED that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"APPLICABLE PREMIUM" means, with respect to any Preferred Stock or Subordinated
Exchange Debenture, as applicable, on any redemption date, the greater of:
(1) 1.0% of the Liquidation Preference of the Preferred Stock or 1.0% of the
principal amount of the Subordinated Exchange Debenture, as applicable;
or
(2) the excess of:
(a) the present value at such redemption date of (i) the redemption price
of the Preferred Stock or Subordinated Exchange Debentures, as
applicable, at April 1, 2004 (such redemption price being set forth
in the table appearing above under the caption "-Optional Redemption"
in the section "--Preferred Stock" or "--Subordinated Exchange
Debentures," as applicable) plus (ii) all required dividend payments
due on the Preferred Stock or interest payments due on the
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Subordinated Exchange Debenture, as applicable, through April 1, 2004
(excluding accrued but unpaid dividends or interest, as applicable),
computed using a discount rate equal to the Treasury Rate as of such
Redemption Date plus 50 basis points; over
(b) the Liquidation Preference of the Preferred Stock or the principal
amount of the Subordinated Exchange Debenture, as applicable, if
greater.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of
business; PROVIDED that the sale, conveyance or other disposition of all
or substantially all of the assets of PCA and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
Certificate of Designation or Exchange Indenture, as applicable,
described above under the caption "-Repurchase at the Option of
Holders-Change of Control" in the section "-Preferred Stock" or
"-Subordinated Exchange Debentures," as applicable, and/or the
provisions described above under the caption "-Certain Covenants-Merger,
Consolidation or Sale of Assets" in the section "-Preferred Stock" or
"-Subordinated Exchange Debentures," as applicable, and not by the
provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of PCA's Restricted Subsidiaries
or the sale of Equity Interests in any of PCA's Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $10.0 million;
(2) a transfer of assets between or among PCA and its Wholly Owned
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary
to PCA or to another Wholly Owned Restricted Subsidiary;
(4) the sale, license or lease of equipment, inventory, accounts receivable
or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents or Marketable
Securities;
(6) the transfer or disposition of assets and the sale of Equity Interests
pursuant to the Contribution;
(7) sales of accounts receivables and related assets of the type specified
in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof including cash
or Cash Equivalents or Marketable Securities in an amount at least equal
to 75% of the fair market value thereof as determined in accordance with
GAAP; and
(8) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption "-Certain
Covenants-Restricted Payments" in the section "-Preferred Stock" or
"-Subordinated Exchange Debentures," as applicable.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at the
time of determination, the present value of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such sale and
leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
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"BOARD OF DIRECTORS" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and
(3) with respect to any other Person, the board or committee of such Person
serving a similar function.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(PROVIDED that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than six months from
the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding twelve months and overnight bank deposits,
in each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each
case maturing within twelve months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger, consolidation or transfer of PCA Voting
Stock), in one or a series of related transactions, of all or
substantially all of the properties or assets of PCA and its Restricted
Subsidiaries taken as a whole to any "person" (as that term is used in
Section 13(d)(3) of the Exchange Act) other than to a Principal or a
Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of PCA
(other than a plan relating to the sale or other disposition of
timberlands);
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(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties or a
Permitted Group, becomes the Beneficial Owner, directly or indirectly,
of more than 50% of the Voting Stock of PCA, measured by voting power
rather than number of shares; or
(4) the first day on which a majority of the members of the Board of
Directors of PCA are not Continuing Directors.
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period PLUS:
(1) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; PLUS
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated
Net Income; PLUS
(3) depletion, depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net
Income; PLUS
(4) all one-time charges incurred in 1999 in connection with the
Contribution (including the impairment charge described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Overview") to the extent such charges were deducted in
computing such Consolidated Net Income; PLUS
(5) all restructuring charges incurred prior to the Issue Date (including
the restructuring charge that was added to pro forma EBITDA to calculate
Adjusted pro forma EBITDA as set forth in footnote 4 under "Selected
Combined Financial and Other Data"); MINUS
(6) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with
GAAP.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of PCA shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of PCA only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to PCA
by such Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of any date of
determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries; PLUS
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(2) the total amount of Indebtedness of any other Person, to the extent that
such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries; PLUS
(3) the aggregate liquidation value of all Disqualified Stock of such Person
and all preferred stock of Restricted Subsidiaries of such Person, in
each case, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any specified Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Wholly Owned
Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) for purposes of calculating Consolidated Cash Flow to determine the Debt
to Cash Flow Ratio or the Fixed Charge Coverage Ratio, the Net Income
(but not loss) of any Unrestricted Subsidiary shall be excluded, whether
or not distributed to the specified Person or one of its Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of the
Board of Directors of PCA who:
(1) was a member of such Board of Directors on the Issue Date; or
(2) was nominated for election or elected to such Board of Directors either
(a) with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election or (b)
pursuant to and in accordance with the terms of the Stockholders
Agreement as in effect on the Issue Date.
"CONTRIBUTION" means the Contribution contemplated by the Contribution
Agreement.
"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement dated as of
January 25, 1999 among TPI, PCA Holdings and PCA as the same is in effect on the
Issue Date.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the date
hereof by and among PCA and Morgan Guaranty Trust Company of New York, as
administrative agent, and the other lenders party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of PCA as additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
"CREDIT FACILITIES" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special
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purpose entities formed to borrow from such lenders against such receivables),
working capital loans, swing lines, advances or letters of credit, in each case,
as amended, restated, modified, renewed, refunded, replaced, restructured or
refinanced in whole or in part from time to time.
"DEBT AND PREFERRED STOCK TO CASH FLOW RATIO" means, as of any date of
determination, the ratio of (1) the Consolidated Indebtedness and Preferred
Stock of PCA as of such date to (2) the Consolidated Cash Flow of PCA for the
four most recent full fiscal quarters ending immediately prior to such date for
which internal financial statements are available, determined on a pro forma
basis after giving effect to all acquisitions or dispositions of assets made by
PCA and its Restricted Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any related
financing transactions) as if such acquisitions and dispositions had occurred at
the beginning of such four-quarter period. In addition, for purposes of making
the computation referred to above:
(1) acquisitions that have been made by PCA or any of its Restricted
Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
date of determination shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on
a pro forma basis in accordance with Regulation S-X under the Securities
Act and including those cost savings that management reasonably expects
to realize within six months of the consummation of the acquisition, but
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the date of determination, shall be excluded;
(3) for any four-quarter reference period that includes any period of time
prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions described in this prospectus
and the related corporate overhead savings and cost savings that were
added to pro forma EBITDA to calculate Adjusted pro forma EBITDA as set
forth in footnote 4 under "Selected Combined Financial and Other Data,"
all as calculated in good faith by a responsible financial or accounting
officer of PCA, as if they had occurred on the first day of such
four-quarter reference period; and
(4) the impact of the Treasury Lock shall be excluded.
"DEFAULT" means any event that is, or with the passage of time or the giving of
notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means any non-cash consideration received by
PCA or one of its Restricted Subsidiaries in connection with an Asset Sale that
is designated as Designated Noncash Consideration pursuant to an Officers'
Certificate executed by the principal executive officer and the principal
financial officer of PCA or such Restricted Subsidiary. Such Officers'
Certificate shall state the basis of such valuation, which shall be a report of
a nationally recognized investment banking firm with respect to the receipt in
one or a series of related transactions of Designated Noncash Consideration with
a fair market value in excess of $10.0 million. A particular item of Designated
Noncash Consideration shall no longer be considered to be outstanding when it
has been sold for cash or redeemed or paid in full in the case of non-cash
consideration in the form of promissory notes or equity.
"DESIGNATED EXCHANGE DEBENTURE SENIOR DEBT" means:
(1) any Indebtedness under or in respect of the Credit Agreement and the
Indenture; and
(2) any other Exchange Debenture Senior Debt permitted under the Exchange
Indenture the principal amount of which is $25.0 million or more and
that has been designated by PCA in the instrument or agreement relating
to the same as "Exchange Debenture Designated Senior Debt;"
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PROVIDED that for purposes of clause (2) of the third paragraph under the
caption "--Subordinated Exchange Debentures--Subordination," the Indenture shall
not be deemed to be Designated Exchange Debenture Senior Debt so long as the
Credit Agreement is still in effect.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible, or for which it is exchangeable,
in each case at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Preferred Stock or the Subordinated Exchange Debentures mature, as
applicable. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require PCA to repurchase such Capital Stock upon the occurrence of a change
of control or an asset sale shall not constitute Disqualified Stock if the terms
of such Capital Stock provide that PCA may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the covenant described above under the caption "-Certain
Covenants-Restricted Payments" in the section "-Preferred Stock" or
"-Subordinated Exchange Debentures," as applicable. The Preferred Stock as in
effect on the Issue Date will not constitute Disqualified Stock for purposes of
the Certificate of Designation and the Exchange Indenture.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).
"EXCHANGE DEBENTURE SENIOR DEBT" means:
(1) all Indebtedness outstanding under all Credit Facilities, all Hedging
Obligations and all Other Hedging Agreements (including guarantees
thereof) with respect thereto of PCA and its Restricted Subsidiaries,
whether outstanding on the Issue Date or thereafter incurred;
(2) all Indebtedness of PCA and its Restricted Subsidiaries outstanding
under the Notes or the guarantees of the Notes;
(3) any other Indebtedness incurred by PCA and its Restricted Subsidiaries
under the terms of the Exchange Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the Subordinated
Exchange Debentures; and
(4) all Obligations with respect to the items listed in the preceding
clauses (1), (2) and (3) (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law).
Notwithstanding anything to the contrary in the preceding, Exchange Debenture
Senior Debt will not include:
(1) any liability for federal, state, local or other taxes owed or owing by
PCA or its Restricted Subsidiaries;
(2) any Indebtedness of PCA or any of its Restricted Subsidiaries to any of
its Subsidiaries;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of the
Exchange Indenture (but only to the extent so incurred).
"EXISTING INDEBTEDNESS" means Indebtedness of PCA and its Subsidiaries (other
than Indebtedness under the Credit Agreement) in existence on the Issue Date,
until such amounts are repaid.
"FIXED CHARGES" means, with respect to any specified Person for any period, the
sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt,
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commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, excluding
amortization of debt issuance costs and net of the effect of all
payments made or received pursuant to Hedging Obligations; PLUS
(2) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; PLUS
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon; PLUS
(4) the product of (a) all dividends, whether paid or accrued in cash, times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus PCA's then current effective combined federal, state
and local tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of preferred stock,
and the use of the proceeds therefrom as if the same had occurred at the
beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior
to the Calculation Date shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on
a pro forma basis in accordance with Regulation S-X under the Securities
Act and including those cost savings that management reasonably expects
to realize within six months of the consummation of the acquisition, but
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded;
(3) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior
to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date;
(4) for any four-quarter reference period that includes any period of time
prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions described in this prospectus
and the related corporate overhead savings and cost savings that were
added to pro forma EBITDA to calculate Adjusted pro forma EBITDA as set
forth in footnote 4 under "Selected Combined Financial and Other Data,"
all as calculated in good faith by a responsible financial or accounting
officer of PCA, as if they had occurred on the first day of such
four-quarter reference period; and
(5) the impact of the Treasury Lock shall be excluded.
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"FOREIGN SUBSIDIARY WORKING CAPITAL INDEBTEDNESS" means Indebtedness of a
Restricted Subsidiary that is organized outside of the United States under lines
of credit extended after the Issue Date to any such Restricted Subsidiary by
Persons other than PCA or any of its Restricted Subsidiaries, the proceeds of
which are used for such Restricted Subsidiary's working capital purposes.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GUARANTEE" means a guarantee of all or any part of any Indebtedness (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), including, without limitation, by way of a pledge of assets or
through letters of credit or reimbursement agreements in respect thereof.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"INDEBTEDNESS" means, with respect to any specified Person, any indebtedness of
such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the deferred balance of the purchase price of any property outside of
the ordinary course of business which remains unpaid, except any such
balance that constitutes an operating lease payment, accrued expense,
trade payable or similar current liability; or
(6) any Hedging Obligations or Other Hedging Agreements,
if and to the extent any of the preceding items (other than letters of credit,
Hedging Obligations and Other Hedging Agreements) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of others secured
by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included,
the Guarantee by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof in the case of any other Indebtedness.
"INITIAL PURCHASERS" means J.P. Morgan Securities Inc. and BT Alex.Brown
Incorporated.
"INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If PCA or any
Subsidiary of PCA sells or otherwise disposes of any Equity Interests of any
direct or indirect Subsidiary of PCA such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of PCA, PCA shall be
deemed to have made an Investment on the date of
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any such sale or disposition equal to the fair market value of the Equity
Interests of such Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
caption "-Certain Covenants-Restricted Payments" in the section "-Preferred
Stock" or "-Subordinated Exchange Debentures," as applicable. The acquisition by
PCA or any Subsidiary of PCA of a Person that holds an Investment in a third
Person shall be deemed to be an Investment by PCA or such Subsidiary in such
third Person in an amount equal to the fair market value of the Investment held
by the acquired Person in such third Person in an amount determined as provided
in the final paragraph of the covenant described above under the caption
"-Certain Covenants-Restricted Payments" in the section "-Preferred Stock" or
"-Subordinated Exchange Debentures," as applicable.
"ISSUE DATE" means the closing date for sale and original issuance of the
Preferred Stock.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement.
"MARKETABLE SECURITIES" means publicly traded debt or equity securities that are
listed for trading on a national securities exchange and that were issued by a
corporation whose debt securities are rated in one of the three highest rating
categories by either Standard & Poor's Rating Services or Moody's Investors
Service, Inc.
"NET INCOME" means, with respect to any specified Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain (or loss), together with any related provision for taxes on
such gain (or loss), realized in connection with: (a) any Asset Sale; or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (or loss), together with any related provision
for taxes on such extraordinary gain (or loss).
"NET PROCEEDS" means the aggregate cash proceeds received by PCA or any of its
Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, sales commissions, any relocation expenses incurred as a result
thereof, all taxes of any kind paid or payable as a result thereof and
reasonable reserves established to cover any indemnity obligations incurred in
connection therewith, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness, other than Indebtedness under a
Credit Facility, secured by a Lien on the asset or assets that were the subject
of such Asset Sale and any reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"NEW EXCHANGE DEBENTURES" means PCA's 12 3/8% Subordinated Exchange Debentures
due 2010 issued pursuant to the Exchange Indenture (i) in the Preferred Stock
Exchange Offer or (ii) in connection with a resale of Subordinated Exchange
Debentures in reliance on a shelf registration statement.
"NEW PREFERRED STOCK" means PCA's 12 3/8% Senior Exchangeable Preferred Stock
due 2010 issued pursuant to the Certificate of Designation (i) in the Preferred
Stock Exchange Offer or (ii) in connection with a resale of Preferred Stock in
reliance on a shelf registration statement.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither PCA nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
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(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder
of any other Indebtedness (other than the Subordinated Exchange
Debentures) of PCA or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of PCA or any of its Restricted
Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications,
expenses, reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
"OTHER HEDGING AGREEMENTS" means any foreign exchange contracts, currency swap
agreements, commodity agreements or other similar agreements or arrangements
designed to protect against the fluctuations in currency or commodity values.
"PCA HOLDINGS" means PCA Holdings LLC, a Delaware limited liability company.
"PERMITTED BUSINESS" means the containerboard, paperboard and packaging products
business and any business in which PCA and its Restricted Subsidiaries are
engaged on the Issue Date or any business reasonably related, incidental or
ancillary to any of the foregoing.
"PERMITTED GROUP" means any group of investors that is deemed to be a "person"
(as that term is used in Section 13(d)(3) of the Exchange Act) at any time prior
to PCA's initial public offering of common stock, by virtue of the Stockholders
Agreement, as the same may be amended, modified or supplemented from time to
time, PROVIDED that no single Person (other than the Principals and their
Related Parties) Beneficially Owns (together with its Affiliates) more of the
Voting Stock of PCA that is Beneficially Owned by such group of investors than
is then collectively Beneficially Owned by the Principals and their Related
Parties in the aggregate.
"PERMITTED INVESTMENTS" means:
(1) any Investment in PCA or in a Restricted Subsidiary of PCA;
(2) any Investment in Cash Equivalents;
(3) any Investment by PCA or any Restricted Subsidiary of PCA in a Person,
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of PCA; or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, PCA or a Restricted Subsidiary of PCA;
(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption "-Repurchase at the Option of
Holders-Asset Sales" in the section "-Preferred Stock" or "-Subordinated
Exchange Debentures," as applicable;
(5) any acquisition of assets to the extent acquired in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of PCA;
(6) Hedging Obligations and Other Hedging Agreements;
(7) any Investment existing on the Issue Date;
(8) loans and advances to employees and officers of PCA and its Restricted
Subsidiaries in the ordinary course of business;
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(9) any Investment in securities of trade creditors or customers received in
compromise of obligations of such persons incurred in the ordinary
course of business, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade
creditors or customers;
(10) negotiable instruments held for deposit or collection in the ordinary
course of business;
(11) loans, guarantees of loans and advances to officers, directors,
employees or consultants of PCA or a Restricted Subsidiary of PCA not to
exceed $7.5 million in the aggregate outstanding at any time;
(12) any Investment by PCA or any of its Restricted Subsidiaries in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in
any other Person in connection with a Qualified Receivables Transaction;
PROVIDED that each such Investment is in the form of a Purchase Money
Note, an equity interest or interests in accounts receivables generated
by PCA or any of its Restricted Subsidiaries; and
(13) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (13) that are at the time
outstanding not to exceed the greater of $50.0 million or 5% of Total
Assets.
"PERMITTED JUNIOR SECURITIES" means debt or equity securities of PCA or any
successor corporation issued pursuant to a plan of reorganization or
readjustment of PCA that are subordinated to the payment of all then outstanding
Exchange Debenture Senior Debt of PCA at least to the same extent that the
Subordinated Exchange Debentures are subordinated to the payment of all Exchange
Debenture Senior Debt of PCA on the Issue Date, so long as:
(1) the effect of the use of this defined term in the subordination
provisions contained in the Exchange Indenture is not to cause the
Subordinated Exchange Debentures to be treated as part of:
(a) the same class of claims as the Exchange Debenture Senior Debt of
PCA; or
(b) any class of claims PARI PASSU with, or senior to, the Exchange
Debenture Senior Debt of PCA for any payment or distribution in any
case or proceeding or similar event relating to the liquidation,
insolvency, bankruptcy, dissolution, winding up or reorganization of
PCA; and
(2) to the extent that any Exchange Debenture Senior Debt of PCA outstanding
on the date of consummation of any such plan of reorganization or
readjustment is not paid in full in cash or Cash Equivalents (other than
Cash Equivalents of the type referred to in clauses (3) and (4) of the
definition thereof) on such date, either:
(a) the holders of any such Exchange Debenture Senior Debt not so paid in
full in cash or Cash Equivalents (other than Cash Equivalents of the
type referred to in clauses (3) and (4) of the definition thereof)
have consented to the terms of such plan of reorganization or
readjustment; or
(b) such holders receive securities which constitute Exchange Debenture
Senior Debt of PCA and which have been determined by the relevant
court to constitute satisfaction in full in money or money's worth of
any Exchange Debenture Senior Debt of PCA not paid in full in cash or
Cash Equivalents (other than Cash Equivalents of the type referred to
in clauses (3) and (4) of the definition thereof).
"PERMITTED LIENS" means:
(1) Liens of PCA and its Restricted Subsidiaries securing Exchange Debenture
Senior Debt that was permitted by the terms of the Certificate of
Designation or the Exchange Indenture, as applicable, to be incurred;
(2) Liens in favor of PCA or its Restricted Subsidiaries;
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(3) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with PCA or any Subsidiary of PCA; PROVIDED
that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with PCA or the Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by PCA or
any Subsidiary of PCA, PROVIDED that such Liens were in existence prior
to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant entitled
"-Certain Covenants-Incurrence of Indebtedness and Issuance of Preferred
Stock" in the section "-Preferred Stock" or "-Subordinated Exchange
Debentures," as applicable, covering only the assets acquired with such
Indebtedness;
(7) Liens existing on the Issue Date together with any Liens securing
Permitted Refinancing Indebtedness incurred under clause (5) of the
second paragraph under the caption "-Certain Covenants-Incurrence of
Indebtedness and Issuance of Preferred Stock" in the section "-Preferred
Stock" or "-Subordinated Exchange Debentures," as applicable, in order
to refinance the Indebtedness secured by Liens existing on the Issue
Date; PROVIDED that the Liens securing the Permitted Refinancing
Indebtedness shall not extend to property other than that pledged under
the Liens securing the Indebtedness being refinanced;
(8) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries;
(9) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(10) Liens to secure Foreign Subsidiary Working Capital Indebtedness
permitted by the Certificate of Designation or the Exchange Indenture,
as applicable, to be incurred so long as any such Lien attached only to
the assets of the Restricted Subsidiary which is the obligor under such
Indebtedness;
(11) Liens securing Attributable Debt;
(12) Liens on assets of a Receivables Subsidiary incurred in connection with
a Qualified Receivables Transaction; and
(13) Liens incurred in the ordinary course of business of PCA or any
Subsidiary of PCA with respect to obligations that do not exceed $15.0
million at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of PCA or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of PCA or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
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(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
Subordinated Exchange Debentures, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Subordinated
Exchange Debentures on terms at least as favorable to the Holders of
Subordinated Exchange Debentures as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by PCA or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PRINCIPALS" means:
(1) Madison Dearborn Partners, LLC and its Affiliates; and
(2) TPI and its Affiliates.
"PURCHASE MONEY NOTE" means a promissory note evidencing a line of credit, which
may be irrevocable, from, or evidencing other Indebtedness owed to, PCA or any
of its Restricted Subsidiaries in connection with a Qualified Receivables
Transaction, which note shall be repaid from cash available to the maker of such
note, other than amounts required to be established as reserves pursuant to
agreements, amounts paid to investors in respect of interest, principal and
other amounts owing to such investors and amounts paid in connection with the
purchase of newly generated receivables.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by PCA or any of its Restricted
Subsidiaries pursuant to which PCA or any of its Restricted Subsidiaries may
sell, convey or otherwise transfer to:
(1) a Receivables Subsidiary (in the case of a transfer by PCA or any of its
Restricted Subsidiaries); and
(2) any other Person (in the case of a transfer by a Receivables
Subsidiary),
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of PCA or any of its Restricted Subsidiaries,
and any assets related thereto including, without limitation, all collateral
securing such accounts receivable, all contracts and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets that are customarily transferred, or in respect of
which security interests are customarily granted, in connection with asset
securitization transactions involving accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Subsidiary of PCA that engages in
no activities other than in connection with the financing of accounts receivable
and that is designated by the Board of Directors of PCA (as provided below) as a
Receivables Subsidiary and:
(1) has no Indebtedness or other Obligations (contingent or otherwise) that:
(a) are guaranteed by PCA or any of its Restricted Subsidiaries, other
than contingent liabilities pursuant to Standard Securitization
Undertakings;
(b) are recourse to or obligate PCA or any of its Restricted Subsidiaries
in any way other than pursuant to Standard Securitization
Undertakings; or
(c) subjects any property or assets of PCA or any of its Restricted
Subsidiaries, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings;
(2) has no contract, agreement, arrangement or undertaking (except in
connection with a Purchase Money Note or Qualified Receivables
Transaction) with PCA or any of its Restricted Subsidiaries than on
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terms no less favorable to PCA or such Restricted Subsidiaries than
those that might be obtained at the time from Persons that are not
Affiliates of PCA, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable; and
(3) neither PCA nor any of its Restricted Subsidiaries has any obligation to
maintain or preserve the Receivables Subsidiary's financial condition or
cause the Receivables Subsidiary to achieve certain levels of operating
results.
Any such designation by the Board of Directors of PCA shall be evidenced to the
Transfer Agent or Exchange Trustee, as applicable, by filing with the Transfer
Agent or Exchange Trustee, as applicable, a certified copy of the resolution of
the Board of Directors of PCA giving effect to such designation and an Officers'
Certificate certifying, to the best of such officer's knowledge and belief after
consulting with counsel, that such designation complied with the foregoing
conditions.
"RELATED PARTY" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal;
or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or
more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding
clause (1).
"REPRESENTATIVE" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Exchange Debenture Senior Debt;
PROVIDED that if, and for so long as, any Designated Exchange Debenture Senior
Debt lacks such a representative, then the Representative for such Designated
Exchange Debenture Senior Debt shall at all times constitute the holders of a
majority in outstanding principal amount of such Designated Exchange Debenture
Senior Debt in respect of any Designated Exchange Debenture Senior Debt.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent Person
that is not an Unrestricted Subsidiary.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by PCA or any of its Restricted
Subsidiaries that are reasonably customary in an accounts receivable
transaction.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"STOCKHOLDERS AGREEMENT" means that certain Stockholders Agreement dated as of
April 12, 1999 by and among PCA Holdings LLC, TPI and PCA, as in effect on the
Issue Date.
"SUBSIDIARY" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and
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(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"TPI" means Tenneco Packaging Inc., a Delaware corporation.
"TIMBERLANDS NET PROCEEDS" means the Net Proceeds from Timberlands Sales in
excess of $500.0 million, up to a maximum of $100.0 million (or such larger
amount as may be necessary to repurchase or redeem all outstanding Preferred
Stock or Subordinated Exchange Debentures in the event of a repurchase or
redemption of all outstanding Preferred Stock or Subordinated Exchange
Debentures), as long as at least $500.0 million of Net Proceeds have been
applied to repay Indebtedness under the Credit Agreement.
"TIMBERLANDS REPURCHASE" means the repurchase or redemption of, payment of a
dividend on, or return of capital with respect to any Equity Interests of PCA,
or the repurchase or redemption of Subordinated Exchange Debentures with
Timberlands Net Proceeds in accordance with the terms of the Certificate of
Designation and the Exchange Indenture.
"TIMBERLANDS SALE" means a sale or series of sales by PCA or a Restricted
Subsidiary of PCA of timberlands.
"TOTAL ASSETS" means the total consolidated assets of PCA and its Restricted
Subsidiaries, as set forth on PCA's most recent consolidated balance sheet.
"TRANSACTION AGREEMENTS" means:
(1) those certain Purchase/Supply Agreements between PCA and TPI, Tenneco
Automotive, Inc. and Tenneco Packaging Specialty and Consumer Products,
Inc., each dated the Issue Date;
(2) that certain Facilities Use Agreement between PCA and TPI, dated the
Issue Date;
(3) that certain Human Resources Agreement among PCA, TPI and Tenneco Inc.,
dated the Issue Date;
(4) that certain Transition Services Agreement among PCA and TPI, dated the
Issue Date;
(5) that certain Holding Company Support Agreement among PCA and PCA
Holdings, dated the Issue Date;
(6) that certain Registration Rights Agreement among PCA, PCA Holdings and
TPI, dated the Issue Date; and
(7) the Stockholders Agreement.
"TREASURY LOCK" means the interest rate protection agreement dated as of March
5, 1999 between PCA and J.P. Morgan Securities Inc.
"TREASURY RATE" means, as of any redemption date, the yield to maturity as of
such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to April 1, 2004; PROVIDED,
HOWEVER, that if the period from the redemption date to April 1, 2004 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of PCA that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with PCA or any Restricted Subsidiary of PCA unless the terms of any
such agreement, contract, arrangement or understanding are no less
favorable to PCA or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of PCA;
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(3) is a Person with respect to which neither PCA nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified
levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of PCA or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of PCA as an Unrestricted Subsidiary shall be
evidenced to the Transfer Agent or Exchange Trustee, as applicable, by filing
with the Transfer Agent or Exchange Trustee, as applicable, a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption
"-Certain Covenants-Restricted Payments" in the section "-Preferred Stock" or
"-Subordinated Exchange Debentures," as applicable. If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Certificate of Designation or Exchange Indenture,
as applicable, and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of PCA as of such date and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption "-Certain Covenants-Incurrence of Indebtedness and
Issuance of Preferred Stock" in the section "-Preferred Stock" or "-Subordinated
Exchange Debentures," as applicable, PCA shall be in default of such covenant.
The Board of Directors of PCA may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of PCA
of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (1) such Indebtedness is permitted under
the covenant described under the caption "-Certain Covenants-Incurrence of
Indebtedness and Issuance of Preferred Stock" in the section "-Preferred Stock"
or "-Subordinated Exchange Debentures," as applicable, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period; and (2) no Default or Event of Default would be in existence
following such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at
any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person means any Wholly
Owned Subsidiary of such Person which at the time of determination is a
Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any specified Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
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THE EXCHANGE OFFER
THE EXCHANGE NOTES
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
PCA originally sold the notes to J.P. Morgan Securities Inc. and BT Alex. Brown
Incorporated, the initial purchasers, pursuant to a Purchase Agreement dated
March 30, 1999. The initial purchasers subsequently resold the notes to
qualified institutional buyers in reliance on Rule 144A and Regulation S under
the Securities Act. As a condition to the Purchase Agreement, PCA, the guarantor
subsidiaries and the initial purchasers entered into a notes registration rights
agreement in which PCA and the guarantor subsidiaries agreed to:
(1) use all commercially reasonable efforts to file a registration statement
registering the exchange notes with the Securities and Exchange
Commission within 60 days after the original issuance of the outstanding
notes;
(2) use all commercially reasonable efforts to have the registration
statement relating to the exchange notes declared effective by the
Securities and Exchange Commission within 150 days after the original
issuance of the outstanding notes;
(3) unless the exchange offer would not be permitted by applicable law or
Securities and Exchange Commission policy, use all commercially
reasonable efforts to commence the exchange offer and use all
commercially reasonable efforts to issue within 30 business days, or
longer, if required by the federal securities laws, after the date on
which the registration statement relating to the exchange notes was
declared effective by the Securities and Exchange Commission, exchange
notes in exchange for all outstanding notes tendered prior to the
expiration date; and
(4) if obligated to file a shelf registration statement, use all
commercially reasonable efforts to file the shelf registration statement
with the Securities and Exchange Commission within 60 days after such
filing obligation arises, to cause the shelf registration statement to be
declared effective by the Securities and Exchange Commission within 120
days after such obligation arises and to use commercially reasonable
efforts to keep effective the shelf registration statement for at least
two years after the original issuance of the notes or such shorter period
that will terminate when all securities covered by the shelf registration
statement have been sold pursuant to the shelf registration statement.
We have agreed to keep the exchange offer open for not less than 20 business
days, or longer if required by applicable law, after the date on which notice of
the exchange offer is mailed to the holders of the notes. The notes registration
rights agreement also requires us to include in the prospectus for the exchange
offer information necessary to allow broker-dealers who hold notes, other than
notes purchased directly from us or one of our affiliates, to exchange such
notes pursuant to the exchange offer and to satisfy the prospectus delivery
requirements in connection with resales of the exchange notes received by such
broker-dealers in the exchange offer.
This prospectus covers the offer and sale of the exchange notes pursuant to the
exchange offer and the resale of exchange notes received in the exchange offer
by any broker-dealer who held notes other than notes purchased directly from us
or one of our affiliates.
For each note surrendered to us pursuant to the exchange offer, the holder of
such note will receive an exchange note having a principal amount equal to that
of the surrendered note. Interest on each exchange note will accrue from the
date of issuance of such exchange note. The holders of notes that are accepted
for exchange will receive, in cash, accrued interest on such notes up to, but
not including, the issuance date of the exchange notes. Such interest will be
paid with the first interest payment on the exchange notes. Interest on the
outstanding notes accepted for exchange will cease to accrue upon issuance of
the exchange notes.
Under existing interpretations of the staff of the Securities and Exchange
Commission contained in several no-action letters to third parties, we believe
the exchange notes would in general be freely tradeable after the
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exchange offer without further registration under the Securities Act. Any
purchaser of the notes, however, who is either an "affiliate" of PCA, a
broker-dealer who purchased notes directly from us or one of our affiliates for
resale, or who intends to participate in the exchange offer for the purpose of
distributing the exchange notes:
(1) will not be able to rely on the interpretation of the staff of the
Securities and Exchange Commission;
(2) will not be able to tender its notes in the exchange offer; and
(3) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or transfer of the
notes, unless such sale or transfer is made pursuant to an exemption from
such requirements.
We have agreed to file with the Securities and Exchange Commission a shelf
registration statement to cover resales of the notes by holders who satisfy
certain conditions relating to the provision of information in connection with
the shelf registration statement if:
(1) we are not required to file the registration statement for the exchange
offer or permitted to consummate the exchange offer because it is not
permitted by applicable law or Securities and Exchange Commission policy;
or
(2) any holder of Transfer Restricted Securities notifies us prior to the
20th day following consummation of the exchange offer that:
(a) it is prohibited by law or Securities and Exchange Commission policy
from participating in the exchange offer;
(b) that it may not resell the exchange notes acquired by it in the
exchange offer to the public without delivering a prospectus and the
prospectus contained in the registration statement relating to the
exchange offer is not appropriate or available for such resales; or
(c) that it is a broker-dealer that purchased notes directly from us or
one of our affiliates for resale.
For purposes of the foregoing, "Transfer Restricted Securities" means each
outstanding note until the earliest to occur of:
(1) the date on which such note has been exchanged by a person other than a
broker-dealer for an exchange note;
(2) following the exchange by a broker-dealer in the exchange offer of a
note for an exchange note, the date on which such exchange note is sold
to a purchaser who receives from such broker-dealer before the date of
such sale a copy of the prospectus contained in the registration
statement relating to the exchange offer;
(3) the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with the shelf registration
statement; or
(4) the date on which such note is distributed to the public pursuant to
Rule 144 under the Securities Act.
We will pay liquidated damages to each holder of notes if:
(1) we fail to file any of the registration statements on or before the date
specified for such filing;
(2) any of such registration statements is not declared effective by the
Securities and Exchange Commission before the date specified for such
effectiveness (the "Effectiveness Target Date");
(3) we fail to consummate the exchange offer within 30 business days of the
Effectiveness Target Date with respect to the registration statement
relating to the exchange offer;
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(4) the shelf registration statement or the registration statement relating
to the exchange offer is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted
Securities during the periods specified in the notes registration rights
agreement (each such event referred to in clauses (1) through (4) above,
a "Registration Default").
The amount of liquidated damages will be equal to a per annum rate of 0.25% on
the principal amount of notes held by each holder, with respect to the first
90-day period immediately following the occurrence of the first Registration
Default. Liquidated damages will increase by an additional per annum rate of
0.25% with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of liquidated damages for all
Registration Defaults of 1.00% per annum on the principal amount of notes. We
will pay all accrued liquidated damages on each interest payment date in the
manner provided for the payment of interest in the notes indenture. Following
the cure of all Registration Defaults, the accrual of liquidated damages will
cease.
Each holder of notes, other than certain specified holders, who wishes to
exchange notes for exchange notes in the exchange offer will be required to make
certain representations, including that:
(1) it is not an affiliate of PCA;
(2) any exchange notes to be received by it were acquired in the ordinary
course of its business; and
(3) it has no arrangement with any person to participate in the distribution
of the exchange notes.
If the holder is a broker-dealer that will receive exchange notes for its own
account in exchange for notes that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge that
it will deliver a prospectus in connection with any resale of such exchange
notes.
The Securities and Exchange Commission has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to the exchange notes, other than a resale of an unsold allotment from the
original sale of the notes, with a prospectus contained in the registration
statement relating to the exchange offer. Under the notes registration rights
agreement, we are required to allow broker-dealers to use the prospectus
contained in the registration statement relating to the exchange offer in
connection with the resale of such exchange notes.
We will, in the event of the filing of a shelf registration statement, provide
to each holder of notes eligible to participate in such shelf registration
statement copies of the prospectus which is a part of the shelf registration
statement, notify each such holder when the shelf registration statement for the
notes has become effective and take certain other actions as are required to
permit resales of the outstanding notes. A holder of notes that sells such notes
pursuant to the shelf registration statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the notes registration rights agreement which are
applicable to such a holder, including certain indemnification obligations. In
addition, each such holder will be required to deliver information to be used in
connection with the shelf registration statement and to provide comments on the
shelf registration statement within the time periods set forth in the notes
registration rights agreement in order to have their notes included in the shelf
registration statement and to benefit from the provisions regarding liquidated
damages.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus and
the accompanying letter of transmittal relating to the exchange notes, we will
accept all outstanding notes validly tendered prior to 5:00 p.m., New York City
time, on the expiration date. We will issue $1,000 principal amount of exchange
notes in exchange for each $1,000 principal amount of outstanding notes accepted
in the exchange offer. Holders may tender some or all of their notes pursuant to
the exchange offer in integral multiples of $1,000.
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The form and terms of the exchange notes are identical to the notes except for
the following:
(1) the exchange notes bear a Series B designation and a different CUSIP
number from the notes;
(2) the exchange notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer; and
(3) the holders of the exchange notes will not be entitled to certain rights
under the notes registration rights agreement, including the provisions
providing for an increase in the interest rate on the notes in certain
circumstances relating to the timing of the exchange offer, all of which
rights will terminate when the exchange offer is terminated.
The exchange notes will evidence the same debt as the notes and will be entitled
to the benefits of the notes indenture under which the notes were issued. As of
the date of this prospectus, $550 million in aggregate principal amount of the
notes is outstanding. Solely for reasons of administration and no other reason,
we have fixed the close of business on , 1999 as the record date for
the exchange offer for purposes of determining the persons to whom this
prospectus and the letter of transmittal will be mailed initially. Only a
registered holder of notes, or such holder's legal representative or
attorney-in-fact, as reflected on the records of the trustee under the notes
indenture, may participate in the exchange offer. There will be no fixed record
date, however, for determining registered holders of the notes entitled to
participate in the exchange offer.
The holders of notes do not have any appraisal or dissenters' rights under the
General Corporation Law of Delaware or the notes indenture in connection with
the exchange offer. We intend to conduct the exchange offer in accordance with
the applicable requirements of the Exchange Act and the rules and regulations of
the Securities and Exchange Commission promulgated under the Exchange Act.
We shall be deemed to have accepted validly tendered notes when, as and if we
have given oral or written notice thereof to the notes exchange agent. The notes
exchange agent will act as agent for the tendering holders for the purpose of
receiving the exchange notes from us.
If any tendered notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth in this prospectus or
otherwise, the certificates for any such unaccepted notes will be returned,
without expense, to the tendering holder as promptly as practicable after the
expiration date.
Those holders who tender notes in the exchange offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange of notes. We will pay
all charges and expenses, other than certain applicable taxes, in connection
with the exchange offer. See "-Fees and Expenses."
EXPIRATION DATES; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on
, 1999 unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" shall mean the latest date to which the
exchange offer is extended. Notwithstanding the foregoing, we will not extend
the expiration date beyond , 1999.
We have no current plans to extend the exchange offer. In order to extend the
expiration date, we will notify the notes exchange agent of any extension by
oral or written notice and will make a public announcement of such extension, in
each case prior to 9:00 a.m., New York City time, on the next business day after
the previously scheduled expiration date.
We reserve the right, in our sole discretion, to:
(1) delay accepting any notes;
(2) extend the exchange offer; or
(3) terminate the exchange offer,
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if any of the conditions set forth below under "-Conditions of the Exchange
Offer" shall not have been satisfied, in each case by giving oral or written
notice of such delay, extension or termination to the notes exchange agent, and
to amend the terms of the exchange offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by a public announcement of such matter. If the exchange offer is
amended in a manner determined by us to constitute a material change, we will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the notes and the exchange offer
will be extended for a period of five to ten business days, as required by law,
depending upon the significance of the amendment and the manner of disclosure to
the registered holders, assuming the exchange offer would otherwise expire
during such five to ten business day period.
Without limiting the manner in which we may choose to make a public announcement
of any delay, extension, termination or amendment of the exchange offer, we
shall not have an obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a timely release of such
announcement to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from their date of issuance. Interest is
payable semiannually on April 1 and October 1 of each year commencing on October
1, 1999, at the rate of 9 5/8% per annum. The holders of notes that are accepted
for exchange will receive, in cash, accrued interest on such notes up to, but
not including, the issuance date of the exchange notes. Such interest will be
paid with the first interest payment on the exchange notes. Consequently,
holders who exchange their notes for exchange notes will receive the same
interest payment on October 1, 1999, which is the first interest payment date
with respect to the notes and the exchange notes, that they would have received
had they not accepted the exchange offer. Interest on the notes accepted for
exchange will cease to accrue upon issuance of the exchange notes.
PROCEDURES FOR TENDERING
Only a registered holder of notes may tender their notes in the exchange offer.
To effectively tender in the exchange offer, a holder must complete, sign and
date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the letter of transmittal, and mail or
otherwise deliver such letter of transmittal or such facsimile, together with
the notes and any other required documents, to the notes exchange agent at the
address set forth below under "-Exchange Agent" for receipt prior to 5:00 p.m.,
New York City time, on the expiration date. Delivery of the notes also may be
made by book-entry transfer in accordance with the procedures described below.
If you are effecting delivery by book-entry transfer, then:
(1) confirmation of such book-entry transfer must be received by the notes
exchange agent prior to the expiration date; and
(2) you must also transmit to the notes exchange agent on or prior to the
expiration date, a computer-generated message transmitted by means of the
Automated Tender Offer Program System of The Depository Trust Company in
which you acknowledge and agree to be bound by the terms of the letter of
transmittal and which, when received by the notes exchange agent, forms a
part of the confirmation of book-entry transfer.
By executing the letter of transmittal or effecting delivery by book-entry
transfer, each holder is making to us those representations set forth under the
heading "-Resale of the Exchange Notes."
The tender by a holder of notes will constitute an agreement between such holder
and us in accordance with the terms and subject to the conditions set forth in
this prospectus and in the letter of transmittal.
The method of delivery of outstanding notes and the letter of transmittal and
all other required documents to the notes exchange agent is at the election and
sole risk of the holder. As an alternative to delivery by mail, holders may wish
to consider overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure
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delivery to the notes exchange agent before the expiration date. No letter of
transmittal or notes should be sent to PCA. Holders may request that their
respective brokers, dealers, commercial banks, trust companies or nominees
effect the above transactions for such holders.
Only a registered holder of notes may tender their notes in connection with the
exchange offer. The term "holder" with respect to the exchange offer means any
person in whose name notes are registered on the books of PCA, any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose notes are held of record by DTC who desires to deliver their
notes by book-entry transfer at DTC.
Any beneficial owner whose notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and who wishes to tender should
promptly contact the person in whose name your notes are registered and instruct
such registered holder to tender on your behalf. If, as a beneficial owner, you
wish to tender on your own behalf, you must, prior to completing and executing
the letter of transmittal and delivering your notes, either make appropriate
arrangements to register ownership of the notes in your name or obtain a
properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an Eligible Institution (defined below) unless the notes tendered
are tendered (1) by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal or (2) for the account of an Eligible Institution. In the
event that signatures on a letter of transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, the guarantee must be by a
participant in a recognized signature guarantee medallion program within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the letter of transmittal is signed by a person other than the registered
holder of any notes listed therein, such notes must be endorsed or accompanied
by properly completed bond powers, signed by such registered holder as such
registered holder's name appears on such notes with the signature on such bond
powers guaranteed by an Eligible Institution.
If the letter of transmittal or any notes or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and submit with the letter of
transmittal evidence satisfactory to us of their authority to so act.
We understand that the notes exchange agent will make a request, promptly after
the date of this prospectus, to establish accounts with respect to the notes at
the book-entry transfer facility of DTC for the purpose of facilitating this
exchange offer, and subject to the establishment of these accounts, any
financial institution that is a participant in the book-entry transfer facility
system may make book-entry delivery of notes by causing the transfer of such
notes into the notes exchange agent's account with respect to the notes in
accordance with DTC's procedures for such transfer. Although delivery of the
notes may be effected through book-entry transfer into the notes exchange
agent's account at the book-entry transfer facility, unless the holder complies
with the procedures described in the following paragraph, an appropriate letter
of transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the notes exchange agent at its address set forth
below before the expiration date, or the guaranteed delivery procedures
described below must be complied with. The delivery of documents to the
book-entry transfer facility does not constitute delivery to the notes exchange
agent.
The notes exchange agent and DTC have confirmed that the exchange offer is
eligible for the Automated Tender Offer Program ("ATOP") of DTC. Accordingly,
DTC participants may electronically transmit their acceptance of the exchange
offer by causing DTC to transfer notes to the notes exchange agent in accordance
with the procedures for transfer established under ATOP. DTC will then send an
Agent's Message to the notes exchange agent. The term "Agent's Message" means a
message transmitted by DTC, which when received by the notes exchange agent
forms part of the confirmation of a book-entry transfer, and which states that
DTC has received an
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express acknowledgment from the participant in DTC tendering notes which are the
subject of such book-entry confirmation that such participant has received and
agrees to be bound by the terms of the letter of transmittal and that PCA may
enforce such agreement against such participant. In the case of an Agent's
Message relating to guaranteed delivery, the term means a message transmitted by
DTC and received by the notes exchange agent which states that DTC has received
an express acknowledgment from the participant in DTC tendering notes that such
participant has received and agrees to be bound by the notice of guaranteed
delivery.
All questions as to the validity, form, eligibility, including time of receipt,
acceptance and withdrawal of the tendered notes will be determined by us in our
sole discretion, which determinations will be final and binding. We reserve the
absolute right to reject any and all notes not validly tendered or any notes the
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the absolute right to waive any defects, irregularities or conditions of
tender as to particular notes. Our interpretation of the terms and conditions of
the exchange offer, including the instructions in the letter of transmittal,
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of notes must be cured within such
time as we shall determine. Although we intend to notify holders of defects or
irregularities with respect to the tenders of notes, neither we, the notes
exchange agent nor any other person shall incur any liability for failure to
give such notification. Tenders of notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any notes
received by the notes exchange agent that are not validly tendered and as to
which the defects or irregularities have not been cured or waived, or if notes
are submitted in a principal amount greater than the principal amount of notes
being tendered by such tendering holder, such unaccepted or non-exchanged notes
will be returned by the notes exchange agent to the tendering holders (or, in
the case of notes tendered by book-entry transfer into the notes exchange
agent's account at the book-entry transfer facility pursuant to the book-entry
transfer procedures described above, such unaccepted or non-exchanged notes will
be credited to an account maintained with such book-entry transfer facility),
unless otherwise provided in the letter of transmittal designated for such
notes, as soon as practicable following the expiration date.
GUARANTEED DELIVERY PROCEDURES
Those holders who wish to tender their notes and:
(1) whose notes are not immediately available; or
(2) who cannot deliver their notes, the letter of transmittal or any other
required documents to the notes exchange agent before the expiration
date; or
(3) who cannot complete the procedures for book-entry transfer before the
expiration date,
may effect a tender if:
(1) the tender is made through an Eligible Institution;
(2) before the expiration date, the notes exchange agent receives from such
Eligible Institution a properly completed and duly executed notice of
guaranteed delivery, by facsimile transmission, mail or hand delivery,
setting forth the name and address of the holder, the certificate number
or numbers of such notes and the principal amount of notes tendered,
stating that the tender is being made thereby, and guaranteeing that,
within five business days after the expiration date, either (a) the
letter of transmittal, or facsimile thereof, together with the
certificate(s) representing the notes and any other documents required by
the letter of transmittal, will be deposited by the Eligible Institution
with the notes exchange agent or (b) that a confirmation of book-entry
transfer of such notes into the notes exchange agent's account at DTC,
will be delivered to the notes exchange agent; and
(3) either (a) such properly completed and executed letter of transmittal,
or facsimile thereof, together with the certificate(s) representing all
tendered notes in proper form for transfer and all other documents
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required by the letter of transmittal or (b) if applicable, confirmation
of a book-entry transfer into the notes exchange agent's account at DTC,
are actually received by the notes exchange agent within five business
days after the expiration date.
Upon request to the notes exchange agent, a notice of guaranteed delivery will
be sent to holders who wish to tender their notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the expiration date.
To effectively withdraw a tender of notes in the exchange offer, the notes
exchange agent must receive a telegram, telex, letter or facsimile transmission
notice of withdrawal at its address set forth herein prior to 5:00 p.m., New
York City time, on the expiration date. Any such notice of withdrawal must:
(1) specify the name of the person having deposited the notes to be
withdrawn;
(2) identify the notes to be withdrawn, including the certificate number or
numbers and the aggregate principal amount of such notes or, in the case
of notes transferred by book-entry transfer, the name and number of the
account at DTC to be credited;
(3) be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such notes were tendered, including
any required signature guarantees, or be accompanied by documents of
transfers sufficient to permit the trustee with respect to the notes to
register the transfer of such notes into the name of the person
withdrawing the tender; and
(4) specify the name in which any such notes are to be registered, if
different from that of the person depositing the notes.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us, and our determination shall
be final and binding on all parties. Any notes so withdrawn will be deemed not
to have been validly tendered for purposes of the exchange offer and no exchange
notes will be issued with respect thereto unless the notes so withdrawn are
validly retendered. Any notes which have been tendered but which are not
accepted for exchange due to the rejection of the tender due to uncured defects
or the prior termination of the exchange offer, or which have been validly
withdrawn, will be returned to the holder thereof without cost to such holder as
soon as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn notes may be retendered by following one of
the procedures described above under "-Procedures for Tendering" at any time
prior to the expiration date.
CONDITIONS OF THE EXCHANGE OFFER
The exchange offer is subject to the condition that the exchange offer, or the
making of any exchange by a holder, does not violate applicable law or any
applicable interpretation of the staff of the Securities and Exchange
Commission. If there has been a change in policy of the Securities and Exchange
Commission such that in the reasonable opinion of our counsel there is a
substantial question whether the exchange offer is permitted by applicable
federal law, we have agreed to seek a no-action letter or other favorable
decision from the Securities and Exchange Commission allowing us to consummate
the exchange offer.
If we determine that the exchange offer is not permitted by applicable federal
law, we may terminate the exchange offer. In connection such termination we may:
(1) refuse to accept any notes and return any notes that have been tendered
by the holders thereof;
(2) extend the exchange offer and retain all notes tendered prior to the
expiration date, subject to the rights of such holders of tendered notes
to withdraw their tendered notes; or
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(3) waive such termination event with respect to the exchange offer and
accept all properly tendered notes that have not been properly withdrawn.
If such waiver constitutes a material change in the exchange offer, we will
disclose such change by means of a supplement to this prospectus that will be
distributed to each registered holder of notes, and we will extend the exchange
offer for a period of five to ten business days, depending upon the significance
of the waiver, if the exchange offer would otherwise expire during such period.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as notes exchange
agent for the exchange offer. Questions and requests for assistance, requests
for additional copies of this prospectus or the letter of transmittal and
requests for the notice of guaranteed delivery should be directed to the notes
exchange agent addressed as follows:
<TABLE>
<S> <C>
BY OVERNIGHT COURIER & BY HAND AFTER
4:30 P.M. ON THE EXPIRATION DATE ONLY: BY HAND UP TO 4:30 P.M.:
United States Trust Company of New York United States Trust Company of New York
770 Broadway, 13(th) Floor 111 Broadway, Lower Level
New York, NY 10003 New York, NY 10006
Attn: Corporate Trust Services Attn: Corporate Trust Services
BY REGISTERED OR CERTIFIED MAIL: FACSIMILE TRANSMISSION: 212-420-6211
United States Trust Company of New York Confirm by Telephone: 800-548-6565
P.O. Box 844, Cooper Station Attn: Corporate Trust Services
New York, NY 10276-0844
Attn: Corporate Trust Services
</TABLE>
Any requests or deliveries to an address or facsimile number other than as set
forth above will not constitute a valid delivery.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation for
tenders is being made by mail. Additional solicitations, however, may be made by
our officers and regular employees and those of our affiliates in person, by
telegraph or telephone.
We have not retained any dealer-manager in connection with the exchange offer
and will not make any payments to brokers, dealers or other persons soliciting
acceptances of the exchange offer. We will pay the notes exchange agent,
however, reasonable and customary fees for its services and will reimburse the
notes exchange agent for its reasonable out-of-pocket expenses in connection
with the exchange offer.
We will pay the cash expenses to be incurred in connection with the exchange
offer. Such expenses include fees and expenses of the notes exchange agent and
the trustee, accounting and legal fees and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the notes
pursuant to the exchange offer. If, however, a transfer tax is imposed for any
reason other than the exchange of the notes pursuant to the exchange offer, then
the amount of any such transfer taxes, whether imposed on the registered holder
or any other persons, will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the letter of transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
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ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the notes,
which is face value as reflected in our accounting records on the date of
exchange. Accordingly, we will not recognize any gain or loss for accounting
purposes. The expenses of the exchange offer will be amortized over the term of
the exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The notes that are not exchanged for exchange notes pursuant to the exchange
offer will remain Transfer Restricted Securities. Accordingly, such notes may be
resold only as follows:
(1) to us, upon redemption thereof or otherwise;
(2) (a) so long as the notes are eligible for resale pursuant to Rule 144A,
to a person inside the United States whom the seller reasonably believes
is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act in a transaction meeting the requirements of Rule
144A, (b) in accordance with Rule 144 under the Securities Act, or (c)
pursuant to another exemption from the registration requirements of the
Securities Act and based upon an opinion of counsel reasonably acceptable
to us;
(3) outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act; or
(4) pursuant to an effective registration statement under the Securities
Act.
RESALE OF THE EXCHANGE NOTES
Based on no-action letters issued by the staff of the Securities and Exchange
Commission to third parties, we believe the exchange notes issued pursuant to
the exchange offer in exchange for the notes may be offered for resale, resold
and otherwise transferred by any holder (other than (1) a broker-dealer who
purchased such notes directly from us for resale pursuant to Rule 144A or any
other available exemption under the Securities Act or (2) a person that is an
"affiliate" of ours within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided, however, that the holder is acquiring the exchange
notes in its ordinary course of business and is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of the exchange notes. In the event that our belief is inaccurate, holders of
exchange notes who transfer exchange notes in violation of the prospectus
delivery provisions of the Securities Act and without an exemption from
registration thereunder may incur liability under the Securities Act. We do not
assume or indemnify holders against such liability.
If, however, any holder acquires exchange notes in the exchange offer for the
purpose of distributing or participating in a distribution of the exchange
notes, such holder cannot rely on the position of the staff of the Securities
and Exchange Commission enunciated in the referenced no-action letters or any
similar interpretive letters, and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available. Further, each participating broker-dealer that receives exchange
notes for its own account in exchange for notes, where such notes were acquired
by such participating broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. Although a broker-dealer may
be an "underwriter" within the meaning of the Securities Act, the letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for notes.
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As contemplated by these no-action letters and the notes registration rights
agreement, each holder tendering notes in the exchange offer is required to
represent to us in the letter of transmittal, that, among things:
(1) the person receiving the exchange notes pursuant to the exchange offer,
whether or not such person is the holder, is receiving them in the
ordinary course of business;
(2) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
exchange notes and that such holder is not engaged in, and does not
intend to engage in, a distribution of exchange notes;
(3) neither the holder nor any such other person is an "affiliate" of ours
within the meaning of Rule 405 under the Securities Act;
(4) the holder acknowledges and agrees that:
(a) any person participating in the exchange offer for the purpose of
distributing the exchange notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection
with a secondary resale transaction with respect to the exchange
notes acquired by such person and cannot rely on the position of the
staff of the Securities and Exchange Commission set forth in
no-action letters that are discussed above and under the heading
"-Purpose and Effect of the Exchange Offer;" and
(b) any broker-dealer that receives exchange notes for its own account in
exchange for notes pursuant to the exchange offer must deliver a
prospectus in connection with any resale of such exchange notes, but
by so acknowledging, the holder shall not be deemed to admit that, by
delivering a prospectus, it is an "underwriter" within the meaning of
the Securities Act; and
(5) the holder understands that a secondary resale transaction described in
clause (4)(a) above should be covered by an effective registration
statement containing the selling securityholder information required by
Item 507 of Regulation S-K of the Securities and Exchange Commission.
The exchange offer is not being made to, and we will not accept surrenders for
exchange from, holders of the notes in any jurisdiction in which the exchange
offer or its acceptance would not comply with the securities or blue sky laws of
such jurisdiction.
All resales must be made in compliance with state securities or "blue sky" laws.
Such compliance may require that the exchange notes be registered or qualified
in a state or that the resales be made by or through a licensed broker-dealer,
unless exemptions from these requirements are available. We assume no
responsibility with regard to compliance with these requirements.
THE NEW PREFERRED STOCK
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
PCA originally sold the preferred stock to J.P. Morgan Securities Inc. and BT
Alex. Brown Incorporated, the initial purchasers, pursuant to the Purchase
Agreement. The initial purchasers subsequently resold the preferred stock to
qualified institutional buyers in reliance on Rule 144A under the Securities
Act. As a condition to the Purchase Agreement, PCA, the guarantor subsidiaries
and the initial purchasers entered into a preferred stock registration rights
agreement in which PCA and the guarantor subsidiaries agreed to:
(1) use all commercially reasonable efforts to file a registration statement
registering the new preferred stock with the Securities and Exchange
Commission within 60 days after the original issuance of the outstanding
preferred stock;
(2) use all commercially reasonable efforts to have the registration
statement relating to the new preferred stock declared effective by the
Securities and Exchange Commission within 150 days after the original
issuance of the outstanding preferred stock;
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(3) unless the exchange offer would not be permitted by applicable law or
Securities and Exchange Commission policy, use all commercially
reasonable efforts to commence the exchange offer and use all
commercially reasonable efforts to issue within 30 business days, or
longer, if required by the federal securities laws, after the date on
which the registration statement relating to the new preferred stock was
declared effective by the Securities and Exchange Commission, new
preferred stock in exchange for all outstanding preferred stock tendered
prior to the expiration date; and
(4) if obligated to file a shelf registration statement, use all
commercially reasonable efforts to file the shelf registration statement
with the Securities and Exchange Commission within 60 days after such
filing obligation arises, to cause the shelf registration statement to be
declared effective by the Securities and Exchange Commission within 120
days after such obligation arises and to use commercially reasonable
efforts to keep effective the shelf registration statement for at least
two years after the original issuance of the preferred stock or such
shorter period that will terminate when all securities covered by the
shelf registration statement have been sold pursuant to the shelf
registration statement.
We have agreed to keep the exchange offer open for not less than 20 business
days, or longer if required by applicable law, after the date on which notice of
the exchange offer is mailed to the holders of the preferred stock. The
preferred stock registration rights agreement also requires us to include in the
prospectus for the exchange offer information necessary to allow broker-dealers
who hold preferred stock, other than preferred stock purchased directly from us
or one of our affiliates, to exchange such preferred stock pursuant to the
exchange offer and to satisfy the prospectus delivery requirements in connection
with resales of the new preferred stock received by such broker-dealers in the
exchange offer.
This prospectus covers the exchange offer and sale of the new preferred stock
pursuant to the exchange offer and the resale of new preferred stock received in
the exchange offer by any broker-dealer who held preferred stock other than
preferred stock purchased directly from us or one of our affiliates.
For each share of preferred stock surrendered to us pursuant to the exchange
offer, the holder of such share of preferred stock will receive a share of new
preferred stock having a liquidation preference equal to that of the surrendered
share of preferred stock. Dividends on each share of preferred stock will accrue
from the date of issuance of such share of preferred stock. The holders of
preferred stock that is accepted for exchange will receive accrued dividends on
such preferred stock up to, but not including, the issuance date of the new
preferred stock. Such dividends will be paid with the first dividend payment on
the new preferred stock. Dividends on the outstanding preferred stock accepted
for exchange will cease to accrue upon issuance of the new preferred stock.
Under existing interpretations of the staff of the Securities and Exchange
Commission contained in several no-action letters to third parties, we believe
the new preferred stock would in general be freely tradeable after the exchange
offer without further registration under the Securities Act. Any purchaser of
the preferred stock, however, who is either an "affiliate" of PCA, a
broker-dealer who purchased preferred stock directly from us or one of our
affiliates for resale, or who intends to participate in the exchange offer for
the purpose of distributing the new preferred stock:
(1) will not be able to rely on the interpretation of the staff of the
Securities and Exchange Commission;
(2) will not be able to tender its preferred stock in the exchange offer;
and
(3) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or transfer of the
preferred stock, unless such sale or transfer is made pursuant to an
exemption from such requirements.
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We have agreed to file with the Securities and Exchange Commission a shelf
registration statement to cover resales of the preferred stock by holders who
satisfy certain conditions relating to the provision of information in
connection with the shelf registration statement if:
(1) we are not required to file the registration statement for the exchange
offer or permitted to consummate the exchange offer because it is not
permitted by applicable law or Securities and Exchange Commission policy;
or
(2) any holder of Transfer Restricted Securities notifies us prior to the
20th day following consummation of the exchange offer that:
(a) it is prohibited by law or Securities and Exchange Commission policy
from participating in the exchange offer;
(b) that it may not resell the new preferred stock acquired by it in the
exchange offer to the public without delivering a prospectus and the
prospectus contained in the registration statement relating to the
exchange offer is not appropriate or available for such resales; or
(c) that it is a broker-dealer that purchased preferred stock directly
from us or one of our affiliates for resale.
For purposes of the foregoing, "Transfer Restricted Securities" means each
outstanding share of preferred stock until the earliest to occur of:
(1) the date on which such share of preferred stock has been exchanged by a
person other than a broker-dealer for a share of new preferred stock;
(2) following the exchange by a broker-dealer in the exchange offer of a
share of preferred stock for a share of new preferred stock, the date on
which such share of new preferred stock is sold to a purchaser who
receives from such broker-dealer before the date of such sale a copy of
the prospectus contained in the registration statement relating to the
exchange offer;
(3) the date on which such shares of new preferred stock has been
effectively registered under the Securities Act and disposed of in
accordance with the shelf registration statement; or
(4) the date on which such share of preferred stock is distributed to the
public pursuant to Rule 144 under the Securities Act.
We will pay liquidated damages to each holder of preferred stock if:
(1) we fail to file any of the registration statements on or before the date
specified for such filing;
(2) any of such registration statements is not declared effective by the
Securities and Exchange Commission before the date specified for such
effectiveness (the "Effectiveness Target Date");
(3) we fail to consummate the exchange offer within 30 business days of the
Effectiveness Target Date with respect to the registration statement
relating to the exchange offer;
(4) the shelf registration statement or the registration statement relating
to the exchange offer is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted
Securities during the periods specified in the preferred stock
registration rights agreement (each such event referred to in clauses (1)
through (4) above, a "Registration Default").
The amount of liquidated damages will be equal to a per annum rate of 0.25% on
the liquidation preference on new preferred stock held by each holder, with
respect to the first 90-day period immediately following the occurrence of the
first Registration Default. Liquidated damages will increase by an additional
per annum rate of 0.25% with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages for all Registration Defaults of 1.00% per annum on the liquidation
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preference on new preferred stock. We will pay all accrued liquidated damages on
each dividend payment date in the manner provided for the payment of dividends
in the certificate of designation. Following the cure of all Registration
Defaults, the accrual of liquidated damages will cease.
Each holder of preferred stock, other than certain specified holders, who wishes
to exchange preferred stock for new preferred stock in the exchange offer will
be required to make certain representations, including that:
(1) it is not an affiliate of PCA;
(2) any new preferred stock to be received by it were acquired in the
ordinary course of its business; and
(3) it has no arrangement with any person to participate in the distribution
of the new preferred stock.
If the holder is a broker-dealer that will receive new preferred stock for its
own account in exchange for preferred stock that was acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such new preferred stock.
The Securities and Exchange Commission has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to the new preferred stock, other than a resale of an unsold allotment from the
original sale of the preferred stock, with a prospectus contained in the
registration statement relating to the exchange offer. Under the preferred stock
registration rights agreement, we are required to allow broker-dealers to use
the prospectus contained in the registration statement relating to the exchange
offer in connection with the resale of such new preferred stock.
We will, in the event of the filing of a shelf registration statement, provide
to each holder of preferred stock eligible to participate in such shelf
registration statement copies of the prospectus which is a part of the shelf
registration statement, notify each such holder when the shelf registration
statement for the preferred stock has become effective and take certain other
actions as are required to permit resales of the outstanding preferred stock. A
holder of preferred stock that sells such preferred stock pursuant to the shelf
registration statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the preferred stock registration rights agreement which are
applicable to such a holder, including certain indemnification obligations. In
addition, each such holder will be required to deliver information to be used in
connection with the shelf registration statement and to provide comments on the
shelf registration statement within the time periods set forth in the preferred
stock registration rights agreement in order to have their preferred stock
included in the shelf registration statement and to benefit from the provisions
regarding liquidated damages.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus and
the accompanying letter of transmittal relating to the new preferred stock, we
will accept all outstanding preferred stock validly tendered prior to 5:00 p.m.,
New York City time, on the expiration date. We will issue $100 liquidation
preference per share of new preferred stock in exchange for each $100
liquidation preference per share of outstanding preferred stock accepted in the
exchange offer.
The form and terms of the new preferred stock are identical to the preferred
stock except for the following:
(1) the new preferred stock bears a Series B designation and a different
CUSIP number from the preferred stock;
(2) the new preferred stock has been registered under the Securities Act
and, therefore, will not bear legends restricting its transfer; and
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(3) the holders of the new preferred stock will not be entitled to certain
rights under the preferred stock registration rights agreement, including
the provisions providing for an increase in the dividend rate on the
preferred stock in certain circumstances relating to the timing of the
exchange offer, all of which rights will terminate when the exchange
offer is terminated.
The new preferred stock will evidence the same debt as the preferred stock and
will be entitled to the benefits of the certificate of designation under which
the preferred stock were issued. As of the date of this prospectus, $100 million
in aggregate liquidation preference of the preferred stock is outstanding.
Solely for reasons of administration and no other reason, we have fixed the
close of business on , 1999 as the record date for the exchange
offer for purposes of determining the persons to whom this prospectus and the
letter of transmittal will be mailed initially. Only a registered holder of
preferred stock, or such holder's legal representative or attorney-in-fact, as
reflected on the records of the transfer agent under the certificate of
designation may participate in the exchange offer. There will be no fixed record
date, however, for determining registered holders of the preferred stock
entitled to participate in the exchange offer.
The holders of preferred stock do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the certificate of designation
in connection with the exchange offer. We intend to conduct the exchange offer
in accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Securities and Exchange Commission promulgated under the
Exchange Act.
We shall be deemed to have accepted validly tendered shares of preferred stock
when, as and if we have given oral or written notice thereof to the preferred
stock exchange agent. The preferred stock exchange agent will act as agent for
the tendering holders for the purpose of receiving the new preferred stock from
us.
If any tendered preferred stock is not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth in this
prospectus or otherwise, the certificates for any such unaccepted shares of
preferred stock will be returned, without expense, to the tendering holder as
promptly as practicable after the expiration date.
Those holders who tender preferred stock in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
preferred stock. We will pay all charges and expenses, other than certain
applicable taxes, in connection with the exchange offer. See "-Fees and
Expenses."
EXPIRATION DATES; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on
, 1999 unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" shall mean the latest date to which the
exchange offer is extended. Notwithstanding the foregoing, we will not extend
the expiration date beyond , 1999.
We have no current plans to extend the exchange offer. In order to extend the
expiration date, we will notify the preferred stock exchange agent of any
extension by oral or written notice and will make a public announcement of such
extension, in each case prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
We reserve the right, in our sole discretion, to:
(1) delay accepting any preferred stock;
(2) extend the exchange offer; or
(3) terminate the exchange offer,
if any of the conditions set forth below under "-Conditions of the Exchange
Offer" shall not have been satisfied, in each case by giving oral or written
notice of such delay, extension or termination to the preferred stock exchange
agent, and to amend the terms of the exchange offer in any manner. Any such
delay in acceptance,
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extension, termination or amendment will be followed as promptly as practicable
by a public announcement of such matter. If the exchange offer is amended in a
manner determined by us to constitute a material change, we will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered holders of the preferred stock and the exchange
offer will be extended for a period of five to ten business days, as required by
law, depending upon the significance of the amendment and the manner of
disclosure to the registered holders, assuming the exchange offer would
otherwise expire during such five to ten business day period.
Without limiting the manner in which we may choose to make a public announcement
of any delay, extension, termination or amendment of the exchange offer, we
shall not have an obligation to publish, advertise, or otherwise communicate any
such public announcement other than by making a timely release of such
announcement to the Dow Jones News Service.
DIVIDENDS ON THE NEW PREFERRED STOCK
The new preferred stock will accrue dividends from its date of issuance.
Dividends are payable semiannually on April 1 and October 1 of each year
commencing on October 1, 1999, at the rate of 12d% per annum. The holders of
preferred stock that is accepted for exchange will receive accrued dividends on
such preferred stock up to, but not including, the issuance date of the new
preferred stock. Such dividends will be paid with the first dividend payment on
the new preferred stock. Consequently, holders who exchange their preferred
stock for new preferred stock will receive the same dividend payment on October
1, 1999, which is the first dividend payment date with respect to the preferred
stock and the new preferred stock, that they would have received had they not
accepted the exchange offer. Dividends on the preferred stock accepted for
exchange will cease to accrue upon issuance of the new preferred stock.
PROCEDURES FOR TENDERING
Only a registered holder of preferred stock may tender such preferred stock in
the exchange offer. To effectively tender in the exchange offer, a holder must
complete, sign and date the letter of transmittal, or a facsimile thereof, have
the signatures thereon guaranteed if required by the letter of transmittal, and
mail or otherwise deliver such letter of transmittal or such facsimile, together
with the preferred stock and any other required documents, to the preferred
stock exchange agent at the address set forth below under "-Exchange Agent" for
receipt prior to 5:00 p.m., New York City time, on the expiration date. Delivery
of the preferred stock also may be made by book-entry transfer in accordance
with the procedures described below. If you are effecting delivery by book-entry
transfer, then:
(1) confirmation of such book-entry transfer must be received by the
preferred stock exchange agent prior to the expiration date; and
(2) you must also transmit to the preferred stock exchange agent on or prior
to the expiration date, a computer-generated message transmitted by means
of the Automated Tender Offer Program System of The Depository Trust
Company in which you acknowledge and agree to be bound by the terms of
the letter of transmittal and which, when received by the preferred stock
exchange agent, forms a part of the confirmation of book-entry transfer.
By executing the letter of transmittal or effecting delivery by book-entry
transfer, each holder is making to us those representations set forth under the
heading "-Resale of the New Preferred Stock."
The tender by a holder of preferred stock will constitute an agreement between
such holder and us in accordance with the terms and subject to the conditions
set forth in this prospectus and in the letter of transmittal.
The method of delivery of outstanding preferred stock and the letter of
transmittal and all other required documents to the preferred stock exchange
agent is at the election and sole risk of the holder. As an alternative to
delivery by mail, holders may wish to consider overnight or hand delivery
service. In all cases, sufficient time
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should be allowed to assure delivery to the preferred stock exchange agent
before the expiration date. No letter of transmittal or preferred stock should
be sent to PCA. Holders may request that their respective brokers, dealers,
commercial banks, trust companies or nominees effect the above transactions for
such holders.
Only a registered holder of preferred stock may tender such preferred stock in
connection with the exchange offer. The term "holder" with respect to the
exchange offer means any person in whose name preferred stock are registered on
the books of PCA, any other person who has obtained a properly completed bond
power from the registered holder, or any person whose preferred stock are held
of record by DTC who desires to deliver such preferred stock by book-entry
transfer at DTC.
Any beneficial owner whose preferred stock are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should promptly contact the person in whose name your preferred stock
are registered and instruct such registered holder to tender on your behalf. If,
as a beneficial owner, you wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your preferred
stock, either make appropriate arrangements to register ownership of the
preferred stock in your name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an Eligible Institution (defined below) unless the preferred stock
tendered is tendered (1) by a registered holder who has not completed the box
entitled "Special Registration Instructions" or "Special Delivery Instructions"
on the letter of transmittal or (2) for the account of an Eligible Institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by a participant in a recognized signature guarantee medallion program
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").
If the letter of transmittal is signed by a person other than the registered
holder of any preferred stock listed therein, such preferred stock must be
endorsed or accompanied by properly completed bond powers, signed by such
registered holder as such registered holder's name appears on such preferred
stock with the signature on such bond powers guaranteed by an Eligible
Institution.
If the letter of transmittal or any preferred stock or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and submit with the letter of
transmittal evidence satisfactory to us of their authority to so act.
We understand that the preferred stock exchange agent will make a request,
promptly after the date of this prospectus, to establish accounts with respect
to the preferred stock at the book-entry transfer facility of DTC for the
purpose of facilitating this exchange offer, and subject to the establishment of
these accounts, any financial institution that is a participant in the
book-entry transfer facility system may make book-entry delivery of preferred
stock by causing the transfer of such preferred stock into the preferred stock
exchange agent's account with respect to the preferred stock in accordance with
DTC's procedures for such transfer. Although delivery of the preferred stock may
be effected through book-entry transfer into the preferred stock exchange
agent's account at the book-entry transfer facility, unless the holder complies
with the procedures described in the following paragraph, an appropriate letter
of transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the preferred stock exchange agent at its address
set forth below before the expiration date, or the guaranteed delivery
procedures described below must be complied with. The delivery of documents to
the book-entry transfer facility does not constitute delivery to the preferred
stock exchange agent.
The preferred stock exchange agent and DTC have confirmed that the exchange
offer is eligible for the Automated Tender Offer Program ("ATOP") of DTC.
Accordingly, DTC participants may electronically transmit their acceptance of
the exchange offer by causing DTC to transfer preferred stock to the preferred
stock exchange agent in accordance with the procedures for transfer established
under ATOP. DTC will then send an Agent's
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Message to the preferred stock exchange agent. The term "Agent's Message" means
a message transmitted by DTC, which when received by the preferred stock
exchange agent forms part of the confirmation of a book-entry transfer, and
which states that DTC has received an express acknowledgment from the
participant in DTC tendering preferred stock which is the subject of such
book-entry confirmation that such participant has received and agrees to be
bound by the terms of the letter of transmittal and that PCA may enforce such
agreement against such participant. In the case of an Agent's Message relating
to guaranteed delivery, the term means a message transmitted by DTC and received
by the preferred stock exchange agent which states that DTC has received an
express acknowledgment from the participant in DTC tendering preferred stock
that such participant has received and agrees to be bound by the notice of
guaranteed delivery.
All questions as to the validity, form, eligibility, including time of receipt,
acceptance and withdrawal of the tendered preferred stock will be determined by
us in our sole discretion, which determinations will be final and binding. We
reserve the absolute right to reject any and all preferred stock not validly
tendered or any preferred stock the acceptance of which would, in the opinion of
our counsel, be unlawful. We also reserve the absolute right to waive any
defects, irregularities or conditions of tender as to particular shares of
preferred stock. Our interpretation of the terms and conditions of the exchange
offer, including the instructions in the letter of transmittal, will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of preferred stock must be cured within such time as we
shall determine. Although we intend to notify holders of defects or
irregularities with respect to the tenders of preferred stock, neither we, the
preferred stock exchange agent nor any other person shall incur any liability
for failure to give such notification. Tenders of preferred stock will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any preferred stock received by the preferred stock exchange agent that
is not validly tendered and as to which the defects or irregularities have not
been cured or waived, or if preferred stock is submitted in an aggregate
liquidation preference greater than the liquidation preference of preferred
stock being tendered by such tendering holder, such unaccepted or non-exchanged
preferred stock will be returned by the preferred stock exchange agent to the
tendering holders (or, in the case of preferred stock tendered by book-entry
transfer into the preferred stock exchange agent's account at the book-entry
transfer facility pursuant to the book-entry transfer procedures described
above, such unaccepted or non-exchanged preferred stock will be credited to an
account maintained with such book-entry transfer facility), unless otherwise
provided in the letter of transmittal designated for such preferred stock, as
soon as practicable following the expiration date.
GUARANTEED DELIVERY PROCEDURES
Those holders who wish to tender their preferred stock and:
(1) whose preferred stock are not immediately available; or
(2) who cannot deliver their preferred stock, the letter of transmittal or
any other required documents to the preferred stock exchange agent before
the expiration date; or
(3) who cannot complete the procedures for book-entry transfer before the
expiration date,
may effect a tender if:
(1) the tender is made through an Eligible Institution;
(2) before the expiration date, the preferred stock exchange agent receives
from such Eligible Institution a properly completed and duly executed
notice of guaranteed delivery, by facsimile transmission, mail or hand
delivery, setting forth the name and address of the holder, the
certificate number or numbers of such preferred stock and the liquidation
preference of preferred stock tendered, stating that the tender is being
made thereby, and guaranteeing that, within five business days after the
expiration date, either (a) the letter of transmittal, or facsimile
thereof, together with the certificate(s) representing the preferred
stock and any other documents required by the letter of transmittal, will
be deposited by the
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Eligible Institution with the preferred stock exchange agent or (b) that
a confirmation of book-entry transfer of such preferred stock into the
preferred stock exchange agent's account at DTC, will be delivered to the
preferred stock exchange agent; and
(3) either (a) such properly completed and executed letter of transmittal,
or facsimile thereof, together with the certificate(s) representing all
tendered preferred stock in proper form for transfer and all other
documents required by the letter of transmittal or (b) if applicable,
confirmation of a book-entry transfer into the preferred stock exchange
agent's account at DTC, are actually received by the preferred stock
exchange agent within five business days after the expiration date.
Upon request to the preferred stock exchange agent, a notice of guaranteed
delivery will be sent to holders who wish to tender their preferred stock
according to the guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of preferred stock may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
To effectively withdraw a tender of preferred stock in the exchange offer, the
preferred stock exchange agent must receive a telegram, telex, letter or
facsimile transmission notice of withdrawal at its address set forth herein
prior to 5:00 p.m., New York City time, on the expiration date. Any such notice
of withdrawal must:
(1) specify the name of the person having deposited the preferred stock to
be withdrawn;
(2) identify the shares of preferred stock to be withdrawn, including the
certificate number or numbers and the aggregate liquidation preference of
such preferred stock or, in the case of preferred stock transferred by
book-entry transfer, the name and number of the account at DTC to be
credited;
(3) be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such preferred stock were tendered,
including any required signature guarantees, or be accompanied by
documents of transfers sufficient to permit the transfer agent with
respect to the preferred stock to register the transfer of such preferred
stock into the name of the person withdrawing the tender; and
(4) specify the name in which any such preferred stock are to be registered,
if different from that of the person depositing the preferred stock.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us, and our determination shall
be final and binding on all parties. Any preferred stock so withdrawn will be
deemed not to have been validly tendered for purposes of the exchange offer and
no new preferred stock will be issued with respect thereto unless the preferred
stock so withdrawn is validly retendered. Any preferred stock which have been
tendered but which are not accepted for exchange due to the rejection of the
tender due to uncured defects or the prior termination of the exchange offer, or
which have been validly withdrawn, will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender or termination of the exchange offer. Properly withdrawn preferred
stock may be retendered by following one of the procedures described above under
"-Procedures for Tendering" at any time prior to the expiration date.
CONDITIONS OF THE EXCHANGE OFFER
The exchange offer is subject to the condition that the exchange offer, or the
making of any exchange by a holder, does not violate applicable law or any
applicable interpretation of the staff of the Securities and Exchange
Commission. If there has been a change in policy of the Securities and Exchange
Commission such that in the reasonable opinion of our counsel there is a
substantial question whether the exchange offer is permitted by applicable
federal law, we have agreed to seek a no-action letter or other favorable
decision from the Securities and Exchange Commission allowing us to consummate
the exchange offer.
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If we determine that the exchange offer is not permitted by applicable federal
law, we may terminate the exchange offer. In connection such termination we may:
(1) refuse to accept any preferred stock and return any preferred stock that
have been tendered by the holders thereof;
(2) extend the exchange offer and retain all preferred stock tendered prior
to the expiration date, subject to the rights of such holders of tendered
preferred stock to withdraw their tendered preferred stock; or
(3) waive such termination event with respect to the exchange offer and
accept all properly tendered preferred stock that have not been properly
withdrawn.
If such waiver constitutes a material change in the exchange offer, we will
disclose such change by means of a supplement to this prospectus that will be
distributed to each registered holder of preferred stock, and we will extend the
exchange offer for a period of five to ten business days, depending upon the
significance of the waiver, if the exchange offer would otherwise expire during
such period.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as preferred stock
exchange agent for the exchange offer. Questions and requests for assistance,
requests for additional copies of this prospectus or the letter of transmittal
and requests for the notice of guaranteed delivery should be directed to the
preferred stock exchange agent addressed as follows:
<TABLE>
<S> <C>
BY OVERNIGHT COURIER & BY HAND AFTER
4:30 P.M. ON THE EXPIRATION DATE ONLY: BY HAND UP TO 4:30 P.M.:
United States Trust Company of New York United States Trust Company of New York
770 Broadway, 13(th) Floor 111 Broadway, Lower Level
New York, NY 10003 New York, NY 10006
Attn: Corporate Trust Services Attn: Corporate Trust Services
BY REGISTERED OR CERTIFIED MAIL: FACSIMILE TRANSMISSION: 212-420-6211
United States Trust Company of New York Confirm by Telephone: 800-548-6565
P.O. Box 844, Cooper Station Attn: Corporate Trust Services
New York, NY 10276-0844
Attn: Corporate Trust Services
</TABLE>
Any requests or deliveries to an address or facsimile number other than as set
forth above will not constitute a valid delivery.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation for
tenders is being made by mail. Additional solicitations, however, may be made by
our officers and regular employees and those of our affiliates in person, by
telegraph or telephone.
We have not retained any dealer-manager in connection with the exchange offer
and will not make any payments to brokers, dealers or other persons soliciting
acceptances of the exchange offer. We will pay the preferred stock exchange
agent, however, reasonable and customary fees for its services and will
reimburse the preferred stock exchange agent for its reasonable out-of-pocket
expenses in connection with the exchange offer.
We will pay the cash expenses to be incurred in connection with the exchange
offer. Such expenses include fees and expenses of the preferred stock exchange
agent and the transfer agent, accounting and legal fees and printing costs,
among others.
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We will pay all transfer taxes, if any, applicable to the exchange of the
preferred stock pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the preferred stock pursuant
to the exchange offer, then the amount of any such transfer taxes, whether
imposed on the registered holder or any other persons, will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The new preferred stock will be recorded at the same carrying value as the
preferred stock, which is face value as reflected in our accounting records on
the date of exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes. The expenses of the exchange offer will be charged to
paid-in-capital.
CONSEQUENCES OF FAILURE TO EXCHANGE
The preferred stock that is not exchanged for new preferred stock pursuant to
the exchange offer will remain Transfer Restricted Securities. Accordingly, such
preferred stock may be resold only as follows:
(1) to us, upon redemption thereof or otherwise;
(2) (a) so long as the preferred stock is eligible for resale pursuant to
Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the meaning
of Rule 144A under the Securities Act in a transaction meeting the
requirements of Rule 144A, (b) in accordance with Rule 144 under the
Securities Act, or (c) pursuant to another exemption from the
registration requirements of the Securities Act and based upon an opinion
of counsel reasonably acceptable to us;
(3) outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act; or
(4) pursuant to an effective registration statement under the Securities
Act.
RESALE OF THE NEW PREFERRED STOCK
Based on no-action letters issued by the staff of the Securities and Exchange
Commission to third parties, we believe the new preferred stock issued pursuant
to the exchange offer in exchange for the preferred stock may be offered for
resale, resold and otherwise transferred by any holder (other than (1) a
broker-dealer who purchased such preferred stock directly from us for resale
pursuant to Rule 144A or any other available exemption under the Securities Act
or (2) a person that is an "affiliate" of ours within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided, however, that
the holder is acquiring the new preferred stock in its ordinary course of
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the new preferred stock. In
the event that our belief is inaccurate, holders of new preferred stock who
transfer new preferred stock in violation of the prospectus delivery provisions
of the Securities Act and without an exemption from registration thereunder may
incur liability under the Securities Act. We do not assume or indemnify holders
against such liability.
If, however, any holder acquires new preferred stock in the exchange offer for
the purpose of distributing or participating in a distribution of the new
preferred stock, such holder cannot rely on the position of the staff of the
Securities and Exchange Commission enunciated in the referenced no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each participating broker-dealer that receives new
preferred stock for its own account in exchange for preferred stock, where such
preferred stock was acquired by such participating broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any
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resale of the new preferred stock. Although a broker-dealer may be an
"underwriter" within the meaning of the Securities Act, the letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new preferred stock received in exchange for preferred stock.
As contemplated by these no-action letters and the preferred stock registration
rights agreement, each holder tendering preferred stock in the exchange offer is
required to represent to us in the letter of transmittal, that, among things:
(1) the person receiving the new preferred stock pursuant to the exchange
offer, whether or not such person is the holder, is receiving it in the
ordinary course of business;
(2) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
new preferred stock and that such holder is not engaged in, and does not
intend to engage in, a distribution of new preferred stock;
(3) neither the holder nor any such other person is an "affiliate" of ours
within the meaning of Rule 405 under the Securities Act;
(4) the holder acknowledges and agrees that:
(a) any person participating in the exchange offer for the purpose of
distributing the new preferred stock must comply with the
registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale transaction with respect to
the new preferred stock acquired by such person and cannot rely on
the position of the staff of the Securities and Exchange Commission
set forth in no-action letters that are discussed above and under the
heading "-Purpose and Effect of the Exchange Offer;" and
(b) any broker-dealer that receives new preferred stock for its own
account in exchange for preferred stock pursuant to the exchange
offer must deliver a prospectus in connection with any resale of such
new preferred stock, but by so acknowledging, the holder shall not be
deemed to admit that, by delivering a prospectus, it is an
"underwriter" within the meaning of the Securities Act; and
(5) the holder understands that a secondary resale transaction described in
clause (4)(a) above should be covered by an effective registration
statement containing the selling securityholder information required by
Item 507 of Regulation S-K of the Securities and Exchange Commission.
The exchange offer is not being made to, and we will not accept surrenders for
exchange from, holders of the preferred stock in any jurisdiction in which the
exchange offer or its acceptance would not comply with the securities or blue
sky laws of such jurisdiction.
All resales must be made in compliance with state securities or "blue sky" laws.
Such compliance may require that the new preferred stock be registered or
qualified in a state or that the resales be made by or through a licensed
broker-dealer, unless exemptions from these requirements are available. We
assume no responsibility with regard to compliance with these requirements.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a general discussion of certain United States federal income
tax consequences as of the date hereof of the acquisition, ownership and
disposition of the exchange notes and new preferred stock issued pursuant to
this exchange offer and the subordinated exchange debentures that may be issued
from time to time after this exchange offer in exchange for the new preferred
stock. This discussion applies only if you are a U.S. Holder (as defined below)
and acquire such exchange notes and/or new preferred stock in exchange for notes
and/or preferred stock acquired on original issuance and for the original
offering price. The following discussion is based on current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
Regulations, judicial authority and current administrative rulings and
pronouncements of the Internal Revenue Service (the "IRS"). No assurance can be
given that the IRS will not take a contrary view, and no ruling from the IRS has
been or will be sought. Legislative, judicial, or administrative changes or
interpretations may be forthcoming that could alter or modify the propriety of
the statements and conclusions set forth herein. Moreover, any such changes or
interpretations may or may not be retroactive. Accordingly, any such changes or
interpretations could affect the tax consequences to holders of the exchange
notes, new preferred stock and subordinated exchange debentures.
We assume in our discussion below that the exchange notes, new preferred stock
and subordinated exchange debentures are held as capital assets. This discussion
is for general information only, and does not address all of the tax
consequences that may be relevant to particular acquirers in light of their
personal circumstances. For instance, special rules may apply to and may affect
the federal income tax consequences for certain types of acquirers such as:
- banks and other financial institutions,
- real estate investment trusts,
- regulated investment companies,
- insurance companies,
- tax-exempt organizations,
- S corporations,
- dealers in securities, or
- persons whose functional currency is not the U.S. Dollar.
In addition, special rules may apply if the exchange notes, new preferred stock
or subordinated exchange debentures are held in connection with integrated
transactions such as certain hedging transactions, conversion transactions or
"straddle" transactions. Finally, this discussion does not include any
description of the tax laws of any state, local or non-U.S. government that may
be applicable to a particular acquirer.
When we use the term "U.S. Holder" we generally mean a holder of exchange notes,
new preferred stock or subordinated exchange debentures who (for U.S. federal
income tax purposes):
- is an individual who is a citizen or resident of the United States (as
determined under U.S. federal income tax laws);
- is a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision thereof (except to the
extent in the case of a partnership, as provided by Treasury Regulations
which may be issued in the future);
- is an estate whose income is includible in gross income for U.S. federal
income tax purposes regardless of its source; or
- is a trust if (1) a court within the United States is able to exercise
primary supervision over the administration of the trust and (2) at least
one U.S. person has authority to control all substantial decisions of the
trust.
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When we use the term "Non-U.S. Holder," we mean a holder that is not a U.S.
Holder.
WE ADVISE YOU TO CONSULT WITH YOUR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES TO YOU OF THE ACQUISITION, OWNERSHIP AND SALE OF THE EXCHANGE
NOTES, THE NEW PREFERRED STOCK AND THE SUBORDINATED EXCHANGE DEBENTURES,
INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH
ACQUISITION, OWNERSHIP AND SALE AND REGARDING CHANGES OR POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
EXCHANGE NOTES
ACQUISITION OF THE EXCHANGE NOTES The exchange notes are being issued pursuant
to this exchange offer and the notes registration rights agreement in exchange
for unregistered notes previously issued in connection with the notes offering.
A U.S. Holder will not recognize any taxable gain or loss on the exchange of
notes for registered exchange notes and a U.S. Holder's tax basis will be the
same in the exchange notes as in the notes exchanged therefor.
STATED INTEREST. You must generally pay federal income tax on the interest on
the exchange notes:
- when it accrues, if you use the accrual method of accounting for United
States federal income tax purposes; or
- when you receive it, if you use the cash method of accounting for United
States federal income tax purposes.
DISPOSITION OF THE EXCHANGE NOTES. Generally you must recognize taxable gain or
loss on the sale, exchange, redemption, retirement or other taxable disposition
of an exchange note. The amount of your gain or loss equals the difference
between the amount you receive for the exchange note (in cash or other property,
valued at fair market value), minus the amount attributable to accrued interest
on the exchange note, minus your adjusted tax basis in the exchange note. Your
initial tax basis in an exchange note equals the price you paid for the original
note.
Your gain or loss will generally be a long-term capital gain or loss if you have
held the exchange note for more than one year from the date the originally
issued note was acquired. Otherwise, such gain or loss will be short-term
capital gain or loss. Payments at disposition attributable to accrued interest
and not yet included in income will be taxed as ordinary interest income.
NEW PREFERRED STOCK
CLASSIFICATION OF NEW PREFERRED STOCK. For the purposes of this discussion, we
are assuming that the outstanding preferred stock and new preferred stock will
be treated as equity (and not debt) for United States federal income tax
purposes. We have not obtained any opinion on this issue.
DIVIDENDS. Distributions on the new preferred stock will constitute dividends
to the extent paid from our current or accumulated earnings and profits (as
determined under United States federal income tax principles). Dividends "paid
in kind" through the issuance of additional new preferred stock will be treated
as distributions in an amount equal to the fair market value of such additional
new preferred stock as of the date of distribution. Such amount will also be the
issue price and initial tax basis of such newly distributed new preferred stock
for United States federal income tax purposes. The amount of our earnings and
profits at any time will depend upon our future actions and financial
performance. At the time the outstanding preferred stock was issued, PCA was a
newly formed corporation, and it is our belief that it did not have any current
or accumulated earnings and profits. Consequently, unless we generate earnings
and profits following that date, distributions with respect to the new preferred
stock may not qualify as dividends for federal income tax purposes. To the
extent that the amount of a distribution on the new preferred stock exceeds our
current and accumulated earnings and profits, such distributions will be treated
as a nontaxable return of capital and will be applied against and reduce the
adjusted tax basis of the new preferred stock in the hands of each U.S. Holder
(but not below zero), thus increasing the
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amount of any gain (or reducing the amount of any loss) that would otherwise be
realized by such U.S. Holder upon the sale or other taxable disposition of such
new preferred stock. The amount of any such distribution that exceeds the
adjusted tax basis of the new preferred stock in the hands of the U.S. Holder
will be treated as capital gain.
DIVIDENDS RECEIVED DEDUCTION. Under Section 243 of the Code, corporate U.S.
Holders may be able to deduct 70% of the amount of any distribution qualifying
as a dividend. There are, however, many exceptions and restrictions relating to
the availability of such dividends received deduction.
Section 246(c) of the Code requires that, in order to be eligible for the
dividends received deduction, a corporate U.S. Holder must generally hold the
shares of the new preferred stock for a minimum of 46 days (91 days in the case
of certain preferred stock) during the 90 day period beginning on the date which
is 45 days before the date on which such dividend is declared payable on such
shares (or during the 180 day period beginning 90 days before such dividend is
declared payable on such preferred shares). A U.S. Holder's holding period for
these purposes is suspended during any period in which it has certain options or
contractual obligations with respect to substantially identical stock or holds
one or more other positions with respect to substantially similar or related
property that diminishes the risk of loss from holding the new preferred stock.
Section 246A of the Code reduces the dividends received deduction allowed to a
corporate U.S. Holder that has incurred indebtedness "directly attributable" to
its investment in new preferred stock held as "portfolio stock".
Under Section 1059 of the Code, a corporate U.S. Holder is required to reduce
its tax basis (but not below zero) in the new preferred stock by the nontaxed
portion of any "extraordinary dividend" if such stock has not been held for more
than two years before the earliest of the date such dividend is declared,
announced, or agreed to. Generally, the nontaxed portion of an extraordinary
dividend is the amount excluded from income by operation of the dividends
received deduction provisions of Section 243 of the Code. An extraordinary
dividend on the new preferred stock generally would be a dividend that:
- equals or exceeds 5% of the corporate U.S. Holder's adjusted tax basis in
the new preferred stock, treating all dividends declared payable on such
shares within an 85 day period as one dividend; or
- exceeds 20% of the corporate U.S. Holder's adjusted tax basis in the new
preferred stock, treating all dividends declared payable on such shares
within a 365 day period as one dividend.
In determining whether a dividend paid on the new preferred stock is an
extraordinary dividend, a corporate U.S. Holder may elect to substitute the fair
market value of the stock for such U.S. Holder's tax basis for purposes of
applying these tests, provided such fair market value is established to the
satisfaction of the Secretary of the Treasury as of the day before the date on
which the dividend is declared payable. An extraordinary dividend also includes
any amount treated as a dividend in the case of a redemption that is either non
pro rata as to all stockholders or in partial liquidation of PCA, regardless of
the stockholder's holding period and regardless of the size of the dividend. If
any part of the nontaxed portion of an extraordinary dividend is not applied to
reduce the U.S. Holder's tax basis as a result of the limitation on reducing
such basis below zero, such part will be treated as capital gain and will be
recognized in the taxable year in which the extraordinary dividend is received.
Special Section 1059 rules exist with respect to "qualified preferred
dividends." A qualified preferred dividend is any fixed dividend payable with
respect to any share of stock which:
- provides for fixed preferred dividends payable not less frequently than
annually; and
- was not in arrears as to dividends at the time the U.S. Holder acquired
such stock.
A qualified preferred dividend does not include any dividend payable with
respect to any share of stock if the actual rate of return of such stock exceeds
15%. Section 1059 does not apply to qualified preferred dividends if the
corporate U.S. Holder holds such stock for more than five years. If the U.S.
Holder disposes of such stock before it has been held for more than five years,
the amount subject to extraordinary dividend treatment with respect to qualified
preferred dividends is limited to the excess of the actual rate of return over
the stated rate of
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return. Actual or stated rates of return are the actual or stated dividends
expressed as a percentage of the lesser of (1) the U.S. Holder's tax basis in
such stock or (2) the liquidation preference of such stock. WE ADVISE CORPORATE
U.S. HOLDERS TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE POSSIBLE
APPLICATION OF SECTION 1059 TO THEIR NEW PREFERRED STOCK.
REDEMPTION PREMIUM. Under Section 305(c) of the Code and the applicable
regulations thereunder, if there is a redemption premium, which is the amount
(more than a DE MINIMIS amount), by which the redemption price of the new
preferred stock exceeds its issue price, such redemption premium will be taxable
as a constructive distribution to the U.S. Holder under a constant interest rate
method similar to that described below for accruing original issue discount
("OID") (see "Subordinated Exchange Debentures--Original Issue Discount").
Because the new preferred stock provides for optional rights of redemption by us
at prices in excess of the issue price, stockholders could be required to
recognize such redemption premium if, based on all of the facts and
circumstances, the optional redemptions are more likely than not to occur.
However, even if such optional redemptions are more likely than not to occur,
constructive distribution treatment would not result if the redemption premium
were solely in the nature of a penalty for premature redemption. For this
purpose, a penalty for premature redemption is a premium paid as a result of
changes in economic or market conditions over which neither PCA nor the U.S.
Holder has control, such as changes in prevailing dividend rates. The
regulations under Section 305(c) of the Code provide a safe harbor pursuant to
which constructive distribution treatment will not result from an issuer call
right if the issuer and the holder are unrelated, there are no arrangements that
effectively require the issuer to redeem the stock, and exercise of the option
to redeem would not reduce the yield of the stock. We intend to take the
position that the existence of our optional redemption rights does not result in
a constructive distribution to the U.S. Holders.
Any additional shares of new preferred stock distributed by us in lieu of cash
dividend payments on the new preferred stock and received by Holders of the new
preferred stock may bear a redemption premium depending upon the issue price of
such shares (i.e., the fair market value of such shares on the date of
issuance). If such shares bear a redemption premium, which is more than a DE
MINIMIS amount, a U.S. Holder may be required to include such redemption premium
in income as a constructive distribution of additional new preferred stock under
a constant interest rate method similar to that described below for accruing
OID. Thus, such shares generally will have different tax characteristics than
other shares of new preferred stock and might trade separately, which might
adversely affect the liquidity of such shares.
DISPOSITION OF NEW PREFERRED STOCK. A U.S. Holder's adjusted tax basis in the
new preferred stock will, in general, be the U.S. Holder's initial tax basis of
such Holder's preferred stock purchased in the initial preferred stock offering,
increased by the portion of any redemption premium previously included in income
by the U.S. Holder. A corporate U.S. Holder's tax basis may be further adjusted
by the extraordinary dividend provision discussed above. Upon the sale or other
disposition of new preferred stock (other than by redemption) a U.S. Holder will
generally recognize capital gain or loss equal to the difference between the
amount realized upon the disposition and the adjusted tax basis of the new
preferred stock. Such gain or loss will be capital gain or loss and will be long
term capital gain or loss if at the time of sale, exchange, redemption or other
disposition the new preferred stock has been held for more than one year from
the date the outstanding preferred stock was acquired.
A redemption of the new preferred stock by us would be treated, under Section
302 of the Code, either as a sale or exchange giving rise to capital gain or
loss as described in the preceding paragraph or as a dividend. In the case of a
redemption of new preferred stock for subordinated exchange debentures, the
amount realized on the exchange would be equal to the "issue price" of the
subordinated exchange debenture plus any cash received on the exchange. The
"issue price" of a subordinated exchange debenture would be equal to:
- its fair market value as of the exchange date if the subordinated exchange
debentures are traded on an established securities market on or at any
time during a specified period; or
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- the fair market value at the exchange date of the new preferred stock if
such new preferred stock is traded on an established securities market
during a specified period but the subordinated exchange debentures are
not.
If neither the new preferred stock nor the subordinated exchange debentures are
so traded, the issue price of the subordinated exchange debentures would be
determined under Section 1274 of the Code, in which case the issue price would
be the stated principal amount of the subordinated exchange debentures provided
that the yield on the subordinated exchange debentures is equal to or greater
than the "applicable federal rate" in effect at the time the subordinated
exchange debentures are issued. If the yield on the subordinated exchange
debentures is less than such applicable federal rate, its issue price under
section 1274 of the Code would be equal to the present value as of the issue
date of all payments to be made on the subordinated exchange debentures,
discounted at the applicable federal rate. It cannot be determined at the
present time whether the new preferred stock or the subordinated exchange
debentures will be, at the relevant time, traded on an established securities
market within the meaning of the Treasury Regulations or whether the yield on
the subordinated exchange debentures will equal or exceed the applicable federal
rate, as discussed above.
If a redemption of shares of the new preferred stock for cash or an exchange of
the new preferred stock for subordinated exchange debentures is treated as a
dividend with respect to a particular exchanging U.S. Holder under Section 302
of the Code, such U.S. Holder:
- will not recognize any loss on the exchange; and
- will recognize dividend income (rather than capital gain) in an amount
equal to the cash or the fair market value of the subordinated exchange
debentures received without regard to the U.S. Holder's basis in the
shares of new preferred stock surrendered in the exchange, to the extent
of its proportionate share of our current or accumulated earnings and
profits.
In such case, unrecovered tax basis may, in some circumstances, be added to the
tax basis of other PCA stock held by the U.S. Holder or in some cases may simply
be lost.
In the case of an exchange for the subordinated exchange debentures, the holding
period for the subordinated exchange debentures will begin on the day after the
day on which the subordinated exchange debentures are acquired by the exchanging
U.S. Holder.
Pursuant to Section 302 of the Code, the redemption or exchange will not be
treated as a dividend if, after giving effect to the constructive ownership
rules of Section 318 of the Code, the redemption or exchange:
- represents a "complete termination" of the exchanging U.S. Holder's stock
interest in PCA;
- is "substantially disproportionate" with respect to the exchanging U.S.
Holder; or
- is "not essentially equivalent to a dividend" with respect to the
exchanging U.S. Holder, all within the meaning of Section 302(b) of the
Code.
An exchange will be "not essentially equivalent to a dividend" as to a
particular U.S. Holder if it results in a "meaningful reduction" in such U.S.
Holder's interest in PCA (after application of the constructive ownership rules
of Section 318 of the Code). In general, there are no fixed rules for
determining whether a "meaningful reduction" has occurred.
Depending upon a U.S. Holder's particular circumstances, the tax consequences of
holding subordinated exchange debentures may be less advantageous than the tax
consequences of holding new preferred stock because, for example, payments of
interest on the subordinated exchange debentures will not be eligible for any
dividends received deduction that may be available to corporate U.S. Holders or
because the U.S. Holder may be required to accrue into income OID on the
subordinated exchange debentures.
WE ADVISE EACH U.S. HOLDER TO CONSULT ITS OWN TAX ADVISOR AS TO ITS ABILITY IN
LIGHT OF ITS OWN PARTICULAR CIRCUMSTANCES TO SATISFY ANY OF THE FOREGOING TESTS.
ADDITIONALLY, WE ADVISE CORPORATE U.S. HOLDERS TO CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE AVAILABILITY OF THE CORPORATE DIVIDENDS RECEIVED
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DEDUCTION AND THE POSSIBLE APPLICATION OF THE EXTRAORDINARY DIVIDEND RULES OF
SECTION 1059 OF THE CODE TO A REDEMPTION OR AN EXCHANGE BY A CORPORATE HOLDER
FOR WHOM SUCH REDEMPTION OR EXCHANGE IS TAXABLE AS A DIVIDEND.
SUBORDINATED EXCHANGE DEBENTURES
ORIGINAL ISSUE DISCOUNT. A subordinated exchange debenture may be issued with
original issue discount ("OID") equal to the excess of its "stated redemption
price at maturity" over its "issue price." If so, U.S. Holders of subordinated
exchange debentures may be subject to special tax accounting rules, pursuant to
which they generally must include OID in gross income for United States federal
income tax purposes on an annual basis under a constant yield method, in advance
of the receipt of cash attributable to that income. We will provide on a timely
basis to U.S. Holders of any subordinated exchange debentures with reportable
OID, the amount of OID and interest income based on our understanding of
applicable law.
The "stated redemption price at maturity" of a debt instrument is the sum of its
principal amount plus all other payments required thereunder, other than
payments of "qualified stated interest." For this purpose "qualified stated
interest" means stated interest that is unconditionally payable in cash or in
property (other than the debt instruments of the issuer), at least annually at a
single fixed rate during the entire term of the debt instrument and that
appropriately takes into account the length of the intervals between payments.
If the subordinated exchange debentures are issued at a time when we have the
option to pay interest on the subordinated exchange debentures by issuing
additional subordinated exchange debentures instead of cash, none of the stated
interest on such subordinated exchange debentures will be treated as qualified
stated interest. On the other hand, if the subordinated exchange debentures are
issued at a time when we do not have such an option, the stated interest will be
treated as qualified stated interest, and, accordingly, will be includible in
income as interest in accordance with your regular method of accounting. The
"issue price" of a subordinated exchange debenture will be determined as
described under "-Disposition of New Preferred Stock."
The amount of OID includible in income by the initial U.S. Holder of a
subordinated exchange debenture is the sum of the "daily portions" of OID with
respect to the subordinated exchange debenture for each day during the taxable
year or portion of the taxable year in which such U.S. Holder held such
subordinated exchange debenture ("accrued OID"). The daily portion is determined
by allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. The "accrual period" for a subordinated
exchange debenture may be of any length and may vary in length over the term of
the subordinated exchange debenture, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest occurs
on the first day or the final day of an accrual period. The amount of OID
allocable to any accrual period is an amount equal to the excess, if any, of:
- the product of the subordinated exchange debenture's adjusted issue price
at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period); over
- the sum of any qualified stated interest allocable to the accrual period.
OID allocable to a final accrual period is the difference between the amount
payable at maturity (other than a payment of qualified stated interest) and the
adjusted issue price at the beginning of the final accrual period. Special rules
will apply for calculating OID for an initial short accrual period. The
"adjusted issue price" of a subordinated exchange debenture at the beginning of
any accrual period is equal to its issue price increased by the accrued OID for
each prior accrual period and reduced by any payments made on such subordinated
exchange debenture (other than qualified stated interest) on or before the first
day of the accrual period. Under these rules, a U.S. Holder will have to include
in income increasingly greater amounts of OID in successive accrual periods.
AMORTIZABLE BOND PREMIUM. If at the time the new preferred stock is exchanged
for the subordinated exchange debentures, the U.S. Holder's tax basis in any
such subordinated exchange debenture exceeds its stated redemption price at
maturity, the subordinated exchange debenture will be considered to have been
issued at a
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premium. A U.S. Holder generally may elect to amortize the premium over the term
of the subordinated exchange debenture on a constant yield method as an offset
to interest otherwise includible in income under the U.S. Holder's regular
accounting method. The election to amortize premium on a constant yield method
once made applies to all debt obligations held or subsequently acquired by the
electing U.S. Holder on or after the first day of the first taxable year to
which the election applies and may not be revoked without the consent of the
IRS.
REDEMPTION, SALE OR EXCHANGE OF SUBORDINATED EXCHANGE DEBENTURES. Upon the
redemption, sale, exchange or retirement of a subordinated exchange debenture, a
U.S. Holder will recognize capital gain or loss equal to the difference between
the amount realized upon the redemption, sale, exchange or retirement (less any
amount attributable to accrued and unpaid interest) and the adjusted tax basis
of the subordinated exchange debenture. The adjusted tax basis of subordinated
exchange debentures to a U.S. Holder who received such subordinated exchange
debentures in exchange for new preferred stock will, in general, be equal to the
initial tax basis of such subordinated exchange debentures, increased by OID
previously included in income by the U.S. Holder and reduced by any amortizable
bond premium deducted by the U.S. Holder and any cash payments on the
subordinated exchange debentures other than qualified stated interest.
APPLICABLE HIGH YIELD DISCOUNT OBLIGATIONS. If the yield to maturity on
subordinated exchange debentures with OID equals or exceeds the sum of (x) the
"applicable federal rate" (as determined under Section 1274(d) of the Code) in
effect for the month in which such debentures are issued (the "AFR") and (y) 5%,
and the OID on such subordinated exchange debentures is "significant," the
subordinated exchange debentures will be considered "applicable high yield
discount obligations" ("AHYDOs") under Section 163(i) of the Code. Consequently,
we would not be allowed to take a deduction for interest (including OID) accrued
on such subordinated exchange debentures for U.S. federal income tax purposes
until such time as we actually pay such interest (including OID) in cash or in
other property (other than our stock or debt or the stock or debt of a person
deemed to be related to us under Section 453(f)(1) of the Code). Because the
amount of OID, if any, attributable to such subordinated exchange debentures
will be determined at such time as such subordinated exchange debentures are
issued, and the AFR at the time such subordinated exchange debentures are issued
in exchange for new preferred stock is not predictable, it is impossible to
determine at the present time whether a subordinated exchange debenture will be
treated as an AHYDO if issued.
Moreover, if the yield to maturity on such a subordinated exchange debenture
exceeds the sum of (x) the AFR and (y) 6% (such excess shall be referred to
hereinafter as the "Disqualified Yield"), the deduction for OID accrued on the
subordinated exchange debenture will be permanently disallowed (regardless of
whether PCA actually pays such interest or OID in cash or in other property) for
U.S. federal income tax purposes to the extent such interest or OID is
attributable to the Disqualified Yield on the subordinated exchange debenture
("Dividend Equivalent Interest"). For purposes of the dividends received
deduction, such Dividend Equivalent Interest will be treated as a dividend to
the extent it is deemed to have been paid out of our current or accumulated
earnings and profits. Accordingly, a corporate U.S. Holder of a subordinated
exchange debenture may be entitled to take a dividends received deduction with
respect to any Dividend Equivalent Interest received by such corporate U.S.
Holder on such a subordinated exchange debenture.
INFORMATION REPORTING AND BACKUP WITHHOLDING
PCA will report to holders of the exchange notes, new preferred stock and
subordinated exchange debentures and the IRS the amount of any "reportable
payments" (including original issue discount accrued on the subordinated
exchange debentures) and any amount withheld with respect to the exchange notes,
new preferred stock and subordinated exchange debentures during the calendar
year.
In general, U.S. Holders may be subject to information reporting requirements
and backup withholding at a rate of 31% with respect to (1) interest (including
OID) paid in respect of the exchange notes and the subordinated
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exchange debentures and dividends paid in respect of the new preferred stock and
(2) proceeds received on the sale, exchange or redemption of the exchange notes,
new preferred stock, or subordinated exchange debentures unless such holder:
- is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or
- provides a correct taxpayer identification number, certifies as to no loss
of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules.
A U.S. Holder who does not provide PCA with his or her correct taxpayer
identification number may be subject to penalties imposed by the IRS. In
general, any amount withheld under these rules will be creditable against the
United States federal tax liability of a U.S. Holder, and will be refundable to
the extent that it results in an overpayment of tax.
TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
INTEREST ON THE EXCHANGE NOTES. Under present United States federal income tax
law, and subject to the discussion below concerning backup withholding, the
"portfolio interest" exemption provides that no withholding of United States
federal income tax will be required with respect to the payment by PCA or any
paying agent of principal or interest on an exchange note owned by a Non-U.S.
Holder, provided that:
- the beneficial owner does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of PCA entitled
to vote within the meaning of section 871(h)(3) of the Code and the
regulations thereunder,
- the beneficial owner is not a controlled foreign corporation that is
related to PCA through stock ownership,
- the beneficial owner is not a bank whose receipt of interest on an
exchange note is described in section 881(c)(3)(A) of the Code and
- the beneficial owner satisfies the "statement requirement" (described
generally below) set forth in section 871(h) and section 881(c) of the
Code and the regulations thereunder.
To satisfy the "statement requirement," the beneficial owner of such exchange
note, or a financial institution holding such exchange note on behalf of such
owner, must provide, in accordance with specified procedures, to PCA or its
paying agent a statement to the effect that the beneficial owner is not a U.S.
person. Pursuant to current temporary Treasury regulations, these requirements
will be met if:
- the beneficial owner provides his name and address, and certifies, under
penalties of perjury, that he is not a U.S. person (which certification
may be made on an IRS Form W-8 (or successor form)); or
- a financial institution holding the exchange note on behalf of the
beneficial owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes a paying agent with a copy
thereof.
If a Non-U.S. Holder cannot satisfy the requirements of the "portfolio interest"
exception described above, payments of interest made to such Non-U.S. Holder
will be subject to a 30% withholding tax unless the beneficial owner of the
exchange note provides PCA or its paying agent, as the case may be, with a
properly executed:
- IRS Form 1001 (or successor form) claiming an exemption from withholding
under the benefit of an applicable tax treaty; or
- IRS Form 4224 (or successor form) stating that interest paid on the
exchange note is not subject to withholding tax because it is effectively
connected with the beneficial owner's conduct of a trade or business in
the United States.
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If a Non-U.S. Holder is engaged in a trade or business in the United States and
premium, if any, or interest on the exchange note is effectively connected with
the conduct of such trade or business, the Non-U.S. Holder, although exempt from
the withholding tax discussed above, will be subject to United States federal
income tax at applicable graduated individual or corporate rates on such
interest in the same manner as if it were a U.S. Holder. In addition, if such
holder is a foreign corporation, it may be subject to a branch profits tax equal
to 30% of its effectively connected earnings and profits for the taxable year,
subject to adjustments. For this purpose, interest on an exchange note will be
included in such foreign corporation's earnings and profits.
SALE, EXCHANGE, REDEMPTION OR OTHER DISPOSITION OF EXCHANGE NOTES. A Non-U.S.
Holder will generally not be subject to United States federal income tax with
respect to gain recognized on a sale, exchange, redemption or other disposition
of exchange notes, unless:
- the gain is "effectively connected" with a trade or business of the
Non-U.S. Holder in the United States, or, if a tax treaty applies, is
attributable to a United States permanent establishment of the Non-U.S.
Holder; or
- in the case of a Non-U.S. Holder who is an individual, such holder is
present in the United States for 183 or more days in the taxable year of
the sale or other disposition and certain other conditions are met.
If an individual Non-U.S. Holder meets the "effectively connected" requirement
described above, he will be taxed on his net gain derived from the sale or other
disposition under regular graduated United States federal income tax rates. If
an individual Non-U.S. Holder meets the 183 day requirement described above, he
will be subject to a flat 30% tax on the gain derived from the sale or other
disposition, which may generally be offset by United States source capital
losses recognized within the same taxable year as such sale or other disposition
(notwithstanding the fact that he is not considered a resident of the United
States).
If a Non-U.S. Holder that is a foreign corporation meets the "effectively
connected" requirement described above, it will be taxed on its gain under
regular graduated United States federal income tax rates and, in addition, may
be subject to the branch profits tax equal to 30% of its effectively connected
earnings and profits within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable income tax treaty. For this purpose, such gain will be included in
such foreign corporation's earnings and profits.
FEDERAL ESTATE TAX. Exchange notes beneficially owned by an individual who at
the time of death is a Non-U.S. Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that:
- such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of PCA entitled to
vote within the meaning of section 871(h)(3) of the Code; and
- the interest payments with respect to such exchange note would not have
been, if received at the time of such individual's death, effectively
connected with the conduct of a United States trade or business by such
individual.
INFORMATION REPORTING AND BACKUP WITHHOLDING. PCA will report to holders of the
exchange notes and the IRS the amount of any "reportable payments" and any
amount withheld with respect to the exchange notes during the calendar year.
No information reporting or backup withholding will be required with respect to
payments made by PCA or any paying agent to Non-U.S. Holders if the "statement
requirement" described under "Tax Consequences to Non-United States
Holders-Interest on the Exchange Notes" has been received and the payor does not
have actual knowledge that the beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of interest on the exchange notes are paid or collected by a foreign
office of a custodian, nominee or other foreign agent on behalf of the
beneficial owner of such exchange notes, or if a foreign office of a broker (as
defined in applicable Treasury
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regulations) pays the proceeds of the sale of the exchange notes to the owner
thereof. If, however, such nominee, custodian, agent or broker is, for United
States federal income tax purposes, a U.S. person, a controlled foreign
corporation or a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States or,
with respect to payments made after December 31, 2000, a foreign partnership, if
at any time during its tax year, one or more of its partners are United States
persons who, in the aggregate, hold more than 50% of the income or capital
interest in the partnership or if, at any time during its tax year, such foreign
partnership is engaged in a United States trade or business, such payments will
not be subject to backup withholding but will be subject to information
reporting, unless:
- such custodian, nominee, agent or broker has documentary evidence in its
records that the beneficial owner is not a U.S. person and certain other
conditions are met, or
- the beneficial owner otherwise establishes an exemption.
Temporary Treasury regulations provide that the Treasury is considering whether
backup withholding will apply with respect to such payments of principal,
interest or the proceeds of a sale that are not subject to backup withholding
under the current regulations.
Payments of principal and interest on exchange notes paid to the beneficial
owner of such exchange notes by a United States office of a custodian, nominee
or agent, or the payment by the United States office of a broker of the proceeds
of sale of exchange notes will be subject to both backup withholding and
information reporting unless the beneficial owner satisfies the "statement
requirement" described above and the payor does not have actual knowledge that
the beneficial owner is a United States person or otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will generally be
allowed as a refund or a credit against such Non-U.S. Holder's U.S. federal
income tax liability provided the required information is furnished to the IRS.
NEW WITHHOLDING REGULATIONS. New regulations relating to withholding tax on
income paid to foreign persons (the "New Withholding Regulations") will
generally be effective for payments made after December 31, 2000, subject to
certain transition rules. The New Withholding Regulations modify and, in
general, unify the way in which you establish your status as a non-United States
"beneficial owner" eligible for withholding exemptions including the "portfolio
interest" exemption, a reduced treaty rate or an exemption from backup
withholding. For example, the New Withholding Regulations will require new
forms, which you generally will have to provide earlier than you would have had
to provide replacements for expiring existing forms.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes or new preferred stock for its
own account pursuant to the exchange offer in exchange for outstanding notes and
preferred stock which were acquired by such broker-dealer as a result of
market-making or other trading activities must acknowledge that it will deliver
a prospectus in connection with any resale of such exchange notes or new
preferred stock. This prospectus, as it may be amended or supplemented from time
to time, may be used by any such broker-dealer in connection with resales of
exchange notes and new preferred stock received in exchange for outstanding
notes and preferred stock. We have agreed that for a period of 180 days after
the exchange offer is completed, we will make this prospectus, as amended or
supplemented, available to any such broker-dealer for use in connection with any
such resale. All resales must be made in compliance with state securities or
blue sky laws. We assume no responsibility with regard to compliance with these
requirements.
We will not receive any proceeds from any sales of the exchange notes or the new
preferred stock by broker-dealers. The exchange notes and the new preferred
stock received by broker-dealers for their own account pursuant to the exchange
offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the exchange notes or the new preferred stock, or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to the purchaser or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such exchange notes or new
preferred stock. Any broker-dealer that resells the exchange notes or the new
preferred stock that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
such exchange notes or new preferred stock may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
exchange notes or new preferred stock and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The letters of transmittal state that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 180 days after the exchange offer is completed, we will promptly
send additional copies of this prospectus and any amendment or supplement to
this prospectus to any broker-dealer that requests such documents in a letter of
transmittal.
We have been advised by J.P. Morgan Securities Inc. and BT Alex. Brown
Incorporated, the initial purchasers of the outstanding notes and preferred
stock, that following completion of the exchange offer they intend to make a
market in the exchange notes and the new preferred stock. The initial
purchasers, however, are under no obligation to do so and any market activities
with respect to the exchange notes and the new preferred stock may be
discontinued at any time.
199
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the issuance of the exchange notes and
the new preferred stock will be passed upon for PCA by Kirkland & Ellis,
Chicago, Illinois. Certain of the partners of Kirkland & Ellis, through an
investment partnership, beneficially own, indirectly through PCA Holdings, an
aggregate of approximately 0.2% of the common stock of PCA (without giving
effect to the issuances of management equity).
EXPERTS
The combined financial statements of The Containerboard Group, a division of
TPI, as of December 31, 1998, 1997 and 1996, and for each of the three years in
the period ended December 31, 1998, included in this prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
We and our subsidiary guarantors have filed a registration statement on Form S-4
under the Securities Act with respect to the exchange notes and the new
preferred stock. This prospectus, which forms a part of the registration
statement, does not contain all of the information included in the registration
statement. Certain parts of the registration statement are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to us, our subsidiary guarantors and the exchange notes and the new
preferred stock, we refer you to the registration statement. You should be aware
that statements made in this prospectus as to the contents of any agreement or
other document filed as an exhibit to the registration statement are not
necessarily complete. We refer you to the copy of such documents filed as
exhibits to the registration statement. Each such statement is qualified in all
respects by such reference.
We are not currently subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934. We have agreed that,
whether or not we are required to do so by the rules and regulations of the
Commission, for so long as any of the exchange notes or the new preferred stock
remain outstanding, we will furnish to the holders of the exchange notes and the
new preferred stock and, if permitted, will file with the Commission:
(1) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if we
were required to file such forms, including a Management's Discussion and
Analysis of Financial Condition and Results of Operations and, with
respect to the annual information only, a report on such information by
our certified independent accountants; and
(2) all reports that would be required to be filed with the Commission on
Form 8-K if we were required to file such reports, in each case within
the time periods specified in the rules and regulations of the
Commission.
Any reports or documents we file with the Commission, including the registration
statement, may be inspected and copied at the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices of the Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such reports or other documents may be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the Commission
maintains a web site that contains reports and other information that is filed
through the Commission's Electronic Data Gathering Analysis and Retrieval
System. The web site can be accessed at http://www.sec.gov.
200
<PAGE>
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Combined Statements of Assets, Liabilities and Interdivision Account as of December 31, 1998, 1997 and 1996
and March 31, 1999 (unaudited)........................................................................... F-3
Combined Statements of Revenues, Expenses and Interdivision Account for the years ended December 31, 1998,
1997 and 1996 and for the three months ended March 31, 1999 and 1998 (unaudited)......................... F-4
Combined Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 and for the three
months ended March 31, 1999 and 1998 (unaudited)......................................................... F-5
Notes to Combined Financial Statements..................................................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tenneco Inc.:
We have audited the accompanying combined statements of assets, liabilities and
interdivision account of THE CONTAINERBOARD GROUP (a division of Tenneco
Packaging Inc., which is a Delaware corporation and a wholly owned subsidiary of
Tenneco Inc.) as of December 31, 1998, 1997 and 1996, and the related combined
statements of revenues, expenses and interdivision account and cash flows for
the years then ended. These financial statements are the responsibility of the
Group's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The Containerboard
Group as of December 31, 1998, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 26, 1999
F-2
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
COMBINED STATEMENTS OF
ASSETS, LIABILITIES AND INTERDIVISION ACCOUNT
ASSETS
<TABLE>
<CAPTION>
------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31
-------------------------------
MARCH 31, 1999
1998 1997 1996 (UNAUDITED)
--------- --------- --------- ---------------
(In thousands)
Current assets:
Cash $ 1 $ 1 $ 1,027 1
Accounts receivable (net of allowance for doubtful accounts
of $5,220 in 1998, $5,023 in 1997 and $5,010 in 1996) 13,971 27,080 16,982 36,515
Receivables from affiliated companies 10,390 19,057 10,303 10,203
Notes receivable 27,390 573 547 27,943
Inventories:
Raw materials 86,681 100,781 99,459 85,008
Work in process and finished goods 48,212 38,402 36,995 46,725
Materials and supplies 44,310 42,043 35,834 48,800
--------- --------- --------- ---------------
Inventory, gross 179,203 181,226 172,288 180,533
Excess of FIFO over LIFO cost (28,484) (25,445) (28,308) (28,950 )
--------- --------- --------- ---------------
Inventory, net 150,719 155,781 143,980 151,583
--------- --------- --------- ---------------
Prepaid expenses and other current assets 41,092 35,019 35,536 28,178
--------- --------- --------- ---------------
Total current assets 243,563 237,511 208,375 254,423
--------- --------- --------- ---------------
Property, plant and equipment, at cost: 1,754,504
Land, timber, timberlands and buildings 287,510 280,060 269,134
Machinery and equipment 1,289,459 1,175,805 1,082,912
Other, including construction in progress 100,136 130,696 140,522
Less-Accumulated depreciation and depletion (735,749) (656,915) (582,437) (756,326 )
--------- --------- --------- ---------------
Property, plant and equipment, net 941,356 929,646 910,131 998,178
--------- --------- --------- ---------------
Intangibles 50,110 56,470 55,660 49,530
--------- --------- --------- ---------------
Other long-term assets 131,092 77,312 72,076 69,014
--------- --------- --------- ---------------
Investments 1,282 16,324 14,809 1,378
--------- --------- --------- ---------------
Total assets $1,367,403 $1,317,263 $1,261,051 1,372,523
--------- --------- --------- ---------------
--------- --------- --------- ---------------
LIABILITIES AND INTERDIVISION ACCOUNT
Current liabilities:
Accounts payable $ 87,054 $ 124,633 $ 111,588 105,871
Payables to Tenneco affiliates 7,091 6,164 29,402 13,085
Current portion of long-term debt 617 3,923 1,603 216
Current portion of deferred gain - 1,973 1,973 0
Loss Reserve - - - 230,112
Accrued liabilities 69,390 70,426 166,663 68,558
--------- --------- --------- ---------------
Total current liabilities 164,152 207,119 311,229 417,842
--------- --------- --------- ---------------
Long-term liabilities:
Long-term debt 16,935 23,941 18,713 250
Deferred taxes 254,064 174,127 87,165 263,936
Deferred gain - 34,262 36,235 --
Other 23,860 23,754 23,287 24,057
--------- --------- --------- ---------------
Total long-term liabilities 294,859 256,084 165,400 288,243
--------- --------- --------- ---------------
Interdivision account 908,392 854,060 784,422 666,438
--------- --------- --------- ---------------
Total liabilities and interdivision account $1,367,403 $1,317,263 $1,261,051 1,372,523
--------- --------- --------- ---------------
--------- --------- --------- ---------------
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these statements.
F-3
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
COMBINED STATEMENTS OF
REVENUES, EXPENSES AND INTERDIVISION ACCOUNT
<TABLE>
<CAPTION>
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
------------------------------------------- ------------------------
1998 1997 1996 1998
------------- ------------- ------------- -----------
1999
-----------
(UNAUDITED)
(IN THOUSANDS)
Net sales $ 1,571,019 $ 1,411,405 $ 1,582,222 391,279 432,901
Cost of sales (1,289,644) (1,242,014) (1,337,410) (332,117) (354,855)
------------- ------------- ------------- ----------- -----------
Gross profit 281,375 169,391 244,812 59,162 78,046
Selling and administrative expenses (108,944) (102,891) (95,283) (28,759) (26,841)
Restructuring, impairment and other (14,385) - - (230,112) -
Other income, net 26,818 44,681 56,243 (1,377) (2,742)
Corporate allocations (63,114) (61,338) (50,461) (13,283) (14,326)
------------- ------------- ------------- ----------- -----------
Income (loss) before interest, taxes and
extraordinary item 121,750 49,843 155,311 (214,369) 34,137
Interest expense, net (2,782) (3,739) (5,129) (221) (741)
------------- ------------- ------------- ----------- -----------
Income (loss) before taxes and
extraordinary item 118,968 46,104 150,182 (214,590) 33,396
Provision for income taxes (47,529) (18,714) (59,816) 88,362 (13,315)
------------- ------------- ------------- ----------- -----------
Income (loss) before extraordinary item 71,439 27,390 90,366 (126,228) 20,081
Extraordinary Loss - - - (6,327) -
------------- ------------- ------------- ----------- -----------
Net income 71,439 27,390 90,366 (132,555) 20,081
Interdivision account, beginning of period 854,060 784,422 640,483 908,392 854,060
Interdivision account activity, net (17,107) 42,248 53,573 (109,399) 31,081
------------- ------------- ------------- ----------- -----------
Interdivision account, end of period $ 908,392 $ 854,060 $ 784,422 $ 666,438 $ (843,060)
------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ----------- -----------
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-4
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
----------------------------------- MARCH 31,
--------------------
1998 1997 1996 1998
----------- ----------- --------- ---------
1999
---------
(UNAUDITED)
(IN THOUSANDS)
Cash flows from operating activities:
Net income $ 71,439 $ 27,390 $ 90,366 (132,555) 20,081
----------- ----------- --------- --------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities-
Depreciation, depletion and amortization 96,950 87,752 78,730 28,360 24,732
Extraordinary Loss early debt extinguishment 6,327
Restructuring and other 14,385 - - -
Gain on sale of joint venture interest (15,060) - - -
Gain on sale of timberlands (16,944) - - -
Gain on sale of assets - - (51,268) 230,112
Gain on lease refinancing - (37,730) - -
Gain on Willow Flowage - (4,449) - -
Gain on sale of mineral rights - (1,646) - -
Amortization of deferred gain (1,973) (1,973) (1,973) (493) (493)
Increase (decrease) in deferred income taxes 71,342 85,070 8,318 9,782 30,413
Undistributed earnings of affiliated companies 302 (2,264) (536) (96) 221
Increase (decrease) in other noncurrent reserves 107 467 (27,287) 196 1,694
----------- ----------- --------- --------- ---------
Total charges to net income not involving cash 149,109 125,227 5,984 141,633 76,648
----------- ----------- --------- --------- ---------
Changes in noncash components of working capital-
Working capital transactions, excluding transactions
with Tenneco and working capital from acquired
businesses-
Decrease (increase) in current assets-
Accounts receivable 12,100 (26,092) 38,261 (23,985) 834
Inventories, net 5,062 (10,932) 1,287 (864) (15,623)
Prepaid expenses and other 4,572 782 (8,070) 8,973 (4,000)
(Decrease) increase in current liabilities-
Accounts payable (37,580) 13,045 (47,930) 18,817 (7,805)
Accrued liabilities (9,301) (22,207) (24,041) 679 (15,388)
----------- ----------- --------- --------- ---------
Net decrease in noncash components of working
capital (25,147) (45,404) (40,493) 3,620 (41,982)
----------- ----------- --------- --------- ---------
Net cash provided by operating activities 195,401 107,213 55,857 145,253 34,666
----------- ----------- --------- --------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (103,429) (110,186) (168,642) (19,460) (16,339)
Prepaid Meridian Lease (84,198) - - -
Acquisition of businesses - (5,866) - -
Other long-term assets (10,970) (6,983) (23,478) (354) (2,825)
Proceeds from disposals 26,214 10,460 122,654 668 43
Other transactions, net (5,350) 690 (4,766) 3,773 (2,021)
----------- ----------- --------- --------- ---------
Net cash used for investing activities (177,733) (111,885) (74,232) (15,373) (21,142)
----------- ----------- --------- --------- ---------
</TABLE>
F-5
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------- MARCH 31,
--------------------
1998 1997 1996 1998
--------- --------- --------- ---------
1999
---------
(UNAUDITED)
(IN THOUSANDS)
Cash flows from financing activities:
Proceeds from long-term debt issued $ - $ 1,146 $ 430 - 130
Payments on long-term debt (10,346) (1,618) (1,886) (27,550) (235)
(Decrease) increase in interdivision account (17,109) 19,907 168,074 (109,399) (31,081)
Working capital transactions with Tenneco and
affiliated companies-
Decrease (increase) in receivables from
affiliated companies 8,667 (8,754) (1,781) 187 (1,287)
Decrease (increase) in factored receivables 192 16,204 (25,563) 888 16,908
Increase (decrease) in accounts payable to
affiliated companies 928 (23,239) (8,007) 5,994 2,041
Dividends paid to Tenneco - - (114,500) - -
--------- --------- --------- --------- ---------
Net cash (used for) provided by financing
activities (17,668) 3,646 16,767 (129,880) (13,524)
--------- --------- --------- --------- ---------
Net decrease in cash - (1,026) (1,608) - -
Cash, beginning of period 1 1,027 2,635 1 1
--------- --------- --------- --------- ---------
Cash, end of period $ 1 $ 1 $ 1,027 1 1
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-6
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
1. BUSINESS DESCRIPTION
The Containerboard Group (the "Group") is a division of Tenneco Packaging
Inc. ("Packaging") which is a wholly owned subsidiary of Tenneco Inc.
("Tenneco"). The Group is comprised of mills and corrugated products
operations.
The Mill operations ("The Mills") consist of two Kraft linerboard mills
located in Counce, Tennessee, and Valdosta, Georgia, and two medium mills
located in Filer City, Michigan, and Tomahawk, Wisconsin. The Mills also
include two recycling centers located in Nashville, Tennessee, and Jackson,
Tennessee. The Mills also control and manage approximately 950,000 acres of
timberlands. The Mills transfer the majority of their output to The
Corrugated Products operations ("Corrugated").
Corrugated operations consist of 39 corrugated combining plants, 28
specialty/sheet and other plants and 5 design centers. All plants are
located in North America. Corrugated combines linerboard and medium
(primarily from The Mills) into sheets that are converted into corrugated
shipping containers, point-of-sale graphics packaging, point-of-purchase
displays and other specialized packaging. Corrugated sells to diverse
customers primarily in North America.
The Group's sales to other Packaging entities and other Tenneco entities are
included in the accompanying combined financial statements. The net sales to
other Packaging entities for the years ended December 31, 1998, 1997 and
1996, were approximately $76,906,000, $69,981,000 and $76,745,000,
respectively. The net sales to other Tenneco entities for the years ended
December 31, 1998, 1997 and 1996, were approximately $14,251,000,
$13,108,000 and $10,376,000, respectively. The profit relating to these
sales are included in the accompanying combined financial statements.
As a result of the Group's relationship with Packaging, the combined
statements of assets, liabilities and interdivision account and the related
combined statements of revenues, expenses and interdivision account are not
necessarily indicative of what actually would have occurred had the Group
been a stand-alone entity. Additionally, these combined financial statements
are not necessarily indicative of the future financial position or results
of operations of the Group.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined financial statements include the selected assets,
liabilities, revenues and expenses of the Group. All significant intragroup
accounts and transactions have been eliminated.
INTERIM FINANCIAL INFORMATION (UNAUDITED)
The Group's condensed combined financial statements as of March 31, 1999 and
for the three months ended March 31, 1998 and 1999 are unaudited but include
all adjustments (consisting only of normal recurring adjustments) that
management considers necessary for a fair presentation of such financial
statements. These financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with Article 10 of SEC Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. Operating results
for the three months ended March 31, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999.
F-7
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Group recognizes revenue as products are shipped to customers.
ACCOUNTS RECEIVABLE
A substantial portion of the Group's trade accounts receivable are sold by
Packaging, generally without recourse, to a financing subsidiary of Tenneco
Inc. Expenses relating to cash discounts, credit losses, pricing adjustments
and other allowances on these factored receivables are accrued and charged
to the Group. The amount of trade accounts receivable sold was approximately
$150,099,000, $149,907,000 and $133,703,000 at December 31, 1998, 1997 and
1996, respectively.
INVENTORIES
Inventories for raw materials and finished goods are valued using the
last-in, first-out ("LIFO") cost method and include material, labor and
manufacturing-related overhead costs. Supplies and materials inventories are
valued using a moving average cost. All inventories are stated at the lower
of cost or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Interest costs relating
to construction in progress are capitalized based upon the total amount of
interest cost (including interest costs on notes payable to Tenneco)
incurred by Packaging.
The amount of interest capitalized related to construction in progress at
the Group was approximately $576,000, $975,000 and $5,207,000 for the years
ended December 31, 1998, 1997 and 1996, respectively.
Depreciation is computed on the straight-line basis over the estimated
useful lives of the related assets. The following useful lives are used for
the various categories of assets:
<TABLE>
<S> <C>
Buildings and land improvements 5 to 40 years
Machinery and equipment 3 to 25 years
Trucks and automobiles 3 to 10 years
Furniture and fixtures 3 to 20 years
Computers and software 3 to 7 years
Period of the
Leasehold improvements lease
---------------
---------------
</TABLE>
Timber depletion is provided on the basis of timber cut during the period
related to the estimated quantity of recoverable timber. Assets under
capital leases are depreciated on the straight-line method over the term of
the lease.
Expenditures for repairs and maintenance are expensed as incurred.
F-8
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
DEFERRED GAIN
In 1992, Packaging entered into a sale-leaseback transaction for financial
reporting purposes involving certain of its timberlands. The deferred gain
recognized upon sale is being amortized on a straight-line basis over the
initial lease term.
This deferred gain relates to a lease which was prepaid by the Group in
December, 1998 (Note 12). The 1998 financial statements have reclassed the
current and long-term portions of the deferred gain against the prepaid
payment in Prepaid Expenses and Other Current Assets and Other Long-Term
Assets.
CHANGES IN ACCOUNTING PRINCIPLES
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes new
accounting and reporting standards requiring that all derivative instruments
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at
its fair value. The statement requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item
in the income statement and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. This statement is effective for all fiscal years beginning after
June 15, 1999. The adoption of this new standard is not expected to have a
significant effect on the Group's financial position or results of
operations.
In April, 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-5, "Reporting on the Costs
of Start-Up Activities," which requires costs of start-up activities to be
expensed as incurred. This statement is effective for fiscal years beginning
after December 15, 1998. The statement requires capitalized costs related to
start-up activities to be expensed as a cumulative effect of a change in
accounting principle when the statement is adopted. Tenneco currently
expects to adopt this new accounting principle in the first quarter of 1999.
The adoption of this new standard is not expected to have a significant
effect on the Group's financial position or results of operations.
In March, 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which establishes
new accounting and reporting standards for the costs of computer software
developed or obtained for internal use. This statement will be applied
prospectively and is effective for fiscal years beginning after December 15,
1998. The adoption of this new standard is not expected to have a
significant effect on the Group's financial position or results of
operations.
FREIGHT TRADES
The Group regularly trades containerboard with other manufacturers primarily
to reduce shipping costs. The freight trade transactions are accounted for
primarily as transactions in the inventory accounts; the impact on income is
not material.
F-9
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
ENVIRONMENTAL LIABILITIES
The estimated landfill closure and postclosure maintenance costs expected to
be incurred upon and subsequent to the closing of existing operating
landfill areas are accrued based on the landfill capacity used to date.
Amounts are estimates using current technologies for closure and monitoring
and are not discounted.
The potential costs related to the Group for various environmental matters
are uncertain due to such factors as the unknown magnitude of possible
cleanup costs, the complexity and evolving nature of governmental laws and
regulations and their interpretations, and the timing, varying costs and
effectiveness of alternative cleanup technologies. Liabilities recorded by
the Group for environmental contingencies are estimates of the probable
costs based upon available information and assumptions relating to the
Group. Because of these uncertainties, however, the Group's estimates may
change. The Group believes that any additional costs identified as further
information becomes available would not have a material effect on the
combined statements of assets, liabilities and interdivision account or
revenues, expenses and interdivision account of the Group.
COMBINED STATEMENTS OF CASH FLOWS
As a division of Packaging, the Group does not maintain separate cash
accounts other than for petty cash. The Group's disbursements for payroll,
capital projects, operating supplies and expenses are processed and funded
by Packaging through centrally managed accounts. In addition, cash receipts
from the collection of accounts receivable and the sales of assets are
remitted directly to bank accounts controlled by Packaging. In this type of
centrally managed cash system in which the cash receipts and disbursements
of Packaging's various divisions are commingled, it is not feasible to
segregate cash received from Packaging (e.g., as financing for the business)
from cash transmitted to Packaging (e.g., as a distribution). Accordingly,
the net effect of these cash transactions with Packaging are presented as a
single line item within the financing section of the cash flow statements.
Similarly, the activity of the interdivision account presents the net
transfer of funds and charges between Packaging and the Group as a single
line item.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. The amounts charged
were $3,728,000, $4,345,000 and $4,789,000 in 1998, 1997 and 1996,
respectively.
INTANGIBLE ASSETS
Goodwill and intangibles, net of amortization, by major category are as
follows:
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Goodwill $ 48,046 $ 52,958 $ 51,721
Intangibles 2,064 3,512 3,939
--------- --------- ---------
$ 50,110 $ 56,470 $ 55,660
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-10
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Goodwill is being amortized on a straight-line basis over 40 years. Such
amortization amounted to $1,449,000, $1,452,000 and $1,440,000 for 1998,
1997 and 1996, respectively. Goodwill totaling approximately $3,463,000 was
written off in 1998 related to a closed facility (Note 7).
The Group has capitalized certain intangible assets, primarily trademarks
and patents, based on their estimated fair value at the date of acquisition.
Amortization is provided for these intangible assets on a straight-line
basis over periods ranging from 3 to 10 years. Covenants not to compete are
amortized on a straight-line basis over the terms of the respective
agreements. Such amortization amounted to $1,127,000, $1,234,000 and
$1,416,000 in 1998, 1997 and 1996, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
The prior years' financial statements have been reclassified, where
appropriate, to conform to the 1998 presentation.
SEGMENT INFORMATION
The Group adopted SFAS No. 131, "Disclosure About Segments of an Enterprise
and Related Information," in 1998 and determined that the Group is primarily
engaged in one line of business: the manufacture and sale of packaging
materials, boxes and containers for industrial and consumer markets. No
single customer accounts for more than 10% of total revenues. The Group has
no foreign operations.
3. INVESTMENTS IN JOINT VENTURES
The Group has a 50% U.S. joint venture with American Cellulose Corporation
to manufacture and market hardwood chips. The net investment, which was
accounted for under the equity method, was $1,282,000, $1,310,000 and
$1,519,000 as of December 31, 1998, 1997 and 1996, respectively. In the
second quarter of 1996, Packaging entered into an agreement to form a joint
venture with Caraustar Industries whereby Packaging sold its two recycled
paperboard mills and a fiber recycling operation and brokerage business to
the joint venture in return for approximately $115 million and a 20% equity
interest in the joint venture. In June, 1998, Packaging sold its remaining
20% equity interest in the joint venture to Caraustar Industries. The net
investment, which was accounted for under the equity method, was $0,
$15,014,000 and $13,290,000 as of December 31, 1998, 1997 and 1996,
respectively.
F-11
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
4. LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Capital lease obligations, interest at 8.5% for 1998 and 1997 and a weighted
average interest rate of 8.2% for 1996 due in varying amounts through 2000 $ 18 $ 32 $ 18,658
Non-interest-bearing note, due in annual installments of $70,000 through
July 1, 2004, net of discount imputed at 10.0% of $182,000, $216,000 and
$249,000 in 1998, 1997 and 1996, respectively 308 344 381
Notes payable, interest at an average rate of 13.5%, 13.3% and 8.8% for
1998, 1997 and 1996, respectively, with varying amounts due through 2010 16,553 26,187 680
Other obligations 673 1,301 597
--------- --------- ---------
Total 17,552 27,864 20,316
Less-Current portion 617 3,923 1,603
--------- --------- ---------
Total long-term debt $ 16,935 $ 23,941 $ 18,713
--------- --------- ---------
--------- --------- ---------
</TABLE>
In January, 1997, the General Electric Capital Corporation ("GECC")
operating leases were refinanced. Through this refinancing, several capital
lease obligations were extinguished as the assets were incorporated into the
new operating lease (Note 12).
Annual payments for debt during the next five years and thereafter are:
$617,000 (1999), $214,000 (2000), $3,569,000 (2001), $4,387,000 (2002),
$4,240,000 (2003) and $4,525,000 (2004 and thereafter).
In 1997, Tenneco contributed the Counce Limited Partnership to Packaging
which included notes payable totaling approximately $26,187,000.
In February, 1999, Tenneco Inc. paid off the remaining note payable as it
relates to the Counce Limited Partnership. The payment was $27,220,000,
including a $10,456,000 premium payment for the early extinguishment of
debt.
5. PENSION AND OTHER BENEFIT PLANS
Substantially all of the Group's salaried and hourly employees are covered
by retirement plans sponsored by Packaging and Tenneco. Benefits generally
are based on years of service and, for most salaried employees, on final
average compensation. Packaging's funding policies are to contribute to the
plans, at a minimum, amounts necessary to satisfy the funding requirements
of federal laws and regulations. The assets of the plans consist principally
of listed equity and fixed and variable income securities, including Tenneco
Inc. common stock.
The Group's eligible salaried employees participate in the Tenneco Inc.
Retirement Plan (the "Retirement Plan"), a defined benefit plan, along with
other Tenneco divisions and subsidiaries. The pension expense
F-12
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
5. PENSION AND OTHER BENEFIT PLANS (CONTINUED)
allocated to the Group by Packaging for this plan was approximately
$5,595,000, $3,197,000 and $3,111,000 for the years ended December 31, 1998,
1997 and 1996, respectively. Amounts allocated are principally determined
based on payroll. This plan is overfunded and a portion of the prepaid
pension costs has not been allocated to the Group.
The Group's eligible hourly employees participate in the Packaging
Corporation of America Hourly-Rated Employees Pension Plan, also a defined
benefit plan, along with other Packaging divisions. As stated, due to the
fact that other divisions within Packaging participate in the plan, certain
of the disclosures required by SFAS No. 132, "Employers' Disclosures About
Pension and Other Postretirement Benefits", such as a summary of the change
in benefit obligation and the change in plan assets, are not available. The
net pension (income) cost actuarially allocated to the Group for this plan
was $(466,000), $144,000 and $2,373,000 for the years ended December 31,
1998, 1997 and 1996, respectively. This plan is overfunded, and a portion of
the related pension asset of $35,603,000, $35,137,000 and $34,429,000 for
December 31, 1998, 1997 and 1996, respectively, has been actuarially
allocated to the Group and is included in Other Long-Term Assets.
However, in connection with the pending sale of the Group as described in
Note 14 to these financial statements, the pension asset allocated to the
Group will be excluded from the sale transaction and remain with Tenneco.
Actuarially allocated net pension cost for the Group's defined benefit
plans, excluding the Retirement Plan, consists of the following components:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Service cost-benefits earned during the year $ 3,112 $ 3,652 $ 4,021
Interest cost on projected benefit obligations 6,990 6,675 6,174
Expected return on plan assets (11,312) (10,819) (8,389)
Amortization of-
Transition liability (164) (164) (164)
Unrecognized loss - - 10
Prior service cost 908 800 721
--------- --------- ---------
Net pension (income) cost $ (466) $ 144 $ 2,373
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-13
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
5. PENSION AND OTHER BENEFIT PLANS (CONTINUED)
The funded status of the Group's allocation of defined benefit plans,
excluding the Retirement Plan, reconciles with amounts recognized in the
statements of assets and liabilities and interdivision account as follows:
<TABLE>
<CAPTION>
-----------------------------------
<S> <C> <C> <C>
1998 1997 1996
----------- ---------- ----------
(IN THOUSANDS)
Actuarial present value at September 30-
Vested benefit obligation $ (98,512) $ (86,865) $ (79,818)
Accumulated benefit obligation (108,716) (95,711) (87,481)
----------- ---------- ----------
----------- ---------- ----------
Projected benefit obligation $ (108,716) $ (96,118) $ (88,555)
Plan assets at fair value at September 30 146,579 141,961 118,968
Unrecognized transition liability (1,092) (1,256) (1,420)
Unrecognized net gain (14,623) (21,573) (5,111)
Unrecognized prior service cost 13,455 12,123 10,547
----------- ---------- ----------
Prepaid pension cost at December 31 $ 35,603 $ 35,137 $ 34,429
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The weighted average discount rate used in determining the actuarial present
value of the benefit obligations was 7.00% for the year ended December 31,
1998, and 7.75% for the years ended December 31, 1997 and 1996. The weighted
average expected long-term rate of return on plan assets was 10% for 1998,
1997 and 1996.
Middle management employees participate in a variety of incentive
compensation plans. These plans provide for incentive payments based on the
achievement of certain targeted operating results and other specific
business goals. The targeted operating results are determined each year by
senior management of Packaging. The amounts charged to expense for these
plans were $5,920,000, $6,407,000 and $6,722,000 in 1998, 1997 and 1996,
respectively.
In June, 1992, Tenneco initiated an Employee Stock Purchase Plan ("ESPP").
The plan allows U.S. and Canadian employees of the Group to purchase Tenneco
Inc. common stock through payroll deductions at a 15% discount. Each year,
an employee in the plan may purchase shares with a discounted value not to
exceed $21,250. The weighted average fair value of the employee purchase
right, which was estimated using the Black-Sholes option pricing model and
the assumptions described below except that the average life of each
purchase right was assumed to be 90 days, was $6.31, $11.09 and $10.77 in
1998, 1997 and 1996, respectively. The ESPP was terminated as of September
30, 1996. Tenneco adopted a new employee stock purchase plan effective April
1, 1997. Under the respective ESPPs, Tenneco sold 133,223 shares, 85,024
shares and 73,140 shares to Group employees in 1998, 1997 and 1996,
respectively.
F-14
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
5. PENSION AND OTHER BENEFIT PLANS (CONTINUED)
In December, 1996, Tenneco adopted the 1996 Stock Ownership Plan, which
permits the granting of a variety of awards, including common stock,
restricted stock, performance units, stock appreciation rights, and stock
options to officers and employees of Tenneco. Tenneco can issue up to
17,000,000 shares of common stock under this plan, which will terminate
December 31, 2001.
The fair value of each stock option issued by Tenneco to the Group during
1998, 1997 and 1996 is estimated on the date of grant using the Black-Sholes
option pricing model using the following weighted average assumptions for
grants in 1998, 1997 and 1996, respectively: (a) risk-free interest rate of
5.7%, 6.7% and 6.0%, (b) expected lives of 10.0 years, 19.7 years and 5.0
years; (c) expected volatility of 25.6%, 27.8% and 24.6%; and (d) dividend
yield of 3.2%, 2.9% and 3.2%. The weighted-average fair value of options
granted during the year is $10.91, $13.99 and $11.51 for 1998, 1997 and
1996, respectively.
The Group applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," to its stock-based compensation plans. The
Group recognized after-tax stock-based compensation expense of approximately
$210,000 in 1998, 1997 and 1996. Had compensation costs for the Group's
stock-based compensation plans been determined in accordance with SFAS 123,
"Accounting for Stock-Based Compensation," based on the fair value at the
grant dates for the awards under those plans, the Group's pro forma net
income for the years ended December 31, 1998, 1997 and 1996, would have been
lower by $7,828,000, $8,205,000 and $1,874,000, respectively.
6. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
In addition to providing pension benefits, the Group provides certain health
care and life insurance benefits for certain retired and terminated
employees. A substantial number of the Group's employees may become eligible
for such benefits if they reach normal retirement age while working for the
Group. The cost of these benefits for salaried employees is allocated to the
Group by Packaging through a payroll charge and the interdivision account.
Amounts allocated are principally determined based on payroll. The net
obligation for these salaried benefits is maintained by Packaging and is not
included in the liabilities section of the accompanying combined statements
of assets, liabilities and interdivision account for the Group's share of
the obligation.
Currently, the Group's postretirement benefit plans are not funded and a
portion of the related postretirement obligation has been actuarially
allocated to the Group. However, due to the fact that other divisions
participate in the plan, certain of the disclosures required by SFAS No.
132, such as a summary of the
F-15
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
6. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS (CONTINUED)
change in benefit obligation, are not available. The obligation of the
plans, related to hourly employees, reconciles with amounts recognized on
the accompanying combined statements of assets, liabilities and
interdivision account at December 31, 1998, 1997 and 1996, as follows:
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Actuarial present value at September 30-
Accumulated postretirement benefit obligation-
Retirees and beneficiaries $ (8,401) $ (7,199) $ (8,213)
Fully eligible active plan participants (3,582) (4,081) (4,283)
Other active plan participants (2,950) (2,426) (1,738)
--------- --------- ---------
Total (14,933) (13,706) (14,234)
Plan assets at fair value at September 30 - - -
Funded status (14,933) (13,706) (14,234)
Claims paid during the fourth quarter 473 178 142
Unrecognized prior service cost - (293) (797)
Unrecognized net gain (1,764) (2,861) (2,205)
--------- --------- ---------
Accrued postretirement benefit cost at December 31 $ (16,224) $ (16,682) $ (17,094)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The net periodic postretirement benefit costs as determined by actuaries for
hourly employees for the years 1998, 1997 and 1996 consist of the following
components:
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Service cost $ 159 $ 105 $ 144
Interest cost 1,024 1,065 1,012
Amortization of net (gain) loss (138) (80) 55
Amortization of prior service cost (293) (504) (643)
--------- --------- ---------
Net periodic postretirement benefit cost $ 752 $ 586 $ 568
--------- --------- ---------
--------- --------- ---------
</TABLE>
The amounts expensed by the Group may be different because it was allocated
by Packaging.
The weighted average assumed health care cost trend rate used in determining
the 1998 and 1997 accumulated postretirement benefit obligation was 5% in
1997, remaining at that level thereafter.
The weighted average assumed health care cost trend rate used in determining
the 1996 accumulated postretirement benefit obligation was 6.0% in 1996
declining to 5.0% in 1997 and remaining at that level thereafter.
F-16
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
6. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS (CONTINUED)
Increasing the assumed health care cost trend rate by one percentage point
in each year would increase the accumulated postretirement benefit
obligation as of September 30, 1998, 1997 and 1996, by approximately
$1,268,000, $868,000 and $1,103,000, respectively, and would increase the
net postretirement benefit cost for 1998, 1997 and 1996 by approximately
$130,000, $75,000 and $102,000, respectively.
The discount rate (which is based on long-term market rates) used in
determining the accumulated postretirement benefit obligations was 7.00% for
1998 and 7.75% for 1997 and 1996.
7. RESTRUCTURING AND OTHER CHARGES
In the fourth quarter of 1998, the Group recorded a pretax restructuring
charge of approximately $14 million. This charge was recorded following the
approval by Tenneco's Board of Directors of a comprehensive restructuring
plan for all of Tenneco's operations, including those of the Group. In
connection with this restructuring plan, the Group will close four
corrugated facilities and eliminate 109 positions. The following table
reflects components of this charge:
<TABLE>
<CAPTION>
---------------------------------------------
<S> <C> <C> <C>
DECEMBER 31,
RESTRUCTURING FOURTH-QUARTER 1998
COMPONENT CHARGE ACTIVITY BALANCE
- -------------------------------------------------------------- ------------- --------------- -------------
(IN THOUSANDS)
Cash charges-
Severance $ 5,135 $ 852 $ 4,283
Facility exit costs and other 3,816 369 3,447
------------- ------ ------
Total cash charges 8,951 1,221 7,730
Noncash charges-
Asset impairments 5,434 3,838 1,596
------------- ------ ------
$ 14,385 $ 5,059 $ 9,326
------------- ------ ------
------------- ------ ------
</TABLE>
Asset impairments include goodwill totaling approximately $5,043,000 related
to two of the facilities. The fixed assets at the closed facilities were
written down to their estimated fair value. No significant cash proceeds are
expected from the ultimate disposal of these assets. Of the $7,730,000
remaining cash charges at December 31, 1998, approximately $7,300,000 is
expected to be spent in 1999. The actions contemplated by the restructuring
plan should be completed during the second quarter of 1999.
8. INCOME TAXES
The Group's method of accounting for income taxes requires that a deferred
tax be recorded to reflect the tax expense (benefit) resulting from the
recognition of temporary differences. Temporary differences are differences
between the tax basis of assets and liabilities and their reported amounts
in the financial statements that will result in differences between income
for tax purposes and income for financial statement purposes in future
years.
F-17
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
8. INCOME TAXES (CONTINUED)
As a division, this Group is not a taxable entity. For purposes of these
combined financial statements, income taxes have been allocated to the Group
and represent liabilities to Packaging.
Following is an analysis of the components of combined income tax expense
(benefit):
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Current-
U.S. $ (21,105) $ (58,813) $ 45,641
State and local (2,708) (7,545) 5,855
--------- --------- ---------
(23,813) (66,358) 51,496
--------- --------- ---------
Deferred-
U.S. 63,230 75,399 7,374
State and local 8,112 9,673 946
--------- --------- ---------
71,342 85,072 8,320
--------- --------- ---------
Income tax expense $ 47,529 $ 18,714 $ 59,816
--------- --------- ---------
--------- --------- ---------
</TABLE>
The primary difference between income taxes computed at the statutory U.S.
federal income tax rate and the income tax expense in the combined
statements of revenues, expenses and interdivision account is due to the
effect of state income taxes.
F-18
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
8. INCOME TAXES (CONTINUED)
The components of the deferred tax assets (liabilities) at December 31,
1998, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
-------------------------------------
<S> <C> <C> <C>
1998 1997 1996
----------- ----------- -----------
(IN THOUSANDS)
Current deferred taxes-
Accrued liabilities $ 10,232 $ 6,374 $ 7,046
Employee benefits and compensation (5,969) (4,946) (929)
Reserve for doubtful accounts 1,275 1,230 1,261
Inventory 707 614 38
Pensions and postretirement benefits (2,994) (4,196) (5,053)
State deferred tax 10,096 5,724 511
Other (76) (123) (89)
----------- ----------- -----------
Total current deferred taxes 13,271 4,677 2,785
----------- ----------- -----------
Noncurrent deferred taxes-
Pension and postretirement benefits 13,898 7,934 8,012
Excess of financial reporting over tax basis in plant and equipment (293,830) (210,797) (121,707)
Accrued liabilities 1,336 1,701 1,947
Capital leases 9,333 7,517 24,672
Other 15,199 19,518 (89)
----------- ----------- -----------
Total noncurrent deferred taxes (254,064) (174,127) (87,165)
----------- ----------- -----------
Net deferred tax liabilities $ (240,793) $ (169,450) $ (84,380)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
9. ASSETS, LIABILITIES AND OTHER INCOME, NET DETAIL
PREPAID EXPENSES AND OTHER CURRENT ASSETS
The components of prepaid expenses and other current assets include:
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Prepaid stumpage $ 15,189 $ 19,231 $ 15,595
Prepaid taxes 13,272 7,549 7,044
Current portion-Meridian Lease, net of deferred gain 5,193 - -
Prepaid professional services/leases 2,356 1,918 5,506
Other 5,082 6,321 7,391
--------- --------- ---------
Total $ 41,092 $ 35,019 $ 35,536
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-19
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
9. ASSETS, LIABILITIES AND OTHER INCOME, NET DETAIL (CONTINUED)
OTHER LONG-TERM ASSETS
The components of the other long-term assets include:
<TABLE>
<CAPTION>
--------------------------------
<S> <C> <C> <C>
1998 1997 1996
---------- --------- ---------
(IN THOUSANDS)
Prepaid pension cost $ 35,603 $ 35,137 $ 34,429
Leased timberlands and mills 14,636 11,857 9,510
Long-term portion-Meridian Lease, net of deferred gain 44,743 - -
Deferred software 15,864 11,088 6,047
Timberland rights 10,919 9,775 8,615
Capitalized fees - 474 3,962
Other 9,327 8,981 9,513
---------- --------- ---------
Total $ 131,092 $ 77,312 $ 72,076
---------- --------- ---------
---------- --------- ---------
</TABLE>
ACCRUED LIABILITIES
The components of accrued liabilities include:
<TABLE>
<CAPTION>
--------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ----------
(IN THOUSANDS)
Accrued payroll, vacation and taxes $ 42,282 $ 48,119 $ 49,162
Accrued insurance 6,012 5,248 4,296
Accrued volume discounts and rebates 5,727 4,428 3,515
Restructuring 9,326 - -
Current portion of accrued postretirement benefit cost 1,460 875 892
Deferred lease credits 1,918 1,014 94,360
Other 2,665 10,742 14,438
--------- --------- ----------
Total $ 69,390 $ 70,426 $ 166,663
--------- --------- ----------
--------- --------- ----------
</TABLE>
As part of the refinancing of the GECC leases in January, 1997 (Note 12),
certain deferred lease credits were eliminated.
F-20
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
9. ASSETS, LIABILITIES AND OTHER INCOME, NET DETAIL (CONTINUED)
OTHER LONG-TERM LIABILITIES
The components of the other long-term liabilities include:
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Accrued postretirement benefit cost $ 14,764 $ 15,807 $ 16,202
Environmental liabilities 6,599 5,421 6,673
Other 2,497 2,526 412
--------- --------- ---------
Total $ 23,860 $ 23,754 $ 23,287
--------- --------- ---------
--------- --------- ---------
</TABLE>
OTHER INCOME, NET
The components of other income (expense), net include:
<TABLE>
<CAPTION>
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
Discount on sale of factored receivables $ (14,774) $ (12,006) $ (12,351)
Gain on sale of timberlands 16,944 - -
Gain on sale of joint venture interest 15,060 - -
Gain on operating lease refinancing - 37,730 -
Gain on Willow Flowage - 4,449 -
Gain on sale of mineral rights - 1,646 -
Capitalization of barter credits - 1,563 -
Sylva Mill rebate income - - 4,500
Gain on sale of recycled mills - - 50,000
Other 9,588 11,299 14,094
--------- --------- ---------
Total $ 26,818 $ 44,681 $ 56,243
--------- --------- ---------
--------- --------- ---------
</TABLE>
10. RELATED-PARTY TRANSACTIONS
FUNDING OF CASH REQUIREMENTS
As discussed in Note 2, Packaging provides centralized treasury functions
and financing for the Group including funding of its cash requirements for
processing of accounts payable and payroll requirements.
CORPORATE ALLOCATIONS
Packaging and Tenneco provide various services to the Group, including
legal, human resources, data processing systems support, training, finance
and treasury, public relations and insurance management.
F-21
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
10. RELATED-PARTY TRANSACTIONS (CONTINUED)
These expenses are allocated based on a combination of factors such as
actual usage of the service provided, revenues, gross salaries and fixed
assets and may not reflect actual costs the Group would incur if it were a
stand-alone entity.
Certain receivables and transactions resulting from the financing
relationship between Packaging and Tenneco are not reflected in the
accompanying financial statements.
INSURANCE AND BENEFITS
The Group is self-insured for medical benefits and workers' compensation.
Expenses related to workers' compensation, health care claims for hourly and
salaried workers and postretirement health care benefits for hourly and
salaried workers are determined by Packaging and are allocated to the Group.
The Group incurred charges of $32,151,000, $34,004,000 and $32,298,000 in
1998, 1997 and 1996, respectively, for health care and $5,109,000,
$9,209,000 and $8,853,000 in 1998, 1997 and 1996, respectively, for workers'
compensation.
In general, all costs and expenses incurred and allocated are based on the
relationship the Group has with Tenneco. If the Group had been a stand-alone
entity, the costs and expenses would differ.
11. COMMITMENTS AND CONTINGENCIES
The Group had authorized capital expenditures of approximately $49,392,000
as of December 31, 1998, in connection with the expansion and replacement of
existing facilities.
The Group is involved in various legal proceedings and litigation arising in
the ordinary course of business. In the opinion of management and in-house
legal counsel, the outcome of such proceedings and litigation will not
materially affect the Group's financial position or results of operations.
12. LEASES
Rental expense included in the combined financial statements was
$96,193,340, $95,284,000 and $118,821,000 for 1998, 1997 and 1996,
respectively. These costs are primarily included in cost of goods sold.
On January 31, 1997, Packaging executed an operating lease agreement with
Credit Suisse Leasing 92A, L.P., and a group of financial institutions led
by Citibank, N.A. The agreement refinanced the previous operating leases
between GECC and Packaging which were entered into at the same time as
GECC's purchase of certain assets from Georgia-Pacific in January, 1991.
Through this refinancing, several capital lease obligations were
extinguished as the assets were incorporated into the new operating lease.
Also with this refinancing, certain fixed assets and deferred credits were
eliminated resulting in a net gain of approximately $38 million in the first
quarter of 1997.
F-22
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
12. LEASES (CONTINUED)
Aggregate minimum rental commitments under noncancelable operating leases
are as follows (in thousands):
<TABLE>
<S> <C>
1999 $ 83,804
2000 81,368
2001 79,428
2002 686,390
2003 26,975
Thereafter 113,154
---------
Total $1,071,119
---------
---------
</TABLE>
Minimum rental commitments under noncancelable operating leases include $68
million for 1999, $68 million for 2000, $68 million for 2001, $676 million
for 2002, $18 million for 2003 and $34 million for years thereafter, payable
to credit Suisse Leasing 92A, L.P. and Citibank, N.A., along with John
Hancock, Metropolitan Life and others (the "Lessors") for certain mill and
timberland assets. The remaining terms of such leases extend over a period
of up to five years.
Following the initial lease period, Packaging may, under the provision of
the lease agreements, extend the leases on terms mutually negotiated with
the Lessors or purchase the leased assets under conditions specified in the
lease agreements. If the purchase options are not exercised or the leases
are not extended, Packaging will make a residual guarantee payment to the
Lessors of approximately $653 million, included in the schedule above, which
will be refunded up to the total amount of the residual guarantee payment
based on the Lessors' subsequent sales price for the leased assets.
Throughout the lease period, Packaging is required to maintain the leased
properties which includes reforestation of the timberlands harvested.
Packaging's various lease agreements require that it comply with certain
covenants and restrictions, including financial ratios that, among other
things, place limitations on incurring additional "funded debt" as defined
by the agreements. Under the provisions of the lease agreements, in order to
incur funded debt, Packaging must maintain a pretax cash flow coverage
ratio, as defined, on a cumulative four quarter basis of a minimum of 2.0,
subsequently modified to 1.75 as of December 31, 1998. Packaging was in
compliance with all of its covenants at December 31, 1998.
In December, 1998, the Group made a payment of $84 million to acquire the
Meridian timberlands utilized by the Group. This transaction was undertaken
in preparation for the separation of the Group's assets from Tenneco.
Subsequent to year end, the Group paid a fee of $50,000 to effect the
conveyance of the Meridian timberlands to the Group.
In connection with the pending sale of the Group described in Note 14 to
these financial statements, Tenneco may purchase the Tomahawk and Valdosta
mills and selected timberland assets currently under lease prior to the
sale.
F-23
<PAGE>
THE CONTAINERBOARD GROUP
(A DIVISION OF TENNECO PACKAGING INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998, 1997 AND 1996
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1999 IS UNAUDITED)
13. SALE OF ASSETS
In the second quarter of 1996, Packaging entered into an agreement to form a
joint venture with Caraustar Industries whereby Packaging sold its two
recycled paperboard mills and a fiber recycling operation and brokerage
business to the joint venture in return for cash and a 20% equity interest
in the joint venture. Proceeds from the sale were approximately $115 million
and the Group recognized a $50 million pretax gain ($30 million after taxes)
in the second quarter of 1996.
In June, 1998, Packaging sold its remaining 20% equity interest in the joint
venture to Caraustar Industries for cash and a note of $26,000,000. The
Group recognized a $15 million pretax gain on this transaction.
At December 31, 1998, the balance of the note with accrued interest is
$26,756,000.
14. SALE OF COMPANY AND RELATED IMPAIRMENT (UNAUDITED)
On January 26, 1999, Tenneco announced that it had entered into an agreement
to contribute a majority interest in the Group to a new joint venture with
Madison Dearborn Partners, in exchange for cash and debt assumption totaling
approximately $2 billion, and a 45% common equity interest in the joint
venture. The assets to be contributed include the Group's 4 linerboard and
medium mills, 67 plants and 5 design centers and an ownership or controlling
interest in approximately 950,000 acres of timberland. The transaction
closed on April 12, 1999.
In connection with the transaction, Packaging borrowed approximately $1.8
billion, most of which was used to acquire assets used by the Group pursuant
to operating leases and timber cutting rights, with the remainder remitted
to Tenneco for corporate debt reduction.
Tenneco then contributed the Group's assets (subject to the new indebtedness
and the Group's liabilities) to a joint venture, Packaging Corporation of
America ("PCA") in exchange for (a) a 45% common equity interest in PCA
valued at approximately $200 million and (b) approximately $240 million in
cash. As a result of the sale transaction, Tenneco recognized a pretax loss
in the first quarter of 1999 of approximately $293 million. Part of that
loss consisted of an impairment charge relating to the Group's property,
plant and equipment and intangible assets, which was pushed down to the
Group's March 31, 1999 financial statements. The amount of the impairment
charge is approximately $230.1 million. Group management is in the process
of determining how the remaining $230.4 million should be allocated to
specific fixed and intangible assets (including certain assets acquired
subsequent to March 31, 1999 in operating lease buy-outs required as part of
the sale). Accordingly, the charge is reflected as a loss reserve liability
in the Group's March 31, 1999 balance sheet.
15. EXTRAORDINARY LOSS (UNAUDITED)
During the first quarter of 1999 the Group extinguished $16.6 million of
debt related to mill assets. In connection with that extinguishment an
extraordinary loss of $10.5 million was recorded ($6.3 million, net of the
related tax effect).
F-24
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YOU SHOULD RELY ONLY UPON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT.
WE ARE NOT MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION
APPEARING IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF
THIS PROSPECTUS ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 21
Forward-Looking Statements................................................ 31
The Transactions.......................................................... 32
Use of Proceeds........................................................... 33
Capitalization............................................................ 34
Unaudited Pro Forma Financial Statements.................................. 35
Selected Financial and Other Data......................................... 45
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 48
Business.................................................................. 58
Management................................................................ 67
Certain Transactions...................................................... 70
Security Ownership........................................................ 72
Description of Senior Credit Facility..................................... 74
Description of Exchange Notes............................................. 76
Description of New Preferred Stock........................................ 118
The Exchange Offer........................................................ 167
Certain United States Federal Tax Considerations.......................... 189
Plan of Distribution...................................................... 199
Legal Matters............................................................. 200
Experts................................................................... 200
Available Information..................................................... 200
Index to Financial Statements............................................. F-1
</TABLE>
PACKAGING CORPORATION
OF AMERICA
[LOGO]
EXCHANGE OFFER
$550,000,000
9 5/8% SERIES B SENIOR
SUBORDINATED NOTES DUE 2009
AND
$100,000,000 12 3/8% SERIES B
SENIOR EXCHANGEABLE PREFERRED STOCK DUE 2010
---------------------
PROSPECTUS
---------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
RESTATED CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation of PCA, as amended, provides that to
the fullest extent permitted from time to time by the General Corporation Law of
the State of Delaware ("DGCL"), a director of PCA shall not be liable to the
company or its stockholders for monetary damages for a breach of fiduciary duty
as a director.
BY-LAWS
The Amended and Restated By-laws of PCA, as amended, provide that PCA shall
indemnify its directors and officers to the maximum extent permitted from time
to time by the DGCL.
The By-laws of Dahlonega Packaging Corporation ("Dahlonega"), Dixie Container
Corporation ("Dixie"), PCA Hydro, Inc. ("PCA Hydro"), PCA Tomahawk Corporation
("PCA Tomahawk") and PCA Valdosta Corporation ("PCA Valdosta") provide that
Dahlonega, Dixie, PCA Hydro, PCA Tomahowk and PCA Valdosta shall indemnify their
directors and officers to the maximum extent permitted from time to time by, in
the case of Dahlonega, PCA Hydro, PCA Tomahawk and PCA Valdosta, the DGCL, and
in the case of Dixie, the Virginia Stock Corporation Act ("VSCA").
DELAWARE GENERAL CORPORATION LAW
Section 145 of the DGCL provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor, against expenses actually and reasonably incurred in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or such other court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided, however, that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
which relates to unlawful payment of dividends and unlawful stock purchases and
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit.
II-1
<PAGE>
VIRGINIA STOCK CORPORATION ACT
Section 13.1-697 of the VSCA provides that a corporation may indemnify a person
made party to a proceeding because he is or was a director against liability
incurred in the proceeding if he conducted himself in good faith and he believed
that his conduct was in, or not opposed to, the corporation's best interests,
and, in the case of a criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful. Section 13.1-697 further provides that a corporation
may not indemnify a director in connection with a proceeding by or in the right
of the corporation in which the director was adjudged liable to the corporation
or in connection with a proceeding charging improper personal benefit to him in
which he was adjudged liable on the basis that personal benefit was improperly
received by him. Indemnification under Section 13.1-697 is limited to reasonable
expenses incurred in connection with the proceeding.
Section 13.1-698 of the VSCA provides that, unless limited by its articles of
incorporation, a corporation shall indemnify a director who entirely prevails in
the defense of any proceeding to which he as a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
Section 13.1-702 of the VSCA provides that, unless limited by a corporation's
articles of incorporation, an officer of the corporation is entitled to
mandatory indemnification under Section 13.1-698 to the same extent as a
director and further provides that the corporation may indemnify and advance
expenses to an officer, employee or agent of the corporation to the same extent
as to a director.
INSURANCE
The directors and officers of PCA are covered under directors' and officers'
liability insurance policies maintained by PCA with coverage up to $50 million.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Contribution Agreement, dated as of January 25, 1999, among Tenneco Packaging Inc. ("TPI"), PCA
Holdings LLC ("PCA Holdings") and Packaging Corporation of America ("PCA").
2.2 Letter Agreement Amending the Contribution Agreement, dated as of April 12, 1999, among TPI, PCA
Holdings and PCA.
3.1 Restated Certificate of Incorporation of PCA.
3.2 Amended and Restated By-laws of PCA.
4.1 Indenture, dated as of April 12, 1999, by and among PCA, Dahlonega Packaging Corporation
("Dahlonega"), Dixie Container Corporation ("Dixie"), PCA Hydro, Inc. ("PCA Hydro"), PCA Tomahawk
Corporation ("PCA Tomahawk"), PCA Valdosta Corporation ("PCA Valdosta") and United States Trust
Company of New York.
4.2 Certificate of Designations, Preferences and Relative, Participating, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of 12 3/8% Senior
Exchangeable Preferred Stock due 2010 and 12 3/8% Series B Senior Exchangeable Preferred Stock due
2010 of PCA.
4.3 Exchange Indenture, dated as of April 12, 1999, by and among PCA and U.S. Trust Company of Texas, N.A.
4.4 Notes Registration Rights Agreement, dated as of April 12, 1999, by and among PCA, Dahlonega, Dixie,
PCA Hydro, PCA Tomahawk, PCA Valdosta, J.P. Morgan Securities Inc. ("J.P. Morgan") and BT Alex. Brown
Incorporated ("BT").
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------------
<S> <C>
4.5 Preferred Stock Registration Rights Agreement, dated as of April 12, 1999, by and among PCA, J.P.
Morgan and BT.
4.6 Form of Rule 144A Global Note and Subsidiary Guarantee
4.7 Form of Regulation S Global Note and Subsidiary Guarantee
4.8 Form of Rule 144A Global Certificate
5.1 Opinion of Kirkland & Ellis.*
10.1 Purchase Agreement, dated as of March 30, 1999, by and among PCA, Dahlonega, Dixie, PCA Hydro, PCA
Tomahawk, PCA Valdosta, J.P. Morgan and BT.
10.2 Credit Agreement, dated as of April 12, 1999, among TPI, the lenders party thereto from time to time,
J.P. Morgan, BT, Bankers Trust Company and Morgan Guaranty Trust Company of New York ("Morgan
Guaranty").
10.3 Subsidiaries Guaranty, dated as of April 12, 1999, made by Dahlonega, Dixie, PCA Hydro, PCA Tomahawk,
PCA Valdosta and Morgan Guaranty.
10.4 Pledge Agreement, dated as of April 12, 1999, among PCA, Dahlonega, Dixie, PCA Hydro, PCA Tomahawk,
PCA Valdosta and Morgan Guaranty.
10.5 TPI Security Agreement, dated as of April 12, 1999, between TPI and Morgan Guaranty.
10.6 PCA Security Agreement, dated as of April 12, 1999, among PCA, Dahlonega, Dixie, PCA Hydro, PCA
Tomahawk, PCA Valdosta and Morgan Guaranty.
10.7 Stockholders Agreement, dated as of April 12, 1999, by and among TPI, PCA Holdings and PCA.
10.8 Registration Rights Agreement, dated as of April 12, 1999, by and among TPI, PCA Holdings and PCA.
10.9 Holding Company Support Agreement, dated as of April 12, 1999, by and between PCA Holdings and PCA.
10.10 Facility Use Agreement, dated as of April 12, 1999, by and between TPI and PCA.
10.11 Human Resources Agreement, dated as of April 12, 1999, by and among Tenneco Inc., TPI and PCA.
10.12 Purchase/Supply Agreement, dated as of April 12, 1999, between PCA and Tenneco Packaging Speciality
and Consumer Products Inc.
10.13 Purchase/Supply Agreement, dated as of April 12, 1999, between PCA and TPI.
10.14 Purchase/Supply Agreement, dated as of April 12, 1999, between PCA and Tenneco Automotive Inc.
10.15 Technology, Financial and Administrative Transition Services Agreement, dated as of April 12, 1999,
between TPI and PCA.
10.16 Letter Agreement Regarding Terms of Employment, dated as of January 25, 1999, between PCA and Paul T.
Stecko.
10.17 Letter Agreement Regarding Terms of Employment, dated as of May 19, 1999, between Samuel M. Mencoff
and Paul T. Stecko.
12.1 Statements Regarding Computation of Ratios of Earnings to Fixed Changes.
12.2 Computation of Ratios of Earnings to Combined Fixed Changes and Preferred Stock Dividends.
21.1 Subsidiaries of the Registrants.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney (included in the signature pages to this registration statement).
25.1 Statement of Eligibility on Form T-1 of United States Trust Company of New York, as trustee, under the
Indenture.
25.2 Statement of Eligibility on Form T-1 of U.S. Trust Company of Texas, N.A., as exchange trustee, under
the Exchange Indenture.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the Notes.*
99.2 Form of Letter of Transmittal for the Preferred Stock.*
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------------
<S> <C>
99.3 Form of Notice of Guaranteed Delivery.*
</TABLE>
- --------------
* To be filed by Amendment.
(B) FINANCIAL STATEMENT SCHEDULES.
The following consolidated financial statement schedules of PCA for the three
years ended December 31, 1998 are included in this registration statement.
Schedule II-Packaging Corporation of America-Valuation and Qualifying Accounts.
<TABLE>
<CAPTION>
BALANCE PROVISION ADDITIONS/DEDUCTIONS TRANSLATION BALANCE END
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE BEGINNING OF YEAR (BENEFIT) FROM RESERVES * ADJUSTMENTS OF YEAR
- ------------------------------------------ ------------------- ----------- --------------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
1998...................................... 5,023 2,710 (2,513) - 5,220
1997...................................... 5,010 611 (598) - 5,023
1996...................................... 5,239 1,018 (1,247) - 5,010
</TABLE>
- --------------
* Consists primarily of write-offs and recoveries of bad debts.
We have audited in accordance with generally accepted auditing standards the
financial statements of The Containerboard Group (a division of Tenneco
Packaging Inc., which is a Delaware corporation and a wholly owned subsidiary of
Tenneco Inc.), included in this registration statement and have issued our
report thereon dated February 26, 1999. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed above is the responsibility of the company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 28, 1999
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrants, pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by any such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
The undersigned Registrants hereby undertake:
(1) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(2) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(3) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the exchange offer.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Packaging
Corporation of America has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Lake
Forest, State of Illinois, on May 27, 1999.
Packaging Corporation of America
By: /s/ RICHARD B. WEST
--------------------------------------
Name: Richard B. West
Title: Chief Financial Officer,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that each officer and director of Packaging
Corporation of America whose signature appears below constitutes and appoints
Paul T. Stecko, Richard B. West and Samuel M. Mencoff, and each of them, his or
her true and lawful attorney-in-fact and agent, with full power of substitution
and revocation, for him or her and in his or her name, place and stead, in any
and all capacities, to execute any and all amendments, including any
post-effective amendments and supplements to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on May 27, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ PAUL T. STECKO
-------------------------------------------- Chairman of the Board and Chief Executive Officer
Paul T. Stecko (Principal Executive Officer)
/s/ RICHARD B. WEST
-------------------------------------------- Chief Financial Officer, Secretary and Treasurer
Richard B. West (Principal Financial and Accounting Officer)
-------------------------------------------- Director
Dana G. Mead
/s/ THEODORE R. TETZLAFF
-------------------------------------------- Director
Theodore R. Tetzlaff
/s/ SAMUEL M. MENCOFF
-------------------------------------------- Director
Samuel M. Mencoff
/s/ JUSTIN S. HUSCHER
-------------------------------------------- Director
Justin S. Huscher
/s/ THOMAS S. SOULELES
-------------------------------------------- Director
Thomas S. Souleles
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dahlonega Packaging
Corporation has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lake
Forest, State of Illinois, on May 27, 1999.
Dahlonega Packaging Corporation
By: /s/ RICHARD B. WEST
--------------------------------------
Name: Richard B. West
Title: Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each officer and director of Dahlonega
Packaging Corporation whose signature appears below constitutes and appoints
Paul T. Stecko, Richard B. West and Samuel M. Mencoff, and each of them, his or
her true and lawful attorney-in-fact and agent, with full power of substitution
and revocation, for him or her and in his or her name, place and stead, in any
and all capacities, to execute any and all amendments, including any
post-effective amendments and supplements to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on May 27, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ PAUL T. STECKO
-------------------------------------------- President and Director
Paul T. Stecko (Principal Executive Officer)
/s/ RICHARD B. WEST
-------------------------------------------- Secretary
Richard B. West (Principal Financial and Accounting Officer)
-------------------------------------------- Director
Dana G. Mead
/s/ THEODORE R. TETZLAFF
-------------------------------------------- Director
Theodore R. Tetzlaff
/s/ SAMUEL M. MENCOFF
-------------------------------------------- Director
Samuel M. Mencoff
/s/ JUSTIN S. HUSCHER
-------------------------------------------- Director
Justin S. Huscher
/s/ THOMAS S. SOULELES
-------------------------------------------- Director
Thomas S. Souleles
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dixie Container
Corporation has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lake
Forest, State of Illinois, on May 27, 1999.
Dixie Container Corporation
By: /s/ RICHARD B. WEST
--------------------------------------
Name: Richard B. West
Title: Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each officer and director of Dixie Container
Corporation whose signature appears below constitutes and appoints Paul T.
Stecko, Richard B. West and Samuel M. Mencoff, and each of them, his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities, to execute any and all amendments, including any post-effective
amendments and supplements to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on May 27, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ PAUL T. STECKO
-------------------------------------------- President and Director
Paul T. Stecko (Principal Executive Officer)
/s/ RICHARD B. WEST
-------------------------------------------- Secretary
Richard B. West (Principal Financial and Accounting Officer)
-------------------------------------------- Director
Dana G. Mead
/s/ THEODORE R. TETZLAFF
-------------------------------------------- Director
Theodore R. Tetzlaff
/s/ SAMUEL M. MENCOFF
-------------------------------------------- Director
Samuel M. Mencoff
/s/ JUSTIN S. HUSCHER
-------------------------------------------- Director
Justin S. Huscher
/s/ THOMAS S. SOULELES
-------------------------------------------- Director
Thomas S. Souleles
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, PCA Hydro, Inc. has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Lake Forest, State of
Illinois, on May 27, 1999.
PCA Hydro, Inc.
By: /s/ RICHARD B. WEST
--------------------------------------
Name: Richard B. West
Title: Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each officer and director of PCA Hydro, Inc.
whose signature appears below constitutes and appoints Paul T. Stecko, Richard
B. West and Samuel M. Mencoff, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and revocation, for
him or her and in his or her name, place and stead, in any and all capacities,
to execute any and all amendments, including any post-effective amendments and
supplements to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on May 27, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ PAUL T. STECKO
-------------------------------------------- President and Director
Paul T. Stecko (Principal Executive Officer)
/s/ RICHARD B. WEST
-------------------------------------------- Secretary
Richard B. West (Principal Financial and Accounting Officer)
-------------------------------------------- Director
Dana G. Mead
/s/ THEODORE R. TETZLAFF
-------------------------------------------- Director
Theodore R. Tetzlaff
/s/ SAMUEL M. MENCOFF
-------------------------------------------- Director
Samuel M. Mencoff
/s/ JUSTIN S. HUSCHER
-------------------------------------------- Director
Justin S. Huscher
/s/ THOMAS S. SOULELES
-------------------------------------------- Director
Thomas S. Souleles
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, PCA Tomahawk
Corporation has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lake
Forest, State of Illinois, on May 27, 1999.
PCA Tomahawk Corporation
By: /s/ RICHARD B. WEST
--------------------------------------
Name: Richard B. West
Title: Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each officer and director of PCA Tomahawk
Corporation whose signature appears below constitutes and appoints Paul T.
Stecko, Richard B. West and Samuel M. Mencoff, and each of them, his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities, to execute any and all amendments, including any post-effective
amendments and supplements to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on May 27, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ PAUL T. STECKO
-------------------------------------------- President and Director
Paul T. Stecko (Principal Executive Officer)
/s/ RICHARD B. WEST
-------------------------------------------- Secretary
Richard B. West (Principal Financial and Accounting Officer)
-------------------------------------------- Director
Dana G. Mead
/s/ THEODORE R. TETZLAFF
-------------------------------------------- Director
Theodore R. Tetzlaff
/s/ SAMUEL M. MENCOFF
-------------------------------------------- Director
Samuel M. Mencoff
/s/ JUSTIN S. HUSCHER
-------------------------------------------- Director
Justin S. Huscher
/s/ THOMAS S. SOULELES
-------------------------------------------- Director
Thomas S. Souleles
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, PCA Valdosta
Corporation has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lake
Forest, State of Illinois, on May 27, 1999.
PCA Valdosta Corporation
By: /s/ RICHARD B. WEST
--------------------------------------
Name: Richard B. West
Title: Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each officer and director of PCA Valdosta
Corporation whose signature appears below constitutes and appoints Paul T.
Stecko, Richard B. West and Samuel M. Mencoff, and each of them, his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities, to execute any and all amendments, including any post-effective
amendments and supplements to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on May 27, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ PAUL T. STECKO
-------------------------------------------- President and Director
Paul T. Stecko (Principal Executive Officer)
/s/ RICHARD B. WEST
-------------------------------------------- Secretary
Richard B. West (Principal Financial and Accounting Officer)
-------------------------------------------- Director
Dana G. Mead
/s/ THEODORE R. TETZLAFF
-------------------------------------------- Director
Theodore R. Tetzlaff
/s/ SAMUEL M. MENCOFF
-------------------------------------------- Director
Samuel M. Mencoff
/s/ JUSTIN S. HUSCHER
-------------------------------------------- Director
Justin S. Huscher
/s/ THOMAS S. SOULELES
-------------------------------------------- Director
Thomas S. Souleles
</TABLE>
II-11
<PAGE>
EXHIBIT 2.1
CONTRIBUTION AGREEMENT
among
TENNECO PACKAGING INC.,
PCA HOLDINGS LLC
and
PACKAGING CORPORATION OF AMERICA
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND TERMS....................................................3
1.1 Specific Definitions.........................................3
1.2 Other Terms.................................................16
1.3 Other Definitional Provisions...............................16
ARTICLE II
ORGANIZATION OF NEWCO;
CONTRIBUTION OF THE CONTAINERBOARD BUSINESS.............................17
2.1 Organization of Newco.......................................17
2.2 Contribution and Purchase of Assets; Assumption of
Liabilities.................................................17
2.3 Retained Assets and Retained Liabilities....................18
2.4 Closing Mechanics...........................................18
2.5 Post-Closing Adjustment.....................................20
2.6 Purchase Price Adjustment Following Public Sale By TPI......22
2.7 Transfer Taxes and Recording Fees...........................22
2.8 Certain Transfers...........................................22
2.9 Appraisal...................................................23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TPI...................................23
3.1 Organization and Qualification..............................23
3.2 Corporate Authorization.....................................23
3.3 Consents and Approvals......................................24
3.4 Non-Contravention...........................................24
3.5 Binding Effect..............................................24
3.6 Financial Statements: Absence of Certain Changes............24
3.7 Litigation and Claims.......................................26
3.8 Taxes.......................................................26
3.9 Employee Benefits...........................................27
3.10 Compliance with Laws........................................27
3.11 Environmental Matters.......................................27
3.12 Intellectual Property.......................................28
3.13 Labor Matters...............................................29
3.14 Contracts...................................................29
3.15 Real Estate Leases..........................................30
3.16 Entire Business; Title to Property..........................30
-i-
<PAGE>
3.17 Finders' Fees...............................................31
3.18 Insurance...................................................31
3.19 No Undisclosed Liabilities..................................32
3.20 No Other Representations or Warranties......................32
3.21 Closing Date................................................32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PCA...................................32
4.1 Organization and Qualification..............................32
4.2 Authorization...............................................32
4.3 Consents and Approvals......................................33
4.4 Non-Contravention...........................................33
4.5 Binding Effect..............................................33
4.6 Finders' Fees...............................................33
4.7 Financial Capability........................................33
4.8 Newco Liabilities...........................................34
4.9 No Other Representations or Warranties......................34
4.10 Closing Date................................................34
ARTICLE V
COVENANTS...............................................................34
5.1 Access......................................................34
5.2 Conduct of Business.........................................34
5.3 Reasonable Efforts..........................................36
5.4 Covenants Regarding Employees...............................37
5.5 Compliance with WARN and Similar Laws.......................38
5.6 Further Assurances..........................................38
5.7 Use of Tenneco Marks........................................39
5.8 Certain Matters Related to Retained and Assumed Liabilities.39
5.9 Intercompany Agreements.....................................39
5.10 Records and Retention and Access............................40
5.11 Insurance...................................................40
5.12 Noncompetition..............................................40
5.13 ............................................................41
5.14 Delivery of Most Recent Year End Statement and the Stub
Period Statements and Regulation S-X Financial Statements...41
5.15 Consent of TPI Auditors. ...................................42
5.16 Covenant Regarding Campbell Road Property...................42
5.17 ............................................................42
-ii-
<PAGE>
ARTICLE VI
CONDITIONS TO CLOSING...................................................42
6.1 Conditions to the Obligations of PCA and TPI................42
6.2 Conditions to the Obligations of PCA........................43
6.3 Conditions to the Obligations of TPI........................45
ARTICLE VII
SURVIVAL; INDEMNIFICATION...............................................46
7.1 Survival....................................................46
7.2 Indemnification by PCA and Newco............................46
7.3 Indemnification by TPI......................................47
7.4 Indemnification Procedures..................................48
7.5 Acknowledgment Regarding Environmental Liabilities..........50
7.6 Computation of Losses Subject to Indemnification............50
7.7 Characterization of Indemnification Payments................51
ARTICLE VIII
TAX COVENANTS...........................................................51
8.1 Liability for Taxes.........................................51
8.2 Preparation of Tax Returns..................................52
8.3 Amended Tax Returns.........................................53
8.4 Carrybacks and Carryforwards................................54
8.5 Additional Tax Matters......................................54
8.6 Tax Controversies; Cooperation..............................55
ARTICLE IX
TERMINATION.............................................................56
9.1 Termination.................................................56
9.2 Effect of Termination.......................................57
ARTICLE X
MISCELLANEOUS...........................................................57
10.1 Notices.....................................................57
10.2 Amendment; Waiver...........................................58
10.3 Assignment..................................................59
10.4 Entire Agreement............................................59
10.5 Fulfillment of Obligations..................................59
10.6 Parties in Interest.........................................59
10.7 Public Disclosure...........................................59
-iii-
<PAGE>
10.8 Expenses....................................................59
10.9 Schedules...................................................59
10.10 Bulk Transfer Laws..........................................60
10.11 Governing Law; Submission to Jurisdiction; Selection
of Forum....................................................60
10.12 Counterparts................................................60
10.13 Headings....................................................60
10.14 Severability................................................60
-iv-
<PAGE>
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT dated as of January 25, 1999, among TENNECO
PACKAGING INC., a Delaware corporation ("TPI"), PCA Holdings LLC, a Delaware
limited liability company ("PCA"), and Packaging Corporation of America, a
Delaware corporation ("Newco").
PRELIMINARY STATEMENTS
A. TPI is engaged, in part, in the business of producing
containerboard and corrugated packaging products (excluding folding carton and
honeycomb paperboard - type products), (as currently conducted at four paper
mills located at Counce, Tennessee, Valdosta, Georgia, Tomahawk, Wisconsin and
Filer City, Michigan (the "Mills"), 70 box plants, two recycling facilities,
four wood products facilities and certain timberlands and related facilities,
the "Containerboard Business").
B. PCA recognizes that TPI has substantial experience and expertise
in the ownership, management and operation of the Containerboard Business and
desires to invest in the operation of the Containerboard Business. PCA and TPI
have determined that it is advisable to form a joint venture corporation to
facilitate PCA's investment in the operation of the Containerboard Business and
have caused Newco to be incorporated under the laws of the State of Delaware as
such joint venture corporation.
C. As of the date hereof, the Purchased Property (as defined below)
is subject to various lease and financing arrangements, all of which lease and
financing arrangements are described on Schedule PS-1 (the "Existing Financing
Arrangements").
D. Upon the terms and subject to the conditions set forth more fully
herein, each of TPI, PCA and Newco desires to cause PCA's investment in the
Containerboard Business and the initial capitalization of Newco to be
consummated as described below, which will occur in the following order but,
except as otherwise specifically provided herein, will be consummated
contemporaneously as part of the Closing:
First PCA will arrange, negotiate and obtain on behalf of TPI and/or
Newco, subject to Section 5.3(b) hereof, credit facilities and
other financings as set forth in the Commitment Letters (the
"New Financing Arrangements") in an aggregate principal amount
sufficient to fund the borrowings by TPI contemplated by
paragraph D.2 below, and those New Financing Arrangements
under which TPI is the initial borrower will be assigned to,
and assumed by, Newco in connection with the transactions
contemplated hereby (such that following the assignment to and
assumption by Newco, the lenders shall not thereafter have
recourse against PCA or TPI in respect thereof, but shall then
have a security interest in the assets of Newco, including the
Contributed Assets). Capitalized terms used in these
<PAGE>
Preliminary Statements and not otherwise defined shall have
the meaning ascribed thereto in the Commitment Letters.
Second: TPI will borrow $1.06 billion under the Term Loan Facilities
on an unsecured basis.
Third: TPI will issue $700 million of Senior Subordinated Notes, or
if elected by TPI, draw down under the Bridge Loan.
Fourth: TPI will contribute the Contributed Assets (including the
Containerboard Business) to Newco free and clear of (i) all
indebtedness for borrowed money or any other obligation that
is fixed as to amount or certainty, other than the Assumed
Indebtedness and (ii) all Encumbrances (other than Permitted
Encumbrances but free and clear of all Encumbrances with
respect to the Existing Financing Arrangements).
Fifth: In consideration of the Contributed Assets, Newco will (i)
assume from TPI $1.06 billion under the Term Loan Facilities,
(ii) enter into the Credit Facilities and become the Borrower
under the Senior Secured Financing, (iii) grant the lenders
under the Senior Secured Financing a security interest in the
assets of Newco, including the Contributed Assets, and (iv)
pay the required fees and expenses with respect thereto.
Sixth: In consideration of the Contributed Assets, Newco will assume
TPI's obligations under the $700 million Senior Subordinated
Notes (or the Bridge Loan if applicable) and issue replacement
Senior Subordinated Notes (or notes evidencing the Bridge Loan
if applicable). Newco will pay the required fees and expenses
with respect to the Senior Subordinated Notes (or the Bridge
Loan if applicable, provided that in such case TPI will pay
the 1.5% Commitment Fee on behalf of Newco and PCA).
Seventh: Subject to adjustment pursuant to paragraph F below, Newco (or
if requested by the underwriters, a holding company) will
issue $100 million of Deferred-Pay Financing and will pay the
required fees and expenses with respect thereto.
Eighth: Subject to adjustment pursuant to paragraph E below, PCA will
contribute $236.5 million in cash (the "Cash Contribution") to
Newco, and Newco will issue to PCA in respect thereof 55% of
Newco's outstanding common stock, $.01 par value (the "Common
Stock").
Ninth: In consideration of the Contributed Assets, Newco will assume
the Assumed Liabilities, and subject to paragraph E below,
Newco will issue to TPI 45% of Newco's outstanding Common
Stock and distribute to TPI
-2-
<PAGE>
cash in an amount equal to $246.5 million less the dollar
amount of the PIK Preferred, if any, issued to TPI and/or its
designees, as contemplated by paragraph F below (the "Cash
Distribution"). Subject to paragraph E below, immediately
following such actions PCA and TPI will own Newco Common Stock
representing 55% and 45%, respectively, of the issued and
outstanding common equity of Newco.
For purposes of the Closing hereunder, each of the above actions will be deemed
to occur as part of an integrated Closing and the Closing will not be deemed to
have occurred and no such action shall be effective unless and until all such
actions have been completed, at which time the Closing will be deemed effective.
E. In addition to the issuance of Common Stock to TPI and PCA, at
the Closing and during the 120-day period following the Closing, Newco may, at
PCA's direction, sell shares of the Common Stock, at the same price per share as
such stock is being purchased by PCA, representing up to 5% of the outstanding
Common Stock of Newco (on a fully diluted basis) to certain members of Newco's
management (the "Management Stock"), on the terms set forth on Schedule PS-2.
TPI shall have the option to be exclusively diluted with respect to such
purchases of Management Stock by delivering notice of its election to be
exclusively diluted to PCA on or before the date on which TPI delivers to PCA
the Most Recent Year End Statement in accordance with Section 5.14 hereof (a
"Dilution Notice"). If TPI delivers PCA a Dilution Notice by such date, then to
the extent such members of management purchase Management Stock at Closing,
Newco shall issue fewer shares to TPI (equal to the number of shares of
Management Stock purchased by management at Closing), in which event the Cash
Distribution will be increased by an amount equal to the aggregate purchase
price of the Management Stock purchased at Closing (provided the per share
purchase price for the Management Stock is equal to the price per share paid for
Common Stock purchased by PCA hereunder). If TPI does not deliver a Dilution
Notice in accordance with the terms hereof, TPI and PCA shall be diluted pro
rata with respect to issuances of Management Stock, so that the number of shares
of Common Stock purchased or received by PCA or TPI shall be reduced by an
aggregate number of shares of Management Stock purchased by management at
Closing in a ratio of 55 to 45, the Cash Contribution shall be reduced by an
amount equal to 55% of the aggregate purchase price of the Management Stock
purchased at Closing, and the Cash Distribution shall be increased by an amount
equal to 45% of the aggregate purchase price of the Management Stock purchased
at Closing. To the extent members of management purchase Management Stock after
the Closing, the provisions of Section 5.17 shall apply.
F. In the event the Deferred-Pay Financing is not sold as part of
the New Financing Arrangements, (i) PCA and/or its designees shall purchase $55
million of PIK Preferred for $55 million, and (ii) Newco shall issue $45 million
of PIK Preferred to TPI and/or its designees.
-3-
<PAGE>
NOW, THEREFORE, TPI, PCA, and Newco agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
(a) "ACC" shall have the meaning set forth in Section 3.16(c).
(b) "Acquisition Proposal" shall have the meaning set forth in
Section 5.13.
(c) "Adjusted Cash Contribution" means, as of any date, the Cash
Contribution, minus (i) the product determined by multiplying (A) the purchase
price paid per share of Common Stock purchased by PCA hereunder at Closing times
(B)the number of shares of Common Stock transferred by PCA to any Person other
than a PCA Affiliate, minus (ii) the aggregate amount of any cash payments
previously paid to PCA in satisfaction of indemnity obligations to PCA under
Section 7.3 hereof, and minus (iii) any distributions (other than pro rata stock
dividends, splits or combinations) previously made by Newco to PCA.
(d) "Affiliates" shall mean, with respect to any Person, any Persons
directly or indirectly controlling, controlled by or under common control with,
such other Person as of the date on which, or at any time during the period for
which, the determination of affiliation is being made. For the purpose of this
definition, "control" means (i) the ownership or control of 50% or more of the
equity interest in any Person, or (ii) the ability to direct or cause the
direction of the management or affairs of a Person, whether through the direct
or indirect ownership of voting interests, by contract or otherwise.
(e) "Agreement" shall mean this Agreement (including the Preliminary
Statements set forth above and all Exhibits), as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
(f) "Ancillary Agreements" shall mean the Facility Use Agreement,
the Human Resources Agreement, the Registration Rights Agreement, the
Stockholders Agreement, the Supply Agreements, and the Transition Services
Agreement.
(g) "Applicable Tax Law" shall mean any Law of any nation, state,
region, province, locality, municipality or other jurisdiction relating to
Taxes, including regulations and other official pronouncements of any
governmental entity or political subdivision of such jurisdiction charged with
interpreting such Laws.
-4-
<PAGE>
(h) "Appraisal" shall have the meaning set forth in Section 2.9.
(i) "Assumed Indebtedness" shall have the meaning set forth in the
Preliminary Statements hereto.
(j) "Assumed Liabilities" shall mean all debts, liabilities,
commitments, or obligations whatsoever, other than Retained Liabilities, Related
to the Containerboard Business or Related to the Contributed Assets, whether
arising before or after the Closing and whether known or unknown, fixed or
contingent, including the following:
(i) all debts, liabilities, obligations or commitments related
to or arising under the Contracts to the extent such Contracts are
assigned to Newco, including the Real Estate Leases provided that,
the foregoing notwithstanding the Assumed Liabilities shall not
include any liabilities and obligations arising under any Contract
which is not identified in the Disclosure Memorandum except as
follows: (A) if such Contract is for an amount of $1,000,000 or less
and (i) is entered into in the ordinary course of business; (ii) the
terms of which are customary and normal for the Containerboard
Business specifically and the containerboard industry generally and
on market rates at the time entered into, and (iii) all of the fees,
expenses, penalties, liabilities and other payment obligations (or
commitments therefor) arising thereunder which were incurred during
the 12-month period ending December 31, 1998 have been paid and have
been (or will be) properly reflected on the Most Recent Year End
Statement and, if applicable, Final Working Capital Statement), such
Contract shall be an Assumed Liability; and (B) if such Contract is
for an amount greater than $1,000,000 or otherwise does not meet the
conditions set forth in clause (A), such Contract shall be an
Assumed Liability only if and to the extent Newco elects to assume
such Contract in accordance with Section 5.21 hereof.
(ii) all debts, liabilities, obligations or commitments
Related to the Real Property;
(iii) the Current Liabilities;
(iv) the Assumed Indebtedness;
(v) except for the Retained Environmental Liabilities, all
liabilities under Environmental Laws Related to the ownership,
operation or conduct of the Containerboard Business or the Real
Property; and
(vi) except for the Retained Litigation, all liabilities with
respect to all actions, suits, proceedings, disputes, claims or
investigations Related to the Containerboard Business or that
otherwise are Related to the Contributed Assets, at law, in equity
or otherwise.
-5-
<PAGE>
(k) "Audited Financial Statements" shall have the meaning set forth
in Section 3.6(a).
(l) "Auditor Consent Letter" shall have the meaning set forth in
Section 5.15.
(m) "Books and Records" shall mean all lists, files and documents
Relating to customers, suppliers and products of the Containerboard Business,
the Contributed Assets, or the Assumed Liabilities, and all general ledgers and
underlying books of original entry and other financial records of the
Containerboard Business, except to the extent included in the Retained Assets
and except for employee records and files.
(n) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City are authorized or obligated by
law or executive order to close.
(o) "Campbell Road Property" shall mean that Real Property
identified as Item 1.I. on Schedule 1.1(vvv).
(p) "Cap" shall have the meaning set forth in Section 7.2(c).
(q) "Cash Contribution" shall have the meaning set forth in the
Preliminary Statements hereto.
(r) "Cash Distribution" shall have the meaning set forth in the
Preliminary Statements hereto.
(s) "Chosen Courts" shall have the meaning set forth in Section
10.11.
(t) "Closing" shall mean the closing of the transactions
contemplated by this Agreement.
(u) "Closing Date" shall have the meaning set forth in Section 2.4.
(v) "Closing Working Capital" shall have the meaning set forth in
Section 2.5(a).
(w) "Closing Working Capital Statement" shall have the meaning set
forth in Section 2.5(a).
(x) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(y) "Commitment Letters" shall have the meaning set forth in Section
4.7(b).
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(z) "Common Stock" shall have the meaning set forth in the
Preliminary Statements hereto.
(aa) "Confidentiality Agreement" shall mean the Confidentiality
Agreement dated November 20, 1998, between Madison Dearborn Partners, Inc. and
TPI.
(bb) "Consent" shall mean any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with, or report or
notice to any Person, including any Governmental Authority, including those
identified on Schedule 3.3.
(cc) "Containerboard Business" shall have the meaning set forth in
the Preliminary Statements hereto.
(dd) "Contracts" shall mean all agreements, contracts, leases,
timber deeds, purchase orders, trade billback, refund and other arrangements,
incentive agreements, commitments, collective bargaining agreements, and
licenses that are Related to the Containerboard Business or the Contributed
Assets or to which the Contributed Assets are subject, except to the extent
included in the Retained Assets.
(ee) "Contributed Assets" shall mean all of the assets of TPI which
Relate to the Containerboard Business, whether tangible or intangible, real or
personal, as they exist on the date hereof, with such changes, deletions or
additions thereto as may occur from the date hereof to the Closing Date in the
ordinary course of business (except, in each case, for the Retained Assets),
including the following:
(i) the Real Property;
(ii) the Fixtures and Equipment;
(iii) the Current Assets;
(iv) the Intellectual Property and the PCA Mark;
(v) the Books and Records;
(vi) the Contracts other than (A) Existing Financing
Arrangements, and (B) Contracts not included in the Assumed
Liabilities pursuant to the exception set forth in Section 1.1(j)(i)
(unless and to the extent assumed by Newco pursuant to Section 5.21
hereof);
(vii) the stock or other ownership interests of the
Contributed Subsidiaries;
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(viii) all prepaid Taxes, to the extent such prepaid Taxes are
reflected on the Final Working Capital Statement;
(ix) all refunds of Taxes, to the extent such refunds of Taxes
are reflected on the Final Working Capital Statement;
(x) the Purchased Property; and
(xi) all Governmental Authorizations which are transferable
without obtaining any Consent.
(ff) "Contributed Subsidiaries" shall mean those Subsidiaries listed
on Schedule 1.1(ff).
(gg) "CPA Firm" shall have the meaning set forth in Section 2.5(b).
(hh) "Current Assets" shall mean Inventory, accounts receivables
(including the gross amount of any factored accounts receivable), deposits, and
all other current assets of the Containerboard Business other than (i) cash,
cash accounts, disbursement accounts, outstanding checks and disbursements in
transit, investment securities and other short-term and medium-term investments
(other than such items, if any, which are securing the performance of any
obligations included in the Assumed Liabilities), and (ii) Non-Trade accounts
receivable from TPI or its Affiliates. For purposes of this Agreement, an
account receivable shall be deemed "Non-Trade" if it (i) is not supported by an
issued invoice, (ii) is not of the type reflected on the Most Recent Statement
of Assets and Liabilities, and (iii) is not the result of an arms' length sale
of goods or services to a third party or a bona fide sale of goods or services
to a third party.
(ii) "Current Liabilities" shall mean all of TPI's current
liabilities to the extent Related to the Containerboard Business other than (i)
Non-Trade accounts payable to TPI or its Affiliates, (ii) cash accounts,
disbursement accounts, outstanding checks and disbursements in transit, and
(iii) federal, state, local and foreign income Taxes with respect to the Tax
Periods, or portions thereof, ending on or before the Closing Date. For purposes
of this Agreement, an account payable shall be deemed "Non-Trade" if (i) it is
not supported by an issued invoice, (ii) is not of the type reflected on the
Most Recent Statement of Assets and Liabilities, and (iii) is not the result of
a of an arms' length purchase of goods or services from a third party or bona
fide purchase of goods or services from a third party. Liabilities for Taxes
(other than federal, state, local or foreign income taxes) shall be Current
Liabilities only to the extent such Tax is reflected in the Final Working
Capital Statement, it being understood that in no event will any Taxes arising
with respect to federal, state, local, or foreign income be included as a
Current Liability.
(jj) "Deductible" shall have the meaning set forth in Section
7.2(c).
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(kk) "Determination Date" shall mean 7:59 a.m. on the Closing Date.
(ll) "Disclosure Memorandum" shall mean the Disclosure Memorandum
dated the date hereof delivered by TPI to PCA and Newco in connection with this
Agreement. References herein to "Schedules" are to the various Schedules of the
Disclosure Memorandum.
(mm) "Dilution Notice" shall have the meaning set forth in the
Preliminary Statements.
(nn) "Encumbrances" shall mean liens, charges, encumbrances,
security interests, options or any other restrictions or third-party rights.
(oo) "Environmental Law" shall mean any applicable federal, state,
local, common or foreign law, statute, ordinance, rule, regulation, code, order,
judgment, decree or injunction relating to (i) the protection of the environment
(including air, water vapor, surface water, groundwater, drinking water supply,
surface or subsurface land), or (ii) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, protection, release or disposal of, Hazardous Substances, or workplace
safety or health.
(pp) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
(qq) "Existing Financing Arrangements" shall have the meaning set
forth in the Preliminary Statements hereto.
(rr) "Facility Use Agreement" shall mean an agreement at the price
as set forth on Exhibit 1.1(ggggg), and otherwise in form and substance
reasonably satisfactory to PCA and TPI, to be entered into by Newco and TPI as
of the Closing pursuant to which TPI grants Newco the right to use the first
floor and related common areas (including the cafeteria, parking, and other
ancillary areas and facilities) of TPI's facility located in Lake Forest,
Illinois.
(ss) "Final Working Capital Statement" shall have the meaning set
forth in Section 2.5(b).
(tt) "Financial Statements" shall have the meaning set forth in
Section 3.6(a).
(uu) "Fixtures and Equipment" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment (including computer hardware,
computer terminals, network servers, and research and development equipment) and
other tangible personal property Related to the Containerboard Business.
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(vv) "Former Facility" shall mean a facility or property previously
owned or operated by TPI or its predecessors in the conduct of the
Containerboard Business that is not located on the Real Property or the Retained
Real Property.
(ww) "GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
(xx) "Governmental Authority" shall mean any nation or government,
any state, province or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States,
any State of the United States or any political subdivision thereof.
(yy) "Governmental Authorizations" shall mean all licenses, permits,
franchises, certificates of occupancy, other certificates and other
authorizations and approvals required to carry on the Containerboard Business as
currently conducted under the applicable laws, ordinances or regulations of any
Governmental Authority.
(zz) "Hazardous Substances" shall mean (i) petroleum, petroleum
byproducts and any petroleum fractions; (ii) materials which contain any
substance defined as a hazardous or toxic substance or words of similar meaning
or effect under the following United States federal statutes and their state
counterparts, as well as such statutes' implementing regulations: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Toxic
Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act,
and the Clean Air Act; and (iii) any other materials as to which liability or
standards of conduct are imposed pursuant to any Environmental Law.
(aaa) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(bbb) "Human Resources Agreement" shall mean an agreement to be
entered into on the Closing Date by and among Tenneco, TPI and Newco in the form
of Exhibit 1.1(bbb) attached hereto.
(ccc) "Indemnification Claim Notice" shall have the meaning set
forth in Section 7.4(a).
(ddd) "Indemnified Parties" shall have the meaning set forth in
Section 7.3(a).
(eee) "Indemnifying Party" shall have the meaning set forth in
Section 7.4(a).
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(fff) "Initial Price" per share means (i) in the case of an initial
Public Offering, the initial offering price per share, and (ii) in the case of a
Spin-Off, the average closing price per share on each of the 10 Business Days
commencing on the first Business Day which is 30 days after the effective date
of the Spin-Off, provided that if TPI or Goldman, Sachs & Co., or their
respective Affiliates, shall have purchased any shares of Newco through the
public market during such period, then the Initial Price shall be the lower of
(x) the closing price on the effective date of the Spin-Off, and (y) the average
closing price per share on each of the 10 Business Days commencing on the first
Business Day which is 30 days after the effective date of the Spin-Off.
(ggg) "Intellectual Property" shall mean (except to the extent
included in the Retained Assets) the following intellectual property (and the
rights associated therewith) Related to the Containerboard Business or the
Contributed Assets: trademarks, service marks, brand names, certification marks,
trade dress, assumed names, Internet Domain names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; patents, applications for patents (including
divisionals, continuations, continuations-in-part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; patent
disclosures and innovations (whether or not patentable and whether or not
reduced to practice); non-public information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; copyrighted works and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; software; any similar intellectual property or proprietary rights; and
any claims or causes of action arising out of or related to any infringement or
misappropriation of any of the foregoing occurring before or after the Closing.
(hhh) "Inventory" shall mean all inventory held for resale in the
Containerboard Business, all raw materials, work in process, finished products,
office supplies, storeroom inventory, spare parts and equipment, wrapping,
supply and packaging items, of the Containerboard Business.
(iii) "Knowledge" or any similar phrase means the actual knowledge
of those management employees of TPI identified on Schedule 1.1(iii), after due
inquiry
(jjj) "Laws" shall mean any federal, state, foreign or local law,
statute, ordinance, rule, code, regulation, order, judgment or decree of any
Governmental Authority.
(kkk) "Leased Real Property" shall mean all land (including, to the
extent included in any such lease, any timberlands and tree farms associated
with the Mills), buildings, fixtures and other real property leased on the date
hereof by TPI or one of the Contributed Subsidiaries as lessee pursuant to the
Real Estate Leases used by the Containerboard Business, other than the real
property identified as "Transition Real Property" on Schedule 1.1(ggggg).
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(lll) "Lemelson Patents" shall have the meaning set forth in Section
6.2(k).
(mmm) "Losses" shall have the meaning set forth in Section 7.2.
(nnn) "Material Adverse Change" shall mean a change that is
materially adverse to the value of the Contributed Assets or the Containerboard
Business taken as a whole or materially adverse to the business, financial
condition or results of operations or business prospects of the Containerboard
Business taken as a whole; provided that any change identified on Schedule
1.1(nnn) shall not constitute a Material Adverse Change. The scope of this
definition of "Material Adverse Change" shall in no way be construed to be
applicable to or to limit in any respect the determination of "Material Adverse
Effect" or "Material Adverse Change" as used in the Commitment Letters, or the
agreements and indentures contemplated thereby, by the lenders thereunder with
respect to the conditions precedent to such lenders' obligation to consummate
the New Financing Arrangements.
(ooo) "Material Adverse Effect" shall mean an effect that is
materially adverse to the value of the Contributed Assets or the Containerboard
Business taken as a whole or materially adverse to the business, financial
condition or results of operations or business prospects of the Containerboard
Business taken as a whole; provided that any effect arising from or attributable
to any condition, event or circumstance identified on Schedule 1.1(nnn) shall
not constitute a Material Adverse Effect. The scope of the definition of
"Material Adverse Effect"shall in no way be construed to be applicable to or to
limit in any respect the determination of "Material Adverse Effect" or "Material
Adverse Change" as used in the Commitment Letters, or the agreements and
indentures contemplated thereby, by the lenders thereunder with respect to the
conditions precedent to such lenders' obligation to consummate the New Financing
Arrangements.
(ppp) "MDP Transaction Fee" has the meaning set forth in Section
4.6.
(qqq) "Most Recent Statement of Assets and Liabilities" shall have
the meaning set forth in Section 3.6(a).
(rrr) "Most Recent Year End Statement" shall have the meaning set
forth in Section 3.6(a).
(sss) "Net Working Capital" shall mean the excess of Current Assets
over Current Liabilities on a consolidated basis determined in accordance with
Section 2.5.
(ttt) "New Financing Arrangements" shall have the meaning set forth
in the Preliminary Statements hereto.
(uuu) "Noncompete Period" shall have the meaning set forth in
Section 5.12(a).
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(vvv) "Objection" shall have the meaning set forth in Section
2.5(b).
(www) "Owned Real Property" shall mean all land (including any
timberlands and tree farms associated with the Mills) and all buildings,
fixtures, and other improvements located thereon, and all easements,
rights-of-way and appurtenances thereto, owned by TPI or one of the Contributed
Subsidiaries which is identified on Schedule 1.1(vvv).
(xxx) "PCA Indemnified Parties" shall have the meaning set forth in
Section 7.3(a).
(yyy) "PCA Marks" shall mean any mark that includes the phrase
"Packaging Corporation of America" or the word "PCA" or any variation thereof
and any trademark symbol or logo using such phrase or name and any variation
thereof.
(zzz) "Permitted Encumbrances" shall have the meaning set forth in
Section 3.16(b).
(aaaa) "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization.
(bbbb) "PIK Preferred" shall mean the Preferred Stock, as such term
is defined in the Commitment Letters.
(cccc) "Post-Closing Period" shall mean, with respect to any
Contributed Subsidiary, any Tax Period commencing after the Closing Date and the
portion of any Straddle Period commencing after the Closing Date.
(dddd) "Pre-Closing Period" shall mean, with respect to any
Contributed Subsidiary, any Tax Period ending on or before the Closing Date and
the portion of any Straddle Period ending on the Closing Date.
(eeee) "Proceeding" shall have the meaning set forth in Section
7.4(a).
(ffff) "Public Offering" shall mean a public offering pursuant to an
effective registration statement under the Securities Act (or any comparable
form under any similar statute then in force), covering the offer and sale of
Common Stock for the account of Newco and/or selling stockholders to the public.
(gggg) "Purchased Property" shall mean all land (including any
timberlands and tree farms associated with the Mills) and all buildings,
fixtures, other improvements, machinery and equipment located thereon, and all
easements, rights-of-way and appurtenances thereto, that are subject to the
Existing Financing Arrangements listed on Schedule PS-1.
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(hhhh) "Real Estate Leases" shall mean those agreements pursuant to
which TPI or one or more of the Contributed Subsidiaries leases, subleases,
licenses, or otherwise uses or licenses, real property, including land (and
everything growing upon the land, to the extent included in such Real Estate
Lease), buildings, structures and improvements thereon or appurtenances thereto,
which are identified on Schedule 1.1(gggg).
(iiii) "Real Property" shall mean the Owned Real Property (and the
applicable Purchased Property) and the Leased Real Property.
(jjjj) "Registration Rights Agreement" shall have the meaning set
forth in Section 2.1(c).
(kkkk) "Related to" or "Relating to" shall mean primarily related
to, or used primarily in connection with.
(llll) "Required Consent" shall mean any Consents specifically
identified on Schedule 3.3 as a "Required Consent" and each other material
Consent, which may be a Consent listed on Schedule 3.3.
(mmmm) "Retained Assets" shall mean
(i) the assets (including real property, tangible personal
property, accounts receivable, intellectual property and contracts)
Related to all businesses conducted by TPI and any of its
Affiliates, including but not limited to, their plastics and
aluminum packaging, aluminum, plastics, folding carton, molded
fiber, cushion protective packaging (including all honeycomb
paperboard-type products), flexible packaging, and foam building
products businesses, and all tangible assets located at TPI's Lake
Forest, Illinois facility, but not including any assets Related to
the Containerboard Business;
(ii) the stock or other ownership interests of all
Subsidiaries of TPI other than the Contributed Subsidiaries;
(iii) all cash and cash accounts, disbursement accounts,
outstanding checks and disbursements, investment securities and
other short-term and medium-term investments and Non-Trade accounts
receivable from TPI and its Affiliates and the notes receivable
listed in Schedule 1.1(llll)(iii);
(iv) all deferred Tax assets of TPI;
(v) all prepaid Taxes to the extent such prepaid Taxes are not
reflected on the Final Working Capital Statement;
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(vi) all refunds of Taxes to the extent such Taxes are not
reflected on the Final Working Capital Statement;
(vii) all Tax Returns of TPI;
(viii) all Books and Records which TPI is required by law to
retain, provided that TPI shall provide Newco with complete copies
of such Books and Records;
(ix) all Tenneco Plans, and all assets of the Tenneco Plans;
(x) all Governmental Authorizations to the extent not
transferable without obtaining a Consent;
(xi) the Tenneco Marks;
(xii) the Retained Real Property and any financial instruments
related to the Retained Real Property;
(xiii) all of TPI's or Tenneco's insurance policies Related to
the Containerboard Business and, subject to the rights of Newco and
obligations of TPI and TPI's Affiliates, respectively, set forth in
Section 5.11, all rights under such insurance policies; and
(xiv) any Contracts not included in the Assumed Liabilities
pursuant to the exception set forth in Section 1.1(j)(i) (unless and
to the extent assumed by Newco pursuant to Section 5.21 hereof).
(nnnn)"Retained Environmental Liabilities" has the meaning set forth
in the definition of "Retained Liabilities."
(oooo) "Retained Liabilities" shall mean all of the following debts,
liabilities, commitments or obligations, whether arising before or after the
Closing and whether known or unknown, fixed or contingent:
(i) all liabilities Related to the Retained Assets;
(ii) all (A) liabilities under Environmental Laws with respect
to any property to which the Containerboard Business disposed or
arranged for the disposal of Hazardous Substances prior to Closing,
other than (x) at the Real Property, or (y) at locations other than
the Retained Real Property where Hazardous Substances may have
migrated or are alleged to have migrated from the Real Property, (B)
liabilities under Environmental Laws with respect to any Former
Facility, and (C) liabilities in
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connection with the Retained Real Property (collectively, the
"Retained Environmental Liabilities");
(iii) all liabilities arising out of the actions, suits,
proceedings, disputes, claims or investigations identified in
Schedule 1.1(nnnn)(iii) (the "Retained Litigation") and all Losses
arising out of the three matters listed in Section 5.18 of this
Agreement to the extent Newco's Losses in connection therewith
exceed the limitations set forth in such section;
(iv) all liabilities which are retained by Tenneco or TPI
under the Ancillary Agreements;
(v) all liabilities under the Tenneco Plans, except to the
extent such liabilities are specifically assumed by Newco pursuant
to the Human Resources Agreement;
(vi) all liabilities for Taxes imposed with respect to the
taxable periods, or portions thereof, ending on or before the
Closing Date except to the extent that any such Taxes are Current
Liabilities and are reflected on the Final Working Capital
Statement;
(vii) all liabilities for "non-trade" accounts payable to TPI
or its Affiliates which arise prior to the Closing Date;
(viii) all liabilities for indebtedness for borrowed money and
any other obligation which is fixed as to amount and certainty as of
the Closing or which is secured by a lien that is not a Permitted
Encumbrance on any of the Contributed Assets, including any
liabilities under the Existing Financing Arrangements, but not
including (A) the Assumed Indebtedness, (B) Assumed Liabilities as
shown on the Final Working Capital Statement and (C) liabilities
under Contracts included in the Contributed Assets;
(ix) all severance, termination, change of control and similar
agreements, payments, debts, obligations or liabilities with respect
to any director, officer, employee or consultant of TPI or any of
its Subsidiaries which exist as of or prior to the Closing (after
taking into account the transactions contemplated by this
Agreement), other than (i) obligations under any collective
bargaining agreement, (ii) obligations of the type described in
Section 2.3 (v) of the Human Resources Agreement, and (iii)
obligations under any employment, consulting, or other agreement
entered into by Newco;
(x) all liabilities and obligations under any employment,
consulting, or other agreement or arrangement between TPI or its
Affiliates and William Sweeney, including any liabilities or
obligations to Mr. Sweeney which exist as of or prior to the
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Closing (including after taking into account the transactions
contemplated by this Agreement and including severance and pension
benefits, costs, or other expenses), except to the extent assumed by
Newco under the Human Resources Agreement;
(xi) all other liabilities and obligations for which TPI has
expressly assumed responsibility pursuant to this Agreement or the
Ancillary Agreements;
(xii) all debts, liabilities or obligations whatsoever, that
do not Relate to the Containerboard Business or that do not
otherwise Relate to the Contributed Assets; and
(xiii) all liabilities and obligations arising under any
Contract which is not identified in the Disclosure Memorandum except
as follows: (A) if such Contract is for an amount of $1,000,000 or
less and (i) is entered into in the ordinary course of business;
(ii) the terms of which are customary and normal for the
Containerboard Business specifically and the containerboard industry
generally and on market rates at the time entered into, and (iii)
all of the fees, expenses, penalties, liabilities and other payment
obligations (or commitments therefor) arising thereunder which were
incurred during the 12-month period ending December 31, 1998 have
been paid and have been (or will be) properly reflected on the Most
Recent Year End Statement, and, if applicable, Final Working Capital
Statement), such Contract shall not be a Retained Liability; and (B)
if such Contract is for an amount greater than $1,000,000 or
otherwise does not meet the conditions set forth in clause (A), such
Contract shall be a Retained Liability only if and to the extent
Newco does not elect to assume such Contract in accordance with
Section 5.21 hereof.
(pppp) "Retained Litigation" has the meaning set forth in the
definition of "Retained Liabilities."
(qqqq) "Retained Real Property" shall mean the real property
identified on Schedule 1.1(pppp).
(rrrr) "Spin-Off" shall mean any distribution by TPI or its
Affiliates of any class or series of Newco Common Stock to TPI's or such
Affiliate's public stockholders.
(ssss) "Straddle Period" shall mean, with respect to any Contributed
Subsidiary, any Tax Period that begins before and ends after the Closing Date.
(tttt) "Stockholders Agreement" shall have the meaning set forth in
Section 2.1(b) hereof.
(uuuu) "Stub Period Financial Statements" shall have the meaning set
forth in Section 3.6(b).
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(vvvv) "Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or other legal entity of which such
Person, either directly or through or together with any other Subsidiary of such
Person, owns any equity interests.
(wwww) "Supply Agreements" shall mean the supply agreements, to be
entered into at Closing by and among Newco, TPI and TPI's affiliates in form and
substance satisfactory to each of TPI and PCA, setting forth the terms and
conditions pursuant to which Newco agrees to supply to TPI and its Affiliates,
and TPI and its Affiliates agree to purchase from Newco, certain products, at
prices set forth on Schedule 1.1(vvvv), for a period of five years from the
Closing Date.
(xxxx) "Survival Period" shall have the meaning set forth in Section
7.1.
(yyyy) "Target Working Capital" has the meaning set forth in Section
2.5(e).
(zzzz) "Tax Authority" shall mean, with respect to any Tax, the
governmental entity or political subdivision thereof that imposes such Tax, and
the agency (if any) charged with the collection of such Taxes for such entity or
subdivision.
(aaaaa) "Tax Benefit" shall mean the amount by which a Person's Tax
liability is actually reduced (including any related interest actually received
from a Tax Authority in connection therewith).
(bbbbb) "Tax Period" shall mean, with respect to any Tax, the period
for which the Tax is reported as provided under Applicable Tax Laws.
(ccccc) "Tax Return" shall mean, with respect to any Tax, any
information return with respect to such Tax, any report, statement, declaration
or document required to be filed under the Applicable Tax Law in respect of such
Tax, any claim for refund of Taxes paid, and any amendment or supplement to any
of the foregoing.
(ddddd) "Taxes" shall mean all federal, state, local or foreign
taxes, including but not limited to income, gross receipts, windfall profits,
goods and services, value added, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes, together
with any interest, additions or penalties with respect thereto and any interest
in respect of such additions or penalties.
(eeeee) "Tenneco" means Tenneco Inc., a Delaware corporation.
(fffff) "Tenneco Mark" shall mean any mark that includes the word
"Tenneco" or "Tenn"or any variation thereof, the Tenneco "horizon" symbol, and
any trademark, symbol or logo using the "Tenneco" or "Tenn" name or such symbol
or any variation thereof.
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(ggggg) "Tenneco Plans" means all employee benefit plans, and all
assets and liabilities related to such employee benefit plans, of TPI, or any
Affiliate of TPI, including Tenneco.
(hhhhh) "Transition Services Agreement" shall mean a mutually
satisfactory agreement to be entered into at Closing between Newco and TPI under
which TPI and its Affiliates will provide transition services requested by Newco
in order to allow it to operate the Containerboard Business after Closing in a
manner consistent with past practices. The charge to Newco for such services
will be TPI's or such Affiliate's (as the case may be) actual cost on a fully
loaded basis without allocation of corporate overhead (the "TPI Cost"). To the
extent of any services reflected in any of the eight service categories on
Schedule 1.1 (ggggg) , the charge to Newco for each such service will be the
lesser of (I) TPI's Cost for such services, and (ii) 105% of the cost for such
service set forth on such Schedule. The Transition Services Agreement shall be
for an initial one year term. Newco may extend the term beyond the initial term
for up to six months for an upcharge of 15%. Newco may terminate any such
services under the Transition Services Agreement on 90 days written notice to
TPI. Newco may reduce or phase-down the services to be provided during the
initial term or renewal term under the Transition Services Agreement upon
reasonable written notice to TPI, in which case the charge to Newco will be
reduced to reflect the actual TPI Cost for rendering such reduced service.
(iiiii) "TPI Indemnified Parties" shall have the meaning set forth
in Section 7.2(a).
(jjjjj) "Transfer Costs" shall have the meaning set forth in Section
2.7.
(kkkkk) "WARN" shall have the meaning set forth in Section 5.5.
(lllll) "WARN Obligations" shall have the meaning set forth in
Section 5.5.
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Agreement, and unless otherwise indicated shall have such meanings
throughout this Agreement.
1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The word
"including" means "including without limitation."
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
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(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
ORGANIZATION OF NEWCO;
CONTRIBUTION OF THE CONTAINERBOARD BUSINESS
2.1 Organization of Newco. At or prior to Closing, TPI , Newco and
PCA shall cause each of the following to occur:
(a) Corporate Documents. Newco's certificate of incorporation shall
be amended and restated to be as set forth as Exhibit 2.1A hereto (except that
such certificate of incorporation shall be amended to create a series of
preferred stock entitled "Series A Preferred Stock as contemplated by the
Stockholders Agreement) and Newco shall adopt amended and restated by-laws in
form and substance satisfactory to PCA and TPI, which by-laws shall include all
provisions required by the Stockholders Agreement to be included in Newco's
by-laws.
(b) Stockholders Agreement. TPI, PCA and Newco shall enter into a
Stockholders Agreement in the form of Exhibit 2.1B.
(c) Registration Rights Agreement. TPI, PCA and Newco shall enter
into a Registration Rights Agreement in the form of Exhibit 2.1C.
2.2 Contribution and Purchase of Assets; Assumption of Liabilities.
(a) Borrowing of Assumed Indebtedness; Repayment of Existing
Financing Arrangements. Immediately prior to the Closing, subject to Article VI,
TPI will borrow the Assumed Indebtedness under the New Financing Arrangements
and will use the proceeds to repay in full the Existing Financing Arrangements
such that TPI shall own all of the Purchased Property free and clear of all
Encumbrances (other than Permitted Encumbrances, but free and clear of all
Encumbrances with respect to Existing Financing Arrangements), and the Purchased
Property shall constitute a part of the Contributed Assets. On the terms and
subject to the conditions set forth herein and in the Ancillary Agreements, at
the Closing the parties shall take the following actions, in the order set forth
below, provided that such actions shall take place contemporaneously as part of
the Closing.
(b) PCA Cash Contribution; Issuance of Common Stock. PCA will
contribute the Cash Contribution to Newco, and Newco will issue to PCA the
number of fully paid, nonassessable shares of Common Stock determined in
accordance with the Preliminary Statements.
(c) Contribution of Contributed Assets; Assumption of Liabilities.
(i) TPI shall contribute, convey, transfer, assign and deliver to Newco, and
Newco shall accept
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and acquire from TPI, all right, title and interest of TPI in and to the
Contributed Assets, free and clear of all Encumbrances (other than Permitted
Encumbrances but free and clear of all Encumbrances with respect to Existing
Financing Arrangements); (ii) Newco shall assume and agree to pay, honor,
discharge and perform the Assumed Liabilities only and shall assume no other
liabilities and obligations of any kind or nature; and (iii) Newco will issue to
TPI the number of fully paid, nonassessable shares of Common Stock determined in
accordance with the Preliminary Statements and pay TPI cash in an amount equal
to the Cash Distribution.
(d) Adjustment for Management Purchases. To the extent members of
Newco management purchase Management Stock at Closing, the number of shares of
Common Stock issued to TPI and PCA, and the amounts of the Cash Distribution and
the Cash Contribution, shall be adjusted as set forth in the Preliminary
Statements.
2.3 Retained Assets and Retained Liabilities. Notwithstanding
anything herein to the contrary, (i) from and after the Closing each of TPI and
its Affiliates shall retain all of its direct or indirect right, title and
interest in and to, and there shall be excluded from the sale, conveyance,
assignment or transfer to Newco hereunder, the Retained Assets and the Retained
Liabilities, and (ii) the Retained Liabilities shall not be assumed by Newco
hereunder.
2.4 Closing Mechanics. The Closing shall take place at the offices
of PCA's counsel at 8:00 a.m. (Chicago time), on the date which is the later of
(i) the 90th day following the execution of this Agreement, (ii) the second
Business Day following the satisfaction or waiver (by the party entitled to
waive the condition) of each condition to the Closing set forth in Article VI,
and (iii) the 45th day following delivery of the Most Recent Year End Statement
and the Regulation S-X Financial Statements pursuant to Section 5.14, provided
that on or prior to any such date TPI shall have provided to Newco any quarterly
financial statements for any calendar quarter ended more than 30 days prior to
such date (unless the foregoing condition is waived by PCA in its sole
discretion), or at such other time and place as the parties hereto may mutually
agree. The date on which the Closing occurs is called the "Closing Date." The
Closing shall be deemed effective at 8:00 a.m. (Chicago time) on the Closing
Date. To effect the steps set forth in Section 2.2 hereof, the parties shall
execute and deliver to each other and to third parties, as appropriate, all
documents reasonably necessary to effect the Closing. Without limiting the
generality of the foregoing,
(a) TPI Deliveries. TPI shall execute and deliver to Newco and PCA:
(i) to Newco, deeds, in limited warranty or other similar
form, in form and substance reasonably acceptable to PCA,
transferring all Owned Real Property (and the applicable Purchased
Property) to Newco;
(ii) to Newco, assignments, or where necessary subleases, in
form and substance reasonably acceptable to PCA, assigning or
subleasing to Newco all Real Property Leases;
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(iii) to Newco, assignments, in form and substance reasonably
acceptable to PCA, assigning to Newco all Intellectual Property and
the PCA Marks;
(iv) to Newco, bills of sale, certificates of title, and all
other instruments of transfer, in form and substance reasonably
acceptable to PCA, transferring to Newco all Contributed Assets
other than the Real Property or the Intellectual Property which are
being transferred to Newco pursuant to conveyance documents in
clauses (i) - (iii) above;
(v) to Newco, such instruments of assumption and other
instruments or documents, in form and substance reasonably
acceptable to PCA, as may be necessary to effect TPI's assignment of
the Assumed Liabilities to Newco;
(vi) to Newco or PCA, as appropriate, a duly executed copy of
each of the Ancillary Agreements to which TPI is a party;
(vii) to PCA, a copy of the opinion of Jenner & Block, TPI's
counsel, in form and substance reasonably satisfactory to PCA;
(viii) to PCA, evidence reasonably satisfactory to PCA that
all Encumbrances other than Permitted Encumbrances on any of the
Contributed Assets have been released;
(ix) to Newco, stock certificates or other evidence of
ownership of each of the Contributed Subsidiaries, in each case duly
endorsed for transfer to Newco;
(x) the certificates and other documents to be delivered
pursuant to Section 6.2(a) and (b); and
(xi) such other instruments or documents, in form and
substance reasonably acceptable to PCA, as may be necessary to
effect the Closing and the contribution of the Contributed Assets in
accordance with this Agreement.
(b) PCA Deliveries. PCA shall execute and deliver to Newco and TPI:
(i) to Newco or TPI, as appropriate, a duly executed copy of
each of the Ancillary Agreements to which PCA is a party;
(ii) to TPI, a copy of the opinion of Kirkland & Ellis, PCA's
counsel, in form and substance reasonably satisfactory to TPI;
(iii) to Newco, the Cash Contribution;
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(iv) the certificates and other documents to be delivered by
PCA pursuant to Section 6.3(a) and (b); and
(v) such other instruments or documents, in form and substance
reasonably acceptable to TPI, as may be necessary to effect the
Closing.
(c) Newco Deliveries. Newco shall execute and deliver to TPI and
PCA:
(i) to TPI and PCA, such instruments of assumption and other
instruments or documents, in form and substance reasonably
acceptable to TPI, as may be necessary to effect Newco's assumption
of the Assumed Liabilities, including all documentation required by
the lenders of the Assumed Indebtedness, and to cause such lenders
to release TPI from and PCA any liability from the Assumed
Indebtedness;
(ii) to TPI or PCA, as appropriate, a duly executed copy of
each of the Ancillary Agreements to which Newco is a party;
(iii) to PCA, stock certificates representing that number of
shares of Common Stock in Newco issuable to PCA as determined in
accordance with the Preliminary Statements hereof;
(iv) to TPI, stock certificates representing that number of
shares of Common Stock in Newco issuable to TPI as determined in
accordance with the Preliminary Statements hereof;
(v) to TPI, the Cash Distribution; and
(vi) such other instruments or documents, in form and
substance reasonably acceptable to TPI and PCA, as may be necessary
to effect the Closing.
2.5 Post-Closing Adjustment.
(a) Within 60 days following the Closing, TPI shall, at its expense
and with cooperation from Newco's employees and access to Newco's books and
records, prepare or cause to be prepared, and deliver to PCA and Newco a
statement (the "Closing Working Capital Statement") which shall set forth the
Net Working Capital of the Containerboard Business as of the Determination Date
(the "Closing Working Capital") and as of the date of the Most Recent Statement
of Assets and Liabilities. The amounts so computed shall be used to determine
the amount of the payment between TPI and Newco in accordance with this Section
2.5 (the "Post Closing Adjustment"). The Closing Working Capital Statement shall
be prepared using the same principles, practices and procedures that were used
in preparing the Most Recent Statement of Assets and Liabilities.
Notwithstanding the foregoing, the following paragraphs (i) through (viii) shall
take precedence over such principles, practices and procedures in the
preparation of the Closing Working Capital Statement:
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(i) The Current Assets included in the Closing Working Capital
Statement will be adjusted to exclude the Retained Assets, the LIFO
reserve and any current assets related to Tenneco defined benefit
pension plans and shall not be taken into account in computing the
Post Closing Adjustment.
(ii) The Current Liabilities included in the Closing Working
Capital Statement will be adjusted to exclude the Retained
Liabilities. Any current liabilities related to Tenneco's defined
benefit pension plans shall not be taken into account in computing
the Post Closing Adjustment.
(iii) The Most Recent Statement of Assets and Liabilities does
not, and the Closing Working Capital Statement will not, include any
accrual or deferral related to federal, state, local or foreign
income Taxes.
(iv) The Closing Working Capital Statement shall not include
any dollar amounts related to the Existing Financing Arrangements.
(v) The Closing Working Capital Statement shall not include
any dollar amounts related to the New Financing Arrangements. No
Post Closing Adjustment shall result from the purchase during the
period from the date of the Most Recent Statement of Assets and
Liabilities to the Determination Date of any assets which were
leased at the date of the Most Recent Statement of Assets and
Liabilities.
(vi) The Closing Working Capital Statement shall not include
any liabilities related to bonuses or incentive compensation earned
in 1998.
(vii) Any change in accounting principles after the date of
the Most Recent Statement of Assets and Liabilities (including any
changes required by GAAP) will not apply in determining the Closing
Working Capital Statement.
(viii) The Closing Working Capital Statement shall exclude any
increase or decrease in Current Assets or Current Liabilities
resulting directly from accounting for the Transaction.
(b) PCA and PCA's accountants and Newco and Newco's accountants
shall have 30 days after the delivery by TPI of the Closing Working Capital
Statement to review the Closing Working Capital Statement. In the event that PCA
or Newco determines that the Closing Working Capital as derived from the Closing
Working Capital Statement has not been determined on the basis set forth herein,
PCA or Newco shall inform TPI in writing (the "Objection"), setting forth a
specific description of the basis of the Objection and the adjustments to the
Closing Working Capital which PCA or Newco believes should be made, which
Objection must be delivered to TPI on or before the last day of such 30-day
period. TPI shall then have 30 days to review and respond to the Objection. TPI
and PCA and Newco shall
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attempt in good faith to reach an agreement with respect to any matters in
dispute. If TPI and PCA and Newco are unable to resolve all of their
disagreements with respect to the determination of the foregoing items within 45
days following the delivery of Objection, they shall refer their remaining
differences to a "Big Five" firm of independent public accountants as to which
TPI and PCA and Newco mutually agree (the "CPA Firm"), who shall, acting as
experts and not as arbitrators, determine in accordance with this Agreement, and
only with respect to the remaining differences so submitted, whether and to what
extent, if any, the Closing Working Capital as derived from the Closing Working
Capital Statement requires adjustment. TPI and PCA and Newco shall direct the
CPA Firm to use its best efforts to render its determination within 30 days
after such submission. The CPA Firm's determination shall be conclusive and
binding upon Newco, PCA and TPI. The fees and disbursements of the CPA Firm
shall be paid by Newco. PCA, Newco and TPI shall make readily available to the
CPA Firm all relevant books and records and any work papers (including those of
the parties' respective accountants) relating to the Closing Working Capital
Statement and all other items reasonably requested by the CPA Firm. The "Final
Working Capital Statement" shall be (i) the Closing Working Capital Statement in
the event that no Objection is delivered by PCA or Newco during the 30-day
period specified above, or (ii) the Closing Working Capital Statement, as
adjusted by either (x) the agreement of TPI, PCA and Newco or (y) the CPA Firm.
(c) PCA and Newco shall have the opportunity to participate in the
preparation of the Closing Working Capital Statement by (i) observing the
physical inventory taken in connection therewith (which may begin prior to the
Closing Date), (ii) attending any audit planning meetings in connection
therewith, (iii) meeting with and discussing procedures with TPI and its
accountants, and (iv) otherwise having full access to all information used by
TPI in preparing the Closing Working Capital Statement, including the Books and
Records and the work papers of its accountants (subject to PCA or Newco
executing any necessary waivers or indemnifications required by TPI's
accountants).
(d) In reviewing the Objection, TPI and its accountants shall have
full access to all information used by PCA or Newco in preparing the Objection,
including the work papers of PCA's and Newco's accountants (subject to TPI
executing any necessary waivers or indemnifications required by PCA's and
Newco's accountants).
(e) If the Closing Working Capital as reflected on the Final Working
Capital Statement is less than the Working Capital of the Containerboard
Business determined on the Most Recent Statement of Assets and Liabilities,
subject to adjustments as set forth in this Section 2.5(a)(i-viii) (the "Target
Working Capital"), then within 10 Business Days following issuance of the Final
Working Capital Statement, TPI shall make a payment to Newco equal to such net
change, plus interest at the prime rate (as set forth in the "Money Rates"
section of The Wall Street Journal) on such amount from the Closing Date through
the date of payment. If the Closing Working Capital as reflected on the Final
Working Capital Statement is greater than the Target Working Capital, then
within 10 Business Days following issuance of the Final Working Capital
Statement, Newco shall make a payment to TPI equal
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to such net change, plus interest at the prime rate (as set forth in the "Money
Rates" section of The Wall Street Journal) on such amount from the Closing Date
through the date of payment.
(f) Payments made by TPI pursuant to this Section 2.5 shall be
deemed to result in adjustments to the Cash Distribution made to TPI in partial
payment for the Contributed Assets for all purposes of this Agreement, including
for purposes of (i) the tax appraisal pursuant to Section 2.9 hereof and (ii)
the purchase price adjustment under Section 2.6 hereof.
(g) In preparing the Closing Working Capital Statement, (i)
liabilities of Newco related to this transaction shall not be treated as
liabilities, and (ii) no liabilities or reserves shall be established for
matters for which PCA, TPI or Newco is (or but for the Cap or the Deductible
would be) entitled to indemnification hereunder.
2.6 Purchase Price Adjustment Following Certain Sales of Common
Stock By TPI. If
(a) during the one year period following the Closing Date, (i)
Newco or TPI shall sell any of its shares of Common Stock in Newco
pursuant to an initial Public Offering undertaken by Newco pursuant
an exercise by TPI of its Demand Registration Right (as defined in
the Registration Rights Agreement) under the Registration Rights
Agreement, or (ii) TPI sells, transfers or distributes any of its
shares of common stock in Newco pursuant to a Spin-Off, and
(b) the Initial Price per share is less than result of (i) the
Adjusted Cash Contribution, divided by (ii) the number of
outstanding shares of common stock of Newco issued to PCA as of the
Closing hereunder and held by PCA and its Affiliates as of the date
the calculation under this Section 2.6 is being made,
then TPI shall pay to PCA an amount equal to the product of such difference per
share, times (y) the number of shares of common stock of Newco then held by PCA
and its Affiliates, provided that the maximum amount to be paid by TPI under
this Section 2.6 shall not exceed the lesser of (A) $64,500,000 and (B) 15% of
the market value of Newco based on the Initial Price per share of the Public
Offering or Spin-Off giving rise to the calculation under this Section 2.6 but
excluding any shares issued or issuable in connection with such event). At TPI's
option, any payment under this Section 2.6 may be paid in cash, in shares of
Common Stock (valued at the Initial Price), or in a combination of cash and
shares of Common Stock. In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in the shares of
Newco's common stock, the parties shall make appropriate and equitable
adjustments to the foregoing computation in order to prevent the dilution or
enlargement of rights under this Section 2.6. This Section 2.6 shall not apply
to any Spin-Off by TPI after Newco has had an initial Public Offering (unless
such Spin-Off is part of the initial Public Offering).
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2.7 Transfer Taxes and Recording Fees. One half of any and all Taxes
(other than Taxes imposed on income or gains) or fees imposed or incurred by
reason of the transfer of the Contributed Assets hereunder and/or the filing or
recording of any instruments necessary to effect the transfer of the Contributed
Assets hereunder, regardless of when such Taxes or fees are levied or imposed,
including sales, use, value-added, excise, real estate transfer, lease
assignment, stamp, documentary and similar Taxes and fees (the "Transfer Costs")
shall be the responsibility of, and shall be paid by each of TPI and Newco.
Newco shall prepare all Tax Returns required to be filed in respect of Transfer
Costs, and PCA and TPI shall have the right to review and approve all such Tax
Returns, upon approval, to be timely filed (if such filing is the responsibility
of TPI or any of its Affiliates under applicable Law and to the extent that such
Tax Returns are approved and given to TPI by Newco in final form before the
applicable due dates thereof). In the event Transfer Costs are imposed on or
incurred by TPI or its Affiliates in excess of its share hereunder, Newco shall
promptly reimburse TPI and its Affiliates for such excess. In the event Transfer
Costs are imposed on or incurred by Newco in excess of its share hereunder, TPI
shall promptly reimburse Newco for such excess.
2.8 Certain Transfers. TPI shall use commercially reasonable efforts
to obtain, at its sole expense, each Consent listed on Schedule 3.3 (other than
those Consents marked with an asterisk on Schedule 3.3), and any other material
Consent not listed on Section 3.3, if any, if such Consent is required to
operate the Containerboard Business after Closing as such business has been
operated over the 12-month period immediately prior to Closing. If prior to
Closing TPI shall not have obtained any such Consent (other than a Required
Consent), the failure to obtain such Consent shall not prevent the Closing,
unless the failure to obtain such Consent, could, individually or together with
the failure to obtain other Consents, have a Material Adverse Effect or preclude
any closing condition to be satisfied. If TPI has not obtained a Consent (other
than a Required Consent), the Closing of the transactions contemplated by this
Agreement shall not constitute a transfer, or any attempted transfer of any
Contract or asset, the transfer of which requires such Consent. Rather,
following the Closing, TPI shall use commercially reasonable efforts at TPI's
sole expense, and PCA and Newco shall cooperate in such efforts, to obtain
promptly such Consent or to enter into reasonable and lawful arrangements
(including subleasing or subcontracting if permitted) reasonably acceptable to
Newco to provide to Newco the full economic (taking into account Tax costs and
benefits) and operational benefits and liabilities which Newco would have had
such Consent been obtained as of Closing. Once such Consent for the transfer of
a Contributed Asset not transferred at the Closing is obtained on terms
reasonably satisfactory to Newco, TPI shall promptly transfer or cause to be
transferred, such Contributed Asset to Newco for no additional consideration.
2.9 Appraisal. Newco shall obtain a professional appraisal (the
"Appraisal") which sets forth separately the fair market values of the
Contributed Assets, and, within 90 days after the Closing Date, Newco shall
provide a copy of such Appraisal to TPI and PCA. Within 15 days after the
receipt of such appraisal, each of TPI and PCA will submit in writing to the
other and to Newco any changes it proposes be made to such Appraisal, and Newco,
TPI, and PCA will endeavor in good faith to resolve any differences with respect
to
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the Appraisal. Subject to the requirements of Applicable Tax Law or election,
all Tax Returns and reports filed by Newco, PCA and TPI will be prepared
consistently with the Appraisal, as modified by any subsequent agreement of
Newco, TPI and PCA.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TPI
TPI represents and warrants to PCA and Newco as follows:
3.1 Organization and Qualification. TPI and each of the Contributed
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and has all requisite corporate
power and authority to own and operate the Contributed Assets and to carry on
the Containerboard Business as currently conducted. TPI and each of the
Contributed Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in the jurisdictions listed on Schedule 3.1
with respect to TPI or the applicable Contributed Subsidiary which are the only
jurisdictions where the ownership or operation of the Contributed Assets or the
conduct of the Containerboard Business requires such qualification.
3.2 Corporate Authorization. TPI has full corporate power and
authority to execute and deliver this Agreement and each of the Ancillary
Agreements, and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by TPI of this Agreement and each of the
Ancillary Agreements have been duly and validly authorized and no additional
corporate authorization or consent is required in connection with the execution,
delivery and performance by TPI of this Agreement and each of the Ancillary
Agreements.
3.3 Consents and Approvals. Except as specifically set forth in
Schedule 3.3 or as required by the HSR Act, no Consent is required to be
obtained by TPI from, and no notice or filing is required to be given by TPI to
or made by TPI with, any Governmental Authority or other Person or under any
Contract listed, or required to be listed, on Schedule 3.14 in connection with
the execution, delivery and performance by TPI of this Agreement and each of the
Ancillary Agreements and the contribution of the Contributed Assets.
3.4 Non-Contravention. Except as set forth on Schedule 3.3, the
execution, delivery and performance by TPI of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate any provision of the
certificate of incorporation or bylaws of TPI, (ii) subject to obtaining the
Consents referred to in Section 3.3, conflict with, or result in the breach of,
or constitute a default under, or result in the termination, cancellation or
acceleration (whether after the filing of notice or the lapse of time or both)
of any right or obligation of TPI under, or to a loss of any benefit to which
TPI is entitled under, any Contract or result in the
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creation of any Encumbrance (other than a Permitted Encumbrance) upon any of the
Contributed Assets; or (iii) assuming compliance with the matters set forth in
Section 3.3, violate, or result in a breach of or constitute a default under any
law, rule, regulation, judgment, injunction, order, decree or other restriction
of any court or governmental authority to which TPI is subject, including any
Governmental Authorization.
3.5 Binding Effect. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of TPI, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles.
3.6 Financial Statements: Absence of Certain Changes. Subject to the
matters set forth on Section 3.6:
(a) The following financial statements of the Containerboard
Business are (and, with respect to the Most Recent Year End Statement, will be
prior to the Closing Date) attached as Schedule 3.6: (i) the audited combined
financial statements of the Containerboard Business (collectively, the "Audited
Financial Statements") as of and for the years ended December 31, 1996, 1997 and
1998 (the "Most Recent Year End Statement"); (ii) the unaudited combined
statement of assets, liabilities and interdivision accounts of the
Containerboard Business as of September 30, 1998 (the "Most Recent Statement of
Assets and Liabilities"); and collectively with statements described in the
foregoing clause (i) , the "Financial Statements"). The Financial Statements
present (or, in the case of the Most Recent Year End Statement, will present),
in all material respects, the financial condition of the Containerboard Business
as of the dates thereof, or the results of operations for the periods then
ended, as the case may be. The Financial Statements were (or, in the case of the
Most Recent Year End Statement, will be) consistent with the Books and Records,
which are complete and accurate in all material respects.
(b) TPI will either (i) engage AA on behalf of Newco to audit the
combined statement of assets, liabilities, and interdivision account as of the
Closing Date, and the related statements of revenues, expenses, and
interdivision account and cash flows for the period from January 1, 1999 to the
Closing Date (the "Stub Period Financial Statements"), or (ii) cooperate with
Newco in the audit of the Stub Period Financial Statements.
(c) The Audited Financial Statements were (or, in the case of the
Most Recent Year End Statement and the Stub Period Statements, will be) prepared
in accordance with GAAP. All of the liabilities reflected in the Financial
Statements are Related to the Containerboard Business and arose out of or were
incurred in connection with the conduct of the Containerboard Business.
(d) The Inventory shown on the Financial Statements was determined
in accordance with GAAP, and is stated at the lower of cost or market on a LIFO
basis. This
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representation shall not be deemed to constitute a warranty or guaranty that all
such Inventory shall be sold.
(e) All accounts receivable reflected on the Financial Statements
are, and all accounts receivable reflected on the Most Recent Year End Statement
and the Stub Period Statements will be, bona fide receivables, accounted for in
accordance with GAAP, and subject to no setoffs or counterclaims, representing
amounts due with respect to actual transactions in the operation of the
Containerboard Business; it being understood that this representation shall not
be deemed to constitute a warranty or guaranty that all such accounts receivable
shall be collected.
(f) Except as set forth in Schedule 3.6(e) or otherwise disclosed in
this Agreement, since December 31, 1997, TPI has conducted the Containerboard
Business in the ordinary and usual course and, other than in the ordinary and
usual course, has not, with respect to the Containerboard Business: (i) sold,
assigned, pledged, hypothecated or otherwise transferred any of the Contributed
Assets, other than for such sales, assignments, pledges, hypothecations or other
transfers which could not, individually or in the aggregate, have a Material
Adverse Effect; (ii) terminated or materially amended any Contracts that are
individually or in the aggregate material to the Containerboard Business; (iii)
suffered any extraordinary damage, destruction or other casualty loss; (iv)
except for normal salary administration for employees of the Containerboard
Business, increases pursuant to collective bargaining agreements, or other
compensation increases (including bonuses), in each case in the ordinary course
of business, increased the compensation payable or to become payable by TPI to
any of the employees of the Containerboard Business or increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
by TPI, for or with any such employees; or (v) entered into an agreement to do
any of the foregoing.
3.7 Litigation and Claims. Except as disclosed on Schedule 3.7:
(a) There is no action (whether civil, criminal or administrative),
suit, demand, claim, dispute, hearing, proceeding (including condemnation or
other proceeding in eminent domain) or investigation pending or, to the
Knowledge of TPI, threatened, Related to the Containerboard Business or any of
the Contributed Assets or included in the Assumed Liabilities.
(b) None of the Contributed Assets is subject to any order, writ,
judgment, award, injunction, or decree of or settlement enforceable in any court
or governmental or regulatory authority of competent jurisdiction or any
arbitrator or arbitrators.
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3.8 Taxes. Except as disclosed on Schedule 3.8:
(a) TPI has duly and timely filed (or has caused to be duly and
timely filed) each Tax Return required to be filed with any Tax Authority which
includes or is based upon the Contributed Assets, or the operations, ownership
or activities of the Containerboard Business, and all Taxes due and payable
(whether or not shown on or required to be shown on a Tax Return) have been paid
prior to their due dates; provided, however, that the representations and
warranties set forth in this paragraph are made only to the extent that (i) such
Taxes are or may become Encumbrances on the Contributed Assets, or (ii) Newco is
or may be liable in the capacity of transferee of the Contributed Assets.
(b) TPI has duly and timely filed (or has caused to be duly and
timely filed) each Tax Return which includes or is based upon the assets,
operations, ownership or activities of any of the Contributed Subsidiaries, and
all Taxes due and payable (whether or not shown on or required to be shown on a
Tax Return) have been paid prior to their due dates.
(c) None of TPI (with respect to the Containerboard Business) and
the Contributed Subsidiaries has made any payments, is obligated to make any
payments or is a party to any agreement that could obligate it to make any
future payments that will not be deductible under Sections 162(m) or 280G of the
Code.
(d) None of the Contributed Assets or the assets of the Contributed
Subsidiaries (i) is subject to any lien arising in connection with any failure
or alleged failure to pay any Tax, (ii) secures any debt the interest on which
is Tax-exempt under Section 103(a) of the Code, (iii) is required to be or is
being depreciated under the alternative depreciation system under Section
168(g)(2) of the Code, (iv) is "limited use property" with the meaning of
Revenue Procedure 76-30 or (v) will be treated as owned by any other person
pursuant to the provisions of former Section 168(f)(8) of the Code.
(e) TPI (with respect to the Containerboard Business) and the
Contributed Subsidiaries have withheld and paid each material Tax required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other party.
(f) There are no pending, threatened, or proposed audits,
assessments or claims from any Tax Authority for deficiencies, penalties or
interest against TPI (with respect to the Contributed Assets or the
Containerboard Business) any of the Contributed Subsidiaries or any of their
assets, operations or activities.
(g) No Contributed Subsidiary owns, directly or indirectly, and none
of the Contributed Assets consists of any interest in any entity classified as a
partnership for United States federal income Tax purposes.
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(h) TPI's aggregate tax basis in the stock of the Containerboard
Subsidiaries, determined immediately prior to the Closing, shall not exceed the
aggregate tax basis of the net assets of the Containerboard Subsidiaries
immediately prior to the Closing, by more than $100,000,000.
3.9 Employee Benefits. Each Tenneco Plan which is an employee
benefit plan, as defined in Section 3(3) of ERISA, has been and is being
maintained in substantial compliance with all applicable laws, including ERISA
and the Code, and each plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has received a determination of such
qualification from the Internal Revenue Service. Except as provided on Schedule
3.9, no employee of the Containerboard Business is covered by a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA. None of the Tenneco Plans
obligates Newco to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this Agreement or
solely as a result of a "change in control" (as such term is defined in Section
280G of the Code). No liability to the PBGC (except for routine payment of
premiums), Internal Revenue Service, Department of Labor, or otherwise has been
or is expected to be incurred with respect to any Tenneco Plan that is subject
to Title IV of ERISA which could result in a material liability to Newco.
3.10 Compliance with Laws. Except as set forth in Schedule 3.10, the
Containerboard Business is being conducted in compliance in all material
respects with all Laws material to the Containerboard Business and as of the
Closing, Newco will have (subject to obtaining the Consents) all Governmental
Authorizations necessary for the conduct of the Containerboard Business as
currently conducted in all material respects and as shall be conducted
immediately following Closing (assuming no material change in operations of the
Containerboard Business from the manner of operation prior to Closing); it being
understood that nothing in this representation is intended to address any
compliance issue that is the subject of the representations and warranties set
forth in Sections 3.7, 3.8, 3.9, 3.11, 3.12, or 3.13 hereof, and that TPI makes
no representations as to the transferability or assignability of any such
Governmental Authorizations. TPI has not received written notice that any
Governmental Authorization may be suspended, revoked, materially modified or
canceled.
3.11 Environmental Matters. Except as set forth in Schedule 3.11
and, in each case, other than as Relates to a Retained Liability:
(a) TPI has complied during the past five years and is currently in
compliance with all applicable Environmental Laws with respect to the
Containerboard Business, and there are no liabilities under any Environmental
Law with respect to the Containerboard Business;
(b) TPI has not received any written notice of any material
violation or alleged material violation of, or any material liability under, any
Environmental Law in connec tion with the Containerboard Business during the
past five years; and
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(c) there are no material writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, proceedings or investigations
pending or, to the Knowledge of TPI, threatened, relating to compliance with or
liability under any Environmental Law affecting the Containerboard Business or
the Contributed Assets.
3.12 Intellectual Property.
(a) Schedule 3.12 sets forth a list and description (including the
country of registration) of all registered Intellectual Property currently (or,
to the Knowledge of TPI, within the last 12 months) used in the Containerboard
Business. No third party has rights in, or otherwise has the right to restrict
TPI's use of, such Intellectual Property, and, to TPI's Knowledge (without any
inquiry), no third party has rights in, or otherwise has the right to restrict
Newco's use of the PCA Marks as of and following the Closing.
(b) To the Knowledge of TPI, no product (or component thereof or
process) currently used, sold or manufactured by the Containerboard Business
infringes on, misappropriates, or otherwise violates a valid and enforceable
intellectual property right of any other Person.
(c) There are no actions or proceedings pending or, to the Knowledge
of TPI, threatened challenging, and, to the Knowledge of TPI, no Person is
infringing or otherwise violating, the Intellectual Property, except for
challenges, infringements or violations which, individually or in the aggregate,
would not have a Material Adverse Effect. As of November 1, 1995, to TPI's
Knowledge (without any inquiry), no Person was infringing on or otherwise
violating the PCA Marks.
(d) All of the Intellectual Property used in the Containerboard
Business and all of TPI's interest in the PCA Marks will be transferred to Newco
at Closing, except for the Intellectual Property that is used by TPI to provide
services under the Transition Services Agreement, and such transferred
Intellectual Property and the PCA Marks will be available to Newco after Closing
on the same terms and conditions under which it was available to TPI prior to
the Closing.
(e) Attached hereto as Schedule 3.12(e) is a copy of the provisions
in Tenneco's most recent Form 10-Q describing Tenneco's efforts at addressing
the Year 2000 issue in Tenneco's business. The information set forth therein is
accurate as of the date hereof, in all material respects. TPI has developed and
begun implementing a Project Plan to remediate and/or replace software,
firmware, hardware (whether general or special purpose) or other similar or
related items of automated, computerized or software systems that are used or
relied upon in the Containerboard Business (each a "Computer System"), but are
not Year 2000 ready. Such remediation and/or replacement is scheduled to be
completed in 1999. Year 2000 ready means that the Computer System when used in
accordance with its associated documentation is Year 2000 compliant, or is not
Year 2000 compliant but will process date data accurately with the
implementation of a tested procedure, or is not 2000 compliant but will not
cause any
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processing problem. Year 2000 compliant means that the applicable Computer
System when used in accordance with its associated documentation will accurately
process date data such that: no value for a date prior to year 2028 will cause
any interruption in processing; date-based functionality operates consistently
for dates prior to, during and after Year 2000 (through year 2027); in all
interfaces and data storage, the century any date is specified either explicitly
or by algorithms or inferencing rules; and leap years will be accurately
recognized and processed. If implemented properly, the Project Plan should be
successful in making all material Computer Systems Year 2000 ready, except to
the extent that a Computer Systems interfaces or exchanges data with other
software, firmware, hardware or other similar or related items of automated,
computerized or software systems that are not Year 2000 compliant.
3.13 Labor Matters. Except as disclosed on Schedule 3.13:
(a) TPI is not a party to any labor or collective bargaining
agreement with respect to employees of the Containerboard Business, no such
employees are represented by any labor organization and, to the Knowledge of
TPI, there are no organizing or decertification activities (including any demand
for recognition or certification proceedings pending or threatened to be brought
or filed with the National Labor Relations Board or other labor relations
tribunal) involving TPI;
(b) There are no strikes, work stoppages, slowdowns, lockouts,
unfair labor practice charges pending or, to the Knowledge of TPI, threatened
against or involving the employees of the Containerboard Business;
(c) There are no complaints, charges, claims or grievances against
TPI pending or, to the Knowledge of TPI, threatened to be brought or filed with
any governmental authority, arbitrator or court based on or arising out of the
employment by TPI of any employee of the Containerboard Business, except for
those which, individually or in the aggregate, would not have a Material Adverse
Effect; and
(d) TPI is in compliance with all Laws relating to the employment of
labor, including all such Laws relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, immigration, workers'
compensation, layoffs, and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes.
3.14 Contracts. Schedule 3.14 sets forth a list, as of the date
hereof, of each Contract that is Related to the Containerboard Business other
than (a) Real Estate Leases, which are listed on Schedule 1.1(gggg), and
collective bargaining agreements which are listed on Schedule 3.13, (b) purchase
orders or similar agreements for the purchase or sale of goods or services in
the ordinary and usual course of business, (c) confidentiality agreements
entered into in the usual course of business in connection with the purchase and
sale of Inventory, and (d) any Contract which requires a payment or imposes an
obligation on either party thereto less than $1,000,000 in the aggregate.
Schedule 3.14 also identifies any Contract that contains a non-compete covenant
or similar provision that could restrict Newco in its conduct of the
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Containerboard Business following Closing, any employment agreement with any
employee of the Containerboard Business, any employment agreement included in
the Contributed Assets or Assumed Liabilities, and any Contract between any
Affiliates of TPI, on one hand, and TPI or any of the Contributed Subsidiaries,
on the other hand, which is related to the Containerboard Business. Each
Contract set forth on Schedule 3.14 is a valid and binding agreement of TPI and,
to the Knowledge of TPI, is in full force and effect. Except as otherwise
provided in Schedule 3.14, TPI is not in, and, to TPI's knowledge, no other
party thereto is, in default in any material respect under any Contract listed
on Schedule 3.14 or any collective bargaining agreement listed on Schedule 3.13.
Schedule 3.14 lists all of the Contracts that are material to the Containerboard
Business other than those referred to in clauses (a) through (d) above.
3.15 Real Estate Leases. Schedule 1.1(gggg) sets forth a list, as of
the date hereof, of each material written Real Estate Lease with a term of more
than one month that is related to the Containerboard Business. Each Real Estate
Lease set forth on Schedule 1.1(gggg) is a valid and binding agreement of TPI
and is in full force and effect. There are no defaults under any Real Estate
Lease listed on Schedule 1.1(gggg) which defaults have not been cured or waived
and which would, individually or in the aggregate, have a Material Adverse
Effect. If the Real Estate Leases that are part of the Existing Financing
Arrangements are terminated prior to closing, as contemplated herein, TPI shall
own title to the assets subject to such Real Estate Leases, upon such
termination, the assets subject to such Real Estate Leases shall be deemed
Purchased Property.
3.16 Entire Business; Title to Property.
(a) Except as set forth in Schedule 3.16(a) and Schedule 3.6(e), the
Contributed Assets, the assets held by the Contributed Subsidiaries, the
intangible Retained Assets (including cash and cash accounts, disbursement
accounts, invested securities and other short and medium term investments, the
Tenneco Marks, the Tenneco Plans, and TPI's and Tenneco's insurance policies),
and the rights specifically provided or made available to Newco under the
Ancillary Agreements include all of the buildings, machinery, equipment and
other assets (whether tangible or intangible) necessary and adequate for Newco
immediately after Closing to conduct in all material respects the Containerboard
Business as conducted as of the date hereof and as of September 30, 1998, and as
conducted during the 12-month period prior to the date hereof (subject to
changes expressly permitted by the terms hereof to be made after the date
hereof).
(b) TPI has (or in the case of the Purchased Property, will have on
the Closing Date) good (and, in the case of Owned Real Property and Purchased
Property (as applicable), marketable) title to, or a valid and binding leasehold
interest in, the Contributed Assets, free and clear of all Encumbrances, except
(i) as set forth in Schedule 3.16(b); (ii) any Encumbrances expressly disclosed
in the Financial Statements; (iii) liens for Taxes (which are not related to
income, sales or withholding Taxes), assessments and other governmental charges
not yet due and payable or due but not delinquent as of the Closing Date or
being
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contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP on the Final Working
Capital Statement; (iv) mechanic's, workmen's, repairmen's, warehousemen's,
carriers, or other like liens arising or incurred in the ordinary course of
business for amounts which are not delinquent and which will not individually or
in the aggregate have a Material Adverse Effect, original purchase price
conditional sales contracts and equipment leases with third parties entered into
in the ordinary course of business; (v) with respect to the Real Property, (A)
easements, quasi-easements, licenses, covenants, rights-of-way and other similar
restrictions, including any other agreements, conditions, restrictions, or other
matters which would be shown by a current title report or other similar report
or listing, (B) any conditions that may be shown by a current survey, title
report or physical inspection, and (C) zoning, building and other similar
restrictions, none of which Encumbrances in (A) through (C) materially impairs
the uses of the Real Property as currently used in the Containerboard Business
or materially detracts from the value thereof as currently used in the
Containerboard Business; and (vi) Encumbrances not described in items (i) - (v)
immediately preceding and which, individually or in the aggregate, would not
have a Material Adverse Effect (all items included in (i) through (vi),
including any matter set forth in Schedule 3.16(b), are referred to collectively
herein as the "Permitted Encumbrances"); provided, however that as of the
Closing Date and for any periods of time thereafter (including for purposes of
Section 2.4 and Article VI), "Permitted Encumbrances" shall not include any
Encumbrances granted or arising in connection with the Existing Financing
Arrangements.
(c) The capital structure of each of the Contributed Subsidiaries is
as set forth in Schedule 3.16(c). The shares of stock of the Contributed
Subsidiaries included in the Contributed Assets constitute 100% of the issued
and outstanding shares of stock of each Contributed Subsidiary, except for
American Cellulose Corporation ("ACC"). The shares of stock of ACC included in
the Contributed Assets constitute 50% of the issued and outstanding shares of
stock of ACC, the remainder of which is owned as set forth on Schedule 3.16(c)
hereof. All shares of stock of the Contributed Subsidiaries included in the
Contributed Assets are validly issued, fully paid and non-assessable. Except as
set forth in the ACC Agreement (as hereinafter defined) (i) there are no
options, warrants, or similar rights to purchase any of the shares of any of the
Contributed Subsidiaries, and no obligations binding upon any Contributed
Subsidiary to issue, sell, redeem, purchase or exchange any of its capital stock
or any right relating thereto, and (ii) there are shareholders' agreements,
voting agreements, voting trusts or other agreements or rights of third parties
with respect to or affecting any of the Contributed Subsidiaries or any of their
shares of stock.
(d) The Contributed Assets and the assets of the Contributed
Subsidiaries are in operating condition and repair (subject to normal wear and
tear) and are in a condition to allow the continued conduct after the Closing by
Newco of the Containerboard Business as it is currently conducted in all
material respects.
3.17 Finders' Fees. Except for Goldman, Sachs & Co., whose fees will
be paid by TPI, there is no investment banker, broker or finder which has been
retained by or
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is authorized to act on behalf of TPI who might be entitled to any fee or
commission from PCA or Newco in connection with the transactions contemplated by
this Agreement.
3.18 Insurance. Schedule 3.18 attached hereto sets forth the
following information with respect to each insurance policy to which TPI, with
respect to the Containerboard Business, has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five years:
(a) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(b) the scope, period and amount of coverage; and
(c) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Schedule 3.18 also describes any self insurance arrangements affecting the
Containerboard Business.
3.19 No Undisclosed Liabilities. TPI does not have any material
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known to TPI, whether due or to become due and
regardless of when asserted) arising out of transactions entered into at or
prior to the Closing, or any action or inaction at or prior to the Closing, or
any state of facts existing at or prior to the Closing other than: (i)
liabilities set forth on the Most Recent Statement of Assets and Liabilities
(including any notes thereto, if any), (ii) liabilities and obligations arising
from or in connection with matters disclosed pursuant to TPI's representations
and warranties in this Agreement or in the Disclosure Memorandum (none of which,
except as set forth on Schedule 3.7, is a liability resulting from a breach of
contract, breach of warranty, tort, infringement claim or lawsuit), (iii)
liabilities and obligations which have arisen after September 30, 1998, in the
ordinary course of business (none of which, except as set forth on Schedule 3.7,
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim or lawsuit).
3.20 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither TPI nor
any other Person makes any other express or implied representation or warranty
on behalf of TPI.
3.21 Closing Date. The representations and warranties of TPI
contained in this Article III and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
certificate or other writing delivered by, or on behalf of, TPI pursuant to this
Agreement to PCA or Newco shall be true and correct in all respects on the
Closing Date as though then made, except as affected by the transactions
expressly contemplated by this Agreement. TPI shall have the right to update the
Schedules up to five Business days prior to Closing to reflect changes in the
Containerboard Business between the
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date hereof and the Closing Date, provided that such changes are actions taken
by TPI permitted under Section 5.2 without PCA's prior consent and that no such
changes shall be deemed to cure any breach that existed as of the date hereof
(none of which relates to any liability resulting from a breach of contract,
breach of warranty, tort, infringement claim or lawsuit).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PCA
PCA represents and warrants to TPI and Newco as follows:
4.1 Organization and Qualification. PCA is a limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite limited liability
company power and authority to own and operate and to carry on its business as
currently conducted. PCA is duly qualified to do business and is in good
standing as a foreign limited liability company in each jurisdiction where the
ownership of its properties or the operation of its business requires such
qualification.
4.2 Authorization. PCA has full power and authority to execute and
deliver this Agreement and each of the Ancillary Agreements, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
PCA of this Agreement and each of the Ancillary Agreements have been duly and
validly authorized and no additional authorization or consent is required in
connection with the execution, delivery and performance by PCA of this Agreement
and each of the Ancillary Agreements.
4.3 Consents and Approvals. Except as required by the HSR Act, no
consent is required to be obtained by PCA from, and no notice or filing is
required to be given by PCA to, or made by PCA with, any Governmental Authority
or other Person in connection with the execution, delivery and performance by
PCA of this Agreement and each of the Ancillary Agreements.
4.4 Non-Contravention. The execution, delivery and performance by
PCA of this Agreement and each of the Ancillary Agreements, and the consummation
of the transactions contemplated hereby and thereby, does not and will not (i)
violate any provision of the charter, bylaws or other organizational documents
of PCA or (ii) assuming compliance with the matters set forth in Section 4.3,
violate or result in a breach of or constitute a default under any law, rule,
regulation, judgment, injunction, order, decree or other restriction of any
court or governmental authority to which PCA is subject, including any
Governmental Authorization.
4.5 Binding Effect. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of PCA enforceable in
accordance with its terms, subject to
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bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
4.6 Finders' Fees. Except for fees payable pursuant to the
Commitment Letters and a fee in the amount of $15,000,000 to be paid to Madison
Dearborn Capital Partners, Inc. or its designated affiliates at Closing (the
"MDP Transaction Fee"), which fees will be paid by Newco, there is no fee or
commission payable from TPI or Newco to any investment banker, broker or finder
which has been retained by or is authorized to act on behalf of PCA or any
Subsidiary of PCA in connection with the transactions contemplated by this
Agreement.
4.7 Financial Capability.
(a) On the Closing Date PCA will have, sufficient funds to fund the
Cash Contribution.
(b) PCA has received the commitment letters with respect to the New
Financing Arrangements attached hereto as Schedule 4.7(b) (the "Commitment
Letters"). As of the date of this Agreement, the Commitment Letters are in full
force and effect and have not been amended or rescinded. The Commitment Letters
set forth, to the best of PCA's knowledge, to the extent customarily set forth
in commitment letters of such nature from such Persons, all the conditions to
and material terms of the New Financing Arrangements. PCA has paid all fees and
other amounts required by such Commitment Letters to be paid by it prior to the
Closing, which amounts may be reimbursed by Newco to PCA, or paid directly by
Newco, following Closing (provided that such reimbursement or any obligation
with respect thereto shall not be included or incorporated in, or reflected as a
Current Liability on, the Closing Working Capital Statement or the Final Working
Capital Statement).
4.8 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither PCA nor any
other Person makes any other express or implied representation or warranty on
behalf of PCA.
4.9 Closing Date. The representations and warranties by PCA
contained in this Article IV and elsewhere in this Agreement, and all
information contained in any exhibit, schedule or attachment hereto or in any
certificate or other writing delivered by, or on behalf of, PCA pursuant to this
Agreement to TPI or its representatives shall be true and correct in all
respects on the Closing Date as though then made, except as affected by the
transactions expressly contemplated by this Agreement.
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ARTICLE V
COVENANTS
5.1 Access. Prior to the Closing, TPI shall permit PCA and its
representatives to have full access, during regular business hours and upon
reasonable advance notice, to the Contributed Assets and the Containerboard
Business, subject to reasonable rules and regulations of TPI, and shall furnish,
or cause to be furnished, to PCA, any financial and operating data and other
information that is available with respect to the Containerboard Business, the
Contributed Assets, or the Assumed Liabilities as PCA shall from time to time
reasonably request. PCA shall abide by the terms of the Confidentiality
Agreement with respect to such access and any information furnished to it or its
representatives pursuant to this Section 5.1. Notwithstanding anything herein to
the contrary, PCA shall not be permitted to perform any invasive testing of any
of the Real Property without specific additional authorization from TPI (which
consent shall not be unreasonably withheld), or to perform any testing which
would cause a breach of any Real Estate Lease to which TPI is a party, provided
that, upon request from PCA, TPI shall use reasonable efforts to obtain any
necessary consent to permit such testing.
5.2 Conduct of Business. During the period from the date hereof to
the Closing, except as otherwise contemplated by this Agreement or as PCA shall
otherwise agree in writing in advance, TPI shall conduct the Containerboard
Business in the ordinary and usual course. During the period from the date
hereof to the Closing, except as otherwise expressly provided for in this
Agreement or as PCA shall otherwise consent (which consent shall not be
unreasonably withheld), with respect to the Containerboard Business, the
Contributed Assets or the Assumed Liabilities other than in the ordinary and
usual course or as set forth in Schedule 5.2, TPI shall not:
(a) enter into commitments for new capital expenditures in excess of
$10,000,000 in the aggregate to the extent not otherwise contemplated in the
1999 business plan for the Containerboard Business;
(b) dispose of or otherwise transfer, or incur, create or assume any
Encumbrance (other than Permitted Encumbrances) on (i) any individual fixed
asset of the Containerboard Business if the greater of the book value or the
fair market value of such fixed asset exceeds $1,000,000, or (ii) any group of
fixed assets of the Containerboard Business if the greater of the book value or
the fair market value of such fixed assets, taken as a whole and which in the
aggregate during such period, exceeds $2,500,000, and such dispositions or
transfers, in either case, are in the ordinary course of business;
(c) institute any material change in the methods of purchase, sale,
lease or accounting or engage in any activity which would accelerate the
collection of TPI's accounts or notes receivable, delay the payment of the TPI's
accounts payable, or reduce or otherwise
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restrict the amount of Inventory (including raw material, packaging,
work-in-process, or finished goods) on hand;
(d) acquire (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or material assets thereof;
(e) grant licenses of Intellectual Property to any Person or allow
registered Intellectual Property to lapse, expire or become abandoned;
(f) amend any Contributed Subsidiary's certificate of incorporation,
bylaws or other charter documents;
(g) grant (or agree to grant) any salary or wage increases or (as it
relates to employees of the Containerboard Business) materially change or amend
any employee benefit or welfare plan, other than pursuant to renegotiation of
any collective bargaining agreements in the normal course; or
(h) make any loans or advances to, guarantees for the benefit of or
investments in any Person, other than intercompany loans to Affiliates of TPI;
(i) agree, in writing or otherwise, to do any of the foregoing or to
take any other action which would be required to be disclosed in Schedule
3.6(e);
(j) enter into any transactions with Affiliates not in the ordinary
course of business consistent with past practice; and
(k) enter into any Contracts required to be disclosed hereunder,
other than timber leases, cutting rights agreements, and similar agreements
entered into in the ordinary course of business at fair value consistent with
past practices.
TPI will:
(a) use its commercially reasonable efforts to (A) preserve
intact the organization and goodwill of the Containerboard Business,
(B) keep available the services of its officers and employees as a
group (provided that such efforts shall not require TPI to pay any
bonuses or other amounts beyond normal compensation to such
persons), (C) maintain satisfactory relationships with its material
suppliers and customers and other Persons having business
relationships with it, and (D) maintain all Governmental
Authorizations;
(b) maintain its facilities and assets in good condition and
repair and replace its facilities and assets in a manner consistent
with past practices and
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make capital expenditures in the ordinary course of business in an
aggregate amount consistent with the 1999 Annual Operating Plan; and
(c) notify PCA of any emergency or other change in the normal
course of the Containerboard Business or in the condition of the
Contributed Assets or the Assumed Liabilities or the operation of
the Containerboard Business and of any governmental or third party
complaint, investigation or hearing (or communication indicating
that such a complaint, investigation or hearing is or may be
contemplated), if such emergency, change, complaint, investigation
or hearing could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
5.3 Reasonable Efforts. Each of TPI and PCA will use commercially
reasonable efforts to fulfill the conditions precedent to its respective
obligations hereunder and to secure as promptly as practicable all Consents
required to be obtained by it in connection with the transactions contemplated
hereby, and TPI and PCA will cooperate in all reasonable requests to fulfill the
conditions precedent to their and the other party's obligations described in
this Section 5.3. Without limiting the generality of the foregoing,
(a) TPI and PCA will file within 5 Business Days of the date hereof
the required notice (including all documentary materials) under the HSR Act and
promptly file any additional information requested as soon as practicable after
receipt of request therefor.
(b) PCA, TPI and Newco each shall use all reasonable efforts to
satisfy all conditions precedent in the Commitment Letters and to otherwise
obtain, on behalf of TPI and Newco, the New Financing Arrangements. TPI shall
use its reasonable efforts to cooperate with PCA in connection with the New
Financing Arrangements, including providing information to and permitting the
lenders and their representatives access to the Contributed Assets and the
Containerboard Business, as set forth in Section 5.1 hereof. Such information
shall include all existing title insurance polices and surveys for the Real
Property, to the extent such items are in TPI's reasonable control. In addition,
TPI shall provide affidavits and customary title insurance undertakings
(including gap and non-imputation undertakings) with respect to the Real
Property to the extent reasonably required by the title insurer. TPI shall have
the opportunity to review and participate in the preparation of the New
Financing Arrangements. The New Financing Arrangements shall be on the terms no
less favorable to Newco as set forth in the Commitment Letters. The New
Financing Arrangements shall provide (unless waived by TPI in its sole
discretion and notwithstanding any provision in the Commitment Letters) that:
(i) the PIK Preferred generally shall have the terms set forth
on Schedule 5.3, and that in the event the Deferred-Pay Financing
(as defined in the Commitment Letters) is not sold to the
underwriter, then (A) PCA and/or its designees will purchase $55
million of PIK Preferred, and (B) TPI and/or its designees will
receive $45 million of PIK Preferred without additional payment;
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(ii) the New Financing Arrangements shall not create a
security interest on any of TPI's assets, including the Contributed
Assets prior to their contribution to Newco hereunder; and
(iii) there are no materially adverse consequences to Newco
which arise under the terms of the New Financing Arrangements as a
result of a sale of all or a portion of TPI's equity interest in
Newco (e.g., such sale will not trigger a change of control
default), and there are no restrictions or limitations in the New
Financing Arrangements on TPI's ability to sell or transfer all or
any portion of TPI's equity interest in Newco; and
(iv) all of the proceeds of the New Financing Arrangements
(other than from the Deferred-Pay Financing) shall be initially
loaned to TPI, and thereafter assumed by Newco as the Assumed
Indebtedness, as set forth in the Preliminary Statements hereof.
In addition, the material terms of the New Financing Arrangements (taken as a
whole) shall be as favorable to Newco and TPI as financing arrangements then
reasonably available in the financial markets to Newco in connection with the
transactions contemplated hereby. In the event TPI is not reasonably satisfied
with the New Financing Arrangements because the condition in the immediately
preceding sentence has not been met, then TPI's sole remedy will be to arrange
for substitute New Financing Arrangements on terms which are in all material
respects no less favorable to Newco or PCA than under the proposed New Financing
Arrangements. TPI shall have the right, at TPI's sole discretion, to direct PCA
to make the necessary elections under the New Financing Arrangements (i) to
cause Newco to obtain a commitment for the Bridge Loan (defined in the
Commitment Letters), provided that if TPI makes such election, TPI shall pay the
1.5% Commitment Fee attributable to such Bridge Loan as set forth in the
Commitment Letters, with Newco paying any other fees or costs associated with
such Bridge Loan, and (ii) direct that all of the New Financing Arrangements
initially be at the TPI level or to direct that a portion of such New Financing
Arrangements initially be at the Newco level, to the extent PCA has the right to
make such elections in the Commitment Letters. PCA shall make such elections as
directed in writing by TPI, and shall not make such elections absent such
directions from TPI.
(c) TPI shall use its commercially reasonable efforts to obtain
prior to the Closing fee simple title to all of the Purchased Property.
5.4 Covenants Regarding Employees.
(a) At Closing, TPI and Newco shall enter into the Human Resources
Agreement, and shall take all actions required by them pursuant to such Human
Resources Agreement.
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(b) Tenneco shall retain sponsorship of the Tenneco Plans, and
neither Newco nor PCA shall be entitled to any assets of the Tenneco Plans.
(c) For a period of three years from the Closing Date, other than
pursuant to the Human Resources Agreement.
(i) neither Newco, PCA nor any Affiliate of Newco will
contact, solicit, induce or encourage any employee of TPI or any
Affiliate of TPI, to leave such employment, or contact, solicit or
approach any employee of TPI or any Affiliate of TPI for the purpose
of offering employment to or hiring (whether as an employee,
consultant, independent contractor or otherwise) without the prior
written consent of TPI, and
(ii) TPI will not contact, solicit, induce or encourage any
employee of Newco or any Affiliate of Newco to leave such
employment, or contact, solicit or approach any employee of Newco
for the purpose of offering employment to or hiring (whether as an
employee, consultant, independent contractor or otherwise) without
the prior written consent of Newco.
The foregoing clauses (i) and (ii) shall not apply to any employee who shall
contact or approach such Person in response to a general solicitation for
employment.
5.5 Compliance with WARN and Similar Laws. TPI and Newco do not
anticipate that there will be any major employment losses as a consequence of
the transactions contemplated by this Agreement and the Human Resources
Agreement that might trigger obligations under the Worker Adjustment and
Retraining Notification ("WARN") Act, 29 U.S.C. Section 2101 et seq., or under
any similar provision of any federal, state, regional, foreign, or local law,
rule, or regulation (referred to collectively as "WARN Obligations").
Nevertheless, to the extent that any WARN Obligations might arise as a
consequence of the transactions contemplated by this Agreement, it is agreed
that Newco will timely give all notices required to be given under WARN or other
similar statutes or regulations of any jurisdiction relating to any plant
closing or mass layoff or as otherwise required by any such statute. For this
purpose, Newco shall be deemed to have caused a mass layoff if the mass layoff
would not have occurred but for Newco's failure to employ the employees of the
Containerboard Business in accordance with the terms of this Agreement and the
Human Resources Agreement.
5.6 Further Assurances. At any time after the Closing Date, TPI, PCA
and Newco shall promptly execute, acknowledge and deliver any other assurances
or documents reasonably requested by Newco, PCA or TPI, as the case may be, and
necessary for them or it to satisfy their or its respective obligations
hereunder or obtain the benefits contemplated hereby. Without limiting the
generality of the foregoing, Newco agrees that if any of the Contributed
Subsidiaries are found to own assets that are not part of the Contributed Assets
(that is, such assets are not Related to the Containerboard Business), or if any
Retained
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Assets are inadvertently transferred to Newco, Newco shall transfer such assets
to TPI , or as TPI shall direct, at TPI's expense but without consideration.
Similarly, if after the Closing TPI identifies any assets that should have been
transferred to Newco as part of the Contributed Assets, but were not, TPI shall
transfer such assets to Newco at TPI's expense without further consideration.
5.7 Use of Tenneco Marks. Except as set forth in this Section 5.7,
after the Closing Newco shall not use the Tenneco Marks, except that for a
period of one year following the Closing Date Newco may (a) continue to produce
materials with such Tenneco Marks until changes can be made to plates, molds,
and similar items so as to allow Newco to produce materials without such Tenneco
Marks, (b) use the Tenneco Marks on products, labels, packaging and promotional
materials that are in existence as of the Closing Date or produced pursuant to
clause (a) above, and (c) use signage, invoices and stationery in existence as
of the Closing Date bearing a Tenneco Mark. Subject to the preceding sentence,
Newco shall cease using the Tenneco Marks as soon as possible after closing
during such one year period and, following the periods described above, Newco
shall cease all use of any Tenneco Marks.
5.8 Certain Matters Related to Retained and Assumed Liabilities.
(a) With respect to all Retained Liabilities, Newco Indemnified
Parties shall, at TPI's expense, reasonably cooperate with TPI, provide TPI as
promptly as possible with notices and other information received by such parties
as well as all relevant materials, information and data requested by TPI and
shall grant TPI, without charge, reasonable access to employees of the
Containerboard Business and to the Real Property.
(b) With respect to all Assumed Liabilities, TPI Indemnified Parties
shall, at Newco's expense, reasonably cooperate with Newco, provide Newco as
promptly as possible with notices and other information received by such parties
as well as all relevant materials, information and data requested by Newco and
shall grant Newco, without charge, reasonable access to employees of TPI.
5.9 Intercompany Agreements. In the period between execution of this
Agreement and the Closing, TPI shall terminate and shall cause its Affiliates to
terminate, any and all agreements (i) between TPI, on one hand, and any of the
Contributed Subsidiaries, on the other hand, or (ii) between TPI, on one hand,
and any of TPI's Affiliates, on the other hand, to the extent such agreements
Relate to the Containerboard Business. Without limiting the generality of the
foregoing, all intercompany loans and Non-Trade accounts receivable and
Non-Trade accounts payable between TPI, and any of its Affiliates, on one hand,
and any of the Contributed Subsidiaries, on the other hand, shall be eliminated
via dividend or capital contribution.
5.10 Records and Retention and Access. Newco shall keep and preserve
in an organized and retrievable manner the Books and Records for at least seven
years from the Closing Date. Newco shall neither dispose of nor destroy such
Books and Records without
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first offering to turn over possession thereof to TPI by written notice to TPI
at least thirty (30) days prior to the proposed date of such disposition or
destruction. While such Books and Records remain in existence, each party shall
allow the other party, its representatives, attorneys and accountants, if
accompanied by the party's tax representatives, accountants or attorneys, at the
requesting party's expense, access to the Books and Records upon reasonable
request and advance notice and during normal business hours for the purpose of
interviewing, examining and copying in connection with such parties' preparation
of financial .
5.11 Insurance.
(a) TPI shall use commercially reasonable efforts to assign to
Newco, to the fullest extent, all of the benefits and rights under any insurance
policies held by TPI and/or any of its Affiliates with respect to any Losses
arising out of, related to or in connection with the Contributed Assets, the
Assumed Liabilities and the Containerboard Business with respect to events
occurring prior to the Closing Date. Newco shall have the right to such benefits
and rights only to the extent actually paid or payable, and exclusive of any
deductibles (including pass through deductibles for which TPI or any Affiliate
is required to reimburse the insurer). To the extent such assignment is not
permitted, TPI shall use commercially reasonable efforts on Newco's behalf to
obtain such proceeds or benefits for Newco, or otherwise to provide Newco with
the benefit equivalent to that which would have been available had such
assignment been permitted. (b) TPI shall cooperate with Newco in obtaining
insurance policies for the Containerboard Business to be in effect from and
after Closing. Notwithstanding such assistance, all decisions with respect to
such policies shall be made solely by Newco, and TPI shall not have any
liability, whether to Newco or to any other Person, whether as an advisor,
broker or otherwise, under any other theory, in connection with providing such
assistance and cooperation. TPI makes no assurances whatsoever with respect to
such insurance coverage, including the availability or price thereof.
5.12 Noncompetition. From and after the Closing:
(a) Noncompetition. In consideration of the mutual covenants
provided for herein, during the period beginning on the Closing Date and ending
on the fifth anniversary of the Closing Date (the "Noncompete Period"), neither
TPI nor any of its Affiliates shall (i) sell containerboard or corrugated
products (other than the sale of folding carton and honeycomb paperboard-type
products), or otherwise engage in the business of the Containerboard Business
(as conducted as of Closing), anywhere within the United States, or (ii) induce
or attempt to induce any customer or other business relation of Newco or any of
its Affiliates to terminate such relationship with Newco; provided that TPI
shall not deemed to be competing in violation of this Section 5.12 by virtue of
its or their (x) ownership of less than 5% of the outstanding stock of any
publicly-traded corporation, (y) acquisition of any Person (whether by asset
purchase, stock purchase, merger or otherwise) engaged in the sale of
containerboard or corrugated products if such sales are not such Person's
primary business and such sales are less than $100 million per year; and (z)
sales of goods or services other than sales of goods or
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services made in the Containerboard Business as of the Closing Date (e.g., sales
of plastic, foam, molded fiber, folding carton, honeycomb paperboard-type
products and other products not sold by the Containerboard Business as of the
Closing Date). This Section 5.12 shall not apply to any entity which might
acquire TPI, or any Affiliate of TPI, or any assets or division of TPI, subject
to the terms of the Stockholders Agreement.
(b) Severability. The parties hereto agree that the covenant set
forth in Section 5.12(a) is reasonable with respect to its duration,
geographical area and scope. If the final judgment of a court of competent
jurisdiction declares that any term or provision of Section 5.12(a) is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(c) Remedy for Breach. TPI, PCA and Newco acknowledge and agree that
in the event of a breach of any of the provisions of this Section 5.12, monetary
damages shall not constitute a sufficient remedy. Consequently, in the event of
any such breach, PCA, Newco and/or their respective successors or assigns may,
in addition to other rights and remedies existing in their favor, apply to any
court of law or equity of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce or prevent any violation of the
provision hereof.
5.13 Exclusivity. TPI and Tenneco will not, and will not permit or
cause their respective officers, directors, agents and Affiliates to, discuss a
possible sale or other disposition of all or any part of the assets of the
Containerboard Business other than the sale of Inventory in the ordinary course
of business or other sales or dispositions permitted by this Agreement (whether
by merger, reorganization, recapitalization or otherwise) with any party other
than PCA and its Affiliates (an "Acquisition Proposal"), or provide any
information to any other party regarding the Containerboard Business other than
information which is traditionally provided in the regular course of its
business operations to third parties where TPI or Tenneco and its officers,
directors, agents and Affiliates have no reason to believe that such information
may be utilized to evaluate a possible sale or other disposition of the
Containerboard Business. TPI and its officers, directors and Affiliates (i) do
not have any agreement, arrangement or understanding with any third party with
respect to any Acquisition Proposal (other than confidentiality agreements),
(ii) will cease and cause to be terminated any and all discussions with third
parties regarding any Acquisition Proposal and (iii) will promptly notify PCA if
any Acquisition Proposal, or any inquiry or contact with any Person or entity
with respect thereto, is made.
5.14 Delivery of Most Recent Year End Statement and the Stub Period
Statements and Regulation S-X Financial Statements. As soon as practicable, but
in any
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event no later than March 31, 1999 TPI will deliver to PCA a copy of the Most
Recent Year End Statement, which statements shall be attached as part of
Schedule 3.6. Prior to the Closing, TPI shall furnish or shall cause TPI's
independent accountants to furnish audited financial statements for the
Containerboard Business for the years ended December 31, 1996, 1997 and 1998 in
a form meeting the requirements of Regulation S-X of the Securities Act of 1933,
as amended ("Regulation S-X"). In addition, prior to the Closing, or as soon as
practicable thereafter in the case of (iii) below, TPI shall provide to Newco:
(i) unaudited selected financial data as of and for the years ended December 31,
1994 and 1995 (as described in Regulation S-K of the Securities Act of 1933, as
amended); (ii) unaudited condensed combined statements of assets, liabilities
and interdivision account as of March 31, 1998, June 30, 1998, and September 30,
1998, and the related unaudited condensed combined statements of revenues,
expenses and interdivision account and cash flows for the three months ended
March 31, 1998, the three and six months ended June 30, 1998, and the three and
nine months ended September 30, 1998; and (iii) in the event the Closing Date is
later than March 31, 1999, unaudited condensed combined statements of assets,
liabilities and interdivision account and the related unaudited condensed
combined statements of revenues, expenses and interdivision account and cash
flows for any interim periods as are required by Regulation S-X. The financial
statements and financial data in (i) through (iii) are collectively known as the
"Regulation S-X Financial Statements." The Regulation S-X Financial Statements
will be prepared in accordance with GAAP and in a form meeting the requirements
of Regulation S-X for Newco's or its Subsidiaries' registration statement and
any amendments thereto in connection with the New Financing Arrangements.
5.15 Consent of TPI Auditors. TPI shall use its commercially
reasonable efforts to obtain prior to the Closing the written agreement (the
"Auditor Consent Letter") of Arthur Anderson LLP ("AA") to permit the use of the
Audited Financial Statements and any applicable Stub Period Financial Statements
(a) in connection with Newco's offerings of securities as contemplated by the
Commitment Letters, and (b) subject to AA's normal procedures, in other private
or public offerings of securities as may be reasonably requested by Newco. In
addition, TPI will use commercially reasonable efforts to cause AA to provide a
comfort letter in accordance with SAS 72 for any such offering.
5.16 Covenant Regarding Campbell Road Property. Prior to the
Closing, TPI shall permit PCA and its representatives to have full access, in
accordance with Section 5.1 hereof, to the Campbell Road Property for the
purposes of conducting such due diligence review of such property as PCA
reasonably deems appropriate. If, based upon such review, PCA identifies any
existing environmental conditions the reasonable costs of addressing which could
reasonably be expected to exceed $1,000,000 within five years from the Closing
Date, PCA may, in its sole discretion, elect to instruct TPI to retain the
Campbell Road Property, in which case, the Campbell Road Property shall
constitute Retained Real Property rather than Owned Real Property for purposes
hereof and TPI shall be deemed to have consented to the appropriate revisions to
the Schedules and any other necessary amendments to this Agreement to reflect
such election.
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5.17 Post Closing Sales of Management Stock. If (i) TPI has
delivered PCA a Dilution Notice in accordance with the terms hereof and (ii) any
members of management purchase Management Stock in the 120-day period following
the Closing Date, then either (x) TPI shall sell shares of its Common Stock to
such members of management, on the same terms as Newco would sell such shares,
provided that such sales by TPI would not violate any state and federal
securities laws and are in compliance with and pursuant to an exemption from
registration under all state and federal securities laws, or (y) in the event
that such sales by TPI cannot be implemented due to such restrictions in the
foregoing clause (x), Newco shall sell such shares of Common Stock to such
members of Management, and shall simultaneously redeem from TPI one share of
Common Stock for each share sold to such Persons, at a redemption price per
share equal to the per share price paid by the Persons purchasing such
Management Stock (provided such amount is equal to the price per share paid for
Common Stock purchased by PCA at Closing hereunder), provided such sales and
redemptions are permitted under the New Financing Arrangements. Any shares sold
by TPI under this Section 5.17 shall not be subject to, or entitle the holder to
any of the benefits of, the Stockholders Agreement or the Registration Rights
Agreement.
5.18 Certain Litigation and Claims. TPI shall indemnify Newco if and
to the extent any Losses for the following matters exceeds the following
amounts:
Matter No. 3.A on Schedule 3.7: $350,000
Matter No. 1.K on Schedule 3.7: $150,000
Matter No. 2.F on Schedule 3.7: $250,000
Newco shall use its commercially reasonable efforts to settle or otherwise
resolve such matters, in accordance with Newco's reasonable business judgment,
for the least amount practical. Upon request, Newco will inform TPI as to the
status of such matters. In the event Newco proposes a definitive settlement, for
which a settlement agreement has been agreed to by all of the other parties
thereto, that TPI does not approve, Newco may pay TPI the amount of such
settlement (up to the aforesaid limits), and TPI shall be responsible for, and
indemnify Newco from and against, all Losses in connection with such matters
5.19 ACC.
(a) The parties acknowledge that the shares of ACC held by TPI
are subject to the terms and conditions set forth in that certain
Subscription and Shareholders Agreement dated as of August 21, 1989,
between Larry E. Homan ("Homan") and TPI (the "ACC Agreement"), a
true and complete copy of which has been previously delivered to
PCA.
(b) Within 30 days from the date hereof, Newco shall instruct
TPI to (i) seek Homan's consent to the transfer of the ACC shares to
Newco without triggering the provisions of Section 5.1 or 5.2 of the
ACC Agreement, (ii) deliver an Offering Notice (as defined in the
ACC Agreement) to Homan under Section 5.1 of
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the ACC Agreement with respect to the proposed transfer of the ACC
shares to Newco, at a price to be reasonably determined (based upon
estimated fair market value) by TPI and Newco, granting Homan a
right of first refusal to purchase the shares of ACC owned by TPI at
such price on the terms set forth in Section 5.1 of the ACC
Agreement, or (iii) deliver a Notice of Purchase (as defined in the
ACC Agreement) to Homan under Section 5.2 of the ACC Agreement, at a
price determined by Newco, granting Homan the right to purchase
TPI's shares of ACC at such price, and requiring TPI to purchase
Homan's shares at such price if Homan does not elect to purchase
TPI's shares.
(c) If Homan consents to the transfer of the ACC shares to
Newco, or if an Offering Notice is given pursuant to Section
5.19(b)(ii) and Homan does not elect to purchase TPI's shares of
ACC, such shares shall be contributed to Newco as part of the
Contributed Assets. If an Offering Notice is given pursuant to
Section 5.19(b)(ii) or a Notice of Purchase is given pursuant to
Section 5.19(b)(iii) and Homan elects to purchase TPI's shares of
ACC, TPI shall sell such shares to Homan and Newco shall receive the
proceeds thereof. If a Notice of Purchase is given pursuant to
Section 5.19(b)(iii) and Homan does not elect to purchase TPI's
shares of ACC, Newco shall purchase Homan's shares of ACC, and TPI's
shares of ACC shall be contributed to Newco as part of the
Contributed Assets.
(d) In no event shall the Cash Contribution, the Cash
Distribution, or the stock issuances contemplated by this Agreement
be effected by the disposition or transfer of the ACC shares.
5.20 Write Down. Prior to Closing, TPI will write down the
Contributed Assets to fair market value based on the value of the consideration
received by TPI pursuant to this Contribution Agreement unless prohibited by
GAAP. The parties agree that 100% of the Common Stock of Newco will have a fair
market value of $430 million immediately after the transactions contemplated by
this Agreement.
5.21 Newco Right to Assume Certain Contracts. Newco shall have the
right to assume any Contract not included in the Assumed Liabilities by reason
of the exclusion in Section 1.1(j)(i) thereof. Newco must assume or reject such
Contract within 30 days after discovery or notice of such Contract. If Newco
assumes such Contract, such Contract shall be included in the Contributed
Assets. Any such assumption must be for all benefits and obligations under the
Contract arising from and after the date of assumption, provided that,
notwithstanding such assumption, TPI shall be liable for performance of all
obligations incurred prior to the date of assumption, and shall indemnify Newco
against any and all Losses attributable to such Contract arising or based on
event occurring prior to the date on which Newco elects to assume such Contract.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of PCA and TPI. The obligations of
the parties hereto to effect the Closing and otherwise under Article II hereof
are subject to the satisfaction (or waiver by both PCA and TPI) prior to the
Closing of the following conditions:
(a) HSR Act. All filings under the HSR Act shall have been made and
any required waiting period under such laws (including any extensions thereof
obtained by request or other action of any governmental authority) applicable to
the transactions contemplated hereby shall have expired or been earlier
terminated.
(b) No Injunctions. No court or governmental authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, non-appealable judgment, decree, injunction or other
order which is in effect on the Closing Date and prohibits the consummation of
the Closing.
6.2 Conditions to the Obligations of PCA. The obligations of PCA to
effect the Closing and otherwise under Article II hereof are subject to the
satisfaction (or waiver by PCA) prior to the Closing, of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of TPI contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all respects as of
the Closing, as if made as of the Closing (except that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date), except to the extent the failure of any such
representations or warranties to be true and correct in all respects could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and PCA shall have received a certificate to such effect dated
the Closing Date and executed by a duly authorized officer of TPI.
(b) Covenants. The covenants and agreements of TPI to be performed
on or prior to the Closing shall have been duly performed in all material
respects, and PCA shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of TPI.
(c) Most Recent Year End Statement. TPI shall have delivered the
Most Recent Year End Statement to PCA prepared and presented in accordance with
Sections 3.6 and 5.14 and on a consistent basis with the audited financial
statements for the year ended December 31, 1997. The Most Recent Year End
Statement shall demonstrate Adjusted EBITDA, as described in this Section
6.2(c), of at least $309.8 million. Adjusted EBITDA is defined as operating
profit adjusted for the following items (if reflected in Most Recent Year
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End Statement): plus (i) interest expense, plus (ii) depreciation, depletion and
amortization expenses, plus (iii) lease expense related to leases terminated as
a result of the transaction, minus (iv) amortization of deferred gain on
refinanced leases included in operating profit, plus (v) the amount of corporate
allocations minus management's estimate of total divisional and corporate
overhead costs ($69.2 million) plus divisional overhead costs, plus (vi) charge
related to the 1998 restructuring included in operating profit, and plus (vii)
rebates TPI or its Affiliates included in operating profit. An example of the
foregoing calculation is set forth on Schedule 6.2(c).
(d) New Financing Arrangements; No Liens or Indebtedness. PCA shall
have obtained, on behalf of TPI for assignment to and assumption by Newco at
Closing, the New Financing Arrangements under which TPI is to be the initial
borrower, and shall have obtained on behalf of Newco all other New Financing
Arrangements, in each case as described in the Commitment Letters or otherwise
on a basis reasonably satisfactory to PCA and TPI (as provided in Section
5.3(b)), and all conditions to funding under the New Financing Arrangements
shall have been satisfied or waived by requisite lenders thereunder. Each of the
Contributed Assets shall be free and clear of all Encumbrances other than
Permitted Encumbrances, and the Containerboard Business shall not have or be
liable for any indebtedness (meaning, for purposes hereof, any indebtedness for
borrowed money or any other obligation that is fixed as to amount or certainty),
or obligation giving rise to any lien on any of the Contributed Assets (other
that the Permitted Encumbrances) other than the Assumed Indebtedness. The
Purchased Property and all other Contributed Assets shall be free and clear of
all Encumbrances with respect to Existing Financing Arrangements.
(e) No Material Adverse Change. Since the date of the Most Recent
Statement of Assets and Liabilities, the Containerboard Business shall not have
suffered a Material Adverse Change.
(f) TPI Required Consents. TPI shall have obtained and delivered
copies to PCA of all Required Consents identified on Schedule 3.3 and any other
Consents reasonably indicated by PCA or Newco's lenders in connection with the
New Financing Arrangements as required for the continued operation of the
Containerboard Business by Newco following Closing in accordance with past
practices.
(g) Senior Management Arrangements. Newco shall have entered into an
employment arrangement with Mr. Paul T. Stecko on the terms set forth in that
certain letter dated January 25, 1999, between PCA and Mr. Stecko, and as of
Closing Mr. Stecko shall confirm that he is willing to serve in the capacity and
on the terms set forth in such letter.
(h) Resignation of Officers and Directors. All officers and
directors of the Contributed Subsidiaries shall resign, effective as of the
Closing, except as PCA shall otherwise request.
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(i) Closing Documents. TPI and Newco shall have executed and
delivered to Newco and PCA all of these documents, instruments, agreements and
other deliveries described in Sections 2.4(a) and 2.4(c).
(j) Estoppel Certificates. TPI shall have obtained and delivered
estoppel certificates with respect to those sites for which estoppel
certificates shall have been requested by the lenders in connection with the New
Financing Arrangements.
(k) Lemelson Settlement. Either (i) Newco shall have received from
the Lemelson Foundation Partnership, either directly or through TPI, a
royalty-free license or sublicense under all patents relating to machine vision,
bar coding or flexible manufacturing that either have issued, or that in the
future may issue, with Jerome H. Lemelson as a named inventor and which patents
are now, or in the future may be owned by, or able to be licensed by, the
Lemelson Foundation Partnership (collectively the "Lemelson Patents") and such
license or sublicense shall include the right for Newco to make, use, sell
and/or lease any and all products, apparatus, methods and services of the
Containerboard Business, subject to any additional terms and conditions included
in the royalty-free license (or sublicense), or (ii) in the event such a license
or sublicense is not obtained by Closing, TPI shall defend indemnify and hold
harmless the PCA Indemnified Parties from, against and in respect of any claim
of infringement of the Lemelson Patents asserted against any of the PCA
Indemnified Parties, directly or indirectly, relating to or arising out of Newco
making, using, selling and/or leasing products, apparatus, methods and services
of the Containerboard Business; provided TPI's obligations hereunder shall apply
only to the extent of the levels of production of the Containerboard Business
affected by the Lemelson Patents as of the Closing Date.
(l) Auditor Consent Letter. TPI shall have obtained and delivered a
copy to PCA of the Auditor Consent Letter and related "cold comfort" letter for
the financing arrangements contemplated as part of the New Financing
Arrangements, each of which shall be in form and substance reasonably
satisfactory to PCA.
(m) Existing Financing Arrangements; Leased Real Property. TPI shall
have delivered to PCA, in form and substance reasonably satisfactory to PCA,
evidence that all of the obligations arising under or related to the Existing
Financing Arrangements have been paid and satisfied in full and that TPI has
obtained a fee simple interest in all of the Purchased Property, free and clear
of all Encumbrances other than Permitted Encumbrances, but free and clear of all
Encumbrances in connection with the Existing Financing Arrangements.
(n) No Shared Facilities. Except as provided in the Facility Use
Agreement and for the Transition Real Property, none of the Owned Real Property
or the Leased Real Property or other assets of the Containerboard Business shall
be owned, used or occupied in whole or in part by TPI or any of its Affiliates
other than in connection with the operation of the Containerboard Business.
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6.3 Conditions to the Obligations of TPI. The obligations of TPI to
effect the Closing and otherwise under Article II hereof are subject to the
satisfaction (or waiver by TPI) prior to the Closing of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of PCA contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all respects as of
the Closing, as if made as of the Closing (except that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date), except to the extent the failure of any such
representations or warranties to be true and correct in all respects, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and TPI shall have received a certificate to such effect dated
the Closing Date and executed by a duly authorized officer of PCA.
(b) Covenants. The covenants and agreements of PCA to be performed
on or prior to the Closing shall have been duly performed in all material
respects, and TPI shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of PCA.
(c) New Financing Arrangements. PCA shall have obtained on behalf of
TPI, for assignment to and assumption by Newco at Closing, the New Financing
Arrangements under which TPI is to be the initial borrower and all conditions to
funding such New Financing Arrangements shall have been satisfied or waived. PCA
shall have obtained on behalf of Newco all other New Financing Arrangements and
all conditions to funding under such New Financing Arrangements shall have been
satisfied or waived.
(d) Management Incentive Plan. Any stock option, management
incentive, stock appreciation, phantom stock, or other similar plan established
for Newco's management as of the Closing whereby such persons receive, or
receive options or rights to acquire, any equity in Newco or equity-based
compensation shall provide that the maximum amount of equity or equity
equivalents (such as stock appreciation rights or phantom stock) that may be
earned, acquired, paid or distributed under such plan, together with Management
Stock issued at the Closing or within 120 days following Closing, shall not
exceed 9.8% of the outstanding equity (in a fully diluted basis) of Newco.
(e) Closing Documents. PCA and Newco shall have executed and
delivered to TPI and Newco, all of those documents, instruments, agreements and
other deliveries described in Section 2.4(b) and Section 2.4(i).
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ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 Survival. The representations and warranties contained in this
Agreement shall survive the Closing (regardless of any investigation, inquiry or
examination made by or on behalf of, or any knowledge of any party hereto or the
acceptance of any party or on its behalf of a certificate and opinion) for the
respective periods (each, a "Survival Period") set forth in this Section 7.1.
All of the representations and warranties of TPI contained in this Agreement and
all claims and causes of action with respect thereto shall terminate upon
expiration of the 18 month period commencing on the Closing Date, except that
(a) the representations and warranties set forth in Section 3.8 shall survive
until the expiration of the applicable statute of limitation (including any
extension thereof), (b) the representations and warranties set forth in Sections
3.1-3.5, 3.16(a)-(c), 3.17, and 4.1-4.6 shall have no expiration date and (c)
the representations and warranty set forth in Section 3.19 shall survive only
until Closing. Any claim for indemnification for breach of a representation and
warranty must be made during the applicable Survival Period. In the event notice
of any claim for indemnification for a breach of a representation or warranty is
given (within the meaning of Section 10.1) within the applicable Survival
Period, an Indemnifying Party's obligations with respect to such indemnification
claim shall survive until such time as such claim is finally resolved.
7.2 Indemnification by PCA and Newco.
(a) PCA shall indemnify, defend and hold harmless TPI, its
Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, members, attorneys, accountants, agents and employees
and their heirs, successors and assigns (the "TPI Indemnified Parties") from,
against and in respect of any damages, claims, losses, charges, actions, suits,
proceedings, deficiencies, Taxes, interest, penalties, and reasonable costs and
expenses (including reasonable attorneys' fees, removal costs, remediation
costs, closure costs, fines, penalties and expenses of investigation and ongoing
monitoring) (collectively, the "Losses") imposed on, sustained, incurred or
suffered by or asserted against any of the TPI Indemnified Parties, directly or
indirectly, relating to or arising out of (i) subject to Section 7.2(c), any
breach of any representation or warranty made by PCA contained in this
Agreement, and (ii) the breach of any covenant or agreement of PCA contained in
this Agreement.
(b) Newco shall indemnify, defend and hold harmless the TPI
Indemnified Parties and the PCA Indemnified Parties from, against and in respect
of any Losses imposed on, sustained, incurred or suffered by or asserted against
any of the TPI Indemnified Parties or the PCA Indemnified Parties, directly or
indirectly, relating to or arising out of (i) the breach of any covenant or
agreement of Newco contained in this Agreement, and (ii) the Assumed
Liabilities; provided that Newco shall have no indemnification obligations
hereunder in respect
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of Losses incurred or suffered by a Person solely in such Person's capacity as
an equity holder or a debt holder (such as a diminution of value of such equity
or debt) of Newco.
(c) PCA shall not be liable to the TPI Indemnified Parties for any
Losses with respect to the matters contained in Section 7.2(a)(i) except to the
extent (and then only to the extent) the Losses therefrom exceed an aggregate
amount equal to $12,500,000 (the "Deductible"), and then only for all such
Losses in excess thereof up to an aggregate amount equal to $150,000,000 (the
"Cap"); provided that Losses from breaches of the representations and warranties
in Sections 4.1-4.6 shall not be subject to the Cap and the Deductible.
(d) TPI acknowledges that this Article VII constitutes TPI's sole
remedy against PCA or Newco with respect to any of the matters referred to
herein other than with respect to claims based on fraud, including any Losses or
liability under any Environmental Law or with respect to any Hazardous
Substances, and expressly waives any other rights or causes of action, including
under any Environmental Law or with respect to any claim involving the presence
of or exposure to any Hazardous Substances.
7.3 Indemnification by TPI.
(a) TPI shall indemnify, defend and hold harmless Newco, PCA, their
Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, members, lenders, attorneys, accountants, agents and
employees and their heirs, successors and assigns (the "PCA Indemnified Parties"
and, collectively with the TPI Indemnified Parties, the "Indemnified Parties")
from, against and in respect and to the extent of any Losses imposed on,
sustained, incurred or suffered by or asserted against each of the PCA
Indemnified Parties, directly or indirectly, relating to or arising out of
(i) subject to Section 7.3(b), any breach of any
representation or warranty made by TPI contained in this Agreement;
(ii) the Retained Liabilities;
(iii) the breach of any covenant or agreement of TPI contained
in this Agreement;
(iv) provided such claim is made during the 18-month period
commencing on the Closing Date, any liabilities from any Losses
arising from, related to or incurred in connection with any state of
facts or conditions or transactions (or series of facts, conditions
or transactions) existing at or prior to the Closing Related to the
Containerboard Business, other than (A) the Assumed Indebtedness,
(B) the liabilities reflected on the Final Working Capital
Statement, (C) liabilities and obligations disclosed pursuant to
TPI's representations or warranties in this Agreement or in the
Disclosure Memorandum (none of which relates to any liability
resulting from a breach
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of contract, breach of warranty, tort, infringement claim or
lawsuit), (D) matters arising from or in connection with the matters
disclosed on Schedule 3.7 or Schedule 3.11, and (E) other
liabilities incurred in the ordinary course of business (none of
which is or relates to any liability resulting from a breach of
contract, breach of warranty, tort, infringement claim or lawsuit);
provided, however, that if a liability for a matter which for
indemnification is sought under this clause (iv) would also
constitute a breach of a representation or warranty of TPI in
Article III hereof (other than Section 3.19), TPI's sole obligation
with respect to such liability, if any, shall be determined pursuant
to Section 7.3(a)(i) hereof and not this Section 7.3(a)(iv), and
provided further that TPI shall not have any liability with respect
to a matter that is the subject of a representation and warranty
hereunder but which was not required to be disclosed hereunder or in
the Disclosure Memorandum due to the specific thresholds or
exclusions included in such representation and warranty; and
(v) any liabilities arising with respect to the matters
described in Section 6.2(k)(ii).
Newco and PCA acknowledge that Section 5.12(c), Section 5.18, and this Article
VII constitute Newco's and PCA's sole remedy with respect to any of the covered
by this Article VII, other than with respect to claims based on fraud, including
any Losses or liability under any Environmental Law or with respect to any
Hazardous Substances and expressly waives any other rights or causes of action,
including under any Environmental Law or with respect to any claim involving the
presence of or exposure to any Hazardous Substances.
(b) TPI shall not be liable to the PCA Indemnified Parties for any
Losses with respect to the matters contained in Section 7.3(a)(i) except to the
extent (and then only to the extent) the Losses therefrom exceed an aggregate
amount equal to the Deductible, and then only for all such Losses in excess
thereof up to an aggregate amount equal to the Cap; provided that Losses from
breaches of the representations and warranties in Sections 3.1-3.5, 3.8,
3.16(a)-(c) and 3.17 shall not be subject to the Cap or the Deductible. TPI
shall not be liable to the PCA Indemnified Parties for any Losses for which and
to the extent (and only to the extent) a reserve is specifically provided on the
Final Working Capital Statement that was not specifically provided in the Most
Recent Statement of Assets or Liabilities, or to the extent of any increase in
any such reserve on the Final Working Capital Statement from the amount of such
reserve on the Most Recent Statement of Assets and Liabilities. In order to
avoid double counting, the portion of any Loss incurred or sustained by Newco
and PCA, respectively, will be determined after giving effect to indemnification
payments (if any) made in respect of such Loss to the other Person. In the event
of a breach of the representation contained in Section 3.8(h), the amount of any
Loss shall be determined in the same manner in which Tax Benefits are determined
under Section 7.6.
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7.4 Indemnification Procedures.
(a) Any Indemnified Person making a claim for indemnification
pursuant to Section 7.2 or 7.3 above must give the party from whom
indemnification is sought (an "Indemnifying Party") written notice of such claim
describing such claim with reasonable particularity and the nature and amount of
such Loss to the extent that the nature and amount of such Loss is known at such
time) (an "Indemnification Claim Notice") promptly after the Indemnified Party
receives any written notice of any action, lawsuit, proceeding, investigation or
other claim (a "Proceeding") against or involving the Indemnified Party by a
Governmental Authority or other third party or otherwise discovers the
liability, obligations or facts giving rise to such claim for indemnification;
provided that the failure to notify or delay in notifying an Indemnifying Party
will not relieve the Indemnifying Party of its obligations pursuant to Section
7.2 or 7.3, as applicable, except to the extent that (and only to the extent
that) such failure shall have caused the damages for which the Indemnifying
Party is obligated to be greater than such damages would have been had the
Indemnified Party given the Indemnifying Party prompt notice hereunder.
(b) The Indemnifying Party shall have 30 days from the personal
delivery or mailing of the Indemnification Claim Notice (the "Notice Period") to
notify the Indemnified Party (i) whether or not the Indemnifying Party disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (ii) whether or not it desires to defend the
Indemnified Party against such claim or demand.
(c) If (i) the Indemnifying Party agrees in writing to be,
responsible for the full amount of such Loss, and (ii) the claim for
indemnification does not relate to a matter (A) that, if determined adversely,
could reasonably be expected to expose the Indemnified Party to criminal
prosecution or penalties, (B) that, if determined adversely, could reasonably be
expected to result in the imposition of a consent order, injunction or decree
which would restrict the activity or conduct of the Indemnified Party or any
Affiliate thereof, or (C) for which the Indemnified Party shall have reasonably
concluded, in good faith, after consultation with the Indemnifying Party, that
such representation is likely to result in a conflict of interest or materially
jeopardize the viability of such defense, then the Indemnifying Party shall have
the right to defend the Indemnified Party by appropriate proceedings and shall
have the sole power to direct and control such defense. If any Indemnified Party
desires to participate in any such defense, it may do so at its sole cost and
expense. The Indemnifying Party in no event shall have any right to control (as
opposed to participate in pursuant to Section 7.4(d) hereof) the defense of any
claim and shall pay the expenses of the Indemnified Party's defense of such
claim if:
(x) the Indemnifying Party does not agree in writing to be
responsible for the full amount of any claim;
(y) the claim for indemnification Relates to a matter (A)
that, if determined adversely, could reasonably be expected to
expose the Indemnified Party
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to criminal prosecution or penalties, (B) that, if determined
adversely, could reasonably be expected to result in the imposition
of a consent order, injunction or decree which would restrict the
activity or conduct of the Indemnified Party or any Affiliate
thereof, (C) for which the Indemnified party shall have reasonably
concluded, in good faith, after consultation with the Indemnifying
Party, that such representations is likely to result in a conflict
of interest or materially jeopardize the viability of such defense;
or
(z) a court determines that the Indemnified Party is not
vigorously defending the claim.
(d) If the claim relates to a matter for which both the Indemnifying
Party and any Indemnified Party could be liable or responsible hereunder, such
as a Loss for which both parties could be partially liable due to the Cap and
Deductible, the Indemnifying Party and the Indemnified Parties shall cooperate
in good faith in the defense of such action. No party shall settle any claim
without the prior consent of the other party (which consent shall not be
unreasonably withheld); provided, however, that an Indemnified Party shall not
be required to consent to any settlement if the proposed settlement (i) does not
provide for a full release of all claims against such Indemnified Party, (ii) is
on a basis which would result in the imposition of a consent order, injunction
or decree or any other restriction on the activity or conduct of such
Indemnified Party, or (iii) is on a basis which could, in such Indemnified
Party's judgment, expose such Indemnified Party to criminal liability or
required an admission of wrongdoing by such Indemnified Party; provided further
that, the foregoing notwithstanding, an Indemnified Party may settle or
compromise any claim without the prior consent of the Indemnifying Party if
under Section 7.3(c) the Indemnifying Party had no right to control the defense
of such claim. If an Indemnified Party does not consent to a definitive
settlement proposed by the Indemnifying Party (with respect to which a
settlement agreement has been agreed to by all parties other than the
Indemnified Party) which settlement satisfies the foregoing clauses (i) through
(iii) or if the Indemnifying Party does not consent to a settlement proposed by
an Indemnified Party, then the party declining such settlement shall thereafter
have full control of the defense of such claim, and the maximum liability of the
party that proposed such settlement shall be determined as though such matter
had settled on the terms so proposed, and, if applicable, the amount of the
proposed settlement, together with all legal costs and expenses incurred in
connection with such matter through and including the proposed settlement date,
shall be deemed the amount of the Loss of the Indemnified Party for purposes of
determining whether the Cap and Deductible have been met. If both parties agree
to the settlement, the relative liabilities of the parties for such Losses shall
be determined as provided in the other provisions of this Article VII.
(e) All costs and expenses incurred by the Indemnifying Party in
defending claim or demand under Section 7.4(c), and all costs and expenses
incurred by the Indemnified Party in defending claim or demand which the
Indemnifying Party has elected not to defend (including by virtue of its failure
to give timely notice to the Indemnified Party) or is not permitted to defend
under Section 7.4(c) shall be a liability of, and shall be paid by, the
Indemnifying Party.
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(f) To the extent the Indemnifying Party shall direct, control or
participate in the defense or settlement of any third-party claim or demand, the
Indemnified Party will give the Indemnifying Party and its counsel access to,
during normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnifying Party and Indemnified Parties shall use
their best efforts in the defense of all such claims.
7.5 Acknowledgment Regarding Environmental Liabilities. PCA and TPI
acknowledge the allocation of relative responsibility for liabilities under
Environmental Laws under this Agreement is a material term of this Agreement,
and that (i) they have taken such matters into consideration in determining the
financial and other terms of this transaction, and (ii) they understand that
Newco is accepting all risks resulting or arising in any way from any known or
unknown liabilities in connection with such matters (other than the Retained
Environmental Liabilities or liabilities as to which indemnification is provided
under Section 7.3(a)) and TPI is retaining all risks relating the Retained
Environmental Liabilities and indemnifying Newco for certain Losses relating to
environmental matters under Section 7.3(a), and (iii) they acknowledge that
neither shall have any claim of any nature against the other or the other's
Affiliates in connection with any matters relating to known or unknown soil or
groundwater contamination or any other claims under any Environmental Laws,
other than as set forth herein.
7.6 Computation of Losses Subject to Indemnification. The amount of
any Loss for which indemnification is provided under this Article VII shall be
computed net of any insurance proceeds actually received by the Indemnified
Party in connection with such Loss. Indemnification for any Loss shall be
determined and paid without reduction for any Tax Benefits not yet realized by
the Indemnified Party. The Indemnified Party will pay to the Indemnifying Party
the amount of any Tax Benefits attributable to the Loss actually realized by the
Indemnified Party promptly after such Tax Benefits are realized; provided,
however, that in the event such Tax Benefits are realized prior to the
indemnification payment hereunder, such indemnification payment shall be reduced
by Tax Benefits previously realized in lieu of a separate payment to the
Indemnifying Party. The amount of any Tax Benefit shall be determined (i) by
comparing the liability of the Indemnified Party for Taxes, determined without
the Loss, to the liability of the Indemnified Party for Taxes, taking into
account the Loss and (ii) by treating any items attributable to the Loss as the
last items claimed by the Indemnified Party in any given Tax Period. The amount
of any Loss for which indemnification is provided under this Article VII shall
exclude consequential and punitive damages and lost profits by an Indemnified
Party, provided that any consequential or punitive damages or lost profits of a
third party for which an Indemnified Party is liable shall be included in
computing such Indemnified Party's Loss.
7.7 Characterization of Indemnification Payments. All amounts paid
by PCA, Newco, or TPI, as the case may be, under Article II, Article V, this
Article VII, or Article VIII shall be treated as adjustments to the amount
contributed to Newco by PCA or TPI, pursuant to Section 2.4(a) or (b) hereof, as
appropriate for all Tax purposes.
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ARTICLE VIII
TAX COVENANTS
8.1 Liability for Taxes.
(a) TPI shall be liable for, and shall indemnify, defend and hold
Newco harmless from and against, any and all Taxes imposed on or with respect to
the Contributed Subsidiaries, or their respective assets, operations or
activities for any Pre-Closing Period, except to the extent that any such Taxes
are a Current Liability and are reflected on the Final Working Capital
Statement.
(b) Newco shall be liable for, and shall indemnify, defend and hold
TPI harmless from and against, any and all Taxes imposed on or with respect to
the Contributed Subsidiaries or their respective operations, ownership, assets
or activities for any Post-Closing Period.
(c) Tax items shall be apportioned between Pre-Closing Periods and
Post-Closing Periods based on a closing of the books and records of the relevant
entity or entities as of the Closing Date (provided that (i) depreciation,
amortization and depletion for any Straddle Period shall be apportioned on a
daily pro rata basis and (ii) any Taxes imposed on a periodic basis (including
real property Taxes, but not including Taxes based on income and receipts) for
any Straddle Period shall be apportioned on a daily pro rata basis).
Notwithstanding anything to the contrary in the preceding sentence, the parties
agree that for U.S. federal income Tax purposes, Tax items for any Straddle
Period shall be apportioned between Pre-Closing Periods and Post-Closing Periods
in accordance with U.S. Treasury Regulation Section 1.1502-76(b), which
regulation shall be reasonably interpreted by the parties in a manner intended
to achieve the method of apportionment described in the preceding sentence.
Neither TPI nor PCA will exercise any option or election (including any election
to ratably allocate a Tax year's items under Treasury Regulation Section
1.1502-76(b)(2)(ii)) to allocate Tax items in a manner inconsistent with this
section.
8.2 Preparation of Tax Returns.
(a) TPI shall have the right and obligation to timely prepare and
file, and cause to be timely prepared and filed, when due, any Tax Return that
is required to include the operations, ownership, assets or activities of TPI,
with respect to the Contributed Assets, or of any Contributed Subsidiary for Tax
Periods ending on or before the Closing Date. TPI shall provide Newco with
copies of any such Tax Returns (to the extent that they relate to the
Contributed Assets or the Containerboard Business and reasonably may have a
material effect on Newco's and its Affiliates' liability for Taxes) at least 30
days prior to the due date (as extended) for filing such Tax Returns. In the
event that Newco reasonably determines that any such Tax Return should be
modified, Newco shall notify TPI of Newco's proposed
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modifications no later than 15 days from the date of receipt of such Tax Return.
To the extent that TPI disagrees with such modifications, Newco and TPI shall
endeavor to agree on the positions to be taken on such return. To the extent
that they are unable to do so, a "Big-Five" accounting firm (other than the
regular auditor of TPI or Newco) shall be retained to determine the position to
be taken, with the fees and expenses of such accounting firm to be borne equally
by TPI and Newco. Any such Tax Return which TPI is required to prepare under the
terms hereof shall (to the extent such Tax Return relates to the Contributed
Assets or the Containerboard Business and reasonably may have a material effect
on Newco's or its Affiliates' Tax liability) be prepared in accordance with past
Tax accounting practices used with respect to the Tax Returns in question
(unless such past practices are no longer permissible under the Applicable Tax
Law), and to the extent any item is not covered by such past practices (or such
past practices are no longer permissible under the Applicable Tax Law), in
accordance with reasonable Tax accounting practices selected by TPI. Newco shall
have the right and obligation to timely prepare and file, or cause to be timely
prepared and filed, when due, all Tax Returns that are required to include the
operations, ownership, assets or activities Related to the Containerboard
Business or of any Contributed Subsidiary for any Tax Period ending after the
Closing Date (including, solely with respect to the Contributed Subsidiaries,
Straddle Period Returns). Newco shall provide TPI with copies of any Straddle
Period Tax Returns required to be filed by Newco hereunder at least 30 days
prior to the due date (as extended) for filing such Tax Returns. In the event
TPI reasonably determines that any Straddle Period Tax Return should be
modified, TPI shall notify Newco of TPI's proposed modifications no later than
fifteen days from the date of receipt of such Tax Return. To the extent that
Newco disagrees with such modifications, Newco and TPI shall endeavor to agree
on the positions to be taken on such return. To the extent that they are unable
to do so, a "Big Five" accounting firm (other than the regular auditor of TPI or
Newco) shall be retained to determine the position to be taken, with the fees
and expenses of such accounting firm to be borne equally by TPI and Newco. Any
Straddle Period Tax Return which Newco is required to prepare under the terms
hereof shall be prepared in accordance with past Tax accounting practices used
with respect to the Tax Returns in question (unless such past practices are no
longer permissible under the Applicable Tax Law), and to the extent any item is
not covered by such past practices (or such past practices are no longer
permissible under the Applicable Tax Law), in accordance with reasonable Tax
accounting practices selected by Newco.
(b) TPI shall prepare and provide to Newco such Tax information as
is reasonably requested by Newco with respect to the operations, ownership,
assets or activities of TPI, with respect to the Contributed Assets, or of any
Contributed Subsidiary for Straddle Periods to the extent such information is
relevant to any Tax Return which Newco has the right and obligation hereunder to
file.
(c) The party not preparing a Tax Return shall pay the party
preparing such Tax Return an amount equal to the non-preparing party's share of
the Taxes shown on such Tax Return, if any, determined in accordance with the
principles of Articles VII and VIII, not later than 2 business days before the
filing of such Tax Return.
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8.3 Amended Tax Returns.
(a) Any amended Tax Return or claim for Tax refund for any
Contributed Subsidiary for any Pre-Closing Period other than a Straddle Period
shall be filed, or caused to be filed, only by TPI who shall not be obligated to
make (or cause to be made) such filing. TPI shall not, without the prior written
consent of Newco (which consent shall not be unreasonably withheld or delayed),
make or cause to be made, any such filing, to the extent such filing, if
accepted, reasonably might change the Tax liability of Newco or any Affiliate of
Newco for any Post-Closing Period. At Newco's request, TPI shall file an amended
Tax Return with respect to Taxes accrued on the Final Working Capital Statement,
except to the extent TPI reasonably objects.
(b) Any amended Tax Return or claim for Tax refund for any Straddle
Period shall be filed by the party responsible for filing the original Tax
Return hereunder if either Newco or TPI so requests, except that such filing
shall not be done without the consent (which shall not be unreasonably withheld
or delayed) of Newco (if the request is made by TPI) or of TPI (if the request
is made by Newco).
(c) Any amended Tax Return or claim for Tax refund for any
Post-Closing Period other than a Straddle Period shall be filed, or caused to be
filed, only by Newco, who shall not be obligated to make (or cause to be made)
such filing. Newco shall not, without the prior written consent of TPI (which
consent shall not be unreasonably withheld or delayed) file, or cause to be
filed, any such filing to the extent that such filing, if accepted, reasonably
might change the Tax liability of TPI or any Affiliates of TPI for any
Pre-Closing Period.
8.4 Carrybacks and Carryforwards.
(a) To the extent permitted by Applicable Tax Law, unless TPI, in
its sole and absolute discretion, consents, Newco shall not and shall not permit
any Contributed Subsidiary to carry back any losses or credits accruing after
the Closing Date to any Tax Return of TPI, a Contributed Subsidiary, or any
Affiliate of either TPI or a Contributed Subsidiary for any Pre-Closing Period.
To the extent permitted by Applicable Tax Law, Newco shall and shall cause each
Contributed Subsidiary to make any elections and take all such actions necessary
to avoid any such carry back. To the extent that, under Applicable Tax Law, a
Contributed Subsidiary is required to carry back any losses or credits accruing
after the Closing Date to any Tax Return of TPI or its Affiliates, TPI shall pay
to Newco the amount of any Tax Benefit actually realized by TPI and its
Affiliates as a result of such carryback promptly after such Tax Benefits are
realized. The amount of any Tax Benefit shall be determined (i) by comparing the
liability of TPI and its Affiliates for Taxes, determined without the carryback,
to the liability of TPI and its Affiliates for Taxes, taking into account the
carryback and (ii) by treating the carryback as the last item claimed by TPI and
its Affiliates in any given Tax Period.
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(b) TPI shall not be liable hereunder for any decrease to any net
operating loss carry forward or any other Tax attributes available to a
Contributed Subsidiary resulting from adjustments to any item of income,
deduction, credit, or exclusion on Tax Returns for which TPI is responsible.
8.5 Additional Tax Matters.
(a) As of the Closing Date, TPI shall cause all Tax allocation, Tax
sharing, Tax reimbursement and similar arrangements or agreements between TPI
and its Affiliates, on the one hand, and any of the Contributed Subsidiaries, on
the other, to be extinguished and terminated with respect to such Contributed
Subsidiaries and any rights or obligations existing under any such agreement or
arrangement to be no longer enforceable.
(b) After the Closing Date, Newco will cause appropriate employees
of the Contributed Subsidiaries to prepare usual and customary Tax Return
packages with respect to the Tax Period beginning January 1, 1999 and ending as
of the Closing Date. Newco will use its commercially reasonable efforts to cause
such Tax Return packages to be delivered to TPI on or before March 1, 2000, but
in any event not later that May 1, 2000.
(c) TPI and Newco agree that Newco has acquired substantially all of
the property used in the Containerboard Business and that in connection
therewith Newco will employ individuals who immediately before the Closing Date
were employed in such trade or business by TPI. Accordingly, pursuant to Rev.
Proc. 96-60, 1996-2 C.B. 399, provided that TPI makes available to Newco all
necessary payroll records for the calendar year that includes the Closing Date,
Newco will furnish a Form W-2 to each employee employed by Newco who had been
employed by TPI, disclosing all wages and other compensation paid for such
calendar year, and Taxes withheld therefrom, and TPI will be relieved of the
responsibility to do so.
(d) If Newco or any Contributed Subsidiary receives a Tax refund
with respect to Taxes of any Contributed Subsidiary attributable to a
Pre-Closing Period (other than a Tax refund accrued on the Final Working Capital
Statement or a refund of Taxes accrued on the Final Working Capital Statement )
Newco shall pay, within the thirty (30) days following the receipt of such Tax
refund, the amount of such Tax refund, net of any Taxes imposed thereon, to TPI.
If TPI receives a Tax refund with respect to Taxes of any Contributed Subsidiary
attributable to any Post-Closing Period or any Taxes accrued on the Final
Working Capital Statement, TPI will pay, within thirty (30) days following the
receipt of such Tax refund, the amount of such Tax refund, net of any Taxes
imposed thereon, to Newco. In the case of any Tax refund with respect to Taxes
of a Contributed Subsidiary attributable to a Straddle Period, the Tax refund
shall be apportioned between Pre-Closing Periods and Post-Closing Periods in
accordance with the principles of Section 8.1(c) hereof; provided that to the
extent any Tax refund for a Straddle Period was accrued on the Final Working
Capital Statement, such refund shall be for the account of Newco. The reduction
of any Tax refund amount under this Section 8.5(d) by the amount of Taxes
imposed on the payor's receipt of
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such refund, shall be determined in the same manner in which Tax Benefits are
determined and paid under Section 7.6.
(e) To the extent requested by TPI, Newco agrees that it will timely
file all required applications and notices with the appropriate authorities to
the extent necessary, under the applicable forest Tax laws, to maintain the
current property tax classification of TPI's timberland properties being
contributed to Newco under the terms hereof, except to the extent that any such
filing would adversely affect Newco.
8.6 Tax Controversies; Cooperation.
(a) TPI shall control any audit, dispute, administrative, judicial
or other proceeding related to Tax Returns filed for Pre-Closing Periods, and
Newco shall control any audit, dispute, administrative, judicial or other
proceeding related to Tax Returns filed for Post-Closing Periods and Straddle
Periods of any Contributed Subsidiary. Subject to the preceding sentence, in the
event an adverse determination may result in each party having responsibility
for any amount of Taxes, each party shall be entitled to fully participate in
that portion of the proceedings relating to the Taxes with respect to which it
may incur liability hereunder. For purposes of this Section 8.6(a), the term
"participation" shall include (i) participation in conferences, meetings or
proceedings with any Tax Authority, the subject matter of which includes an item
for which such party may have liability hereunder, (ii) participation in
appearances before any court or tribunal, the subject matter of which includes
an item for which a party may have liability hereunder, and (iii) with respect
to the matters described in the preceding clauses (i) and (ii), participation in
the submission and determination of the content of the documentation, protests,
memorandum of fact and law, briefs, and the conduct of oral arguments and
presentations.
(b) Newco and TPI shall not agree to settle any Tax liability or
compromise any claim with respect to Taxes, which settlement or compromise may
affect the liability for Taxes (or right to a Tax Benefit) hereunder of the
other party, without such other party's consent (which consent shall not be
unreasonably withheld or delayed).
(c) Newco and TPI shall bear their own expenses incurred in
connection with audits and other administrative judicial proceedings relating to
Taxes for which such party and its Affiliates are liable.
(d) TPI on the one hand, and Newco and the Contributed Subsidiaries,
on the other, shall cooperate (and cause their Affiliates to cooperate) with
each other and with each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the Contributed Assets and
the Contributed Subsidiaries, including (i) preparation and filing of Tax
Returns, (ii) determining the liability and amount of any Taxes due or the right
to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and
(iv) any administrative or judicial proceeding in respect of Taxes assessed or
proposed to be assessed. Such cooperation shall include each party making all
information and documents
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in its possession relating to the Contributed Subsidiaries available to the
other party. The parties shall retain all Tax Returns, schedules and work
papers, and all material records and other documents relating thereto, until one
year after the expiration of the applicable statute of limitations (including,
to the extent notified by any party, any extension thereof) of the Tax Period to
which such Tax Returns and other documents and information relate. Each of the
parties shall also make available to the other party, as reasonably requested
and available, personnel (including officers, directors, employees and agents)
responsible for preparing, maintaining, and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by agreement of PCA and TPI;
(b) by either PCA or TPI by giving written notice of such
termination to the other party if the Closing shall not have occurred on or
prior to June 30, 1999, provided that the terminating party is not in material
breach of its obligations under this Agreement;
(c) by either PCA or TPI if there shall be in effect any law or
regulation that prohibits the consummation of the Closing or if consummation of
the Closing would violate any non-appealable final order, decree or judgment of
any court or governmental body having competent jurisdiction;
(d) by TPI if, as a result of action or inaction by PCA, the Closing
shall not have occurred on or prior to the date that is 10 Business Days
following the date on which the Closing is required to occur pursuant to Section
2.4;
(e) by PCA if, as a result of action or inaction by TPI, the Closing
shall not have occurred on or prior to the date that is 10 Business Days
following the date on which the Closing is required to occur pursuant to Section
2.4; or
(f) by either party, prior to Closing, following a material breach
of this Agreement by the other party hereto, upon 10 Business Days' written
notice to the breaching party, unless such breach is cured within such 10
Business Day period; provided that the terminating party is not in material
breach of its obligations under this Agreement.
9.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 9.1, this Agreement shall thereafter become
void and
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have no effect, and no party hereto shall have any liability to the other party
hereto or their respective Affiliates, directors, officers or employees, except
for the obligations of the parties hereto contained in this Section 9.2 and in
Sections 10.1, 10.7, 10.8 and 10.11, and except that nothing herein will relieve
any party from liability for any breach of this Agreement prior to such
termination. Upon such termination, PCA shall (i) return immediately all of the
originals or copies of the Books and Records to TPI, (ii) return (or, at TPI's
option, destroy) all other copies of any Evaluation Material (as defined in the
Confidentiality Agreement) in its possession or in the possession of its
Affiliates, directors, officers, employees, agents and attorneys, and (iii)
hold, and cause each of said parties to hold, all of such materials and the
information contained in the Books and Records or Evaluation Material in
confidence subject to the terms of the Confidentiality Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices or other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service, or
if sent by facsimile transmission; provided that the facsimile transmission is
promptly confirmed by telephone confirmation thereof, to the Person at the
address or facsimile number set forth below, or such other address or facsimile
number as may be designated in writing hereafter, in the same manner, by such
Person:
To PCA: PCA HOLDINGS LLC
c/o Madison Dearborn Partners, Inc.
Three First National Plaza
Suite 3800
Chicago, IL 60602
Telephone: (312) 895-1000
Fax: (312) 895-1056
Attn: Samuel M. Mencoff
Justin S. Huscher
With a copy to: KIRKLAND & ELLIS
200 East Randolph Drive
Chicago, IL 60601
Telephone: (312) 861-2000
Fax: (312) 861-2200
Attn: William S. Kirsch, P.C.
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<PAGE>
To TPI: TENNECO PACKAGING INC.
1900 West Field Court
Lake Forest, Illinois 60045
Telephone: (847) 482-2447
Fax: (847) 482-4589
Attn: President
With a copy to: TENNECO PACKAGING INC.
1900 West Field Court
Lake Forest, Illinois 60045
Telephone: (847) 482-2430
Fax: (847) 482-4589
Attn: General Counsel
10.2 Amendment; Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by PCA and TPI, or in the case of a waiver,
by the party against whom the waiver is to be effective. No failure or delay by
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
10.3 Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto (not to be unreasonably withheld), except that (i) a
party may collaterally assign its rights and obligations under this Agreement to
a lender as security for a loan to Newco or its Subsidiaries, (ii) following
Closing, PCA and TPI may assign their rights, but not their obligations, to any
Person to whom PCA or TPI may transfer their shares in Newco, and (iii) Newco
may assign its rights under this Agreement in connection with any sale of all or
any portion of timberland (and tree farms associated with the Mills) including
any assets or operations related to or located thereon, to the extent such
assigned rights relate to the assets so sold.
10.4 Entire Agreement. This Agreement (including the Preliminary
Statements, all Schedules and Exhibits hereto and the Ancillary Agreements)
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters, except for the obligations of the
parties under the Confidentiality Agreement and the obligations of Madison
Dearborn Partners, Inc., set forth in that certain letter dated January 25,
1999, to Goldman, Sachs & Co., which obligations will remain in full force and
effect.
10.5 Fulfillment of Obligations. Any obligation of any party to any
other party under this Agreement or any of the Ancillary Agreements, which
obligation is performed,
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satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
10.6 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than PCA, TPI, Newco or their respective successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
10.7 Public Disclosure. Notwithstanding anything herein to the
contrary, except as may be required to comply with the requirements of any
applicable Laws and the rules and regulations of each stock exchange upon which
the securities of one of the parties (or its Affiliate) is listed, no press
release or similar public announcement or communication shall, prior to the
Closing, be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto.
10.8 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses. Notwithstanding the foregoing, (a) all expenses of PCA shall be
paid by Newco, (b) all legal and accounting fees and expenses of TPI incurred in
connection with negotiating the terms of this Agreement and the Ancillary
Agreements and otherwise in connection with the transactions contemplated under
this Agreement and the Ancillary Agreements (not to exceed $2,000,000) shall be
paid by Newco, (c) the 1.5% Commitment Fee with respect to the Bridge Loan
pursuant to the Commitment Letters, if such commitment is obtained by Newco
pursuant to the direction of TPI, shall be paid by TPI as set forth in Section
5.3(b) hereof, and (d) the MDP Transaction Fee shall be paid by Newco, provided
that the aggregate amount of bank fees and expenses (excluding any Commitment
Fee with respect to the Bridge Loan) paid by Newco plus the MDP Transaction Fee
shall not exceed $90 million.
10.9 Schedules. The disclosure of any matter in any Schedule shall
not be deemed to constitute an admission by PCA or TPI or to otherwise imply
that any such matter is material for the purposes of this Agreement.
10.10 Bulk Transfer Laws. PCA and Newco acknowledge that TPI has not
taken, and does not intend to take, any action required to comply with any
applicable bulk sale or bulk transfer laws or similar laws; provided that TPI
shall indemnify PCA for any Losses arising from such non-compliance.
10.11 Governing Law; Submission to Jurisdiction; Selection of Forum.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Illinois. Each party hereto agrees that it shall bring any
action or proceeding in respect of any claim arising out of or related to this
Agreement or the transactions contained in or
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contemplated by this Agreement, whether in tort or contract or at law or in
equity, exclusively in the United States District Court for the Northern
District of Illinois or any state court located in Cook County, Illinois (the
"Chosen Courts") and (i) irrevocably submits to the exclusive jurisdiction of
the Chosen Courts, (ii) waives any objection to laying venue in any such action
or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen
Courts are an inconvenient forum or do not have jurisdiction over any party
hereto, and (iv) agrees that service of process upon such party in any such
action or proceeding shall be effective if notice is given in accordance with
Section 10.1 of this Agreement.
10.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
10.13 Headings. The heading references herein and the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
10.14 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Contribution
Agreement as of the date first written above.
TENNECO PACKAGING INC.
By: /s/ Theodore R. Tetzlaff
----------------------------------
Name: Theodore R. Tetzlaff
Title: Authorized Signatory
PCA HOLDINGS LLC
By: /s/ Sammuel M. Mencoff
---------------------------------
Name: Sammuel M. Mencoff
Title: Managing Director
PACKAGING CORPORATION OF AMERICA
By: /s/ Sammuel M. Mencoff
---------------------------------
Name: Sammuel M. Mencoff
Title: Vice President
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SCHEDULES AND EXHIBITS
Schedules
Schedule PS-1 - Existing Financing Arrangements
Schedule PS-2 - Term Sheet for Management Stock Purchases
Schedule 1.1(ff) - Contributed Subsidiaries
Schedule 1.1(hhh) - TPI Employees with "Knowledge"
Schedule 1.1(mmm) - Exceptions to Material Adverse Change or Effect
Schedule 1.1(vvv) - Owned Real Property
Schedule 1.1(gggg) - Real Estate Leases
Schedule 1.1(pppp) - Retained Real Property
Schedule 1.1(llll)(iii) - Retained Notes Receivable
Schedule 1.1(nnnn)(iii) - Retained Litigation
Schedule 1.1(vvvv) - Supply Agreement Pricing Terms
Schedule 1.1(ggggg) - Services and Pricing under Transition Services
Agreement and Facility Use Agreement
Schedule 2.5 - Target Capital Expenditure
Schedule 3.1 - TPI Qualifications
Schedule 3.3 - TPI Consent and Approvals
Schedule 3.6 - Certain Matters Related to Financial Statements
Schedule 3.6 - Financing Statements
Schedule 3.6(e) - Changes Since 12/31/97
Schedule 3.7 - Litigation and Claims
Schedule 3.8 - Taxes
Schedule 3.9 - Employee Benefits
Schedule 3.10 - Compliance with Laws
Schedule 3.11 - Environmental Matters
Schedule 3.12 - Intellectual Property
Schedule 3.12(e) - Year 2000 language from most recent 10-Q
Schedule 3.13 - Labor Matters
Schedule 3.14 - Contracts
Schedule 3.16(a) - Exceptions to Entire Business
Schedule 3.16(b) - Encumbrances
Schedule 3.16(c) - Capital Structure of Contributed Subsidiaries
Schedule 3.18 - Insurance
Schedule 4.7(b) - PCA New Financing Arrangement Commitment Letters
Schedule 5.2 - Conduct of Business
Schedule 5.3 - Terms of PIK Preferred
Schedule 6.2(c) - Adjusted EBITDA
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Exhibits
Exhibit 1.1(aaa) - Human Resources Agreement
Exhibit 2.1A. - Newco Certificate of Incorporation
Exhibit 2.1B - Stockholders Agreement
Exhibit 2.1C - Registration Rights Agreement
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EXHIBIT 2.2
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.
<PAGE>
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, 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 number of shares of
<PAGE>
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).
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):
<PAGE>
<TABLE>
<CAPTION>
VENDOR NAME OF SOFTWARE
------ ----------------
<S> <C>
Levi, Ray & Shoup VPS and DRS
GEAC Financial Applications (GL, AR, AP, FA)
Comshare System W
Hyperion Hyperion (NT)
XRT Treasury Workstation (Netware)
</TABLE>
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):
<TABLE>
<CAPTION>
VENDOR NAME OF SOFTWARE
------ ----------------
<S> <C>
TSI Keymaster
Information Builders Focus
</TABLE>
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")
<PAGE>
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 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.
<PAGE>
Please acknowledge your agreement to the foregoing by signing below.
Sincerely,
TENNECO PACKAGING INC.
By: /s/ James V. Faulkner
----------------------------
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
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
PACKAGING CORPORATION OF AMERICA
The corporation was incorporated under the name "Packaging
Corporation of America" by the filing of its original Certificate of
Incorporation with the Secretary of State of the State of Delaware on January
25, 1999. This Restated Certificate of Incorporation of the corporation, which
both restates and further amends the provisions of the corporation's Certificate
of Incorporation, was duly adopted in accordance with the provisions of Sections
241 and 245 of the General Corporation Law of the State of Delaware. The
corporation has not received any payment for any of its stock. The Certificate
of Incorporation of the corporation is hereby amended and restated to read in
its entirety as follows:
ARTICLE ONE
The name of the corporation is Packaging Corporation of America (the
"Corporation").
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
4.1 Authorized Shares. The total number of shares of stock which the
Corporation has authority to issue is 4,000,100 shares, consisting of 3,000,000
shares of initially undesignated Preferred Stock, with a par value of $0.01 per
share (the "Preferred Stock"), 100 shares
<PAGE>
of Junior Preferred Stock, with a par value of $0.01 per share (the "Junior
Preferred Stock"), and 1,000,000 shares of Common Stock, with a par value of
$0.01 per share (the "Common Stock").
4.2 Preferred Stock. The Preferred Stock may be issued from time to
time in one or more series. The board of directors of the Corporation is hereby
authorized to provide for the issuance of shares of Preferred Stock in one or
more series and, by filing a certificate pursuant to the applicable law of the
State of Delaware (hereinafter referred to as a "Preferred Stock Designation"),
to establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations and restrictions
thereof. The authority of the board of directors with respect to each series
shall include, but not be limited to, determination of the following:
A. The designation of the series, which may be by distinguishing
number, letter or title.
B. The number of shares of the series, which number the board of
directors may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares thereof
then outstanding).
C. The amounts payable on, and the preferences, if any, of shares of
the series in respect of dividends, and whether such dividends, if any, shall be
cumulative or noncumulative.
D. Dates at which dividends, if any, shall be payable.
E. The redemption rights and price or prices, if any, for shares of
the series.
F. The terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series.
G. The amounts payable on, and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation.
H. Whether the shares of the series shall be convertible into or
exchangeable for shares of any other class or series, or any other security, of
the Corporation or any other corporation, and, if so, the specification of such
other class or series or such other security, the conversion or exchange price
or prices or rate or rates, any adjustments thereof, the date or dates at which
such shares shall be convertible or exchangeable and all other terms and
conditions upon which such conversion or exchange may be made.
I. Restrictions on the issuance of shares of the same series or of
any other class or series.
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<PAGE>
J. The voting rights, if any, of the holders of shares of the
series.
4.3 Junior Preferred Stock.
A. General. Except as otherwise may be required by law, all shares
of Junior Preferred Stock shall be identical in all respects and shall entitle
the holders thereof to the same rights, preferences and privileges, subject to
the same qualifications, limitations and restrictions as set forth herein.
B. Voting Rights. Unless otherwise agreed to in writing by all of
the holders of Junior Preferred Stock, until such time when the Stockholders
Agreement, to be dated as of April 12, 1999, among Tenneco Packaging Inc., PCA
Holdings LLC and the Corporation (as the same may be amended from time to time,
the "Stockholders Agreement"), or Section 3.3 thereof is terminated or is no
longer effective, whether by its terms or pursuant to agreement of the parties
thereto, the holders of the shares of Junior Preferred Stock shall have the
right, voting separately as a class, to elect one director (the "CEO Director")
to the board of directors of the Corporation. Except as set forth in the
immediately preceding sentence and except as otherwise required by applicable
law, holders of Junior Preferred Stock shall not be entitled to vote at or
receive notice of any meeting of stockholders.
C. Dividends. The holders of the shares of Junior Preferred Stock,
as such, shall not be entitled to receive any dividends or other distributions
in respect thereof (except as provided below in Section 4.3(D) hereof).
D. Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and after the payment
of any preferential amounts to be distributed to the holders of the Preferred
Stock, before any payment or distribution of assets of the Corporation shall be
made or set apart for payment to the holders of any shares of Common Stock, the
holders of the shares of Junior Preferred Stock shall be entitled to receive
$1.00 per share (the "Liquidation Preference"), but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of Junior Preferred Stock
shall be insufficient to pay in full the Liquidation Preference and the
liquidation preference on all other shares of any class or series of stock of
the Corporation that ranks on a parity with the Junior Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof, shall be distributed to
the holders of the shares of Junior Preferred Stock and any such other parity
stock ratably in accordance with the respective amounts that would be payable on
such shares of Junior Preferred Stock and any such other parity stock if all
amounts payable thereon were paid in full. For purposes of this Section 4.3(D),
a consolidation or merger of the Corporation or a sale, lease, exchange or
transfer of all or substantially all of the Corporation's assets shall not be
deemed to be a liquidation, dissolution or winding up of the Corporation.
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<PAGE>
E. Transfer. Except as contemplated by Section 8.1 of the
Stockholders Agreement, the shares of Junior Preferred Stock are not
transferrable by the original holders thereof without the prior written approval
of all of the holders of Junior Preferred Stock; provided that shares of Junior
Preferred Stock may be redeemed, at the election of the Corporation, at any
time, at a price of $1.00 per share.
F. Retirement. Shares of Junior Preferred Stock which shall have
been issued, redeemed or otherwise reacquired in any manner by the Corporation
shall, upon such acquisition, be retired automatically (without any further
action by the Corporation or the board of directors of the Corporation) and
shall not be reissued by the Corporation.
4.4 Common Stock.
A. General. Except as otherwise may be required by law, all shares
of Common Stock shall be identical in all respects and shall entitle the holders
thereof to the same rights, preferences and privileges, subject to the same
qualifications, limitations and restrictions as set forth herein.
B. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by a Preferred Stock Designation,
all of the voting power of the Corporation shall be vested in the holders of the
Common Stock, and each holder of Common Stock shall have one (1) vote for each
share of Common Stock held by such holder on all matters voted upon by the
stockholder, and holders of Preferred Stock and, except as expressly provided in
Section 4.3, the Junior Preferred Stock shall not be entitled to vote at or
receive notice of any meeting of stockholders.
C. Dividends. Subject to the express terms of any Preferred Stock
Designation, the board of directors may declare a dividend upon the Common
Stock. The holders of the Common Stock shall share ratably in any such dividend
in proportion to the number of shares of Common Stock held by each.
D. Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and after the payment
of any preferential amounts to be distributed to the holders of Preferred Stock
and Junior Preferred Stock, the remaining assets of the Corporation shall be
distributed ratably among the holders of the Common Stock in proportion to the
number of shares held by each. For purposes of this Section 4.4(D), a
consolidation or merger of the Corporation or a sale, lease, exchange or
transfer of all or substantially all of the Corporation's assets shall not be
deemed to be a liquidation, dissolution or winding up of the Corporation.
E. Director Approval. In addition to any other vote of the board of
directors required by applicable law, the Corporation shall not take any action
which, as of the time the proposed action is taken, requires the affirmative
vote of at least four of the five TPI/PCA Directors
-4-
<PAGE>
(as defined in the Stockholders Agreement) under Section 3.6 of the Stockholders
Agreement without such affirmative vote, so long as the applicable provision of
such Section of the Stockholders Agreement is effective and enforceable by the
parties to such agreement and has not otherwise terminated by its terms, by
operation of law or by agreement of the parties thereunder.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter or repeal the by-laws of the Corporation upon the affirmative vote
of a majority of the board of directors, except as may otherwise be required by
Section 4.4(E). Each director of the Corporation shall be entitled to cast one
vote as such; provided that in any instance in which the CEO Director is present
and purports to vote and the vote of the CEO Director would result in an equal
number of votes of the directors being cast for and against the proposal or
matter, the CEO Director shall be deemed not entitled to vote on such matter or
proposal.
ARTICLE SEVEN
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the Corporation. Election of directors need not be by written ballot unless
the by-laws of the Corporation so provide.
ARTICLE EIGHT
To the fullest extent permitted by the General Corporation Law of
the State of Delaware as the same exists or may hereafter be amended, a director
of this Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHT shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
-5-
<PAGE>
ARTICLE NINE
The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
ARTICLE TEN
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the Secretary of the Corporation, do make
this certifi cate, hereby declaring and certifying that this is my act and deed
and the facts stated herein are true, and accordingly have hereunto set my hand
on the 8th day of April, 1999.
/s/ Thomas S. Souleles
----------------------------
Thomas S. Souleles
Secretary
-6-
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
PACKAGING CORPORATION OF AMERICA
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation in
the State of Delaware shall be located at the Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, Delaware, County of New Castle. The
name of the Corporation's registered agent at such address shall be The
Corporation Trust Company. The registered office and/or registered agent of the
Corporation may be changed from time to time by action of the board of directors
(the "Board" or the "Board of Directors").
Section 2. Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the Corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall be
determined by the chief executive officer or the president of the Corporation;
provided, that if the chief executive officer or the president does not act, the
Board of Directors shall determine the date, time and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the Board of Directors, the chief executive officer or the president and shall
be called by the chief executive officer or the president upon the written
request of holders of shares entitled to cast not less than a majority in voting
power of the outstanding shares of common stock of the Corporation, such written
request shall state the purpose or purposes of the meeting and shall be
delivered to the chief executive officer or the president.
<PAGE>
Section 3. Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Corporation.
Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than ten (10) nor more than sixty (60) days before the date of the meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the Corporation. If sent by
facsimile transmission, such notice shall be deemed to be delivered when the
facsimile transmission is promptly confirmed by telephone confirmation thereof.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the Corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock entitled to vote at the meeting, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders, except
as otherwise provided by statute or by the certificate of incorporation. If a
quorum is not present, the holders of a majority of the shares present in person
or represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. All matters and questions (other than the
election of directors) shall, unless otherwise provided by the certificate of
incorporation of the Corporation, these by-laws, the rules or regulations of any
stock exchange applicable to the Corporation, as otherwise provided
2
<PAGE>
by law or pursuant to any regulation applicable to the Corporation or its
securities, be decided by the affirmative vote of the holders of a majority in
voting power of the shares of stock of the Corporation which are present in
person or by proxy and entitled to vote thereon.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the Corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to cast one (1) vote in person or by proxy for each share of common
stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the Corporation
generally. Any proxy is suspended when the person granting the proxy is present
at a meeting of stockholders and elects to vote, except that when such proxy is
coupled with an interest and the fact of the interest appears on the face of the
proxy, the agent named in the proxy shall have all voting and other rights
referred to in the proxy, notwithstanding the presence of the person granting
the proxy. At each meeting of the stockholders, and before any voting commences,
all proxies submitted at or before the meeting shall be submitted to the
secretary or a person designated by the secretary, and no shares may be
represented or voted under a proxy that has been found to be invalid or
irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
the state of Delaware, or the Corporation's principal place of business, or an
officer or agent of the Corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the Corporation as required by this section,
written consents signed by the holders of a sufficient number of shares to take
such corporate action are so recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders
3
<PAGE>
who have not consented in writing and who, if the action had been taken at a
meeting, would have been entitled to notice of the meeting if the record date
for such meeting had been the date that written consents signed by a sufficient
number of holders to take the action were delivered to the Corporation as
provided herein. Any action taken pursuant to such written consent or consents
of the stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors, subject to
the General Corporation Law of the State of Delaware.
Section 2. Size and Composition. The number of directors shall be
established from time to time by resolution of the Board except that until such
time when the Stockholders Agreement, dated April 12, 1999, among TPI, PCA and
the Corporation (as may be amended from time to time, the "Stockholders
Agreement") or Section 3.3 thereof is no longer effective and enforceable
against the parties thereto or until such time when the Stockholders Agreement
or Section 3.3 thereof is terminated, whether by its terms, by agreement of the
parties thereto or by operation of law, the composition of the Board shall be as
follows: The Board shall consist initially of six individuals of which (i) two
directors shall be designated in writing by Tenneco Packaging, Inc., a Delaware
corporation ("TPI"); (ii) three directors shall be designated in writing by PCA
Holdings LLC, a Delaware limited liability company ("PCA"); and (iii) the
remaining director shall be the Chief Executive Officer of the Corporation (the
"CEO Director"). The directors in the preceding clause (i) (the "TPI Directors")
and in the preceding clause (ii) (the "the PCA Directors") sometimes are
referred to collectively 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 the Corporation as the CEO Director; and (y) remove the CEO Director
if the CEO Director ceases to serve as the Chief Executive Officer of the
Corporation. The size and composition of the board of directors or similar
governing body of each Subsidiary of the Corporation (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. Capitalized terms
used in this Article III and Article VIII herein but not otherwise defined
herein shall have the meanings ascribed to them under the Stockholders
Agreement. 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. Anything to the contrary contained herein notwithstanding, the
rights of each of TPI and PCA under this Section 2 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
4
<PAGE>
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.
Section 3. Term; Removal; Vacancies. The members of the Board other than
the CEO Director shall hold office at the pleasure of the Stockholders (or group
of Stockholders) which designated them. Any such Stockholder may at any time, by
written notice to the other Stockholders and the Corporation, remove (with or
without cause) any member of the Board designated by such Stockholders other
than the CEO Director. Subject to applicable law, no member of the Board may be
removed except by written request by the Stockholders that designated the same.
In the event a vacancy occurs on the Board for any reason, the vacancy will be
filled by the written designation of the Stockholder(s) entitled to designate
the director creating the vacancy.
Section 4. Notice; Quorum. Meetings of the 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, 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 be necessary to constitute a quorum
for the transaction of business at any special, annual or regular meeting of the
Board. Each Stockholder shall use its reasonable efforts to ensure that a quorum
is present at any duly convened meeting of the Board. If at any meeting of the
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.
Section 5. Voting. Except as otherwise expressly provided by the
Stockholders Agreement, the certificate of incorporation or these by-laws, the
act of a majority of the members of the Board present and entitled to vote at
any meeting at which a quorum is present shall constitute an act of the Board.
Notwithstanding anything to the contrary contained herein, so long as the
applicable provision of Section 3.6 of the Stockholders Agreement is effective
and enforceable against the parties thereto and has not terminated or expired
(whether by its terms, by agreement of the parties thereto or by operation of
law): (a) 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; (b) the Corporation 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 (c) PCA
shall not cause or, to the extent reasonably within PCA's control, permit the
Corporation 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 and budget for the
Corporation and its Subsidiaries ("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 the
Corporation and/or any of its Subsidiaries which are not within the
Business Scope (as such term is defined in the Stockholders Agreement);
(ii) subject to Section 275(c) of the General Corporation Law of the
State of Delaware, any dissolution or liquidation of the Corporation;
(iii) (a) during the period from April 12, 1999 through April, 11,
2000, any amendment of the certificate of incorporation, articles of
incorporation, by-laws or other
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governing documents of the Corporation 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 the Stockholders
Agreement but for this clause (a)); and (b) after April 11, 2000, any
amendment of the certificate of incorporation, articles of incorporation,
by-laws or other governing documents of the Corporation 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 directly or indirectly sell, assign, pledge,
encumber, hypothecate, dispose of or otherwise transfer ("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 any
stockholder than the governing documents typical of a publicly-traded
company engaged in a business within the Business Scope;
(iv) any merger, consolidation, reorganization (except as provided
in ss.253 of the General Corporation Law of the State of Delaware 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 in which TPI Holders are not treated
disproportionately or differently than PCA Holders) or the issuance of
capital stock or other securities of the Corporation or any of its
Subsidiaries (other than the formation of or issuance of securities of a
wholly-owned Subsidiary, 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 and other than issuances of a number of shares of
common stock which, on a cumulative basis, does not exceed 5% of the
number of shares of common stock outstanding as of April 12, 1999 and
other than issuances pursuant to the Management Buy-In);
(v) the sale, transfer, exchange, license, assignment or other
disposition by the Corporation 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 of the Stockholders Agreement), except in each case for
Permitted Encumbrances;
(vi) the acquisition of assets (tangible or intangible) by the
Corporation 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 the Corporation and/or any
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of its Subsidiaries on terms which either: (a) are, taken as a whole, less
favorable to the Corporation 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 the
Corporation 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 the Corporation 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 $7.5 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 5; and (e) guarantees, loans and 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 the Corporation and/or any of its Subsidiaries, on the one hand,
and a Stockholder or any Affiliate thereof, on the other hand, except for:
(a) ancillary agreements and other agreements and instruments delivered in
connection with the closing of the Contribution Agreement by and among
TPI, PCA and the Corporation, dated January 25, 1999, as amended by the
Letter Agreement, dated April 12, 1999, by and among TPI, PCA and the
Corporation (the "Contribution Agreement"); and (b) contracts, amendments
and transactions which are no less favorable to the Corporation 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 the Corporation 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 the Corporation, or by
another Subsidiary in which all the equity interests of such other
Subsidiary are owned directly or indirectly by the Corporation; 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 the Corporation; and (b) the Transfer of any equity interest in
a Subsidiary other than to the Corporation or another
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Subsidiary in which all the equity interests of such other Subsidiary are
owned by the Corporation;
(xiv) removal of the independent public auditors of the Corporation
or a Subsidiary of the Corporation 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 5 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 5; (ii) nothing in this Section 5
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 issuances of management equity (representing in the aggregate up to
9.8% of the Corporation's outstanding Common Stock) and the related distribution
of proceeds from such issuance and repurchases of the corresponding number of
outstanding shares for such issuances as contemplated in the Contribution
Agreement.
Section 6. 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 General Corporation Law of
the State of Delaware and Section 5 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.
Section 7. Annual Meetings. The annual meeting of each newly elected Board
of Directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 8. Committees. Subject to Section 5 of this Article III, the Board
of Directors may designate one or more committees, each committee to consist of
one or more of the directors of the Corporation, which to the extent provided in
such resolution or these by-laws shall have and may exercise, subject to Section
5 of this Article III, the powers of the Board of Directors in the management
and affairs of the Corporation except as otherwise limited by law. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Each committee
shall keep regular minutes of its meetings and report the same to the Board of
Directors when required.
Section 9. Committee Rules. Each committee of the Board of Directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the Board of
Directors designating such committee or otherwise
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provided in Section 5. Unless otherwise provided in such a resolution, the
presence of at least a majority of the members of the committee shall be
necessary to constitute a quorum.
Section 10. Waiver of Notice and Presumption of Assent. Any member of the
Board of Directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be elected by the
Board of Directors and shall consist of a chief executive officer, a president,
one or more vice-presidents, a secretary, a treasurer, and such other officers
and assistant officers as may be deemed necessary or desirable by the Board of
Directors. Any number of offices may be held by the same person. In its
discretion, the Board of Directors may choose not to fill any office for any
period as it may deem advisable, except that the office of chief executive
officer shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any meeting
of the Board of Directors. Each officer shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the Board of Directors
may be removed by the Board of Directors with or without cause, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term by the Board of
Directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the Board of Directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the Corporation.
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Section 6. The Chief Executive Officer. The chief executive officer, if
there shall be one, shall preside at all meetings of the stockholders and Board
of Directors at which he is present; subject to the powers of the Board of
Directors, shall have general charge of the business, affairs and property of
the Corporation, and control over its officers, agents and employees; and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The chief executive officer shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation. The chief
executive officer shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or as may be provided in these
by-laws.
Section 7. President. The president, if there shall be one, shall, in the
absence or disability of the chief executive officer, act with all of the powers
and be subject to all the restrictions of the chief executive officer. The
president shall also perform such other duties and have such other powers as the
Board of Directors, the chief executive officer or these by-laws may, from time
to time, prescribe.
Section 8. Vice-Presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the Board of Directors
or by the chief executive officer, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and have
such other powers as the Board of Directors, the chief executive officer, the
president or these by-laws may, from time to time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the Board of Directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the Board of Directors, the chief executive officer
or these by-laws may, from time to time, prescribe; and shall have custody of
the corporate seal of the Corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors, the
chief executive officer, the president or secretary may, from time to time,
prescribe.
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the Board of Directors;
shall cause the funds of the Corporation to be disbursed when such disbursements
have been duly
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authorized, taking proper vouchers for such disbursements; shall render to the
chief executive officer and the Board of Directors, at its regular meeting or
when the Board of Directors so requires, an account of the Corporation; and
shall have such powers and perform such duties as the Board of Directors, the
chief executive officer, the president or these by-laws may, from time to time,
prescribe. If required by the Board of Directors, the treasurer shall give the
Corporation a bond (which shall be rendered every six years) in such sums and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of the office of treasurer and for
the restoration to the Corporation, in case of death, resignation, retirement,
or removal from office, of all books, papers, vouchers, money, and other
property of whatever kind in the possession or under the control of the
treasurer belonging to the Corporation. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
Board of Directors, shall in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer. The assistant treasurers
shall perform such other duties and have such other powers as the Board of
Directors, the chief executive officer, the president or treasurer may, from
time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the Board of Directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he or she is the legal representative, is or was a director or officer, of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary, or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, shall be indemnified and held harmless by the
Corporation to the fullest extent which it is empowered to do so unless
prohibited from doing so by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in Section 2 hereof, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the
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Board of Directors of the Corporation. The right to indemnification conferred in
this Article V shall be a contract right. The Corporation may, by action of its
Board of Directors, provide indemni fication to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the Corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the Corporation fails to respond within thirty days to a written request for
indemnity, the Corporation shall be deemed to have approved the request. If the
Corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the Corporation would have the power to indemnify such
person against such liability under this Article V.
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Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the Corporation
in advance of such proceeding's final disposition upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
Corporation. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the Corporation, or who are or were serving at the request of the Corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the Board of Directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving corporation as he or she would have
with respect to such constituent corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the chief executive officer, the president or a vice-president and the secretary
or an assistant secretary of the Corporation, certifying the number of shares
owned by such holder in the Corporation. In case any officer or officers who
have signed, or whose facsimile signature or signatures have been used on, any
such certificate or certificates shall cease to be such officer or officers of
the Corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the Corporation.
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All certificates for shares shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
books of the Corporation. Shares of stock of the Corporation shall only be
transferred on the books of the Corporation by the holder of record thereof or
by such holder's attorney duly authorized in writing, upon surrender to the
Corporation of the certificate or certificates for such shares endorsed by the
appropriate person or persons, with such evidence of the authenticity of such
endorsement, transfer, authorization, and other matters as the Corporation may
reasonably require, and accompanied by all necessary stock transfer stamps. In
that event, it shall be the duty of the Corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate or certificates, and
record the transaction on its books. The Board of Directors may appoint a bank
or trust company organized under the laws of the United States or any state
thereof to act as its transfer agent or registrar, or both in connection with
the transfer of any class or series of securities of the Corporation.
Section 2. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against the Corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the Corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered
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to the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by statute, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. Except as otherwise required by applicable law, the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
Board of Directors. Any call made by the Board of Directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the certificate of incorporation and these by-laws,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the certificate of incorporation.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think
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proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
any other purpose and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the Board of Directors or a duly
authorized committee thereof.
Section 3. Contracts. Except as otherwise provided in Article III, the
Board of Directors may authorize any officer or officers, or any agent or
agents, of the Corporation to enter into any contract or to execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 4. Loans. Except as otherwise provided in Article III, the
Corporation may lend money to, or guarantee any obligation of, or otherwise
assist any officer or other employee of the Corporation or of its subsidiary,
including any officer or employee who is a director of the Corporation or its
subsidiary, whenever, in the judgment of the directors, such loan, guaranty or
assistance may reasonably be expected to benefit the Corporation. The loan,
guaranty or other assistance may be with or without interest, and may be
unsecured, or secured in such manner as the Board of Directors shall approve,
including, without limitation, a pledge of shares of stock of the Corporation.
Nothing in this section contained shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the Corporation at common law or under any
statute.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 6. Voting Securities Owned By Corporation. Voting securities in
any other Corporation held by the Corporation shall be voted by the chief
executive officer, unless the Board of Directors specifically confers authority
to vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized to
vote securities shall have the power to appoint proxies, with general power of
substitution.
Section 7. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the Corporation at its registered
office in the State of Delaware or at its principal place of business.
16
<PAGE>
Section 8. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 9. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted:
(i) during the period prior to April 12, 2000, at any meeting of the Board
of Directors upon the affirmative vote of at least four of the five TPI/PCA
Directors and thereafter, at any meeting of the Board of Directors, upon the
affirmative vote of a majority of the directors; except that, the foregoing
notwithstanding, prior to the termination or expiration of Section 3.6 of the
Stockholders Agreement (whether by its terms, by agreement of the parties
thereto or by operation of law) or until such time when such Section is no
longer valid and enforceable against the parties thereto, the affirmative vote
of four out of five TPI/PCA Directors shall be required with respect to any
amendment to these by-laws which would (a) treat any TPI Holder
disproportionately more adversely vis-a-vis any PCA Holder; (b) place any
restriction on the ability of any TPI Holder to Transfer, directly or
indirectly, all or any portion of its Shares or reduce the consideration
received or to be received therefor in connection with such Transfer or (c)
cause these by-laws, taken as a whole, to be less favorable to any stockholder
than by-laws typical of a publicly-traded company engaged in business within the
Business Scope; or
(ii) by the stockholders of the Corporation upon the approval thereof by
the holders of at least 82.6% of the outstanding shares of common stock of the
Corporation.
17
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EXHIBIT 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
PACKAGING CORPORATION OF AMERICA
$750,000,000
SERIES A AND SERIES B
9 5/8% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
------------------------------------------------------
Dated as of April 12, 1999
------------------------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
--------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1)........................................................7.10
(a)(2) ...........................................................7.10
(a)(3)............................................................N.A.
(a)(4)............................................................N.A.
(a)(5)............................................................7.10
(b) ..............................................................7.10
(c) ..............................................................N.A.
311 (a) ..........................................................7.11
(b) ..............................................................7.11
(i)(c) ...........................................................N.A.
312 (a) ..........................................................2.05
(b) .............................................................13.03
(c) .............................................................13.03
313 (a) ..........................................................7.06
(b)(2)............................................................7.07
(c) ..............................................................7.06; 13.02
(d) ..............................................................7.06
314 (a) ..........................................................4.03; 13.02
(c)(1)............................................................13.04
(c)(2)............................................................13.04
(c)(3)............................................................N.A.
(e) ..............................................................13.05
(f) ..............................................................N.A.
315 (a) ..........................................................7.01
(b) ..............................................................7.05; 13.02
(A)(c) ...........................................................7.01
(d) ..............................................................7.01
(e) ..............................................................6.11
316 (a)(last sentence)............................................2.09
(a)(1)(a) ........................................................6.05
(a)(1)(b) ........................................................6.04
(a)(2)............................................................N.A.
(b) ..............................................................6.07
(c) ..............................................................2.12
317 (a)(1)........................................................6.08
(a)(2)............................................................6.09
(b) ..............................................................2.04
318 (a) ..........................................................13.01
(b) ..............................................................N.A.
(c) ..............................................................12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................23
Section 1.03. Trust Indenture Act Definitions............................24
Section 1.04. Rules of Construction......................................24
ARTICLE 2. THE NOTES........................................................25
Section 2.01. Form and Dating............................................25
Section 2.02. Execution and Authentication...............................26
Section 2.03. Registrar and Paying Agent.................................27
Section 2.04. Paying Agent to Hold Money in Trust........................27
Section 2.05. Holder Lists...............................................27
Section 2.06. Transfer and Exchange......................................28
Section 2.07. Replacement Notes..........................................39
Section 2.08. Outstanding Notes..........................................39
Section 2.09. Treasury Notes.............................................40
Section 2.10. Temporary Notes............................................40
Section 2.11. Cancellation...............................................40
Section 2.12. Defaulted Interest.........................................40
Section 2.13. CUSIP Numbers..............................................41
ARTICLE 3. REDEMPTION AND PREPAYMENT........................................41
Section 3.01. Notices to Trustee.........................................41
Section 3.02. Selection of Notes to Be Redeemed..........................41
Section 3.03. Notice of Redemption.......................................42
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Page
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Section 3.04. Effect of Notice of Redemption.............................42
Section 3.05. Deposit of Redemption Price................................42
Section 3.06. Notes Redeemed in Part.....................................43
Section 3.07. Optional Redemption........................................43
Section 3.08. Mandatory Redemption.......................................44
Section 3.09. Offer to Purchase by Application of Excess
Proceeds...................................................44
ARTICLE 4. COVENANTS........................................................46
Section 4.01. Payment of Notes...........................................46
Section 4.02. Maintenance of Office or Agency............................46
Section 4.03. Reports....................................................46
Section 4.04. Compliance Certificate.....................................47
Section 4.05. Taxes......................................................48
Section 4.06. Stay, Extension and Usury Laws.............................48
Section 4.07. Restricted Payments........................................48
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries.....................................50
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock............................................52
Section 4.10. Asset Sales................................................55
Section 4.11. Transactions with Affiliates...............................57
Section 4.12. Liens......................................................59
Section 4.13. Sale and Leaseback Transactions..........................59
Section 4.14. Corporate Existence........................................59
Section 4.15. Offer to Repurchase Upon Change of Control.................59
Section 4.16. No Senior Subordinated Debt................................60
Section 4.17. Additional Subsidiary Guarantees...........................61
Section 4.18. Business Activities........................................61
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Page
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Section 4.19. Designation of Restricted and Unrestricted
Subsidiaries...............................................61
ARTICLE 5. SUCCESSORS.......................................................61
Section 5.01. Merger, Consolidation, or Sale of Assets...................61
Section 5.02. Successor Corporation Substituted..........................62
ARTICLE 6. DEFAULTS AND REMEDIES............................................62
Section 6.01. Events of Default..........................................62
Section 6.02. Acceleration...............................................64
Section 6.03. Other Remedies.............................................65
Section 6.04. Waiver of Past Defaults....................................65
Section 6.05. Control by Majority........................................65
Section 6.06. Limitation on Suits........................................65
Section 6.07. Rights of Holders of Notes to Receive Payment..............66
Section 6.08. Collection Suit by Trustee.................................66
Section 6.09. Trustee May File Proofs of Claim...........................66
Section 6.10. Priorities.................................................67
Section 6.11. Undertaking for Costs......................................67
ARTICLE 7. TRUSTEE..........................................................67
Section 7.01. Duties of Trustee..........................................67
Section 7.02. Rights of Trustee..........................................68
Section 7.03. Individual Rights of Trustee...............................69
Section 7.04. Trustee's Disclaimer.......................................69
Section 7.05. Notice of Defaults.........................................69
Section 7.06. Reports by Trustee to Holders of the Notes.................69
Section 7.07. Compensation and Indemnity.................................70
Section 7.08. Replacement of Trustee.....................................71
iii
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Page
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Section 7.09. Successor Trustee by Merger, etc...........................72
Section 7.10. Eligibility; Disqualification..............................72
Section 7.11. Preferential Collection of Claims Against
Company....................................................72
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................72
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.................................................72
Section 8.02. Legal Defeasance and Discharge.............................72
Section 8.03. Covenant Defeasance........................................73
Section 8.04. Conditions to Legal or Covenant Defeasance.................73
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions..............75
Section 8.06. Repayment to Company.......................................75
Section 8.07. Reinstatement..............................................75
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................76
Section 9.01. Without Consent of Holders of Notes........................76
Section 9.02. With Consent of Holders of Notes...........................76
Section 9.03. Compliance with Trust Indenture Act........................78
Section 9.04. Revocation and Effect of Consents..........................78
Section 9.05. Notation on or Exchange of Notes...........................78
Section 9.06. Trustee to Sign Amendments, etc............................78
ARTICLE 10. SUBORDINATION...................................................79
Section 10.01. Agreement to Subordinate..................................79
Section 10.02. Certain Definitions.......................................79
Section 10.03. Liquidation; Dissolution; Bankruptcy......................80
Section 10.04. Default on Designated Senior Debt.........................81
Section 10.05. Acceleration of Notes.....................................82
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Page
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Section 10.06. When Distribution Must Be Paid Over.......................82
Section 10.07. Notice by Company.........................................83
Section 10.08. Subrogation...............................................83
Section 10.09. Relative Rights...........................................83
Section 10.10. Subordination May Not Be Impaired by Company..............83
Section 10.11. Distribution or Notice to Representative..................84
Section 10.12. Rights of Trustee and Paying Agent........................84
Section 10.13. Authorization to Effect Subordination.....................84
Section 10.14. Amendments................................................85
ARTICLE 11. SUBSIDIARY GUARANTEES...........................................85
Section 11.01. Subsidiary Guarantee......................................85
Section 11.02. Subordination of Subsidiary Guarantee.....................86
Section 11.03. Limitation on Guarantor Liability.........................86
Section 11.04. Execution and Delivery of Subsidiary Guarantee............87
Section 11.05. Guarantors May Consolidate, etc., on Certain
Terms......................................................87
Section 11.06. Releases Following Sale of Assets.........................88
ARTICLE 12. SATISFACTION AND DISCHARGE......................................88
Section 12.01. Satisfaction and Discharge of Indenture...................88
Section 12.02. Application of Trust Money................................89
ARTICLE 13. MISCELLANEOUS...................................................89
Section 13.01. Trust Indenture Act Controls..............................89
Section 13.02. Notices...................................................90
Section 13.03. Communication by Holders of Notes with Other
Holders of Notes...........................................91
Section 13.04. Certificate and Opinion as to Conditions
Precedent..................................................91
Section 13.05. Statements Required in Certificate or Opinion.............91
v
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Page
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Section 13.06. Rules by Trustee and Agents...............................92
Section 13.07. No Personal Liability of Directors, Officers,
Employees and Shareholders................................92
Section 13.08. Governing Law.............................................92
Section 13.09. No Adverse Interpretation of Other Agreements.............92
Section 13.10. Successors................................................92
Section 13.11. Severability..............................................92
Section 13.12. Counterpart Originals.....................................92
Section 13.13. Table of Contents, Headings, etc..........................93
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit E FORM OF NOTATION OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
vi
<PAGE>
INDENTURE dated as of April 12, 1999 by and among Packaging
Corporation of America, a Delaware corporation (the "Company"), the Guarantors
named on the signature pages hereto and United States Trust Company of New York,
a bank and trust company organized under the New York Banking Law, as trustee
(the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 95/8% Series A Senior Subordinated Notes due 2009 (the "Series A Notes") and
the 95/8% Series B Senior Subordinated Notes due 2009 (the "Series B Notes" and,
together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"Additional Notes" means up to $200.0 million in aggregate principal
amount of Notes (other than the Initial Notes) issued under this Indenture in
accordance with Sections 2.02 and 4.09 hereof.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to any Note on any
Redemption Date, the greater of:
(i) 1.0% of the principal amount of such Note; or
(ii) the excess of:
<PAGE>
(A) the present value at the Redemption Date of (1) the
redemption price of such Note at April 1, 2004 (such
redemption price being set forth in the table in Section
3.07 hereof) plus (2) all required interest payments due
on such Note through April 1, 2004 (excluding accrued
but unpaid interest), computed using a discount rate
equal to the Treasury Rate at the Redemption Date plus
50 basis points; over
(B) the principal amount of such Note, if greater.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and CEDEL that apply to such transfer or
exchange.
"Asset Sale" means:
(i) the sale, lease, conveyance or other disposition of any assets
or rights, other than sales of inventory in the ordinary course of business;
provided that the sale, conveyance or other disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole shall be governed by the provisions of Section 4.15 hereof and/or the
provisions of Section 5.01 hereof and not by the provisions of Section 4.10
hereof; and
(ii) the issuance of Equity Interests by any of the Company's
Restricted Subsidiaries or the sale of Equity Interests in any of the Company's
Subsidiaries.
Notwithstanding the foregoing, the following items shall not be
deemed to be Asset Sales:
(i) any single transaction or series of related transactions that
involves assets having a fair market value of less than $10.0 million;
(ii) a transfer of assets between or among the Company and its
Wholly Owned Restricted Subsidiaries;
(iii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;
(iv) the sale, license or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;
(v) the sale or other disposition of cash or Cash Equivalents or
Marketable Securities;
(vi) the transfer or disposition of assets and the sale of Equity
Interests pursuant to the Contribution;
(vii) sales of accounts receivables and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof including cash or Cash
Equivalents or Marketable Securities in an amount at least equal to 75% of the
fair market value thereof as determined in accordance with GAAP; and
2
<PAGE>
(viii) a Restricted Payment or Permitted Investment that is
permitted under Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. For purposes of this definition, the terms "Beneficially Owns" and
"Beneficially Owned" shall have corresponding meanings.
"Board of Directors" means:
(i) with respect to a corporation, the board of directors of the
corporation;
(ii) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(iii) with respect to any other Person, the board or committee of
such Person serving a similar function.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
3
<PAGE>
(iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
(i) United States dollars;
(ii) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than six months from the date of
acquisition;
(iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or with
any domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above;
(v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in each
case maturing within twelve months after the date of acquisition; and
(vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) through (v) of
this definition.
"CEDEL" means CEDEL Bank, SA.
"Change of Control" means the occurrence of any of the following:
(i) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger, consolidation or transfer of the
Company's Voting Stock), in one or a series of related transactions, of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as that term is used in Section
13(d)(3) of the Exchange Act) other than to a Principal or a Related Party of a
Principal;
(ii) the adoption of a plan relating to the liquidation or
dissolution of the Company (other than a plan relating to the sale or other
disposition of timberlands);
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related Parties
or a Permitted Group, becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the Voting Stock of the Company, measured by voting power
rather than number of shares; or
(iv) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors.
4
<PAGE>
"Company" means Packaging Corporation of America, and any and all
successors thereto.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:
(i) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income; plus
(ii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus
(iii) depletion, depreciation, amortization (including amortization
of goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents an accrual
of or reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period to the extent that such depletion,
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; plus
(iv) all one-time charges incurred in 1999 in connection with the
Contribution (including the impairment charge described under the section
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview" in the Offering Memorandum) to the extent such charges
were deducted in computing such Consolidated Net Income; plus
(v) all restructuring charges incurred prior to the date of this
Indenture (including the restructuring charge that was added to pro forma EBITDA
to calculate adjusted pro forma EBITDA as set forth in footnote 4 under the
section "Selected Combined Financial and Other Data" in the Offering
Memorandum); minus
(vi) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depletion, depreciation and amortization and other non-cash
expenses of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute Consolidated Cash Flow of the Company only to
the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
5
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"Consolidated Indebtedness" means, with respect to any Person as of
any date of determination, the sum, without duplication, of:
(i) the total amount of Indebtedness of such Person and its
Restricted Subsidiaries; plus
(ii) the total amount of Indebtedness of any other Person, to the
extent that such Indebtedness has been Guaranteed by the referent Person or one
or more of its Restricted Subsidiaries; plus
(iii) the aggregate liquidation value of all Disqualified Stock of
such Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Wholly Owned Restricted
Subsidiary thereof;
(ii) the Net Income of any Restricted Subsidiary shall be excluded
to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded;
(iv) the cumulative effect of a change in accounting principles
shall be excluded; and
(v) for purposes of calculating Consolidated Cash Flow to determine
the Debt to Cash Flow Ratio or the Fixed Charge Coverage Ratio, the Net Income
(but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the specified Person or one of its Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(i) was a member of such Board of Directors on the date of this
Indenture; or
(ii) was nominated for election or elected to such Board of
Directors either (A) with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election or (B)
pursuant to and in accordance with the terms of the Stockholders Agreement as in
effect on the date of this Indenture.
"Contribution" means the Contribution contemplated by the
Contribution Agreement.
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"Contribution Agreement" means that certain Contribution Agreement
dated as of January 25, 1999 among TPI, PCA Holdings and the Company as the same
is in effect on the date of this Indenture.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of
the date hereof by and among the Company, J.P. Morgan Securities Inc. and BT
Alex.Brown Incorporated, as co-lead arrangers, Bankers Trust Company, as
syndication agent, and Morgan Guaranty Trust Company of New York, as
administrative agent, and the other lenders party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Credit Facilities" means one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables), working capital loans, swing lines,
advances or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced, restructured or refinanced in whole or in part from
time to time.
"Debt to Cash Flow Ratio" means, as of any date of determination,
the ratio of:
(i) the Consolidated Indebtedness of the Company as of such date to
(ii) the Consolidated Cash Flow of the Company for the four most
recent full fiscal quarters ending immediately prior to such date for which
internal financial statements are available, determined on a pro forma basis
after giving effect to all acquisitions or dispositions of assets made by the
Company and its Restricted Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any related
financing transactions) as if such acquisitions and dispositions had occurred at
the beginning of such four-quarter period.
In addition, for purposes of making the computation referred to
above:
(i) acquisitions that have been made by the Company or any
Restricted Subsidiary of the Company, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the date of determination shall be given pro forma effect as if they
had occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a pro
forma basis in accordance with Regulation S-X under the Securities Act and
including those cost savings that management reasonably expects to realize
within six months of the consummation of the acquisition, but without giving
effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income;
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(ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the date of determination, shall be excluded;
(iii) for any four-quarter reference period that includes any period
of time prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions and the related corporate overhead
savings and cost savings that were added to pro forma EBITDA to calculate
adjusted pro forma EBITDA as set forth in footnote 4 under the section "Selected
Combined Financial and Other Data" in the Offering Memorandum, all as calculated
in good faith by a responsible financial or accounting officer of the Company,
as if they had occurred on the first day of such four-quarter reference period;
and
(iv) the impact of the Treasury Lock shall be excluded.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Noncash Consideration" means any non-cash consideration
received by the Company or one of its Restricted Subsidiaries in connection with
an Asset Sale that is designated as Designated Noncash Consideration pursuant to
an Officers' Certificate executed by the principal executive officer and the
principal financial officer of the Company or such Restricted Subsidiary. Such
Officers' Certificate shall state the basis of such valuation, which shall be a
report of a nationally recognized investment banking firm with respect to the
receipt in one or a series of related transactions of Designated Noncash
Consideration with a fair market value in excess of $10.0 million. A particular
item of Designated Noncash Consideration shall no longer be considered to be
outstanding when it has been sold for cash or redeemed or paid in full in the
case of non-cash consideration in the form of promissory notes or equity.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.07
hereof. The Preferred Stock as in effect on the date of this Indenture shall not
constitute Disqualified Stock for purposes of this Indenture.
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"Domestic Subsidiary" means any Restricted Subsidiary that was
formed under the laws of the United States or any state thereof or the District
of Columbia or that guarantees or otherwise provides direct credit support for
any Indebtedness of the Company.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Series B Notes issued in the Exchange
Offer pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of:
(i) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, including,
without limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
excluding amortization of debt issuance costs and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(ii) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon; plus
(iv) the product of (A) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock) or to
the Company or a Restricted Subsidiary of the Company, times (B) a fraction, the
numerator of which is one and the denominator of which is one minus the
Company's then current effective combined federal, state and local tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
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"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(i) acquisitions that have been made by the specified Person or any
of its Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be given pro forma effect as if they had occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated on a pro forma basis in accordance with Regulation
S-X under the Securities Act and including those cost savings that management
reasonably expects to realize within six months of the consummation of the
acquisition, but without giving effect to clause (iii) of the proviso set forth
in the definition of Consolidated Net Income;
(ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded;
(iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the Calculation
Date;
(iv) for any four-quarter reference period that includes any period
of time prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions and the related corporate overhead
savings and cost savings that were added to pro forma EBITDA to calculate
adjusted pro forma EBITDA as set forth in footnote 4 under the section "Selected
Combined Financial and Other Data" in the Offering Memorandum, all as calculated
in good faith by a responsible financial or accounting officer of the Company,
as if they had occurred on the first day of such four-quarter reference period;
and
(v) the impact of the Treasury Lock shall be excluded.
"Foreign Subsidiary Working Capital Indebtedness" means Indebtedness
of a Restricted Subsidiary that is organized outside of the United States under
lines of credit extended after the date of this Indenture to any such Restricted
Subsidiary by Persons other than the Company or any Restricted Subsidiary of the
Company, the proceeds of which are used for such Restricted Subsidiary's working
capital purposes.
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"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A-1 or A-2 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee of all or any part of any Indebtedness
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), including, without limitation, by way of a pledge
of assets or through letters of credit or reimbursement agreements in respect
thereof.
"Guarantors" means:
(i) each Restricted Subsidiary that is or becomes a Domestic
Subsidiary of the Company (other than a Receivables Subsidiary); and
(ii) any other subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of this Indenture, and their respective
successors and assigns.
"Hedging Obligations" means, with respect to any specified Person,
the obligations of such Person under:
(i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(ii) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
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<PAGE>
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(i) in respect of borrowed money;
(ii) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(iii) in respect of banker's acceptances;
(iv) representing Capital Lease Obligations;
(v) in respect of the deferred balance of the purchase price of any
property outside of the ordinary course of business which remains unpaid, except
any such balance that constitutes an operating lease payment, accrued expense,
trade payable or similar current liability; or
(vi) in respect of any Hedging Obligations or Other Hedging
Agreements, if and to the extent any of the preceding items (other than letters
of credit, Hedging Obligations and Other Hedging Agreements) would appear as a
liability upon a balance sheet of the specified Person prepared in accordance
with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by the specified Person of any Indebtedness of
any other Person. The amount of any Indebtedness outstanding as of any date
shall be (i) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount, and (ii) the principal amount thereof in the case
of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Notes" means $550.0 million in aggregate principal amount
of Notes issued under this Indenture on the date hereof.
"Initial Purchasers" means J.P. Morgan Securities Inc. and BT
Alex.Brown Incorporated.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, which is not also a QIB.
"Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no
12
<PAGE>
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07 hereof. The
acquisition by the Company or any Subsidiary of the Company of a Person that
holds an Investment in a third Person shall be deemed to be an Investment by the
Company or such Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person in such third Person
in an amount determined as provided in the final paragraph of Section 4.07
hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement.
"Liquidated Damages" means all amounts owing pursuant to Section 5
of the Registration Rights Agreement.
"Marketable Securities" means publicly traded debt or equity
securities that are listed for trading on a national securities exchange and
that were issued by a corporation whose debt securities are rated in one of the
three highest rating categories by either Standard & Poor's Rating Services or
Moody's Investors Service, Inc.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (or loss), together with any related provision for taxes on such gain (or
loss), realized in connection with (A) any Asset Sale or (B) the disposition of
any securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary gain (or loss), together with any
related provision for taxes on such extraordinary gain (or loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any Restricted Subsidiary of the Company in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, sales commissions, any relocation
expenses incurred as a result thereof, all taxes of any kind paid or payable as
a result thereof and reasonable reserves established to cover any indemnity
obligations incurred in connection therewith, in each case, after taking into
account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien
on the asset or assets that were the subject of such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
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"Non-Recourse Debt" means Indebtedness:
(i) as to which neither the Company nor any Restricted Subsidiary of
the Company (A) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (B) is directly or
indirectly liable as a guarantor or otherwise, or (C) constitutes the lender;
(ii) with respect to which no default (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted Subsidiary)
would permit upon notice, lapse of time or both, any holder of any other
Indebtedness (other than the Notes) of the Company or any Restricted Subsidiary
of the Company to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Company or any
Restricted Subsidiary of the Company.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, expenses, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Initial Notes by the Company.
"Offering Memorandum" means the Offering Memorandum, dated March 30,
1999, pursuant to which the Initial Notes were offered and sold.
"Officer" means, with respect to the Company or any Guarantor, any
Chairman of the Board, President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Senior Vice President, Vice President,
Treasurer, Secretary or Assistant Secretary of such Person.
"Officers' Certificate" means a certificate that meets the
requirements of Section 13.5 and has been signed by two Officers.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Other Hedging Agreements" means any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
"PCA Holdings" means PCA Holdings LLC, a Delaware limited liability
company.
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"Participant" means, with respect to the Depositary, Euroclear or
CEDEL, a Person who has an account with the Depositary, Euroclear or CEDEL,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and CEDEL).
"Permitted Business" means the containerboard, paperboard and
packaging products business and any business in which the Company and its
Restricted Subsidiaries are engaged on the date of this Indenture or any
business reasonably related, incidental or ancillary to any of the foregoing.
"Permitted Group" means any group of investors that is deemed to be
a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any
time prior to the Company's initial public offering of common stock, by virtue
of the Stockholders Agreement, as the same may be amended, modified or
supplemented from time to time, provided that no single Person (other than the
Principals and their Related Parties) Beneficially Owns (together with its
Affiliates) more of the Voting Stock of the Company that is Beneficially Owned
by such group of investors than is then collectively Beneficially Owned by the
Principals and their Related Parties in the aggregate.
"Permitted Investments" means:
(i) any Investment in the Company or in a Restricted Subsidiary of
the Company;
(ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company;
(iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof;
(v) any acquisition of assets to the extent acquired in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(vi) Hedging Obligations and Other Hedging Agreements;
(vii) any Investment existing on the date of this Indenture;
(viii) loans and advances to employees and officers of the Company
and its Restricted Subsidiaries in the ordinary course of business;
(ix) any Investment in securities of trade creditors or customers
received in compromise of obligations of such persons incurred in the ordinary
course of business, including pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers;
(x) negotiable instruments held for deposit or collection in the
ordinary course of business;
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(xi) loans, guarantees of loans and advances to officers, directors,
employees or consultants of the Company or a Restricted Subsidiary of the
Company not to exceed $7.5 million in the aggregate outstanding at any time;
(xii) any Investment by the Company or any Restricted Subsidiary of
the Company in a Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person in connection with a Qualified Receivables
Transaction; provided that each such Investment is in the form of a Purchase
Money Note, an equity interest or interests in accounts receivables generated by
the Company or any Restricted Subsidiary of the Company; and
(xiii) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (xiii) that are at the time
outstanding not to exceed the greater of $50.0 million or 5% of Total Assets.
"Permitted Liens" means:
(i) Liens of the Company and any Guarantor securing Senior Debt that
was permitted by the terms of this Indenture to be incurred;
(ii) Liens in favor of the Company or the Guarantors;
(iii) Liens on property of a Person existing at the time such Person
is merged with or into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or the Subsidiary;
(iv) Liens on property existing at the time of acquisition thereof
by the Company or any Subsidiary of the Company, provided that such Liens were
in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of Section 4.09
hereof covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the date of this Indenture together with any
Liens securing Permitted Refinancing Indebtedness incurred under clause (v) of
the second paragraph of Section 4.09 hereof in order to refinance the
Indebtedness secured by Liens existing on the date of this Indenture; provided
that the Liens securing the Permitted Refinancing Indebtedness shall not extend
to property other than that pledged under the Liens securing the Indebtedness
being refinanced;
(viii) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(ix) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and
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diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(x) Liens to secure Foreign Subsidiary Working Capital Indebtedness
permitted by this Indenture to be incurred so long as any such Lien attached
only to the assets of the Restricted Subsidiary which is the obligor under such
Indebtedness;
(xi) Liens securing Attributable Debt;
(xii) Liens on assets of a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction; and
(xiii) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $15.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any Restricted Subsidiary of the Company issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Company or any Restricted Subsidiary of the
Company (other than intercompany Indebtedness); provided that:
(i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest thereon and
the amount of all expenses and premiums incurred in connection therewith);
(ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(iv) such Indebtedness is incurred either by the Company or by the
Subsidiary who is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"Preferred Stock" means the Company's 123/8% Senior Exchangeable
Preferred Stock due 2010.
"Principals" means (i) Madison Dearborn Partners, LLC and its
Affiliates and (ii) TPI and its Affiliates.
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"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Money Note" means a promissory note evidencing a line of
credit, which may be irrevocable, from, or evidencing other Indebtedness owed
to, the Company or any Restricted Subsidiary of the Company in connection with a
Qualified Receivables Transaction, which note shall be repaid from cash
available to the maker of such note, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated receivables.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any Restricted
Subsidiary of the Company pursuant to which the Company or any Restricted
Subsidiary of the Company may sell, convey or otherwise transfer to (i) a
Receivables Subsidiary (in the case of a transfer by the Company or any
Restricted Subsidiary of the Company) and (ii) any other Person (in the case of
a transfer by a Receivables Subsidiary), or may grant a security interest in,
any accounts receivable (whether now existing or arising in the future) of the
Company or any Restricted Subsidiary of the Company, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets
that are customarily transferred, or in respect of which security interests are
customarily granted, in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the
Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary and
(i) has no Indebtedness or other Obligations (contingent or
otherwise) that (A) are guaranteed by the Company or any Restricted Subsidiary
of the Company, other than contingent liabilities pursuant to Standard
Securitization Undertakings, (B) are recourse to or obligate the Company or any
Restricted Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (C) subjects any property or asset of the Company
or any Restricted Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(ii) has no contract, agreement, arrangement or undertaking (except
in connection with a Purchase Money Note or Qualified Receivables Transaction)
with the Company or its Restricted Subsidiaries other than on terms no less
favorable to the Company or such Restricted Subsidiaries than those that might
be obtained at the time from Persons that are not Affiliates of the Company,
other than fees payable in the ordinary course of business in connection with
servicing accounts receivable; and
(iii) neither the Company nor any Restricted Subsidiary of the
Company has any obligation to maintain or preserve the Receivables Subsidiary's
financial condition or cause the Receivables Subsidiary to achieve certain
levels of operating results.
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Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying, to the best of such
officers' knowledge and belief after consulting with counsel, that such
designation complied with the foregoing conditions.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note
in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note
in the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" means:
(i) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or
(ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (i).
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
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"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary of the Company that are reasonably customary in an
accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders Agreement" means that certain Stockholders Agreement
dated as of April 12, 1999 by and among PCA Holdings, TPI and the Company, as in
effect on the date of this Indenture.
"Subordinated Exchange Debentures" means the Company's 123/8%
Subordinated Exchange Debentures due 2010.
"Subsidiary" means, with respect to any specified Person:
(i) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
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(ii) any partnership (A) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (B)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the subordinated Guarantee by each
Guarantor of the Company's payment obligations under this Indenture and the
Notes, executed pursuant to the provisions of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TPI" means Tenneco Packaging Inc., a Delaware corporation.
"Timberlands Net Proceeds" means the Net Proceeds from Timberlands
Sales in excess of $500.0 million, up to a maximum of $100.0 million (or such
larger amount as may be necessary to repurchase or redeem all outstanding
Preferred Stock or Subordinated Exchange Debentures in the event of a repurchase
or redemption of all outstanding Preferred Stock or Subordinated Exchange
Debentures), as long as at least $500.0 million of Net Proceeds from such
Timberlands Sales have been applied to repay Indebtedness under the Credit
Agreement.
"Timberlands Repurchase" means the repurchase or redemption of,
payment of a dividend on, or return of capital with respect to any Equity
Interests of the Company, the repurchase or redemption of Subordinated Exchange
Debentures or the redemption of Notes with Timberlands Net Proceeds in
accordance with the terms of this Indenture.
"Timberlands Sale" means a sale or series of sales by the Company or
a Restricted Subsidiary of the Company of timberlands.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet.
"Transacations" has the meaning given to such term in the Offering
Memorandum.
"Transaction Agreements" means:
(i) those certain Purchase/Supply Agreements between the Company and
each of TPI, Tenneco Automotive, Inc. and Tenneco Packaging Specialty and
Consumer Products, Inc. each dated the date of this Indenture;
(ii) that certain Facilities Use Agreement between the Company and
TPI, dated the date of this Indenture;
(iii) that certain Human Resources Agreement among the Company, TPI
and Tenneco Inc., dated the date of this Indenture;
(iv) that certain Transition Services Agreement between the Company
and TPI, dated the date of this Indenture;
(v) that certain Holding Company Support Agreement between the
Company and PCA Holdings, dated the date of this Indenture;
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(vi) that certain Registration Rights Agreement among the Company,
PCA Holdings and TPI, dated the date of this Indenture; and
(vii) the Stockholders Agreement.
"Treasury Lock" means the interest rate protection agreement dated
as of March 5, 1999 between PCA and J.P. Morgan Securities Inc.
"Treasury Rate" means, as of any redemption date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to April 1, 2004; provided,
however, that if the period from the redemption date to April 1, 2004 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named in the preamble until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company;
(iii) is a Person with respect to which neither the Company nor any
Restricted Subsidiary of the Company has any direct or indirect obligation (A)
to subscribe for additional Equity Interests or (B) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and
(iv) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any Restricted Subsidiary
of the Company.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to
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such designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted under Section 4.07
hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, the Company
shall be in default of Section 4.09. The Board of Directors of the Company may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (x) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period and (y) no Default or Event of
Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under
the Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by multiplying (A) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
thereof, by (B) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment; by
(ii) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means
any Wholly Owned Subsidiary of such Person which at the time of determination is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any specified Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
---- -------
"Affiliate Transaction" 4.11
"Asset Sale Offer" 4.10
"Authentication Order" 2.02
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
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"Designated Senior Debt 10.02
"Designation" 4.07
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Blockage Notice" 10.04
"Permitted Indebtedness" 4.09
"Permitted Junior Securities" 10.02
"Purchase Date" 3.09
"Redemption Date" 3.07
"Registrar" 2.03
"Representative" 10.02
"Restricted Payments" 4.07
"Revocation" 4.07
"Senior Debt" 10.02
SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes or the Subsidiary Guarantees means the
Company and the Guarantors, respectively and any successor obligor upon the
Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
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(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular;
(e) provisions apply to successive events and transactions;
and
(f) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A-1 and A-2 hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A-1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated
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agents holding on behalf of Euroclear or CEDEL Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of a written
certificate from the Depositary, together with copies of certificates from
Euroclear and CEDEL Bank certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal amount
of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note or an IAI Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.06(a)(ii) hereof). Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and CEDEL Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of CEDEL Bank" and "Customer Handbook" of CEDEL Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by
Participants through Euroclear or CEDEL Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be
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presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
The Trustee is authorized to enter into a letter of representations
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will promptly notify the Trustee in writing of any default by the Company in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary. All
Global Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Trustee written notice from the Depositary that it is
unwilling or unable to
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continue to act as Depositary or that it is no longer a clearing agency
registered under the Exchange Act and, in either case, a successor Depositary is
not appointed by the Company within 120 days after the date of such notice from
the Depositary or (ii) the Company in its sole discretion determines that the
Global Notes (in whole but not in part) should be exchanged for Definitive Notes
and delivers a written notice to such effect to the Trustee; provided that in no
event shall the Regulation S Temporary Global Note be exchanged by the Company
for Definitive Notes prior to (x) the expiration of the Restricted Period and
(y) the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes.
The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note. No written orders or instructions shall be required to be delivered
to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above,
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provided that in no event shall Definitive Notes be issued upon the
transfer or exchange of beneficial interests in the Regulation S Temporary
Global Note prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903 under the Securities Act. Upon consummation of an Exchange Offer by
the Company in accordance with Section 2.06(f) hereof, the requirements of
this Section 2.06(b)(ii) shall be deemed to have been satisfied upon
receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal or via the
Depositary's book-entry system that it is not (1) a broker-dealer,
(2) a Person participating in the distribution of the Exchange Notes
or (3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
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(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (1)
thereof;
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(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount.
Any Definitive Note issued in exchange for a beneficial interest in
a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination
or denominations as the holder of such beneficial interest shall
instruct the Registrar through written instructions from the
Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names
such Notes are so registered. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Notes to
Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note
that does not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the certifications in
item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a Definitive Note that does not bear
the Private Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
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(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Restricted Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt by
the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities Act
in accordance with Rule 144, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(G) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (c) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note only if:
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(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest in a Global Note is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
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(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then
the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof;
or
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(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder
thereof.
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal or via the Depositary's book-entry system that
(x) they are not broker-dealers, (y) they are not participating in a
distribution of the Exchange Notes and (z) they are not affiliates (as defined
in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and
(ii) Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY REQUIRED UNDER THE INDENTURE PURSUANT TO
WHICH THIS NOTE IS ISSUED)
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AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
IF THE COMPANY SO REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A
CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET
FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
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(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of the mailing of notice of
redemption under Section 3.02 hereof and ending at the close of business
on such day,
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(B) to register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(ii) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser or protected purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on
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and after that date such Notes shall be deemed to be no longer outstanding and
shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirements of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation for which the
Company has received notice of cancellation from the Trustee.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
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SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed, (iv) the redemption price and (v) the CUSIP
numbers of the Notes to be redeemed.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(i) the redemption date;
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(ii) the redemption price;
(iii) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(vi) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(vii) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
Prior to 9:00 a.m. (New York City time) on the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
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SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(i) Except as provided below, the Notes shall not be redeemable at
the Company's option prior to April 1, 2004. Thereafter, the Company may redeem
all or a part of the Notes upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 1 of the years indicated below:
Year Percentage
2004............................................................. 104.8125%
2005............................................................. 103.2083%
2006............................................................. 101.6042%
2007 and thereafter.............................................. 100.0000%
(ii) Notwithstanding the foregoing, at any time prior to April 1,
2002, the Company may on any one or more occasions redeem up to 35% of the
aggregate principal amount of Notes originally issued under this Indenture at a
redemption price of 109.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more offerings of common stock of the
Company or a capital contribution to the Company's common equity made with the
net cash proceeds of an offering of common stock of the Company's direct or
indirect parent or with Timberlands Net Proceeds (which amount shall be reduced
on a dollar for dollar basis by the amount of Timberlands Net Proceeds used to
make a Timberlands Repurchase in accordance with the fourth paragraph of Section
4.10 hereof); provided that:
(A) at least 65% of the aggregate principal amount of Notes issued
under this Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the
Company and its Subsidiaries); and
(B) the redemption must occur within 60 days of the date of the
closing of such offering, the making of such capital
contribution or the consummation of a Timberlands Sale.
(iii) At any time prior to April 1, 2004, the Company may also
redeem the Notes, in whole but not in part, upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days' prior written notice, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest and Liquidated
Damages, if any, thereon, to, the date of redemption.
(iv) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof. Nothing in this
Indenture prohibits the Company from
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acquiring the Notes by means other than a redemption, whether pursuant to an
issuer tender offer or otherwise, assuming such acquisition does not otherwise
violate the terms of this Indenture.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(ii) the Offer Amount, the purchase price and the Purchase Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(vi) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer the Note by book-entry transfer, to the Company, a
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depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(viii) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(ix) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. on the Purchase Date, the Company shall, to
the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest and Liquidated Damages, if any, shall be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest and Liquidated Damages, if any,
then due. The Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
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The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Trustee
and the Holders of Notes, within the time periods specified in the SEC's rules
and regulations: (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report on the annual financial
statements by the Company's certified independent accountants; and (ii) all
current reports that would be required to be filed with the SEC on Form 8-K if
the Company were required to file such reports. In addition, following the
consummation of the Exchange Offer contemplated by the Registration Rights
Agreement, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all the information and reports referred to in
clauses (i) and (ii) above with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. The Company shall at all times comply
with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding the Company and the
Subsidiary Guarantors shall furnish to the Trustee and the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
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If the Company designates any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required in
clauses (i) and (ii) above shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the
Unrestricted Subsidiaries of the Company.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor shall (to the extent that such
Guarantor is so required under the TIA) deliver to the Trustee within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto. For purposes of this paragraph, such compliance shall
be determined without regard to any period of grace or requirement of notice
provided under this Indenture.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) hereof shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, promptly upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto unless such Default or Event of Default is no longer continuing.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
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SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any Restricted Subsidiary
of the Company) or to the direct or indirect holders of the Company's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable (A) in Equity Interests (other than
Disqualified Stock) of the Company or (B) to the Company or a Restricted
Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company;
(iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is by its
terms expressly subordinated to the Notes or the Subsidiary Guarantees, except a
payment of interest or principal at the Stated Maturity thereof; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments")
unless, at the time of and after giving effect to such Restricted
Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(iii) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv) and (v) of the next succeeding
paragraph), is less than the sum, without duplication, of:
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(A) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the
date of this Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus
(B) 100% of the aggregate net cash proceeds received by
the Company since the date of this Indenture as a contribution
to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified
Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable
debt securities of the Company that have been converted into
or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company), together with the net proceeds
received by the Company upon such conversion or exchange, if
any, plus
(C) to the extent that any Restricted Investment that
was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (1) the
cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (2) the
initial amount of such Restricted Investment.
The foregoing provisions shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any Guarantor or
of any Equity Interests of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (iii)(B) of the preceding
paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) so long as no Default has occurred and is continuing or would
be caused thereby, any Timberlands Repurchase pursuant to and in accordance with
the fourth paragraph of Section 4.10 hereof;
(v) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its common Equity Interests on a pro rata basis;
(vi) so long as no Default has occurred and is continuing or would
be caused thereby, the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company or any Restricted Subsidiary of
the Company held by any current or former officers, directors or employees of
the Company (or any Restricted Subsidiary of the Company) pursuant to any
management equity subscription agreement, stock option agreement or stock plan
entered into in the ordinary course of
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business; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $5.0 million in
any calendar year;
(vii) repurchases of Equity Interests of the Company deemed to occur
upon exercise of stock options to the extent Equity Interests represent a
portion of the exercise price of such options;
(viii) cash payments, advances, loans or expense reimbursements made
to PCA Holdings to permit PCA Holdings to pay its general operating expenses
(other than management, consulting or similar fees payable to Affiliates of the
Company), franchise tax obligations, accounting, legal, corporate reporting and
administrative expenses incurred in the ordinary course of its business in an
amount not to exceed $1.0 million in the aggregate in any fiscal year; and
(ix) so long as no Default has occurred and is continuing or would
be caused thereby, other Restricted Payments in an aggregate amount not to
exceed $25.0 million since the date of this Indenture.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this covenant shall be determined by the Board of Directors whose resolution
with respect thereto shall be conclusive. The Board of Directors' determination
must be based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if the fair market value exceeds
$25.0 million.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any Restricted
Subsidiary of the Company; or
(iii) transfer any of its properties or assets to the Company or any
of its Restricted Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances
or restrictions existing under or by reasons of:
(i) Existing Indebtedness as in effect on the date of this
Indenture;
(ii) this Indenture, the Notes and the Subsidiary Guarantees;
(iii) applicable law;
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(iv) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any Restricted Subsidiary of the Company as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred;
(v) non-assignment provisions in leases, licenses or similar
agreements entered into in the ordinary course of business and consistent with
past practices;
(vi) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the property so acquired
of the nature described in clause (iii) of the first paragraph of this Section
4.08 on the property so acquired;
(vii) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(viii) Liens securing Indebtedness that limit the right of the
debtor to dispose of the assets subject to such Lien;
(ix) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business;
(x) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(xi) the Credit Agreement as in effect on the date of this
Indenture;
(xii) restrictions on the transfer of assets subject to any Lien
permitted under this Indenture imposed by the holder of such Lien;
(xiii) any Purchase Money Note or other Indebtedness or other
contractual requirements of a Receivables Subsidiary in connection with a
Qualified Receivables Transaction; provided that such restrictions apply only to
such Receivables Subsidiary;
(xiv) encumbrances or restrictions existing under or arising
pursuant to Credit Facilities entered into in accordance with this Indenture;
provided that the encumbrances or restrictions in such Credit Facilities are not
materially more restrictive than those contained in the Credit Agreement as in
effect on the date hereof; and
(xv) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (i) through (xiv) above; provided, that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board of
Directors of the Company, not materially more restrictive with respect to such
dividend and other payment restrictions than those contained in the dividends or
other payment restrictions prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing.
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SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur
Indebtedness or issue preferred stock, if the Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.0 to 1 or, if a Timberlands
Repurchase has occurred pursuant to and in accordance with the fourth paragraph
of Section 4.10 hereof, 2.25 to 1, in either case determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or the preferred stock or
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and any Guarantor of additional
Indebtedness under Credit Facilities and letters of credit under Credit
Facilities in an aggregate principal amount at any one time outstanding under
this clause (i) (with letters of credit being deemed to have a principal amount
equal to the face amount) not to exceed $1.51 billion less the aggregate amount
of all Net Proceeds of Asset Sales that have been applied by the Company or any
Restricted Subsidiary of the Company since the date of this Indenture to
permanently repay Indebtedness under a Credit Facility pursuant to Section 4.10
hereof and less the amount of Indebtedness outstanding under clause (xviii)
below; provided that the amount of Indebtedness permitted to be incurred
pursuant to Credit Facilities in accordance with this clause (i) shall be in
addition to any Indebtedness permitted to be incurred pursuant to Credit
Facilities, in reliance on, and in accordance with, clauses (iv) and (xix) below
or in the first paragraph hereof;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the related Subsidiary Guarantees to
be issued on the date of this Indenture and the Exchange Notes and the related
Subsidiary Guarantees to be issued pursuant to the Registration Rights
Agreement;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiary, in an aggregate principal amount (which amount
may, but need not be, incurred in whole or in part under Credit Facilities),
including all Permitted Refinancing Indebtedness incurred to refund, refinance,
replace, amend, restate, modify or renew, in whole or in part, any Indebtedness
incurred pursuant to this clause (iv), not to exceed the greater of 7.5% of
Total Assets as of the date of incurrence and $50.0 million at any time
outstanding;
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(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance, replace, amend, restate, modify
or renew, in whole or in part, Indebtedness (other than intercompany
Indebtedness) that was permitted by this Indenture to be incurred under the
first paragraph hereof or clauses (ii), (iii), (iv), (xv) or (xix) of this
paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
Restricted Subsidiary of the Company; provided, however, that each of the
following shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (vi):
(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary thereof; and
(B) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Restricted Subsidiary thereof;
(vii) the incurrence by the Company or any of the Guarantors of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating or fixed rate Indebtedness that
is permitted by the terms of this Indenture to be outstanding and the incurrence
of Indebtedness under Other Hedging Agreements providing protection against
fluctuations in currency values or in the price of energy, commodities and raw
materials in connection with the Company's or any of its Restricted
Subsidiaries' operations so long as management of the Company or such Restricted
Subsidiary, as the case may be, has determined that the entering into of such
Other Hedging Agreements are bona fide hedging activities;
(viii) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that was
permitted to be incurred under by another provision of this Section 4.09;
(ix) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (ix);
(x) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 4.09; provided, in
each such case, that the amount thereof is included in Fixed Charges and
Consolidated Indebtedness of the Company as accrued;
(xi) the incurrence by the Company of Indebtedness and the issuance
by the Company of preferred stock, in each case, that is deemed to be incurred
or issued, as the case may be, in connection with the Contribution;
(xii) the incurrence by the Company or any Guarantor of obligations
pursuant to foreign currency agreements entered into in the ordinary course of
business and not for speculative purposes;
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(xiii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of financing such
acquisition; provided, however, that (A) such Indebtedness is not reflected on
the balance sheet of the Company or any Restricted Subsidiary (contingent
obligations referred to in a footnote to financial statements and not otherwise
reflected on the balance sheet will not be deemed to be reflected on such
balance sheet for purposes of this clause (A)) and (B) the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the gross
proceeds including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect to any
subsequent changes in value) actually received by the Company and its Restricted
Subsidiaries in connection with such disposition;
(xiv) the incurrence of obligations in respect of performance and
surety bonds and completion guarantees provided by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;
(xv) the incurrence of Indebtedness by any Restricted Subsidiary in
connection with the acquisition of assets or a new Restricted Subsidiary in an
aggregate principal amount, including all Permitted Refinancing Indebtedness
incurred to refund, refinance, replace, amend, restate, modify or renew, in
whole or in part, any Indebtedness incurred pursuant to this clause (xv), not to
exceed $25.0 million at any one time outstanding; provided that such
Indebtedness was incurred by the prior owner of such asset or such Restricted
Subsidiary prior to such acquisition by the Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such acquisition by the
Restricted Subsidiary;
(xvi) the incurrence of Indebtedness consisting of guarantees of
loans made to management for the purpose of permitting management to purchase
Equity Interests of the Company, in an amount not to exceed $7.5 million at any
one time outstanding;
(xvii) Indebtedness of the Company that may be deemed to exist under
the Contribution Agreement as a result of the Company's obligation to pay
purchase price adjustments; provided that the incurrence of Indebtedness to pay
the purchase price adjustment shall be deemed to constitute an incurrence of
Indebtedness that was not permitted by this clause (xvii);
(xviii) the incurrence of Indebtedness by a Receivables Subsidiary
in a Qualified Receivables Transaction that is not recourse to the Company or
any of its Subsidiaries (except for Standard Securitization Undertakings);
provided that the aggregate principal amount of Indebtedness outstanding under
this clause (xviii) and clause (i) above does not exceed $1.51 billion less the
aggregate amount of all Net Proceeds of Asset Sales that have been applied by
the Company or any Restricted Subsidiary of the Company since the date of this
Indenture to permanently repay Indebtedness under a Credit Facility pursuant to
Section 4.10 hereof; and
(xix) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) (which amount may,
but need not be, incurred in whole or in part under the Credit Facilities) at
any time outstanding, including all Permitted Refinancing Indebtedness incurred
to refund, refinance, replace, amend, restate, modify or renew, in whole or in
part, any Indebtedness incurred pursuant to this clause (xix), not to exceed
$75.0 million.
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For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in clauses (i) through (xix)
above, or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company shall be permitted to classify or later reclassify
such item of Indebtedness in any manner that complies with this Section 4.09.
Indebtedness under Credit Facilities outstanding on the date on which Notes are
first issued and authenticated under this Indenture shall be deemed to have been
incurred on such date in reliance on the exception provided by clause (i) of the
definition of Permitted Debt.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (x) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale which, taken as a whole, is at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed of,
(y) such fair market value is determined by the Company's Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee and (z) at least 75% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
cash or Cash Equivalents or Marketable Securities. For purposes of this
provision, each of the following shall be deemed to be cash:
(i) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by
the transferee of any such assets;
(ii) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
converted, sold or exchanged by the Company or such Restricted Subsidiary into
cash within 30 days of the related Asset Sale (to the extent of the cash
received in that conversion); and
(iii) any Designated Noncash Consideration received by the Company
or any Restricted Subsidiary of the Company in such Asset Sale having an
aggregate fair market value, taken together with all other Designated Noncash
Consideration received since the date of this Indenture pursuant to this clause
(iii) that is at that time outstanding, not to exceed 10% of Total Assets at the
time of the receipt of such Designated Noncash Consideration (with the fair
market value of each item of Designated Noncash Consideration being measured at
the time received and without giving effect to subsequent changes in value).
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option:
(i) to repay Senior Debt and, if the Senior Debt repaid is revolving
credit Indebtedness, to correspondingly reduce commitments with respect thereto;
(ii) to invest in or to acquire other properties or assets to
replace the properties or assets that were the subject of the Asset Sale or that
will be used in businesses of the Company or its Restricted Subsidiaries, as the
case may be, existing at the time such assets are sold;
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(iii) to make a capital expenditure or commit, or cause such
Restricted Subsidiary to commit, to make a capital expenditure (such commitments
to include amounts anticipated to be expended pursuant to the Company's capital
investment plan as adopted by the Board of Directors of the Company) within 24
months of such Asset Sale; or
(iv) to make a Timberlands Repurchase in accordance with Section
3.07(ii) hereof.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph shall constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
make an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100%
of the principal amount plus accrued and unpaid interest and Liquidated Damages,
if any, to the date of purchase, and shall be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Notwithstanding the three preceding paragraphs, the Company shall be
permitted to apply up to $100.0 million of Timberlands Net Proceeds (which
amount shall be reduced on a dollar for dollar basis by the amount of
Timberlands Net Proceeds used to make a Timberlands Repurchase in accordance
with Section 3.07(ii) hereof) to repurchase or redeem, or pay a dividend on, or
a return of capital with respect to, any Equity Interests of the Company, or
repurchase or redeem Subordinated Exchange Debentures, if:
(i) the repurchase, redemption, dividend or return of capital is
consummated within 90 days of the final sale of such Timberlands Sale;
(ii) the Company's Debt to Cash Flow Ratio at the time of such
Timberlands Repurchase, after giving pro forma effect to (A) such repurchase,
redemption, dividend or return of capital, (B) the Timberlands Sale and the
application of the net proceeds therefrom and (C) any increase or decrease in
fiber, stumpage or similar costs as a result of the Timberlands Sale as if the
same had occurred at the beginning of the most recently ended four full fiscal
quarter period of the Company for which internal financial statements are
available, would have been no greater than 4.5 to 1; and
(iii) in the case of a repurchase or redemption of all of the then
outstanding Preferred Stock or Subordinated Exchange Debentures, no Timberlands
Net Proceeds have previously been applied to redeem Notes or repurchase or
redeem, or pay a dividend on, or a return of capital with respect to, any other
Equity Interests of the Company.
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The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.10, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
the provisions of this Section 4.10 by virtue of such conflict.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms taken as a whole that are
no less favorable to the Company or the relevant Restricted Subsidiary than
those that could have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person and
(ii) the Company delivers to the Trustee
(A) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with this Section 4.11 and that such Affiliate
Transaction has been approved by a majority of the disinterested
members of the Board of Directors and
(B) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $25.0 million, an opinion as to the fairness to the
Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal, investment banking or advisory
firm of national standing; provided that this clause (B) shall not
apply to transactions with TPI and its subsidiaries in the ordinary
course of business at a time when Madison Dearborn Partners, LLC and
its Affiliates are entitled, directly or indirectly, to elect a
majority of the Board of Directors of the Company.
Notwithstanding the foregoing, the following items shall not be
deemed to be Affiliate Transactions and, therefore, will not be subject to the
provisions of the first paragraph of this Section 4.11:
(i) any employment agreement entered into by the Company or any
Restricted Subsidiary of the Company in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary;
(ii) transactions between or among the Company and/or its Restricted
Subsidiaries;
(iii) transactions with a Person that is an Affiliate of the Company
solely because the Company owns an Equity Interest in such Person;
(iv) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company;
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(v) sales of Equity Interests (other than Disqualified Stock) to
Affiliates of the Company;
(vi) the payment of transaction, management, consulting and advisory
fees and related expenses to Madison Dearborn Partners, LLC and its Affiliates;
provided that such fees shall not, in the aggregate, exceed $15.0 million (plus
out-of-pocket expenses) in connection with the Contribution or $2.0 million in
any twelve-month period commencing after the date of the Contribution;
(vii) the payment of fees and expenses related to the Contribution
other than fees and expenses paid to Madison Dearborn Partners, LLC and its
Affiliates;
(viii) Restricted Payments that are permitted by Section 4.07
hereof;
(ix) transactions described in clause (xi) of the definition of
Permitted Investments;
(x) reasonable fees and expenses and compensation paid to, and
indemnity provided on behalf of, officers, directors or employees of the Company
or any Subsidiary as determined in good faith by the Board of Directors of the
Company or senior management;
(xi) payments made to PCA Holdings for the purpose of allowing PCA
Holdings to pay its general operating expenses, franchise tax obligations,
accounting, legal, corporate reporting and administrative expenses incurred in
the ordinary course of its business in an amount not to exceed $1.0 million in
the aggregate in any fiscal year;
(xii) transactions contemplated by the Contribution Agreement and
the Transaction Agreements as the same are in effect on the date of this
Indenture;
(xiii) transactions in connection with a Qualified Receivables
Transaction; and
(xiv) transactions with either of the Initial Purchasers or any of
their respective Affiliates.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired securing
Indebtedness, Attributable Debt or trade payables, except Permitted Liens.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:
(i) either (A) the Company or that Restricted Subsidiary, as
applicable, could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction under the
Fixed Charge Coverage Ratio test in the first paragraph of Section 4.09 hereof
or (B) the Net Proceeds of such sale and leaseback transaction are applied to
repay outstanding Senior Debt; and
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(ii) the transfer of assets in that sale and leaseback transaction
is permitted by, and the Company applies the net proceeds of such transaction in
compliance with, Section 4.10 hereof.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) If a Change of Control occurs, each Holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") on the terms set forth in this
Section 4.15. In the Change of Control Offer, the Company shall offer payment in
cash equal to 101% of the aggregate principal amount of Notes repurchased plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, to the date
of purchase (the "Change of Control Payment"). Within thirty (30) days following
any Change of Control, the Company shall mail a notice to the Trustee and each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by this Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
provisions of this Section 4.15 by virtue of such conflict.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful:
(i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company.
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The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book-entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with any of the provisions of this Section 4.15, but in any event within 90 days
following a Change of Control, the Company shall either repay all outstanding
Senior Debt or obtain the requisite consents, if any, under all agreements
governing outstanding Senior Debt to permit the repurchase of Notes required by
this Section 4.15. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(c) The Company shall first comply with the first sentence in the
immediately preceding paragraph before it shall be required to repurchase Notes
pursuant to the provisions described above. The Company's failure to comply with
the first sentence in the immediately preceding paragraph may (with notice and
lapse of time) constitute an Event of Default described in clause (iii) of
Section 6.01 but shall not constitute an Event of Default described in clause
(ii) of Section 6.01.
(d) Notwithstanding anything to the contrary in this Section 4.15,
the Company shall not be required to make a Change of Control Offer upon the
occurrence of a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.15 and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The foregoing provisions of this Section 4.15, insofar as they
require the Company to make a Change of Control Offer following a Change of
Control, shall be applicable regardless of whether any other provisions of this
Indenture are applicable.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of the Company and senior in any respect in
right of payment to the Notes. No Guarantor shall incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to the Senior Debt of such Guarantor and senior in
any respect in right of payment to such Guarantor's Subsidiary Guarantee.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Restricted Subsidiaries acquires or
creates another Domestic Subsidiary or if any Restricted Subsidiary becomes a
Domestic Subsidiary of the Company after the date of this Indenture, then that
newly acquired or created Domestic Subsidiary (other than a Receivables
Subsidiary) shall become a Guarantor and execute a supplemental indenture and
deliver an Opinion of Counsel to the Trustee within 10 Business Days of the date
on which it was acquired or created.
SECTION 4.18. BUSINESS ACTIVITIES
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The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Company and
its Restricted Subsidiaries taken as a whole.
SECTION 4.19. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary so designated shall be deemed to be an
Investment made as of the time of such designation and shall either reduce the
amount available for Restricted Payments under the first paragraph of Section
4.07 hereof or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments, as the Company shall
determine. That designation shall only be permitted if such Investment would be
permitted at that time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may redesignate
any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not, directly or indirectly: (1) consolidate or
merge with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person unless:
(i) either (a) the Company is the surviving corporation, or (b) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes, this Indenture and the Registration
Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists; and
(iv) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made will,
on the date of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof.
In addition, the Company shall not, directly or indirectly, lease
all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions,
to any other Person. This Section 5.01 shall not apply to a sale, assignment,
transfer,
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conveyance or other disposition of assets between or among the Company and any
of its Wholly Owned Restricted Subsidiaries.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following is an Event of Default:
(i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by
Article 10 hereof);
(ii) default in payment when due of the principal of, or premium, if
any, on the Notes (whether or not prohibited by Article 10 hereof);
(iii) failure by the Company or any of its Restricted Subsidiaries
to comply with Sections 4.10 or 5.01 hereof;
(iv) failure by the Company or any of its Restricted Subsidiaries
for 30 days after notice by the Trustee or by the Holders of at least 25% in
principal amount of the Notes to comply with any of the other agreements in this
Indenture;
(v) default under any mortgage, indenture or instrument under which
there is issued and outstanding any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of this
Indenture, if that default:
(A) is caused by a failure to pay principal at the final
stated maturity of such Indebtedness (a "Payment Default"); or
(B) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a
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Payment Default or the maturity of which has been so accelerated,
aggregates $25.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to
pay final nonappealable judgments aggregating in excess of $25.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days;
(vii) except as permitted by this Indenture, any Subsidiary
Guarantee by a Guarantor that is a Significant Subsidiary shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor that is a Significant
Subsidiary, or any Person acting on behalf of any Guarantor that is a
Significant Subsidiary, shall deny or disaffirm its obligations under its
Subsidiary Guarantee;
(viii) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become due; or
(ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries;
(B) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary; or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs (other than an Event of Default
specified in clause (viii) or (ix) of Section 6.01 hereof with respect to the
Company) and is continuing, the Trustee, upon request of
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the Holders of at least 25% in principal amount of the Notes then outstanding,
or the Holders of at least 25% in principal amount of the Notes then outstanding
may declare the principal of, premium and accrued interest and Liquidated
Damages, if any, on all the Notes to be due and payable by notice in writing to
the Company and the Trustee specifying the respective Event of Default and that
such notice is a "notice of acceleration" (the "Acceleration Notice"), and the
same (i) shall become immediately due and payable or (ii) if there are any
amounts outstanding under the Credit Agreement, shall become immediately due and
payable upon the first to occur of (x) an acceleration under the Credit
Agreement or (y) five Business Days after receipt by the Company and the
Representative under the Credit Agreement of such Acceleration Notice but only
if such Event of Default is then continuing. Notwithstanding the foregoing, if
an Event of Default specified in clause (viii) or (ix) of Section 6.01 hereof
occurs with respect to the Company, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the Notes then outstanding by written notice to
the Trustee may on behalf of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default occurs on or after April 1, 2004 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company in bad faith with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to April 1, 2004
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company in bad faith with the intention of avoiding the
prohibition on redemption of the Notes prior to April 1, 2004, then, upon
acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, for each of the years beginning on
April 1 of the years set forth below, as set forth below (expressed as a
percentage of the aggregate principal amount to the date of payment that would
otherwise be due but for the provisions of this sentence):
Year Percentage
---- ----------
1999...............................................112.8333%
2000...............................................111.2292%
2001...............................................109.6250%
2002...............................................108.0208%
2003...............................................106.4167%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(i) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(iii) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase),
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or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts purported to be stated therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel
or both. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel of its selection and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is actually known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it becomes known
to the Trustee. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as its board of directors, its executive
committee or a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
Notwithstanding anything to the contrary expressed in this Indenture, the
Trustee shall not be deemed to have knowledge of any Default or Event of Default
hereunder, except in the case of an Event of Default under Section 6.01(i) or
(ii) hereof (provided that the Trustee is the Paying Agent), unless and until a
Responsible Officer shall have actual knowledge thereof or shall have received
written notice, at its Principal Corporate Trust Office as specified in Section
11.02 hereof, from the Company or any Holder of Senior Notes that such a Default
or an Event of Default has occurred.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
securities exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and the Trustee shall agree. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel and
any taxes.
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The Company shall indemnify the Trustee and its officers, directors,
shareholders, agents and employees (each an "Indemnified Party") for and hold
each Indemnified Party harmless against any and all losses, liabilities or
expenses incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section
7.07) and defending itself against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee and its officers, directors, shareholders, agents and
employees in its capacity as Paying Agent, Registrar, and Custodian and Agent
for services of notices and demands shall have the full benefit of the foregoing
indemnity. An Indemnified Party shall notify the Company promptly of any claim
for which it may seek indemnity. Failure by an Indemnified Party to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and an Indemnified Party shall cooperate in the
defense. An Indemnified Party may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section with
respect to compensation and indemnity, the Trustee shall have a Lien prior to
the Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture. The Trustee's right to
receive payment of any amounts under this Indenture shall not be subordinated to
any other liability or any of the Indebtedness of the Company.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(viii) or (ix) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
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(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which any other
securities, or certificates of interest or participation in any other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310 (b)(1) are met.
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its Obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all of its obligations
under such Notes and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder:
(i) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section 8.04, payments in respect of the principal of and premium,
interest and Liquidated Damages, if any, on such Notes when such payments are
due;
(ii) the Company's obligations with respect to such Notes under
Article 2 and Section 4.02 hereof;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith; and
(iv) this Article 8.
Subject to compliance with this Article 8, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth
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in Section 8.04 hereof, be released from their respective obligations under the
covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15,
4.16, 4.17, 4.18 and 4.19 hereof with respect to the outstanding Notes on and
after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(iii) through
6.01(vii) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
(i) the Company must irrevocably deposit, with the Trustee, in
trust, for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium and Liquidated
Damages, if any, on the outstanding Notes on the stated maturity thereof or on
the applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(ii) in the case of Legal Defeasance, the Company must deliver to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (B) since the date of
this Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company must deliver
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be
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applied to such deposit) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture but in any event including the Credit
Agreement) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(vi) the Company must deliver to the Trustee an Opinion of Counsel
in the United States to the effect that, assuming no intervening bankruptcy of
the Company or any Guarantor between the date of deposit and the 91st day
following the deposit and assuming that no Holder is an "insider" of the Company
under applicable bankruptcy law, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights and
remedies generally;
(vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of the Notes over other creditors of the Company, or
with the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(viii) the Company must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating that
all conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(ii) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
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SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times (national edition) and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 hereof, the Company, the Guarantors and
the Trustee may amend or supplement this Indenture, the Notes or the Subsidiary
Guarantees without the consent of any Holder of a Note:
(i) to cure any ambiguity, defect, error or inconsistency;
(ii) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(iii) to provide for the assumption of the Company's or any
Guarantor's obligations to the Holders of the Notes by a successor to the
Company or a Guarantor pursuant to Article 5 hereof;
(iv) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
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(v) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(vi) to provide for the issuance of Additional Notes in accordance
with the provisions set forth in this Indenture as of the date hereof; or
(vii) to allow any Guarantor to execute a supplemental indenture
and/or a Subsidiary Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture (including
Section 3.09, 4.10 and 4.15 hereof), the Notes or the Subsidiary Guarantees with
the consent of the Holders of at least a majority in principal amount Notes
(including Additional Notes, if any) then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the Notes or the
Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including Additional
Notes, if any) voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes). Without the consent of at least 75% in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, the Notes), no waiver or amendment to
this Indenture may make any change in the provisions of Article 10 hereof that
adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes (including
Additional Notes, if any) then outstanding voting as a single class may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver under this Section 9.02 may not (with respect to any Notes
held by a non-consenting Holder):
(i) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Note or alter or waive any of the provisions with respect to the redemption of
the Notes, other than provisions relating to Sections 3.09, 4.10 or 4.15 hereof;
(iii) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(iv) waive a Default or Event of Default in the payment of principal
of or premium or Liquidated Damages, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes (including Additional
Notes, if any) and a waiver of the payment default that resulted from such
acceleration;
(v) make any Note payable in money other than that stated in the
Notes;
(vi) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, interest or Liquidated Damages, if any, on the
Notes;
(vii) waive a redemption payment with respect to any Note, other
than a payment required by Section 3.09, 4.10 or 4.15 hereof;
(viii) make any change in the foregoing amendment and waiver
provisions; or
(ix) release any Guarantor from any of its obligations under its
Subsidiary Guarantee or this Indenture, except in accordance with the terms of
this Indenture.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note
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may revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon an Officer's Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture and that such amendment is the
legal, valid and binding obligation of the Company and any Guarantors,
enforceable against them in accordance with their terms, subject to customary
exceptions, and complies with the provisions hereof (including Section 9.03).
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that
the principal of and premium, interest and Liquidated Damages, if any, and any
other Obligations on, or relating to the Notes are subordinated and junior in
right of payment, to the extent and in the manner provided in this Article 10,
to the prior payment in full in cash or Cash Equivalents (other than Cash
Equivalents of the type referred to in clauses (iii) and (iv) of the definition
thereof) of all Senior Debt of the Company (whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of and shall be enforceable by, the holders of
Senior Debt of the Company, and that each holder of Senior Debt of the Company
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired such Senior Debt in reliance upon the covenants
and provisions contained in this Indenture and the Notes.
SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Debt" means:
(i) any Indebtedness under or in respect of the Credit Agreement;
and
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(ii) any other Senior Debt permitted under this Indenture the
principal amount of which is $25.0 million or more and that has been designated
by the Company in the instrument or agreement relating to the same as
"Designated Senior Debt."
"Permitted Junior Securities" means debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all then
outstanding Senior Debt of the Company at least to the same extent that the
Notes are subordinated to the payment of all Senior Debt of the Company on the
date of this Indenture, so long as:
(i) the effect of the use of this defined term in the provisions of
Article 10 hereof is not to cause the Notes to be treated as part of (A) the
same class of claims as the Senior Debt of the Company or (B) any class of
claims pari passu with, or senior to, the Senior Debt of the Company for any
payment or distribution in any case or proceeding or similar event relating to
the liquidation, insolvency, bankruptcy, dissolution, winding up or
reorganization of the Company; and
(ii) to the extent that any Senior Debt of the Company outstanding
on the date of consummation of any such plan of reorganization or readjustment
is not paid in full in cash or Cash Equivalents (other than Cash Equivalents of
the type referred to in clauses (iii) and (iv) of the definition thereof) on
such date, either (A) the holders of any such Senior Debt not so paid in full in
cash or Cash Equivalents (other than Cash Equivalents of the type referred to in
clauses (iii) and (iv) of the definition thereof) have consented to the terms of
such plan of reorganization or readjustment or (B) such holders receive
securities which constitute Senior Debt of the Company (which are guaranteed
pursuant to guarantees constituting Senior Debt of each Guarantor) and which
have been determined by the relevant court to constitute satisfaction in full in
money or money's worth of any Senior Debt of the Company (and any related Senior
Debt of the Guarantors) not paid in full in cash or Cash Equivalents (other than
Cash Equivalents of the type referred to in clauses (iii) and (iv) of the
definition thereof).
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided that if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Senior Debt" means:
(i) all Indebtedness outstanding under all Credit Facilities, all
Hedging Obligations and all Other Hedging Agreements (including guarantees
thereof) with respect thereto of the Company and the Guarantors, whether
outstanding on the date of this Indenture or thereafter incurred;
(ii) any other Indebtedness incurred by the Company and the
Guarantors, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees, as the case may be; and
(iii) all Obligations with respect to the items listed in the
preceding clauses (i) and (ii) (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law).
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Notwithstanding anything to the contrary in the preceding, Senior Debt
shall not include:
(i) any liability for federal, state, local or other taxes owed or
owing by the Company or the Guarantors;
(ii) any Indebtedness of the Company or any Guarantor to any of its
Subsidiaries;
(iii) any trade payables; or
(iv) the portion of any Indebtedness that is incurred in violation
of this Indenture (but only to the extent so incurred).
A "distribution" may consist of cash, securities or other property,
by set-off or otherwise.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors of the
Company in a liquidation or dissolution of the Company, in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, in an assignment for the benefit of creditors or in any
marshalling of the Company's assets and liabilities:
(i) holders of Senior Debt of the Company shall receive payment in
full in cash or Cash Equivalents (other than Cash Equivalents of the type
referred to in clauses (iii) and (iv) of the definition thereof) of all
Obligations due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt, whether or not such interest is an allowable claim) before Holders
of the Notes shall be entitled to receive any payment or distribution of any
kind or character with respect to any Obligations on, or relating to, the Notes
(except that Holders may receive and retain (A) Permitted Junior Securities and
(B) payments and other distributions made from any defeasance trust created
pursuant to Article 8 hereof, so long as the trust was created in accordance
with all relevant conditions specified in Article 8 hereof); and
(ii) until all Obligations with respect to Senior Debt of the
Company (as provided in subsection (i) above) are paid in full, in cash or Cash
Equivalents (other than Cash Equivalents of the type referred to in clauses
(iii) and (iv) of the definition thereof), any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to which Holders would be entitled but for this Article 10 shall be
made to holders of such Senior Debt (except that Holders of Notes may receive
(A) Permitted Junior Securities and (B) payments and other distributions made
from any defeasance trust created pursuant to Article 8 hereof, so long as the
trust was created in accordance with all relevant conditions specified in
Article 8 hereof), as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution of any kind or
character to the Trustee or any Holder with respect to any Obligations on, or
relating to, the Notes and may not acquire from the Trustee or any Holder any
Notes for cash or property (other than (x) Permitted Junior Securities and (y)
payments and other distributions made from any defeasance trust created pursuant
to Article 8 hereof, so long as the trust was created in accordance with all
relevant conditions specified in Article 8 hereof) until all principal and other
Obligations with respect to the Senior Debt have been paid in full in
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cash or Cash Equivalents (other than Cash Equivalents of the type referred to in
clauses (iii) and (iv) of the definition thereof) if:
(i) a default in the payment when due, whether at maturity, upon
redemption, declaration or otherwise, of any principal of, interest on,
unpaid drawings for letters of credit issued in respect of, or any other
Obligations with respect to any Designated Senior Debt of the Company
occurs and is continuing; or
(ii) a default, other than a default referred to in clause (i) of
this Section 10.04, on Designated Senior Debt of the Company occurs and is
continuing that then permits holders of such Designated Senior Debt to
accelerate its maturity and the Trustee receives a written notice of such
default (a "Payment Blockage Notice") from the holders or a Representative
of such Designated Senior Debt. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section 10.04 unless and until at least 360 days
shall have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been waived for a period of not less
than 90 consecutive days.
The Company may and shall resume payments on and distributions with
respect to any Obligations on, or with respect to, the Notes and may acquire
them upon the earlier of:
(i) in the case of a default referred to in clause (i) of the
immediately preceding paragraph, the date upon which the default is cured or
waived, or
(ii) in the case of a default referred to in clause (ii) of the
immediately preceding paragraph, the earlier of (A) the date on which all
nonpayment defaults are cured or waived, (B) 179 days after the date of delivery
of the applicable Payment Blockage Notice or (C) the date on which the Trustee
receives notice from the Representative for such Designated Senior Debt
rescinding the Payment Blockage Notice, unless the maturity of any such
Designated Senior Debt has been accelerated.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the Company
of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment or
distribution of any kind or character, whether in cash, properties or
securities, in respect of any Obligations with respect to the Notes (other than
(x) Permitted Junior Securities and (y) payments and other distributions made
from any defeasance trust created pursuant to Article 8 hereof) at a time when
such payment or distribution is prohibited by Section 10.03 or 10.04 hereof,
such payment shall be held by the Trustee or such Holder, in trust for the
benefit of, and shall be paid forthwith over and delivered, upon written
request, (on a pro rata basis based on the aggregate principal amount of such
Senior Debt held by such holders), to the holders of Senior Debt of the Company
or their Representative under the indenture or other agreement (if any) pursuant
to which such Senior Debt may have been issued for application to the payment of
all Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and
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(iv) of the definition thereof) in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Debt.
If any Holder or the Trustee is required by any court or otherwise
to deliver payments it received by the Company or Guarantor to a holder of
Senior Debt, any amount so paid to the extent theretofore discharged, shall be
reinstated in full force and effect.
With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt of the Company, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of Holders
or the Company or any other Person money or assets to which any holders of
Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.
To the extent any payment of Senior Debt of the Company (whether by
or on behalf of the Company, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set aside
or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt of the Company or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent
in writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt of the Company as provided in this Article 10.
SECTION 10.08. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and (iv) of the
definition thereof) of all Senior Debt of the Company, Holders of Notes shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Notes) to the rights of holders of Senior Debt of the Company to receive
payments or distributions of cash, properties or securities of the Company
applicable to the Senior Debt of the Company until the Notes have been paid in
full. A distribution made under this Article 10 to holders of Senior Debt of the
Company that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company to or on account of
Senior Debt of the Company.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt of the Company. Nothing in this Indenture shall:
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(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest and Liquidated Damages, if any, on the Notes in accordance with
their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt of the
Company; or
(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt of the Company to receive distributions and
payments otherwise payable to Holders of Notes.
The failure to make a payment on account of principal of, or
interest on, the Notes by reason of any provision of this Article 10 will not be
construed as preventing the occurrence of a Default or Event of Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes as provided herein
shall at any time in any way be prejudiced or be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture, regardless of any knowledge thereof which
any such Holder may have otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt of the Company may, at any time and from
time to time, without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article 10 or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Debt of the
Company, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior
Debt of the Company, or otherwise amend or supplement in any manner Senior Debt
of the Company, or any instrument evidencing the same or any agreement under
which Senior Debt of the Company is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt of the Company; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt of the Company; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred
to in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt of the Company and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 10.
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SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least three Business Days prior to the date upon which
such payment would otherwise become due and payable written notice of facts that
would cause the payment of any Obligations with respect to the Notes to violate
this Article 10. Only the Company, the holders of Senior Debt of the Company or
a Representative therefor may give any such notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt of the Company with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the holders of Senior Debt of the Company or their Representatives
are hereby authorized to file an appropriate claim for and on behalf of the
Holders of the Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the parties holding a majority of the outstanding
Indebtedness under each credit agreement included in the Credit Facilities.
ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly paid
in full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and
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(ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately. Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection. The Guarantors
hereby agree that their obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenant
that this Subsidiary Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors or any custodian, trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by the Company or the Guarantors to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE.
Each Guarantor agrees, and each Holder by accepting a Note agrees,
that the Obligations of each Guarantor under its Subsidiary Guarantee, are
subordinated and junior in right of payment to the prior payment of all Senior
Debt of each Guarantor on the same basis as the Obligations on, or relating to
the Notes, are subordinated and junior in right of payment to the prior payment
of all Senior Debt of the Company pursuant to Article 10. In furtherance of the
foregoing, each Guarantor agrees, and the Trustee and each Holder by accepting a
Note agrees, that the subordination and related provisions applicable to the
Obligations of each Guarantor under its Subsidiary Guarantee by virtue of the
preceding sentence shall be as set forth in Article 10 as if each reference to
"Company" therein were instead a reference to "a Guarantor," each reference to
"Senior Debt of the Company" therein were instead a reference to "Senior Debt of
each Guarantor" and each reference to "Notes" therein were instead a reference
to "this Subsidiary Guarantee," with such appropriate modifications as the
context may require. For the purposes
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of the foregoing sentence, the Trustee and the Holders shall have the right to
receive and/or retain payments by any of the Guarantors only at such times as
they may receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 10 hereof. The provisions of this Section 11.02 may
not be amended or modified without the written consent of the parties holding a
majority of the outstanding Indebtedness under each credit agreement included in
the Credit Facilities.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Subsidiary Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by an Officer
thereof.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any other Domestic
Subsidiaries subsequent to the date of this Indenture, or if any current or
future Subsidiaries become Domestic Subsidiaries subsequent to the date of this
Indenture, if required by Section 4.17 hereof, the Company shall cause such
Subsidiaries to execute supplemental indentures to this Indenture in accordance
with Section 4.17 hereof, and this Article 11, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Guarantor unless:
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(i) subject to Section 11.06 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee, under
the Notes, this Indenture, the Registration Rights Agreement and the Subsidiary
Guarantee on the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (i) and (ii) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and relieved
of any obligations under its Subsidiary Guarantee; provided that the Net
Proceeds of such sale or other disposition are applied in accordance with the
applicable provisions of this Indenture, including without limitation Section
4.10 hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the applicable provisions
of this Indenture, including without limitation Section 4.10 hereof, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.
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ARTICLE 12.
SATISFACTION AND DISCHARGE
SECTION 12.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall be discharged and shall cease to be of further
effect as to all Notes issued hereunder, when
(i) either
(A) all such Notes theretofore authenticated (except lost, stolen
or destroyed Notes that have been replaced or paid and Notes
for whose payment money has theretofore been deposited in
trust and thereafter repaid to the Company) have been
delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to such Trustee for
cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise, in cash in U.S.
dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest, to pay and
discharge the entire Indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation for
principal, premium and Liquidated Damages, if any, and accrued
interest to the date of maturity or redemption;
(ii) no Default or Event of Default with respect to this Indenture
or the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company or a Guarantor, is a party or by
which the Company or a Guarantor is bound;
(iii) the Company or a Guarantor has paid or caused to be paid all
sums payable by it under this Indenture; and
(iv) the Company has delivered irrevocable instructions to the
Trustee under this Indenture to apply the deposited money toward the
payment of such Notes at maturity or the redemption date, as the case may
be.
In addition, the Company must deliver an Officers' Certificate and
an Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
SECTION 12.02. APPLICATION OF TRUST MONEY
Subject to the provisions of the last paragraph of Section 4.19
hereof, all money deposited with the Trustee pursuant to Section 12.01 hereof
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to Persons entitled thereto, of the principal (and premium, if any),
interest and Liquidated Damages, if any, for whose payment such money has been
deposited with the Trustee.
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If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 12.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though such deposit had occurred pursuant to
Section 12.01 hereof; provided that if the Company has made any payment of
principal of, premium, if any, or interest on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.
ARTICLE 13.
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company and/or any Guarantor:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Telecopier No.: (847) 482-4559
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telecopier No.: (312) 861-2200
Attention: William S. Kirsch, P.C.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Telecopier No.: (212) 852-1626
Attention: John Guiliano
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With a copy to:
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
Telecopier No.: (212) 753-0751
Attention: Jeffrey Spindler
The Company, or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
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SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(i) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of such Person, he or she has
or they have made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
SHAREHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or any Guarantor under the Notes,
the Subsidiary Guarantees, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
SECTION 13.08. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
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SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Indenture signature page follows]
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DATED APRIL 12, 1999 PACKAGING CORPORATION OF AMERICA
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Chief Finacial Officer,
Secretary and Treasurer
Guarantors:
DAHLONEGA PACKAGING CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
DIXIE CONTAINER CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
PCA HYDRO, INC.
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
PCA TOMAHAWK CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
PCA VALDOSTA CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
BY: /s/ John Guiliano
------------------------------------
Name: John Guiliano
Title: Vice President
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
12 3/8% SENIOR EXCHANGEABLE
PREFERRED STOCK DUE 2010
AND
12 3/8% SERIES B SENIOR EXCHANGEABLE
PREFERRED STOCK DUE 2010
OF
PACKAGING CORPORATION OF AMERICA
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
Packaging Corporation of America (the "COMPANY"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, certifies that pursuant to the authority contained in Article Four
of its Restated Certificate of Incorporation (the "CERTIFICATE OF
INCORPORATION") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of
the Company has duly approved and adopted the following resolution (this
"CERTIFICATE OF DESIGNATIONS"), which resolution remains in full force and
effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of 1,100,000
shares of 12 3/8% Senior Exchangeable Preferred Stock due 2010, par value
$0.01 per share, and 1,900,000 shares of 12 3/8% Series B Senior Exchangeable
Preferred Stock due 2010, par value $0.01 per share, with a liquidation
preference of $100 per share (the "LIQUIDATION PREFERENCE"), PROVIDED that no
shares of the Series B Senior Exchangeable Preferred Stock Preferred Stock
may be issued except upon the surrender and cancellation of such number of
shares of the Senior Exchangeable Preferred Stock having an aggregate
Liquidation Preference equal to the aggregate Liquidation Preference of the
shares of the Series B Senior Exchangeable Preferred Stock so issued or as
payment of dividends in accordance with the terms described herein. The
Senior Exchangeable Preferred Stock and the Series B Senior Exchangeable
Preferred Stock shall have the following powers, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions thereof as follows:
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SECTION 1 CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Section
1 shall have, for all purposes of this resolution, the meanings herein
specified (with terms defined in the singular having comparable meanings when
used in the plural).
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with or
into, or becoming a Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise; PROVIDED that beneficial
ownership of 10% or more of the Voting Stock of a Person shall be deemed to
be control. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" shall have correlative
meanings.
"APPLICABLE PREMIUM" means, with respect to any Preferred Stock on any
redemption date, the greater of:
(1) 1.0% of the Liquidation Preference of the Preferred
Stock; or
(2) the excess of:
(a) the present value at such redemption date of (i) the
redemption price of the Preferred Stock at April 1, 2004
(such redemption price being set forth in the table
appearing in Section 6.2 hereof plus (ii) all required
dividend payments due on the Preferred Stock through April
1, 2004 (excluding accrued but unpaid dividends), computed
using a discount rate equal to the Treasury Rate as of such
Redemption Date plus 50 basis points; over
(b) the Liquidation Preference of the Preferred Stock, if
greater.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Certificate, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"ASSET SALE" means:
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(1) the sale, lease, conveyance or other disposition of any
assets or rights, other than sales of inventory in the ordinary course of
business; PROVIDED that the sale, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Section 8.1 hereof and/or
Section 9.4 hereof and not by Section 8.2 hereof; and
(2) the issuance of Equity Interests by any of the Company's
Restricted Subsidiaries or the sale of Equity Interests in any of the
Company's Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed
to be Asset Sales:
(1) any single transaction or series of related transactions
that involves assets having a fair market value of less than $10.0 million;
(2) a transfer of assets between or among the Company and its
Wholly Owned Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;
(4) the sale, license or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents or
Marketable Securities;
(6) the transfer or disposition of assets and the sale of Equity
Interests pursuant to the Contribution;
(7) sales of accounts receivables and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof including cash or
Cash Equivalents or Marketable Securities in an amount at least equal to
75% of the fair market value thereof as determined in accordance with GAAP;
and
(8) a Restricted Payment or Permitted Investment that is
permitted by Section 9.1 hereof.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of
the lessee for net rental payments during the remaining term of the lease
included in such sale and leaseback transaction including any period for
which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal
to the rate of interest implicit in such transaction, determined in
accordance with GAAP.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term
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is used in Section 13(d)(3) of the Exchange Act), such "person" shall be
deemed to have beneficial ownership of all securities that such "person" has
the right to acquire by conversion or exercise of other securities, whether
such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition. The terms "Beneficially Owns" and
"Beneficially Owned" shall have a corresponding meaning.
"BOARD OF DIRECTORS" means:
(1) with respect to a corporation, the board of directors of
the corporation;
(2) with respect to a partnership, the Board of Directors of
the general partner of the partnership; and
(3) with respect to any other Person, the board or committee
of such Person serving a similar function.
"BROKER-DEALER" means any broker or dealer registered under the Exchange
Act.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality
thereof (PROVIDED that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than six months
from the date of acquisition;
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<PAGE>
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or
with any domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (2) and
(3) above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in
each case maturing within twelve months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through
(5) of this definition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger, consolidation or transfer of the
Company Voting Stock), in one or a series of related transactions, of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as that term is
used in Section 1 3(d)(3) of the Exchange Act) other than to a Principal or
a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or
dissolution of the Company (other than a plan relating to the sale or other
disposition of timberlands);
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties or a Permitted Group, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Company, measured
by voting power rather than number of shares; or
(4) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors.
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period PLUS:
(1) provision for taxes based on income or profits of such
Person and its Restricted Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net
Income; PLUS
(2) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest
payments, the
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interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated
Net Income; PLUS
(3) depletion, depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization
of prepaid cash expenses that were paid in a prior period) and other
non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to
the extent that such depletion, depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income;
PLUS
(4) all one-time charges incurred in 1999 in connection with the
Contribution (including the impairment charge described in the Offering
Memorandum under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview") to the extent
such charges were deducted in computing such Consolidated Net Income; PLUS
(5) all restructuring charges incurred prior to the Issue Date
(including the restructuring charge that was added to pro forma EBITDA to
calculate Adjusted pro forma EBITDA as set forth in the Offering Memorandum
in footnote 4 under the heading "Selected Combined Financial and Other
Data"); MINUS
(6) non-cash items increasing such Consolidated Net Income for
such period, other than the accrual of revenue in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the
income or profits of, and the depletion, depreciation and amortization and
other non-cash expenses of, a Restricted Subsidiary of the Company shall be
added to Consolidated Net Income to compute Consolidated Cash Flow of the
Company only to the extent that a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior governmental approval (that has not been obtained),
and without direct or indirect restriction pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of any
date of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its
Restricted Subsidiaries; PLUS
(2) the total amount of Indebtedness of any other Person, to the
extent that such Indebtedness has been Guaranteed by the referent Person or
one or more of its Restricted Subsidiaries; PLUS
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(3) the aggregate liquidation value of all Disqualified Stock of
such Person and all preferred stock of Restricted Subsidiaries of such
Person, in each case, determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined
in accordance with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends
or distributions paid in cash to the specified Person or a Wholly Owned
Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is
not at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded;
(4) the cumulative effect of a change in accounting principles
shall be excluded; and
(5) for purposes of calculating Consolidated Cash Flow to
determine the Debt to Cash Flow Ratio or the Fixed Charge Coverage Ratio,
the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified Person or one of its
Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date;
or
(2) was nominated for election or elected to such Board of
Directors either (a) with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election or (b) pursuant to and in accordance with the terms of the
Stockholders Agreement as in effect on the Issue Date.
"CONTRIBUTION" means the Contribution contemplated by the Contribution
Agreement.
"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement dated
as of January 25, 1999 among TPI, PCA Holdings and the Company as the same is
in effect on the Issue Date.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the
date hereof by and among the Company, J.P. Morgan Securities Inc. and BT
Alex. Brown Incorporated, as co-lead arrangers, Bankers
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Trust Company, as syndication agent, and Morgan Guaranty Trust Company of New
York, as administrative agent, and the other lenders party thereto, together
with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor
or replacement agreement and whether by the same or any other agent, lender
or group of lenders.
"CREDIT FACILITIES" means, one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale
of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables), working capital loans,
swing lines, advances or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced, restructured or refinanced
in whole or in part from time to time.
"DEBT AND PREFERRED STOCK TO CASH FLOW RATIO" means, as of any date of
determination, the ratio of (1) the Consolidated Indebtedness and Preferred
Stock of the Company as of such date to (2) the Consolidated Cash Flow of the
Company for the four most recent full fiscal quarters ending immediately
prior to such date for which internal financial statements are available,
determined on a pro forma basis after giving effect to all acquisitions or
dispositions of assets made by the Company and its Restricted Subsidiaries
from the beginning of such four-quarter period through and including such
date of determination (including any related financing transactions) as if
such acquisitions and dispositions had occurred at the beginning of such
four-quarter period. In addition, for purposes of making the computation
referred to above:
(1) acquisitions that have been made by the Company or any of
its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the date of determination shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a
pro forma basis in accordance with Regulation S-X under the Securities Act
and including those cost savings that management reasonably expects to
realize within six months of the consummation of the acquisition, but
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the date of determination, shall be
excluded;
(3) for any four-quarter reference period that includes any
period of time prior to the consummation of the Contribution, pro forma
effect shall be given for such period to the Transactions described in the
Offering Memorandum and the related corporate overhead savings and cost
savings that were added to pro forma EBITDA to calculate Adjusted pro forma
EBITDA as set forth in the Offering Memorandum in footnote 4 under the
heading "Selected Combined Financial
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and Other Data," all as calculated in good faith by a responsible
financial or accounting officer of the Company, as if they had occurred
on the first day of such four-quarter reference period; and
(4) the impact of the Treasury Lock shall be excluded.
"DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means any non-cash consideration
received by the Company or one of its Restricted Subsidiaries in connection
with an Asset Sale that is designated as Designated Noncash Consideration
pursuant to an Officers' Certificate executed by the principal executive
officer and the principal financial officer of the Company or such Restricted
Subsidiary. Such Officers' Certificate shall state the basis of such
valuation, which shall be a report of a nationally recognized investment
banking firm with respect to the receipt in one or a series of related
transactions of Designated Noncash Consideration with a fair market value in
excess of $10.0 million. A particular item of Designated Noncash
Consideration shall no longer be considered to be outstanding when it has
been sold for cash or redeemed or paid in full in the case of non-cash
consideration in the form of promissory notes or equity.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Preferred Stock mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified
Stock solely because the holders thereof have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock if the terms
of such Capital Stock provide that the Company may not repurchase or redeem
any such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 9.1 hereof. The Preferred Stock as in
effect on the Issue Date shall not constitute Disqualified Stock for purposes
of this Certificate of Designations.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"EXCHANGE DATE" means the date on which the Company exchanges all but
not less than all of the Preferred Stock for Subordinated Exchange Debentures.
"EXCHANGE DEBENTURE SENIOR DEBT" means:
(1) all Indebtedness outstanding under all Credit Facilities,
all Hedging Obligations and all Other Hedging Agreements (including
guarantees thereof) with respect thereto of the Company and its Restricted
Subsidiaries, whether outstanding on the Issue Date or thereafter incurred;
(2) all Indebtedness of the Company and its Restricted
Subsidiaries outstanding under the Notes or the guarantees of the Notes;
(3) any other Indebtedness incurred by the Company and its
Restricted Subsidiaries under the terms of the Exchange Indenture, unless
the instrument under which such Indebtedness is
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<PAGE>
incurred expressly provides that it is on a parity with or subordinated
in right of payment to the Subordinated Exchange Debentures; and
(4) all Obligations with respect to the items listed in the
preceding clauses (1), (2) and (3) (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided
for in the documentation with respect thereto, whether or not such interest
is an allowed claim under applicable law).
Notwithstanding anything to the contrary in the preceding, Exchange
Debenture Senior Debt shall not include:
(1) any liability for federal, state, local or other taxes owed
or owing by the Company or its Restricted Subsidiaries;
(2) any Indebtedness of the Company or any of its Restricted
Subsidiaries to any of its Subsidiaries;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in
violation of the Exchange Indenture (but only to the extent so incurred).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE INDENTURE" means the indenture between the Company and the
Exchange Trustee governing the Subordinated Exchange Debentures.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in
existence on the Issue Date, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, excluding amortization
of debt issuance costs and net of the effect of all payments made or
received pursuant to Hedging Obligations; PLUS
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; PLUS
(3) any interest expense on Indebtedness of another Person that
is Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon; PLUS
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(4) the product of (a) all dividends, whether paid or accrued in
cash, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the Company's then current effective
combined federal, state and local tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and
its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that
the specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than
ordinary working capital borrowings) or issues, repurchases or redeems
preferred stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated and on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
Guarantee, repayment, repurchase or redemption of Indebtedness, or such
issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or
any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on
or prior to the Calculation Date shall be given pro forma effect as if they
had occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a
pro forma basis in accordance with Regulation S-X under the Securities Act
and including those cost savings that management reasonably expects to
realize within six months of the consummation of the acquisition, but
without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded;
(3) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to
the extent that the obligations giving rise to such Fixed Charges will not
be obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date;
(4) for any four-quarter reference period that includes any
period of time prior to the consummation of the Contribution, pro forma
effect shall be given for such period to the Transactions described in the
Offering Memorandum and the related corporate overhead savings and cost
savings that were added to pro forma EBITDA to calculate Adjusted pro forma
EBITDA as set forth in the Offering Memorandum in footnote 4 under the
heading "Selected Combined Financial and Other Data," all as calculated in
good faith by a responsible financial or accounting officer of the Company,
as if they had occurred on the first day of such four-quarter reference
period; and
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(5) the impact of the Treasury Lock shall be excluded.
"FOREIGN SUBSIDIARY WORKING CAPITAL INDEBTEDNESS" means Indebtedness of
a Restricted Subsidiary that is organized outside of the United States under
lines of credit extended after the Issue Date to any such Restricted
Subsidiary by Persons other than the Company or any of its Restricted
Subsidiaries, the proceeds of which are used for such Restricted Subsidiary's
working capital purposes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"GLOBAL CERTIFICATE LEGEND" means the legend set forth in Section
15.3(g)(ii) to be placed on all Preferred Stock issued under this Certificate
of Designations except where otherwise permitted by the provisions of this
Certificate of Designations.
"GUARANTEE" means a guarantee of all or any part of any Indebtedness
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates.
"HOLDER" means a Person in whose name any Preferred Stock or any
Subordinated Exchange Debentures, as applicable, are registered.
"INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
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(5) in respect of the deferred balance of the purchase price of
any property outside of the ordinary course of business which remains
unpaid, except any such balance that constitutes an operating lease
payment, accrued expense, trade payable or similar current liability; or
(6) in respect of any Hedging Obligations or Other Hedging
Agreements,
if and to the extent any of the preceding items (other than letters of
credit, Hedging Obligations and Other Hedging Agreements) would appear as a
liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by the specified Person of any Indebtedness
of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness
issued with original issue discount; and
(2) the principal amount thereof in the case of any other
Indebtedness.
"INDENTURE" means the indenture among the Company, the guarantors named
therein and United States Trust Company of New York, as trustee, governing
the Notes.
"INITIAL PURCHASERS" means J.P. Morgan Securities Inc. and BT Alex.
Brown Incorporated.
"INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the
forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the
Company or any Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of Section 9.1
hereof. The acquisition by the Company or any Subsidiary of the Company of a
Person that holds an Investment in a third Person shall be deemed to be an
Investment by the Company or such Subsidiary in such third Person in an
amount equal to the fair market value of the Investment held by the acquired
Person in such third Person in an amount determined as provided in the final
paragraph of Section 9.1 hereof.
"ISSUE DATE" means the closing date for sale and original issuance of
the Preferred Stock.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is
a Legal Holiday at a place of payment, payment may be made at that place on
the next
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succeeding day that is not a Legal Holiday, and no dividends shall accrue on
such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared
by the Company and sent to all Holders of Preferred Stock or Subordinated
Exchange Debentures, as applicable, for use by such Holders in connection
with the Preferred Stock Exchange Offer.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement.
"LIQUIDATED DAMAGES" means all amounts owing pursuant to Section 5 of
the Preferred Stock Registration Rights Agreement.
"MARKETABLE SECURITIES" means publicly traded debt or equity securities
that are listed for trading on a national securities exchange and that were
issued by a corporation whose debt securities are rated in one of the three
highest rating categories by either Standard & Poor's Rating Services or
Moody's Investors Service, Inc.
"NET INCOME" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (or loss), together with any related provision for
taxes on such gain (or loss), realized in connection with: (a) any Asset
Sale; or (b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (or loss), together with any related
provision for taxes on such extraordinary gain (or loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, sales commissions, any
relocation expenses incurred as a result thereof, all taxes of any kind paid
or payable as a result thereof and reasonable reserves established to cover
any indemnity obligations incurred in connection therewith, in each case,
after taking into account any available tax credits or deductions and any tax
sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Indebtedness under a Credit Facility, secured by a
Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"NEW EXCHANGE DEBENTURES" means the Company's 12 3/8% Subordinated
Exchange Debentures due 2010 issued pursuant to the Exchange Indenture (i) in
the Preferred Stock Exchange Offer or (ii) in connection with a resale of
Subordinated Exchange Debentures in reliance on a shelf registration
statement.
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"NEW PREFERRED STOCK" means the Company's 12 3/8% Senior Exchangeable
Preferred Stock due 2010 issued pursuant to this Certificate of Designations
(i) in the Preferred Stock Exchange Offer or (ii) in connection with a resale
of Preferred Stock in reliance on a shelf registration statement.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) with respect to which no default (including any rights that
the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or both
any holder of any other Indebtedness (other than the Subordinated Exchange
Debentures) of the Company or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Company or
any of its Restricted Subsidiaries.
"NOTE REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement to be entered into by the Company on or before the Issue Date
relating to the registration of the Notes with the Commission.
"NOTES" means the Company's 9 5/8% Senior Subordinated Notes due 2009.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, expenses, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"OFFERING MEMORANDUM" means the Offering Memorandum, dated March 30,
1999, pursuant to which the Preferred Stock was offered and sold.
"OFFICERS" means, with respect to the Company, any Chairman of the
Board, President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Senior Vice President, Vice President, Treasurer,
Secretary or Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate that meets the requirements
of Section 12 hereof and has been signed by two Officers.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Exchange Trustee, that meets the requirements of
Section 12 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company, the Transfer Agent or the Trustee.
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"OTHER HEDGING AGREEMENTS" means any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
"PCA HOLDINGS" means PCA Holdings LLC, a Delaware limited liability
company.
"PARTICIPATING BROKER-DEALER" means a Broker-Dealer that participates in
the Preferred Stock Exchange Offer in accordance with Section 3(c) of the
Preferred Stock Registration Rights Agreement.
"PERMITTED BUSINESS" means the containerboard, paperboard and packaging
products business and any business in which the Company and its Restricted
Subsidiaries are engaged on the Issue Date or any business reasonably
related, incidental or ancillary to any of the foregoing.
"PERMITTED GROUP" means any group of investors that is deemed to be a
"person" (as that term is used in Section 13(d)(3) of the Exchange Act) at
any time prior to the Company's initial public offering of common stock, by
virtue of the Stockholders Agreement, as the same may be amended, modified or
supplemented from time to time, PROVIDED that no single Person (other than
the Principals and their Related Parties) Beneficially Owns (together with
its Affiliates) more of the Voting Stock of the Company that is Beneficially
Owned by such group of investors than is then collectively Beneficially Owned
by the Principals and their Related Parties in the aggregate.
"PERMITTED INVESTMENTS" means:
(1) any Investment in the Company or in a Restricted Subsidiary
of the Company;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary
of the Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Company;
or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 8.2 hereof;
(5) any acquisition of assets to the extent acquired in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company;
(6) Hedging Obligations and Other Hedging Agreements;
(7) any Investment existing on the Issue Date;
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(8) loans and advances to employees and officers of the Company
and its Restricted Subsidiaries in the ordinary course of business;
(9) any Investment in securities of trade creditors or customers
received in compromise of obligations of such persons incurred in the
ordinary course of business, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of
such trade creditors or customers;
(10) negotiable instruments held for deposit or collection in the
ordinary course of business;
(11) loans, guarantees of loans and advances to officers,
directors, employees or consultants of the Company or a Restricted
Subsidiary of the Company not to exceed $7.5 million in the aggregate
outstanding at any time;
(12) any Investment by the Company or any of its Restricted
Subsidiaries in a Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person in connection with a Qualified Receivables
Transaction; PROVIDED that each such Investment is in the form of a
Purchase Money Note, an equity interest or interests in accounts
receivables generated by the Company or any of its Restricted Subsidiaries;
and
(13) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (13) that are at
the time outstanding not to exceed the greater of $50.0 million or 5% of
Total Assets.
"PERMITTED LIENS" means:
(1) Liens of the Company and its Restricted Subsidiaries
securing Exchange Debenture Senior Debt that was permitted by the terms of
this Certificate of Designations to be incurred;
(2) Liens in favor of the Company or its Restricted
Subsidiaries;
(3) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any
Subsidiary of the Company; PROVIDED that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with
the Company or the Subsidiary;
(4) Liens on property existing at the time of acquisition
thereof by the Company or any Subsidiary of the Company, PROVIDED that such
Liens were in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like
nature incurred in the ordinary course of business;
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(6) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (4) of the second paragraph of Section 9.2
hereof covering only the assets acquired with such Indebtedness;
(7) Liens existing on the Issue Date together with any Liens
securing Permitted Refinancing Indebtedness incurred under clause (5) of
the second paragraph of Section 9.2 hereof in order to refinance the
Indebtedness secured by Liens existing on the Issue Date; PROVIDED that the
Liens securing the Permitted Refinancing Indebtedness shall not extend to
property other than that pledged under the Liens securing the Indebtedness
being refinanced;
(8) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(9) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded, PROVIDED that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor;
(10) Liens to secure Foreign Subsidiary Working Capital
Indebtedness permitted by this Certificate of Designations to be incurred
so long as any such Lien attached only to the assets of the Restricted
Subsidiary which is the obligor under such Indebtedness;
(11) Liens securing Attributable Debt;
(12) Liens on assets of a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction; and
(13) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that
do not exceed $15.0 million at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
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(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Subordinated Exchange Debentures, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Subordinated Exchange Debentures
on terms at least as favorable to the Holders of Subordinated Exchange
Debentures as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by the Company or by
the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PREFERRED STOCK" means the Company's 12 3/8% Senior Exchangeable
Preferred Stock due 2010 including the New Preferred Stock.
"PREFERRED STOCK EXCHANGE OFFER" means the exchange and issuance by the
Company of New Preferred Stock or New Exchange Debentures, as the case may
be, which shall be registered pursuant to a registration statement, in an
amount equal to (1) the aggregate Liquidation Preference of all shares of
Preferred Stock that are tendered by the Holders thereof or (2) the aggregate
principal amount of all Subordinated Exchange Debentures that are tendered by
the Holders thereof, as the case may be, in connection with such exchange and
issuance.
"PREFERRED STOCK EXCHANGE OFFER REGISTRATION STATEMENT" means the
registration statement relating to the Preferred Stock Exchange Offer,
including the related prospectus.
"PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement to be entered into by the Company on or before the Issue
Date relating to the registration of the Preferred Stock and the Subordinated
Exchange Debentures with the Commission.
"PREFERRED STOCK REGISTRATION STATEMENT" means any registration
statement of the Company relating to an offering of New Preferred Stock or
New Exchange Debentures, as the case may be, that is filed pursuant to the
provisions of the Preferred Stock Registration Rights Agreement, and includes
the prospectus included therein, all amendments and supplements thereto
(including post-effective amendments) and all exhibits and material
incorporated by reference therein.
"PRINCIPALS" means:
(1) Madison Dearborn Partners, LLC and its Affiliates; and
(2) TPI and its Affiliates.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
15.3(g)(i) to be placed on all Preferred Stock issued under this Certificate
of Designations except where otherwise permitted by the provisions of this
Certificate of Designations.
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"PURCHASE MONEY NOTE" means a promissory note evidencing a line of
credit, which may be irrevocable, from, or evidencing other Indebtedness owed
to, the Company or any of its Restricted Subsidiaries in connection with a
Qualified Receivables Transaction, which note shall be repaid from cash
available to the maker of such note, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated receivables.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A of
the Securities Act.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to:
(1) a Receivables Subsidiary (in the case of a transfer by the
Company or any of its Restricted Subsidiaries); and
(2) any other Person (in the case of a transfer by a Receivables
Subsidiary),
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto including, without limitation,
all collateral securing such accounts receivable, all contracts and all
guarantees or other obligations in respect of such accounts receivable,
proceeds of such accounts receivable and other assets that are customarily
transferred, or in respect of which security interests are customarily
granted, in connection with asset securitization transactions involving
accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Subsidiary of the Company
that engages in no activities other than in connection with the financing of
accounts receivable and that is designated by the Board of Directors of the
Company (as provided below) as a Receivables Subsidiary and:
(1) has no Indebtedness or other Obligations (contingent or
otherwise) that:
(a) are guaranteed by the Company or any of its Restricted
Subsidiaries, other than contingent liabilities pursuant to
Standard Securitization Undertakings;
(b) are recourse to or obligate the Company or any of its
Restricted Subsidiaries in any way other than pursuant to
Standard Securitization Undertakings; or
(c) subjects any property or assets of the Company or any of its
Restricted Subsidiaries, directly or indirectly,
contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings;
(2) has no contract, agreement, arrangement or undertaking
(except in connection with a Purchase Money Note or Qualified Receivables
Transaction) with the Company or any of its Restricted Subsidiaries than on
terms no less favorable to the Company or such Restricted Subsidiaries than
those that might be obtained at the time from Persons that are not
Affiliates of the Company, other than fees payable in the ordinary course
of business in connection with servicing accounts receivable; and
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(3) neither the Company nor any of its Restricted Subsidiaries
has any obligation to maintain or preserve the Receivables Subsidiary's
financial condition or cause the Receivables Subsidiary to achieve certain
levels of operating results.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Transfer Agent or Exchange Trustee, as applicable, by filing
with the Transfer Agent or Exchange Trustee, as applicable, a certified copy
of the resolution of the Board of Directors of the Company giving effect to
such designation and an Officers' Certificate certifying, to the best of such
officers' knowledge and belief after consulting with counsel, that such
designation complied with the foregoing conditions.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"RELATED PARTY" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary,
or immediate family member (in the case of an individual) of any Principal;
or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of any one or
more Principals and/or such other Persons referred to in the immediately
preceding clause (1).
"RESTRICTED DEFINITIVE CERTIFICATE" means a definitive certificate
evidencing Preferred Stock, registered in the name of the holder thereof, in
the form of Exhibit A hereto and bearing the Private Placement Legend.
"RESTRICTED GLOBAL CERTIFICATE" means a global certificate in the form
of Exhibit A hereto bearing the Global Certificate Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the
name of, the Depositary or its nominee that will be issued in a denomination
equal to the outstanding aggregate Liquidation Preference of the Preferred
Stock sold in reliance on Rule 144A.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as
defined in the Preferred Stock Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations,
warranties, covenants and indemnities entered into by the Company or any of
its Restricted Subsidiaries that are reasonably customary in an accounts
receivable transaction.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"STOCKHOLDERS AGREEMENT" means that certain Stockholders Agreement to be
dated as of April 12, 1999 by and among PCA Holdings LLC, TPI and the
Company, as in effect on the Issue Date.
"SUBSIDIARY" means, with respect to any specified Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"SUBORDINATED EXCHANGE DEBENTURES" means the Company's 12 3/8%
Subordinated Exchange Debentures due 2010 issuable in exchange for Preferred
Stock.
"TPI" means Tenneco Packaging Inc., a Delaware corporation.
"TIMBERLANDS NET PROCEEDS" means the Net Proceeds from Timberlands Sales
in excess of $500.0 million, up to a maximum of $100.0 million (or such
larger amount as may be necessary to repurchase or redeem all outstanding
Preferred Stock in the event of a repurchase or redemption of all outstanding
Preferred Stock), as long as at least $500.0 million of Net Proceeds have
been applied to repay Indebtedness under the Credit Agreement.
"TIMBERLANDS REPURCHASE" means the repurchase or redemption of, payment
of a dividend on, or return of capital with respect to any Equity Interests
of the Company, or the redemption of Notes, with Timberlands Net Proceeds in
accordance with the terms of this Certificate of Designations.
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"TIMBERLANDS SALE" means a sale or series of sales by the Company or a
Restricted Subsidiary of the Company of timberlands.
"TOTAL ASSETS" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet.
"TRANSACTION AGREEMENTS" means:
(1) those certain Purchase/Supply Agreements between the Company
and TPI, Tenneco Automotive, Inc. and Tenneco Packaging Specialty and
Consumer Products, Inc., each dated the Issue Date;
(2) that certain Facilities Use Agreement between the Company
and TPI, dated the Issue Date;
(3) that certain Human Resources Agreement among the Company,
TPI and Tenneco Inc., dated the Issue Date;
(4) that certain Transition Services Agreement among the Company
and TPI, dated the Issue Date;
(5) that certain Holding Company Support Agreement among the
Company and PCA Holdings, dated the Issue Date;
(6) that certain Registration Rights Agreement among the
Company, PCA Holdings and TPI, dated the Issue Date; and
(7) the Stockholders Agreement.
"TRANSACTIONS" has the meaning given to such term in the Offering
Memorandum.
"TRANSFER AGENT" means the Transfer Agent for the Preferred Stock, who
shall be United States Trust Company of New York unless and until a successor
is selected by the Company.
"TREASURY LOCK" means the interest rate protection agreement dated as of
March 5, 1999 between the Company and J.P. Morgan Securities Inc.
"TREASURY RATE" means, as of any redemption date, the yield to maturity
as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15 (519) that has become publicly available at
least two business days prior to the redemption date (or, if such Statistical
Release is no longer published, any publicly available source of similar
market data)) most nearly equal to the period from the redemption date to
April 1, 2004; PROVIDED, HOWEVER, that if the period from the redemption date
to April 1, 2004 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of
one year shall be used.
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"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which the Exchange
Indenture is qualified under the Trust Indenture Act.
"UNRESTRICTED DEFINITIVE CERTIFICATE" means a definitive certificate
evidencing Preferred Stock, registered in the name of the holder thereof, in
the form of Exhibit A hereto, representing a series of Preferred Stock that
do not bear the Private Placement Legend.
"UNRESTRICTED GLOBAL CERTIFICATE" means a permanent global certificate
in the form of Exhibit A attached hereto that bears the Global Certificate
Legend and that has the "Schedule of Exchanges of Interests in the Global
Certificate" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Preferred
Stock that do not bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Company;
(3) is a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or indirect obligation
(a) to subscribe for additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or any of its
Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Transfer Agent or Exchange Trustee, as
applicable, by filing with the Transfer Agent or Exchange Trustee, as
applicable, a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 9.1
hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of this Certificate of
Designations and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Company as of such date and, if
such Indebtedness is not permitted to be incurred as of such date under
Section 9.2 hereof, the Company shall be in default of Section 9.2. The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation
shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1)
such Indebtedness is permitted under Section 9.2 hereof, calculated on a pro
forma basis as if such designation had occurred at
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the beginning of the four-quarter reference period; and (2) no Default or
Event of Default would be in existence following such designation.
"U.S. PERSON" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity,
in respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person means any
Wholly Owned Subsidiary of such Person which at the time of determination is
a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any specified Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 2 RANKING
The Preferred Stock shall rank senior in right of payment to all classes
or series of the Company's capital stock as to dividends and upon
liquidation, dissolution or winding up of the Company.
Without the consent of the Holders of at least a majority in aggregate
Liquidation Preference of the then outstanding Preferred Stock, the Company
may not authorize, create (by way of reclassification or otherwise) or issue:
(1) any class or series of capital stock of the Company ranking
on a parity with the Preferred Stock ("PARITY SECURITIES");
(2) any obligation or security convertible or exchangeable into
or evidencing a right to purchase, any Parity Securities;
(3) any class or series of capital stock of the Company ranking
senior to the Preferred Stock ("SENIOR SECURITIES") or
(4) any obligation or security convertible or exchangeable into,
or evidencing a right to purchase, any Senior Securities.
SECTION 3 DIVIDENDS
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When the Board of Directors declares dividends out of legally available
Company funds, the Holders of the Preferred Stock, who are Holders of record
as of the preceding March 15 and September 15 (each, a "RECORD DATE"), shall
be entitled to receive cumulative preferential dividends at the rate per
share of 12 3/8% per annum. Dividends on the Preferred Stock shall be
payable semiannually in arrears on April 1 and October 1 of each year (each,
a "DIVIDEND PAYMENT DATE"), commencing on October 1, 1999.
On or prior to April 1, 2004, the Company may, at its option, pay
dividends:
(1) in cash or
(2) in additional fully-paid and non-assessable shares of
Preferred Stock (including fractional stock) having an aggregate
Liquidation Preference equal to the amount of such dividends.
After April 1, 2004, the Company shall pay dividends in cash only.
Dividends payable on the Preferred Stock shall:
(1) be computed on the basis of a 360-day year comprised of
twelve 30-day months; and
(2) accrue on a daily basis.
Dividends on the Preferred Stock shall accrue whether or not:
(1) the Company has earnings or profits;
(2) there are funds legally available for the payment of such
dividends; or
(3) dividends are declared.
Dividends shall accumulate to the extent they are not paid on the
Dividend Payment Date for the semiannual period to which they relate.
Accumulated unpaid dividends will accrue dividends at the rate of 12 3/8% per
annum. The Company must take all actions required or permitted under
Delaware law to permit the payment of dividends on the Preferred Stock.
Unless the Company has declared and paid full cumulative dividends upon,
or declared and set apart a sufficient sum for the payment of full cumulative
dividends on, all outstanding Preferred Stock due for all past dividend
periods, then:
(1) no dividend (other than a dividend payable solely in shares
of any class or series of capital stock ranking junior to the Preferred
Stock as to the payment of dividends and as to rights in liquidation,
dissolution and winding up of the affairs of the Company (any such stock,
"JUNIOR SECURITIES")) shall be declared or paid upon, or any sum set apart
for the payment of dividends upon, any Junior Securities;
(2) no other distribution shall be declared or made upon, or any
sum set apart for the payment of any distribution upon, any Junior
Securities;
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(3) no Junior Securities shall be purchased, redeemed or
otherwise acquired or retired for value (excluding an exchange for other
Junior Securities) by the Company or any of its Restricted Subsidiaries;
and
(4) no monies shall be paid into or set apart or made available
for a sinking or other like fund for the purchase, redemption or other
acquisition or retirement for value of any Junior Securities by the Company
or any of its Restricted Subsidiaries.
Holders of the Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the full cumulative
dividends as herein described.
SECTION 4 VOTING RIGHTS
Holders of the Preferred Stock shall have no voting rights, except as
required by law and as provided in this Certificate of Designations. Under
this Certificate of Designations, the number of members of the Company's
Board of Directors shall immediately and automatically increase by two, and
the Holders of a majority in Liquidation Preference of the outstanding
Preferred Stock, voting as a separate class, may elect two members to the
Board of Directors of the Company, upon the occurrence of any of the
following events (each, a "VOTING RIGHTS TRIGGERING EVENT"):
(1) the accumulation of accrued and unpaid dividends on the
outstanding Preferred Stock in an amount equal to three or more full
semiannual dividends (whether or not consecutive);
(2) failure by the Company or any of its Restricted Subsidiaries
to comply with any mandatory redemption obligation with respect to the
Preferred Stock, the failure to make an Asset Sale Offer or Change of
Control Offer in accordance with the provisions of this Certificate of
Designations or the failure to repurchase Preferred Stock pursuant to such
offers;
(3) failure by the Company or any of its Restricted Subsidiaries
to comply with any of the other covenants or agreements set forth in this
Certificate of Designations and the continuance of such failure for 30
consecutive days or more after notice from the Holders of at least 25% in
aggregate Liquidation Preference of the Preferred Stock then outstanding;
(4) default under any mortgage, indenture or instrument under
which there is issued and outstanding any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the
Issue Date, if that default (i) is caused by a failure to pay principal at
the final stated maturity of such Indebtedness (a "PAYMENT DEFAULT") or
(ii) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $25.0 million or more;
(5) the Company or any of its Significant Subsidiaries pursuant
to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
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(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become
due; or
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any
Significant Subsidiary or for all or substantially all of the
property of the Company or any Significant Subsidiary; or
(iii) orders the liquidation of the Company or any
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
Voting Rights arising as a result of a Voting Rights Triggering Event
shall continue until all dividends in arrears on the Preferred Stock are paid
in full and all other Voting Rights Triggering Events have been cured or
waived.
In addition, as provided in Section 2 hereof, the Company may not
authorize, create (by way of reclassification or otherwise) or issue any
Senior Securities or Parity Securities, or any obligation or security
convertible into or evidencing a right to purchase any Senior Securities or
Parity Securities, without the affirmative vote or consent of the Holders of
a majority in Liquidation Preference of the then outstanding shares of
Preferred Stock.
SECTION 5 EXCHANGE
On any Dividend Payment Date, the Company may exchange all and not less
than all of the shares of then outstanding Preferred Stock for the Company's
Subordinated Exchange Debentures if:
(1) on the date of the exchange, there are no accumulated and
unpaid dividends on the Preferred Stock (including the dividend payable on
that date) or other contractual impediments to the exchange;
(2) the exchange does not immediately cause:
(a) a Default or Event of Default (each as defined in
the Exchange Indenture) under the Exchange Indenture;
(b) a default or event of default under any Credit
Facility or the Indenture; and
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(c) a default or event of default under any material
instrument governing Indebtedness of the Company or any of its
Restricted Subsidiaries that is outstanding at the time;
(3) the Exchange Indenture has been duly authorized, executed
and delivered by the Company and a trustee of recognized national standing
selected by the Company, which on the Issue Date shall be U.S. Trust
Company of Texas, N.A. (the "EXCHANGE TRUSTEE"), and is a legal, valid and
binding agreement of the Company;
(4) the Exchange Indenture has been qualified under the Trust
Indenture Act, if qualification is required at the time of exchange; and
(5) the Company has delivered a written opinion to the Exchange
Trustee stating that all conditions to the exchange have been satisfied and
as to such other matters as the Exchange Trustee shall reasonably request.
Upon any exchange pursuant to the preceding paragraph, Holders of
outstanding Preferred Stock shall be entitled to receive:
(1) a principal amount of Subordinated Exchange Debentures equal
to the aggregate Liquidation Preference of the Preferred Stock held by such
Holder, PLUS
(2) without duplication, any accrued and unpaid dividends and
Liquidated Damages, if any, on such shares.
The Subordinated Exchange Debentures shall be:
(1) issued in registered form, without coupons; and
(2) issued in principal amounts of $1,000 and integral multiples
thereof to the extent possible and any other principal amount to the extent
necessary, PROVIDED that the Company may pay cash in lieu of issuing a
Subordinated Exchange Debenture having a principal amount that is less than
$1,000.
The Company shall send notice of its intention to exchange by first
class mail, postage prepaid, to each Holder of Preferred Stock at its
registered address not more than 60 days nor less than 30 days prior to the
Exchange Date. In addition to any information required by law or by the
applicable rules of any exchange upon which Preferred Stock may be listed or
admitted to trading, the notice shall state:
(1) the Exchange Date;
(2) the place or places where certificates for such stock are to
be surrendered for exchange, including any procedures applicable to
exchanges to be accomplished through book-entry transfers; and
(3) that dividends on the Preferred Stock to be exchanged will
cease to accrue on the Exchange Date.
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If notice of any exchange has been properly given, and if on or before
the Exchange Date the Subordinated Exchange Debentures have been duly
executed and authenticated and an amount in cash or additional Preferred
Stock (as applicable) equal to all accrued and unpaid dividends and
Liquidated Damages, if any, thereon to the Exchange Date has been deposited
with the Transfer Agent, then on and after the close of business on the
Exchange Date:
(1) the Preferred Stock to be exchanged shall no longer be
considered outstanding and may subsequently be issued in the same manner as
the other authorized but unissued preferred stock, but not as Preferred
Stock; and
(2) all rights of the Holders as stockholders of the Company
shall cease, except their right to receive upon surrender of their
certificates the Subordinated Exchange Debentures and all accrued and
unpaid dividends and Liquidated Damages, if any, thereon to the Exchange
Date.
SECTION 6 REDEMPTION
SECTION 6.1 MANDATORY REDEMPTION
On April 1, 2010 (the "MANDATORY REDEMPTION DATE"), the Company shall be
required to redeem (subject to it having sufficient legally available funds
and subject to compliance with the Credit Agreement, the Indenture, the
Exchange Indenture and any Credit Facility entered into by the Company and
its Restricted Subsidiaries after the Issue Date) all outstanding Preferred
Stock at a price in cash equal to the Liquidation Preference, plus accrued
and unpaid dividends and Liquidated Damages, if any, to the date of
redemption. The Company shall not be required to make sinking fund payments
with respect to the Preferred Stock.
If the Contribution is not consummated by 5:00 p.m. on the Issue Date,
the Company shall be required to redeem (subject to it having sufficient
legally available funds) all outstanding Preferred Stock at a price in cash
equal to 100% of the Liquidation Preference thereof. The Company must take
all actions required or permitted under Delaware law to permit such
redemption.
SECTION 6.2 OPTIONAL REDEMPTION
At any time prior to April 1, 2002, the Company may on any one occasion
redeem all, or on any one or more occasions redeem up to 35% of the aggregate
principal amount of Preferred Stock at a redemption price of 112.375% of the
Liquidation Preference thereof, plus accrued and unpaid dividends and
Liquidated Damages, if any, to the redemption date, with the net cash
proceeds of one or more offerings of common stock of the Company or a capital
contribution to the Company's common equity made with the net cash proceeds
of an offering of common stock of the Company's direct or indirect parent or
with Timberlands Net Proceeds (which amount shall be reduced on a dollar for
dollar basis by the amount of Timberlands Net Proceeds used to make a
Timberlands Repurchase in accordance with the fourth paragraph of Section 8.2
hereof; PROVIDED that:
(1) except in the case of a redemption of all of the then
outstanding Preferred Stock, at least 65% of the aggregate Liquidation
Preference of the Preferred Stock issued under this Certificate of
Designations remains outstanding immediately after the occurrence of such
redemption (excluding Preferred Stock held by the Company and its
Subsidiaries); and
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(2) the redemption must occur within 60 days of the date of the
closing of such offering or the making of such capital contribution or the
consummation of a Timberlands Sale.
Prior to April 1, 2004, the Company may also redeem the Preferred Stock,
as a whole but not in part, upon the occurrence of a Change of Control, upon
not less than 30 nor more than 60 days' prior written notice, at a redemption
price equal to 100% of the Liquidation Preference thereof plus the Applicable
Premium as of, and accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the date of redemption.
Except pursuant to the preceding paragraphs, the Preferred Stock shall
not be redeemable at the Company's option prior to April 1, 2004. Nothing in
this Certificate of Designations prohibits the Company from acquiring the
Preferred Stock by means other than a redemption, whether pursuant to an
issuer tender offer or otherwise, assuming such acquisition does not
otherwise violate the terms of this Certificate of Designations.
After April 1, 2004, the Company may redeem all or a part of the
Preferred Stock upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of the Liquidation Preference)
set forth below plus accrued and unpaid dividends and Liquidated Damages, if
any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004 106.1875%
2005 104.6406%
2006 103.0938%
2007 101.5469%
2008 and thereafter 100.0000%
</TABLE>
SECTION 6.3 SELECTION AND NOTICE
If less than all of the Preferred Stock is to be redeemed at any time,
the Transfer Agent will select Preferred Stock for redemption as follows:
(1) if the Preferred Stock is listed, in compliance with the
requirements of the principal national securities exchange on which the
Preferred Stock is listed; or
(2) if the Preferred Stock is not so listed, on a pro rata
basis, by lot or by such method as the Transfer Agent shall deem fair and
appropriate.
No shares of Preferred Stock shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Preferred
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Stock to be redeemed at its registered address. Notices of redemption may
not be conditional.
If any Preferred Stock is to be redeemed in part only, the notice of
redemption that relates to that Preferred Stock shall state the portion of
the Liquidation Preference thereof to be redeemed. A new certificate with an
aggregate Liquidation Preference equal to the unredeemed portion of the
original certificate evidencing Preferred Stock presented for redemption
shall be issued in the name of the Holder thereof upon cancellation of the
certificate. Preferred Stock called for redemption become due on the date
fixed for redemption. On and after the redemption date, dividends cease to
accrue on Preferred Stock or portions thereof called for redemption.
SECTION 7 LIQUIDATION RIGHTS
Each Holder of the Preferred Stock shall be entitled to payment, out of
the assets of the Company available for distribution (after giving effect to
the prior payment of all Indebtedness and other claims), of an amount equal
to the Liquidation Preference of the Preferred Stock held by such Holder,
plus accrued and unpaid dividends and Liquidated Damages, if any, to the date
fixed for liquidation, dissolution, winding up or reduction or decrease in
capital stock, before any distribution is made on any Junior Securities,
including, without limitation, common stock of the Company, upon any:
(1) voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company; or
(2) reduction or decrease in the Company's capital stock
resulting in a distribution of assets to the holders of any class or series
of the Company's capital stock (a "reduction or decrease in capital
stock").
After payment in full of the Liquidation Preference and all accrued and
unpaid dividends and Liquidated Damages, if any, to which Holders of
Preferred Stock are entitled, such Holders may not further participate in any
distribution of assets of the Company. However, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into one
or more Persons shall be a voluntary or involuntary liquidation, dissolution
or winding up of the Company or reduction or decrease in capital stock,
unless such sale, conveyance, exchange or transfer is in connection with a
liquidation, dissolution or winding up of the business of the Company or
reduction or decrease in capital stock.
SECTION 8 REPURCHASE AT THE OPTION OF HOLDERS
SECTION 8.1 CHANGE OF CONTROL
If a Change of Control occurs, each Holder of Preferred Stock shall have
the right to require the Company to repurchase all or any part (but not any
fractional shares) of that Holder's Preferred Stock pursuant to the offer
described below (the "CHANGE OF CONTROL OFFER"). In the Change of Control
Offer, the Company shall offer a payment in cash equal to 101% of the
aggregate Liquidation Preference of Preferred Stock repurchased plus accrued
and unpaid dividends and Liquidated Damages, if any, thereon, to the date of
purchase (the "CHANGE OF CONTROL PAYMENT"). Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing
the transaction or transactions that constitute the
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Change of Control and offering to repurchase Preferred Stock on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "CHANGE OF
CONTROL PAYMENT DATE"), pursuant to the procedures required by this
Certificate of Designations and described in such notice.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Preferred Stock as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict
with this Section 8.1, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 8.1 by virtue of such conflict.
On the Change of Control Payment Date, the Company shall, to the extent
lawful:
(1) accept for payment all Preferred Stock or portions thereof
properly tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent (as defined in Section 13
hereof) an amount equal to the Change of Control Payment in respect of all
Preferred Stock or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Transfer Agent the
Preferred Stock so accepted together with an Officers' Certificate stating
the Liquidation Preference of Preferred Stock or portions thereof being
purchased by the Company.
The Paying Agent shall promptly mail to each Holder of Preferred Stock
so tendered the Change of Control Payment for such Preferred Stock, and the
Transfer Agent shall promptly authenticate and mail (or cause to be
transferred by book-entry) to each Holder a new certificate representing the
Preferred Stock equal in Liquidation Preference to any unpurchased portion of
the Preferred Stock surrendered, if any.
Prior to complying with any of the provisions of this Section 8.1, but
in any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Exchange Debenture Senior Debt or obtain the
requisite consents, if any, under all agreements governing outstanding
Exchange Debenture Senior Debt to permit the repurchase of Preferred Stock
required by this Section 8.1. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Company shall first comply with the first sentence in the
immediately preceding paragraph before it shall be required to repurchase
Preferred Stock pursuant to the provisions described above. The Company's
failure to comply with the first sentence in the immediately preceding
paragraph may (with notice and lapse of time) constitute a Voting Rights
Triggering Event described in clause (3) but shall not constitute a Voting
Rights Triggering Event described under clause (2) of Section 4 hereof.
This Section 8.1 shall be applicable regardless of whether any other
provisions of this Certificate of Designations are applicable.
The Company shall not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance
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with the requirements set forth in this Certificate of Designations
applicable to a Change of Control Offer made by the Company and purchases all
Preferred Stock validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 8.2 ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale which, taken as a
whole, is at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(2) such fair market value is determined by the Company's Board
of Directors and evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Transfer Agent; and
(3) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents or Marketable Securities.
For purposes of this provision, each of the following shall be deemed to
be cash:
(a) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than contingent liabilities) that are
assumed by the transferee of any such assets;
(b) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that
are converted, sold or exchanged by the Company or such Restricted
Subsidiary into cash within 30 days of the related Asset Sale (to the
extent of the cash received in that conversion); and
(c) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in such Asset Sale having
an aggregate fair market value, taken together with all other Designated
Noncash Consideration received since the Issue Date pursuant to this
clause (c) that is at that time outstanding, not to exceed 10% of Total
Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated
Noncash Consideration being measured at the time received and without
giving effect to subsequent changes in value).
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds at its option:
(1) to repay Exchange Debenture Senior Debt and, if the Exchange
Debenture Senior Debt repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto;
(2) to invest in or to acquire other properties or assets to
replace the properties or assets
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<PAGE>
that were the subject of the Asset Sale or that will be used in
businesses of the Company or its Restricted Subsidiaries, as the case
may be, existing at the time such assets are sold;
(3) to make a capital expenditure or commit, or cause such
Restricted Subsidiary to commit, to make a capital expenditure (such
commitments to include amounts anticipated to be expended pursuant to the
Company's capital investment plan as adopted by the Board of Directors of
the Company) within 24 months of such Asset Sale; or
(4) to make a Timberlands Repurchase in accordance with the
first paragraph of Section 6.2 hereof.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Certificate of
Designations.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company
shall make an Asset Sale Offer to all Holders of Preferred Stock and all
holders of Parity Securities containing provisions similar to those set forth
in this Certificate of Designations with respect to offers to purchase or
redeem with the proceeds of sales of assets to purchase the maximum amount of
Preferred Stock and such other Parity Securities that may be purchased out of
the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal
to 100% of the Liquidation Preference plus accrued and unpaid dividends and
Liquidated Damages, if any, to the date of purchase, and shall be payable in
cash. If any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Certificate of Designations. If the aggregate Liquidation
Preference of Preferred Stock and such other Parity Securities tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Transfer
Agent shall select the Preferred Stock and such other Parity Securities to be
purchased on a pro rata basis based on the Liquidation Preference of
Preferred Stock and such other Parity Securities tendered. Upon completion
of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero.
Notwithstanding the three preceding paragraphs, the Company shall be
permitted to apply Timberlands Net Proceeds (which amount shall be reduced on
a dollar for dollar basis by the amount of Timberlands Net Proceeds used to
make a Timberlands Repurchase in accordance with the first paragraph of
Section 6.2 hereof) to repurchase or redeem, or pay a dividend on, or a
return of capital with respect to, any Equity Interests of the Company if:
(1) the repurchase, redemption, dividend or return of capital is
consummated within 90 days of the final sale of such Timberlands Sale;
(2) the Company's Debt and Preferred Stock to Cash Flow Ratio at
the time of such Timberlands Repurchase, after giving pro forma effect to
(a) such repurchase, redemption, dividend or return of capital, (b) the
Timberlands Sale and the application of the net proceeds therefrom and (c)
any increase or decrease in fiber, stumpage or similar costs as a result of
the Timberlands Sale as if the same had occurred at the beginning of the
most recently ended four full fiscal quarter period of the Company for
which internal financial statements are available, would have been no
greater than 5.0 to 1; and
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(3) in the case of a repurchase or redemption of all of the then
outstanding Preferred Stock, no Timberlands Net Proceeds have been
previously applied to repurchase or redeem, or pay a dividend on, or return
of capital with respect to, any other Equity Interests of the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Preferred Stock pursuant to an Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Section 8.2, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the provisions of this Section 8.2 by virtue of such
conflict.
SECTION 9 CERTAIN COVENANTS
SECTION 9.1 RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (other than the Preferred Stock) including,
without limitation, any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries
or to the direct or indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than the Preferred Stock
in their capacity as such) other than dividends or distributions payable
(a) in Equity Interests (other than Disqualified Stock) of the Company or
(b) to the Company or a Restricted Subsidiary of the Company;
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company or
any direct or indirect parent of the Company other than Preferred Stock; or
(3) make any Restricted Investment (all such payments and other
actions set forth in clauses (1) through (3) above being collectively
referred to as "RESTRICTED PAYMENTS"),
unless, at the time of and after giving effect to such Restricted
Payment:
(1) no Voting Rights Triggering Event shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 9.2 hereof; and
(3) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (2), (3) and (4) of the next succeeding paragraph), is less
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than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the Issue Date
to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit,
less 100% of such deficit), PLUS
(b) 100% of the aggregate net cash proceeds received by the
Company since the Issue Date as a contribution to its common
equity capital or from the issue or sale of Equity Interests
of the Company (other than Disqualified Stock) or from the
issue or sale of convertible or exchangeable Disqualified
Stock or convertible or exchangeable debt securities of the
Company that have been converted into or exchanged for such
Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary
of the Company), together with the net proceeds received by
the Company upon such conversion or exchange, if any, PLUS
(c) to the extent that any Restricted Investment that was made
after the Issue Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment
(less the cost of disposition, if any) and (ii) the initial
amount of such Restricted Investment.
The preceding provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Certificate of Designations;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests of the Company in exchange for, or out
of the net cash proceeds of the substantially concurrent sale (other than
to a Restricted Subsidiary of the Company) of, Equity Interests of the
Company (other than Disqualified Stock); PROVIDED that the amount of any
such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded
from clause (3) (b) of the preceding paragraph;
(3) so long as no Voting Rights Triggering Event has occurred
and is continuing or would be caused thereby, any Timberlands Repurchase
pursuant to and in accordance with the fourth paragraph of Section 8.2
hereof;
(4) the payment of any dividend by a Restricted Subsidiary of
the Company to the holders of its common Equity Interests on a pro rata
basis;
(5) so long as no Voting Rights Triggering Event has occurred
and is continuing or would be caused thereby, the repurchase, redemption or
other acquisition or retirement for value of any Equity Interests of the
Company or any Restricted Subsidiary of the Company held by any current or
former officers, directors or employees of the Company (or any of its
Restricted Subsidiaries')
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pursuant to any management equity subscription agreement, stock option
agreement or stock plan entered into in the ordinary course of business;
PROVIDED that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $5.0
million in any calendar year;
(6) repurchases of Equity Interests of the Company deemed to
occur upon exercise of stock options to the extent Equity Interests
represent a portion of the exercise price of such options;
(7) cash payments, advances, loans or expense reimbursements
made to PCA Holdings to permit PCA Holdings to pay its general operating
expenses (other than management, consulting or similar fees payable to
Affiliates of the Company), franchise tax obligations, accounting, legal,
corporate reporting and administrative expenses incurred in the ordinary
course of its business in an amount not to exceed $1.0 million in the
aggregate in any fiscal year; and
(8) so long as no Voting Rights Triggering Event has occurred
and is continuing or would be caused thereby, other Restricted Payments in
an aggregate amount not to exceed $25.0 million since the Issue Date.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required
to be valued by this covenant shall be determined by the Board of Directors
whose resolution with respect thereto shall be conclusive. The Board of
Directors' determination must be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if
the fair market value exceeds $25.0 million.
SECTION 9.2 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt), and the Company shall not issue any Disqualified
Stock and shall not permit any of its Restricted Subsidiaries to issue any
shares of preferred stock; PROVIDED, HOWEVER, that the Company may incur
Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the
Restricted Subsidiaries of the Company may incur Indebtedness or issue
preferred stock, if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.0 to 1 or, if a Timberlands
Repurchase has occurred, 2.25 to 1, in either case determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as
if the additional Indebtedness had been incurred or the preferred stock or
Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period.
The first paragraph of this Section 9.2 shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"CERTIFICATE OF DESIGNATIONS PERMITTED DEBT"):
(1) the incurrence by the Company and its Restricted
Subsidiaries of additional Indebtedness under Credit Facilities and letters
of credit under Credit Facilities in an aggregate
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principal amount at any one time outstanding under this clause (1) (with
letters of credit being deemed to have a principal amount equal to the
face amount) not to exceed $1.51 billion LESS the aggregate amount of
all Net Proceeds of Asset Sales that have been applied by the Company or
any of its Restricted Subsidiaries since the Issue Date to permanently
repay Indebtedness under a Credit Facility pursuant to Section 8.2
hereof and LESS the amount of Indebtedness outstanding under clause (18)
below; PROVIDED that the amount of Indebtedness permitted to be incurred
pursuant to Credit Facilities in accordance with this clause (1) shall
be in addition to any Indebtedness permitted to be incurred pursuant to
Credit Facilities, in reliance on, and in accordance with, clauses (4)
and (19) below or in the first paragraph of this Section 9.2;
(2) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and its Restricted
Subsidiaries of Indebtedness represented by the Notes and the related
subsidiary guarantees to be issued on the Issue Date and the exchange notes
and the related subsidiary guarantees to be issued pursuant to the Note
Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount (which amount may, but need not be, incurred in whole or
in part under Credit Facilities), including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate, modify
or renew, in whole or in part, any Indebtedness incurred pursuant to this
clause (4), not to exceed the greater of 7.5% of Total Assets as of the
date of incurrence and $50.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance, replace, amend,
restate, modify or renew, in whole or in part, Indebtedness (other than
intercompany Indebtedness) that was permitted by this Certificate of
Designations to be incurred under the first paragraph of this Section 9.2
or clauses (2), (3), (4), (15) or (19) of this paragraph;
(6) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; PROVIDED, HOWEVER, that each of the
following shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (6):
(a) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person
other than the Company or a Restricted Subsidiary thereof;
and
(b) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Restricted
Subsidiary thereof,
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(7) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating or fixed
rate Indebtedness that is permitted by the terms of this Certificate of
Designations to be outstanding and the incurrence of Indebtedness under
Other Hedging Agreements providing protection against fluctuations in
currency values or in the price of energy, commodities and raw materials in
connection with the Company's or any of its Restricted Subsidiaries'
operations so long as management of the Company or such Restricted
Subsidiary, as the case may be, has determined that the entering into of
such Other Hedging Agreements are bona fide hedging activities;
(8) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
Section 9.2;
(9) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (9);
(10) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this
covenant; PROVIDED, in each such case, that the amount thereof is included
in Fixed Charges and Consolidated Indebtedness of the Company as accrued;
(11) the incurrence by the Company of Indebtedness and the
issuance by the Company of preferred stock, in each case, that is deemed to
be incurred or issued, as the case may be, in connection with the
Contribution;
(12) the incurrence by the Company or any of its Restricted
Subsidiaries of obligations pursuant to foreign currency agreements entered
into in the ordinary course of business and not for speculative purposes;
(13) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary,
other than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; PROVIDED, HOWEVER, that (a) such Indebtedness
is not reflected on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of this clause
(a)) and (b) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including noncash
proceeds (the fair market value of such noncash proceeds being measured at
the time received and without giving effect to any subsequent changes in
value) actually received by the Company and its Restricted Subsidiaries in
connection with such disposition;
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(14) the incurrence of obligations in respect of performance and
surety bonds and completion guarantees provided by the Company or any of
its Restricted Subsidiaries in the ordinary course of business;
(15) the incurrence of Indebtedness by any Restricted Subsidiary
that is organized outside of the United States in connection with the
acquisition of assets or a new Restricted Subsidiary in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance, replace, amend, restate, modify or renew, in whole or
in part, any Indebtedness incurred pursuant to this clause (15), not to
exceed $25.0 million at any one time outstanding; PROVIDED that such
Indebtedness was incurred by the prior owner of such asset or such
Restricted Subsidiary prior to such acquisition by the Restricted
Subsidiary and was not incurred in connection with, or in contemplation of,
such acquisition by the Restricted Subsidiary;
(16) the incurrence of Indebtedness consisting of guarantees of
loans made to management for the purpose of permitting management to
purchase Equity Interests of the Company, in an amount not to exceed $7.5
million at any one time outstanding;
(17) Indebtedness of the Company that may be deemed to exist
under the Contribution Agreement as a result of the Company's obligation to
pay purchase price adjustments; PROVIDED that the incurrence of
Indebtedness to pay the purchase price adjustment shall be deemed to
constitute an incurrence of Indebtedness that was not permitted by this
clause (17);
(18) the incurrence of Indebtedness by a Receivables Subsidiary
in a Qualified Receivables Transaction that is not recourse to the Company
or any of its Subsidiaries (except for Standard Securitization
Undertakings); PROVIDED that the aggregate principal amount of Indebtedness
outstanding under this clause (18) and clause (1) above does not exceed
$1.51 billion LESS the aggregate amount of all Net Proceeds of Asset Sales
that have been applied by the Company or any of its Restricted Subsidiaries
since the Issue Date to permanently repay Indebtedness under a Credit
Facility pursuant to Section 8.2 hereof; and
(19) the incurrence by the Company of additional Indebtedness in
an aggregate principal amount (or accreted value, as applicable) (which
amount may, but need not be, incurred in whole or in part under the Credit
Facilities) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, amend, restate, modify
or renew, in whole or in part, any Indebtedness incurred pursuant to this
clause (19), not to exceed $75.0 million.
For purposes of determining compliance with this Section 9.2, in the
event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Certificate of Designations Permitted Debt described
in clauses (1) through (19) above, or is entitled to be incurred pursuant to
the first paragraph of this Section 9.2, the Company shall be permitted to
classify or later reclassify such item of Indebtedness in any manner that
complies with this Section 9.2. Indebtedness under Credit Facilities
outstanding on the Issue Date shall be deemed to have been incurred on such
date in reliance on the exception provided by clause (1) of the definition of
Certificate of Designations Permitted Debt.
SECTION 9.3 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or
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indirectly, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock to the Company or any of its Restricted Subsidiaries, or with respect
to any other interest or participation in, or measured by, its profits, or
pay any indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company or
any of its Restricted Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date;
(2) the Indenture, the Notes and the subsidiary guarantees of
the Notes;
(3) this Certificate of Designations;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, PROVIDED that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of this
Certificate of Designations to be incurred;
(6) non-assignment provisions in leases, licenses or similar
agreements entered into in the ordinary course of business and consistent
with past practices;
(7) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the property so
acquired of the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;
(9) Liens securing Indebtedness that limit the right of the
debtor to dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution
of assets or property in joint venture agreements, assets sale agreements,
stock sale agreements and other similar agreements
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entered into in the ordinary course of business;
(11) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of
business;
(12) the Credit Agreement as in effect on the Issue Date;
(13) restrictions on the transfer of assets subject to any Lien
permitted under this Certificate of Designations imposed by the holder of
such Lien;
(14) any Purchase Money Note or other Indebtedness or other
contractual requirements of a Receivables Subsidiary in connection with a
Qualified Receivables Transaction; PROVIDED that such restrictions apply
only to such Receivables Subsidiary;
(15) encumbrances or restrictions existing under or arising
pursuant to Credit Facilities entered into in accordance with this
Certificate of Designations or the Exchange Indenture, as applicable;
PROVIDED that the encumbrances or restrictions in such Credit Facilities
are not materially more restrictive than those contained in the Credit
Agreement as in effect on the Issue Date; and
(16) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (15) above; PROVIDED, that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment of
the Board of Directors of the Company, not materially more restrictive with
respect to such dividend and other payment restrictions than those
contained in the dividends or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement,
refunding, replacement or refinancing.
SECTION 9.4 MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related
transactions, to another Person; unless:
(1) either: (a) the Company is the surviving corporation; or (b)
the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all the obligations of the Company under the Preferred Stock, this
Certificate of Designations and the Preferred Stock Registration Rights
Agreement pursuant to agreements reasonably satisfactory to the Transfer
Agent;
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(3) immediately after such transaction no Voting Rights
Triggering Event exists; and
(4) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
will, on the date of such transaction after giving pro forma effect thereto
and any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 9.2 hereof.
In addition, the Company shall not, directly or indirectly, lease all or
substantially all of the properties or assets of the Company and its
Restricted Subsidiaries, taken as a whole, in one or more related
transactions, to any other Person. This Section 9.4 shall not apply to a
sale, assignment, transfer, conveyance or other disposition of assets between
or among the Company and any of its Wholly Owned Restricted Subsidiaries.
SECTION 9.5 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Voting Rights
Triggering Event. If a Restricted Subsidiary is designated as an
Unrestricted Subsidiary, the aggregate fair market value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be an Investment made as of the
time of such designation and will either reduce the amount available for
Restricted Payments under the first paragraph of Section 9.1 hereof or reduce
the amount available for future Investments under one or more clauses of the
definition of Permitted Investments, as the Company shall determine. That
designation shall only be permitted if such Investment would be permitted at
that time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary. The Board of Directors may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Voting Rights Triggering Event.
SECTION 9.6 TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "AFFILIATE TRANSACTION"), unless:
(1) such Affiliate Transaction is on terms taken as a whole that
are no less favorable to the Company or the relevant Restricted Subsidiary
than those that could have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Transfer Agent:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with
this Section 9.6 and that such Affiliate Transaction has
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been approved by a majority of the disinterested members of
the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $25.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction
from a financial point of view issued by an accounting,
appraisal, investment banking or advisory firm of national
standing; PROVIDED that this clause (b) shall not apply to
transactions with TPI and its subsidiaries in the ordinary
course of business at a time when Madison Dearborn Partners,
LLC and its Affiliates are entitled, directly or indirectly,
to elect a majority of the Board of Directors of the
Company.
The following items shall not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the first paragraph
of this Section 9.6:
(1) any employment agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course
of business and consistent with the past practice of the
Company or such Restricted Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions with a Person that is an Affiliate of the
Company solely because the Company owns an Equity
Interest in such Person;
(4) payment of reasonable directors fees to Persons who are
not otherwise Affiliates of the Company;
(5) sales of Equity Interests (other than Disqualified Stock)
to Affiliates of the Company;
(6) the payment of transaction, management, consulting and
advisory fees and related expenses to Madison Dearborn
Partners, LLC and its Affiliates; PROVIDED that such fees
shall not, in the aggregate, exceed $15.0 million (plus
out-of-pocket expenses) in connection with the
Contribution or $2.0 million in any twelve-month period
commencing after the date of the Contribution;
(7) the payment of fees and expenses related to the
Contribution other than fees and expenses paid to Madison
Dearborn Partners, LLC and its Affiliates;
(8) Restricted Payments that are permitted by Section 9.1
hereof;
(9) transactions described in clause (11) of the definition
of Permitted Investments;
(10) reasonable fees and expenses and compensation paid to,
and indemnity provided on behalf of, officers, directors
or employees of the Company or any Subsidiary as
determined in good faith by the Board of Directors of the
Company or senior management;
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(11) payments made to PCA Holdings for the purpose of allowing
PCA Holdings to pay its general operating expenses,
franchise tax obligations, accounting, legal, corporate
reporting and administrative expenses incurred in the
ordinary course of its business in an amount not to
exceed $1.0 million in the aggregate in any fiscal year;
(12) transactions contemplated by the Contribution Agreement
and the Transaction Agreements as the same are in effect
on the Issue Date;
(13) transactions in connection with a Qualified Receivables
Transaction; and
(14) transactions with either of the Initial Purchasers or any
of their respective Affiliates.
SECTION 9.7 SALE AND LEASEBACK TRANSACTIONS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:
(1) either (a) the Company or that Restricted Subsidiary, as
applicable, could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction under the
Fixed Charge Coverage Ratio test in the first paragraph of Section 9.2
hereof or (b) the Net Proceeds of such sale and leaseback transaction are
applied to repay outstanding Exchange Debenture Senior Debt; and
(2) the transfer of assets in that sale and leaseback
transaction is permitted by, and the Company applies the net proceeds of
such transaction in compliance with, Section 8.2 hereof.
SECTION 9.8 BUSINESS ACTIVITIES
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 9.9 REPORTS
Whether or not required by the Securities and Exchange Commission (the
"Commission"), so long as any Preferred Stock is outstanding, the Company
shall furnish to the Holders of Preferred Stock, within the time periods
specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on
the annual financial statements by the Company's certified independent
accountants; and
(2) all current reports that would be required to be filed with
the Commission on Form 8-K
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if the Company were required to file such reports.
In addition, following the consummation of the exchange offer
contemplated by the Preferred Stock Registration Rights Agreement, whether or
not required by the Commission, the Company shall file a copy of all of the
information and reports referred to in clauses (1) and (2) above with the
Commission for public availability within the time periods specified in the
Commission's rules and regulations (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Company has agreed
that, for so long as any Preferred Stock remains outstanding, it will furnish
to the Holders and to securities analysts and prospective investors, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto,
and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations
of the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company.
SECTION 9.10 RESTRICTIONS ON THE COMPANY PRIOR TO THE CONTRIBUTION
Prior to the Contribution, the Company shall not engage in any
activities other than activities contemplated by or in connection with the
Contribution Agreement.
SECTION 10 AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, this
Certificate of Designations or the Preferred Stock may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate Liquidation Preference of the Preferred Stock then outstanding
(including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Preferred Stock), and any
existing default or compliance with any provision of this Certificate of
Designations or the Preferred Stock may be waived with the consent of the
Holders of a majority in aggregate Liquidation Preference of the then
outstanding Preferred Stock (including, without limitation, consents obtained
in connection with a purchase of, or tender offer or exchange offer for,
Preferred Stock).
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any shares of Preferred Stock held by a non-consenting
Holder):
(1) alter the voting rights with respect to the Preferred Stock
or reduce the number of shares of Preferred Stock whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the Liquidation Preference of or change the Mandatory
Redemption Date of any Preferred Stock or alter the provisions with respect
to the redemption of the Preferred Stock (other than provisions relating to
Sections 8.1 and 8.2 hereof);
(3) reduce the rate of or change the time for payment of
dividends on any Preferred Stock;
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(4) waive a default in the payment of Liquidation Preference of,
or dividends or premium or Liquidated Damages, if any, on the Preferred
Stock;
(5) make any Preferred Stock payable in any form or money other
than that stated in this Certificate of Designations;
(6) waive a redemption payment with respect to any Preferred
Stock (other than a payment required by Sections 8.1 or 8.2 hereof), or
(7) make any change in the preceding amendment and waiver
provisions.
Notwithstanding the preceding, without the consent of any Holder of
Preferred Stock, the Company may (to the extent permitted by Delaware law)
amend or supplement this Certificate of Designations:
(1) to cure any ambiguity, defect, error or inconsistency;
(2) to provide for uncertificated Preferred Stock in addition to
or in place of certificated Preferred Stock;
(3) to provide for the assumption of the Company's obligations
to Holders of Preferred Stock in the case of a merger or consolidation or
sale of all or substantially all of the Company's assets; or
(4) to make any change that would provide any additional rights
or benefits to the Holders of Preferred Stock or that does not adversely
affect the legal rights under this Certificate of Designations of any such
Holder.
SECTION 11 REISSUANCE
Preferred Stock redeemed or otherwise acquired or retired by the Company
shall assume the status of authorized but unissued preferred stock and may
thereafter be reissued in the same manner as the other authorized but
unissued preferred stock, but not as Preferred Stock.
SECTION 12 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each Officers' Certificate or Opinion of Counsel provided for in this
Certificate of Designations shall include:
(1) a statement that the Officers or Person making such
certificate or opinion have read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person or
Officer, he or she has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and
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(4) a statement as to whether or not, in the opinion of each
such Person or Officer, such condition or covenant has been satisfied.
SECTION 13 PAYMENT
All amounts payable in cash with respect to the Preferred Stock shall be
payable in United States dollars at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of dividends (if any) may be made by check
mailed to the Holders of the Preferred Stock at their respective addresses
set forth in the register of Holders of Preferred Stock maintained by the
Transfer Agent; PROVIDED that all cash payments with respect to the Global
Certificates (as defined below) and shares of Preferred Stock the Holders of
which have given wire transfer instructions to the Company shall be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof.
Any payment, redemption or exchange with respect to the Preferred Stock
due on any day that is not a Business Day need not be made on such day, but
may be made on the next succeeding Business Day with the same force and
effect as if made on such due date.
The Company has initially appointed the Transfer Agent to act as the
"PAYING AGENT." The Company may at any time terminate the appointment of any
Paying Agent and appoint additional or other Paying Agents; PROVIDED that
until the Preferred Stock has been delivered to the Company for cancellation,
or moneys sufficient to pay the Liquidation Preference of the Preferred Stock
PLUS, without duplication, accumulated and unpaid dividends (including an
amount in cash equal to a prorated dividend for any partial Dividend Period)
and Liquidated Damages, if any, on the Preferred Stock shall have been made
available for payment and either paid or returned to the Company as provided
in this Certificate of Designations, the Company shall maintain an office or
agency in the Borough of Manhattan, The City of New York for surrender of
Preferred Stock for payment and exchange.
Dividends payable on the Preferred Stock on any redemption date or
repurchase date that is a Dividend Payment Date shall be paid to the Holders
of record as of the immediately preceding Record Date.
All moneys and shares of Preferred Stock deposited with any Paying Agent
or then held by the Company in trust for the payment of the Liquidation
Preference and accumulated and unpaid dividends and Liquidated Damages, if
any, on any shares of Preferred Stock which remain unclaimed at the end of
two years after such payment has become due and payable shall be repaid to
the Company, and the Holder of such shares of Preferred Stock shall
thereafter look only to Company for payment thereof.
SECTION 14 EXCLUSION OF OTHER RIGHTS
Except as may otherwise be required by law, the shares of Preferred
Stock shall not have any powers, preferences and relative, participating,
optional or other special rights, other than those specifically set forth in
this Certificate of Designations (as this Certificate of Designations may be
amended from time to time) and in the Certificate of Incorporation. The
shares of Preferred Stock shall have no preemptive or subscription rights.
SECTION 15 PREFERRED STOCK CERTIFICATES
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SECTION 15.1 FORM AND DATING.
The Preferred Stock and the Transfer Agent's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Preferred Stock may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Preferred Stock certificate shall be
dated the date of its authentication. The terms and provisions contained in
the Preferred Stock shall constitute, and are hereby expressly made, a part
of this Certificate of Designations.
The Preferred Stock sold in reliance on Rule 144A shall be issued
initially in the form of one or more fully registered global certificates
with the private placement legend in Section 15.3(g)(i) and the global
securities legend in Section 15.3(g)(ii) and set forth in Exhibit A hereto
(the "GLOBAL CERTIFICATES"), which shall be deposited on behalf of the
purchasers represented thereby with the Transfer Agent, at its New York
office, as custodian for the Depository Trust Company ("DTC," and together
with any and all successors thereto appointed as depositary hereunder and
having become such pursuant to the applicable provision of this Certificate
of Designations, the "DEPOSITARY") or with such other custodian as DTC may
direct, and registered in the name of DTC or a nominee of DTC, duly executed
by the Company and authenticated by the Transfer Agent as hereinafter
provided. Subject to the terms hereof and to the requirements of applicable
law, the number of shares of Preferred Stock represented by Global
Certificates may from time to time be reduced or increased, as appropriate,
to reflect exchanges and redemptions. Any endorsement of a Global
Certificate to reflect the amount of any increase or decrease in the number
of shares of Preferred Stock outstanding represented thereby shall be made by
the Transfer Agent as hereinafter provided. Members of, or participants in,
DTC ("PARTICIPANTS") shall have no rights under this Certificate of
Designations with respect to any Global Certificates held on their behalf by
DTC or by the Transfer Agent as the custodian of DTC or under such Global
Certificate, and DTC may be treated by the Company, the Transfer Agent and
any agent of the Company or the Transfer Agent as the absolute owner of such
Global Certificate for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Transfer Agent or
any agent of the Company or the Transfer Agent from giving effect to any
written certification, proxy or other authorization furnished by DTC or
impair, as between DTC and its Participants, the operation of customary
practices of DTC governing the exercise of the rights of a holder of a
beneficial interest in any Global Certificate. Except as otherwise provided
by applicable law or as provided in Section 15.3 of this Certificate of
Designations, owners of beneficial interests in Global Certificates will not
be entitled to receive physical delivery of Preferred Stock in definitive
form registered in the name of such owner ("DEFINITIVE CERTIFICATES").
SECTION 15.2 EXECUTION AND AUTHENTICATION.
Two Officers shall sign the certificates representing the Preferred
Stock for the Company by manual or facsimile signature.
If an Officer whose signature is on a certificate representing Preferred
Stock no longer holds that office at the time the Transfer Agent
authenticates such certificate, the shares of Preferred Stock evidenced
thereby shall nevertheless be valid.
A certificate representing Preferred Stock shall not be valid until
authenticated by the manual signature of the Transfer Agent. The signature
shall be conclusive evidence that the certificate representing Preferred
Stock has been authenticated under this Certificate of Designations.
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The Transfer Agent shall, upon a written order of the Company signed by
two Officers (an "AUTHENTICATION ORDER"), authenticate a certificate
representing Preferred Stock for original issue and, from time to time, upon
notice from the Company, increase the number of shares evidenced by such
certificate for the payment of dividends in accordance with Section 3 hereof.
The Transfer Agent also shall, upon receipt of an Authentication Order,
authenticate certificates representing shares of New Preferred Stock for
issue only in a registered exchange offer pursuant to the Preferred Stock
Registration Rights Agreement or as payment of dividends in accordance with
the terms described herein. Notwithstanding the foregoing, in no event shall
the number of additional shares, plus the total number of shares of Preferred
Stock then outstanding, exceed the total number of shares of Preferred Stock
then authorized by the Certificate of Incorporation.
The Transfer Agent may appoint an authenticating agent acceptable to the
Company to authenticate Preferred Stock. An authenticating agent may
authenticate Preferred Stock whenever the Transfer Agent may do so. Each
reference in this Certificate of Designations to authentication by the
Transfer Agent includes authentication by such agent. An authenticating
agent has the same rights as the Transfer Agent or agent for service of
notices and demands.
SECTION 15.3 TRANSFER AND EXCHANGE
(a) TRANSFER AND EXCHANGE OF GLOBAL CERTIFICATES. A Global
Certificate may not be transferred as a whole except by the Depositary to a
nominee of the Depositary, by a nominee of the Depositary to the Depositary
or to another nominee of the Depositary, the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary. All
Global Certificates will be exchanged by the Company for Definitive
Certificates if (i) the Company delivers to the Transfer Agent notice from
the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by
the Company within 120 days after the date of such notice from the Depositary
or (ii) the Company in its sole discretion determines that the Global
Certificates (in whole but not in part) should be exchanged for Definitive
Certificates and delivers a written notice to such effect to the Transfer
Agent. Upon the occurrence of either of the preceding events in (i) or (ii)
above, Definitive Certificates shall be issued in such names as the
Depositary shall instruct the Transfer Agent. Global Certificates also may
be exchanged or replaced, in whole or in part, as provided in Sections 15.4
and 15.7 hereof. Every certificate evidencing Preferred Stock authenticated
and delivered in exchange for, or in lieu of, a Global Certificate or any
portion thereof, pursuant to this Section 15.3 or Section 15.4 or 15.7
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Certificate. A Global Certificate may not be exchanged for another
Global Certificate other than as provided in this Section 15.3(a), however,
beneficial interests in a Global Certificate may be transferred and exchanged
as provided in Section 15.3(b), (c) or (f) hereof.
(b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL
CERTIFICATES. (i) The transfer and exchange of beneficial interests in the
Global Certificates shall be effected through the Depositary, in accordance
with the provisions of this Certificate of Designations and the Applicable
Procedures. Beneficial interests in the Restricted Global Certificates shall
be subject to restrictions on transfer comparable to those set forth herein
to the extent required by the Securities Act. Beneficial interests in any
Restricted Global Certificate may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Restricted Global
Certificate in accordance with the transfer restrictions set forth in the
Private Placement Legend. Beneficial interests in any Unrestricted Global
Certificate may be transferred to Persons
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who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Certificate. No written orders or instructions shall be
required to be delivered to the Transfer Agent to effect the transfers
described in this Section 15.3(b).
(ii) A beneficial interest in any Restricted Global Certificate may be
exchanged by any holder thereof for a beneficial interest in an Unrestricted
Global Certificate representing the same number of shares of Preferred Stock
or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Certificate representing the
same number of shares of Preferred Stock only if the transferor of such
beneficial interest delivers to the Transfer Agent either (1) a written order
from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit
or cause to be credited a beneficial interest in the other Global Certificate
in an amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited with
such increase, and:
(A) such exchange or transfer is effected pursuant to the
Preferred Stock Exchange Offer in accordance with the Preferred Stock
Registration Rights Agreement and the holder of the beneficial interest to
be transferred, in the case of an exchange, or the transferee, in the case
of a transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution of
the New Preferred Stock or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Preferred Stock Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Preferred Stock Exchange Offer Registration Statement in
accordance with the Preferred Stock Registration Rights Agreement; or
(D) the Transfer Agent receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Certificate proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Certificate, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Certificate proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form of
a beneficial interest in an Unrestricted Global Certificate, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Transfer Agent so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Transfer Agent to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
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If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Certificate has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order,
the Transfer Agent shall authenticate one or more Unrestricted Global
Certificates Certificate representing the number of shares of Preferred Stock
equal to the number of shares of Preferred Stock represented by the
beneficial interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Certificate cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Certificate.
(c) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN GLOBAL
CERTIFICATES FOR DEFINITIVE CERTIFICATES.
(i) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL CERTIFICATES TO
RESTRICTED DEFINITIVE CERTIFICATES. If any holder of a beneficial interest
in a Restricted Global Certificate proposes to exchange such beneficial
interest for a Restricted Definitive Certificate representing the same
number of shares of Preferred Stock or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Restricted
Definitive Certificate representing the same number of shares of Preferred
Stock, then, upon receipt by the Transfer Agent of the following
documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Certificate proposes to exchange such beneficial
interest for a Restricted Definitive Certificate, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(F) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Transfer Agent shall cause the number of shares of Preferred Stock
represented by the applicable
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Global Certificate to be reduced accordingly, and the Company shall
execute and the Transfer Agent shall authenticate and deliver to the
Person designated in the instructions a Definitive Certificate
representing such number of shares. Any Definitive Certificate issued
in exchange for a beneficial interest in a Restricted Global
Certificate shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Transfer Agent through
instructions from the Depositary and the Participant or Indirect
Participant. The Transfer Agent shall deliver such Definitive
Certificates to the Persons in whose names such Preferred Stock are so
registered. Any Definitive Certificate issued in exchange for a
beneficial interest in a Restricted Global Certificate pursuant to this
Section 15(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL CERTIFICATES TO
UNRESTRICTED DEFINITIVE CERTIFICATES. A holder of a beneficial interest
in a Restricted Global Certificate may exchange such beneficial interest
for an Unrestricted Definitive Certificate representing the same number
of shares of Preferred Stock or may transfer such beneficial interest to
a Person who takes delivery thereof in the form of an Unrestricted
Definitive Certificate representing the same number of shares of
Preferred Stock only if:
(A) such exchange or transfer is effected pursuant to
the Preferred Stock Exchange Offer in accordance with the
Preferred Stock Registration Rights Agreement and the holder of
such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the New Preferred Stock or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Preferred Stock Exchange Offer
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement; or
(D) the Transfer Agent receives the following:
(1) if the holder of such beneficial interest
in a Restricted Global Certificate proposes to exchange
such beneficial interest for a Definitive Certificate that
does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest
in a Restricted Global Certificate proposes to transfer
such beneficial interest to a Person who shall take
delivery thereof in the form of a Definitive Certificate
that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Transfer Agent so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
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Transfer Agent to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL CERTIFICATES
TO UNRESTRICTED DEFINITIVE CERTIFICATES. If any holder of a beneficial
interest in an Unrestricted Global Certificate proposes to exchange such
beneficial interest for a Definitive Certificate representing the same
number of shares of Preferred Stock or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Definitive Certificate representing the same number of shares of
Preferred Stock, then, upon the delivery by the transferor of such
beneficial interest to the Transfer Agent of either (1) a written order
from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
debit or cause to be debited a beneficial interest in the Global
Certificate in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the
Participant account to be debited, the Transfer Agent shall cause the
number of shares of Preferred Stock represented by the applicable Global
Certificate to be reduced accordingly pursuant to Section 15.3(h)
hereof, and the Company shall execute and the Transfer Agent shall
authenticate and deliver to the Person designated in the instructions a
Definitive Certificate representing such number of shares. Any
Definitive Certificate issued in exchange for a beneficial interest
pursuant to this Section 15.3(c)(iii) shall be registered in such name
or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Transfer Agent
through instructions from the Depositary and the Participant or Indirect
Participant. The Transfer Agent shall deliver such Definitive
Certificates to the Persons in whose names such Preferred Stock are so
registered. Any Definitive Certificate issued in exchange for a
beneficial interest pursuant to this Section 15.3(c)(iii) shall not bear
the Private Placement Legend.
(d) TRANSFER AND EXCHANGE OF DEFINITIVE CERTIFICATES FOR BENEFICIAL
INTERESTS.
(i) RESTRICTED DEFINITIVE CERTIFICATES TO BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL CERTIFICATES. If any Holder of a Restricted
Definitive Certificate proposes to exchange such Preferred Stock for a
beneficial interest in a Restricted Global Certificate representing the
same number of shares of Preferred Stock or to transfer such Restricted
Definitive Certificates to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Certificate
representing the same number of shares of Preferred Stock, then, upon
receipt by the Transfer Agent of the following documentation:
(A) if the Holder of such Restricted Definitive
Certificate proposes to exchange such Preferred Stock for a
beneficial interest in a Restricted Global Certificate, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Certificate is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Certificate is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule
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144 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(D) if such Restricted Definitive Certificate is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(E) if such Restricted Definitive Certificate is being
transferred pursuant to an effective registration statement under
the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Transfer Agent shall cancel the Restricted Definitive Certificate,
increase or cause to be increased number of shares of Preferred Stock
represented by the Global Certificate. At no time shall holders of
Definitive Certificates be able to transfer or exchange their Preferred
Stock for a beneficial interest in a Global Certificate in reliance on
Regulation S under the Securities Act.
(ii) RESTRICTED DEFINITIVE CERTIFICATES TO BENEFICIAL INTERESTS
IN UNRESTRICTED GLOBAL CERTIFICATES. A Holder of a Restricted
Definitive Certificate may exchange such Preferred Stock for a
beneficial interest in an Unrestricted Global Certificate representing
the same number of shares of Preferred Stock or transfer such Restricted
Definitive Certificate to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Certificate
representing the same number of shares of Preferred Stock only if:
(A) such exchange or transfer is effected pursuant to
the Preferred Stock Exchange Offer in accordance with the
Preferred Stock Registration Rights Agreement and the Holder, in
the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that
it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the New Preferred Stock or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Preferred Stock Exchange Offer
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement; or
(D) the Transfer Agent receives the following:
(1) if the Holder of such Definitive Certificates
proposes to exchange such Preferred Stock for a beneficial
interest in the Unrestricted Global Certificate, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive Certificates
proposes to transfer such Preferred Stock to a Person who
shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Certificate, a
certificate from such
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Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Transfer
Agent so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Transfer Agent to the effect
that such exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain compliance
with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 15.3(d)(ii), the Transfer Agent shall cancel the Definitive
Certificates and increase or cause to be increased the number of shares of
Preferred Stock represented by the Unrestricted Global Certificate.
(iii) UNRESTRICTED DEFINITIVE CERTIFICATES TO BENEFICIAL INTERESTS
IN UNRESTRICTED GLOBAL CERTIFICATES. A Holder of an Unrestricted
Definitive Certificate may exchange such Preferred Stock for a beneficial
interest in an Unrestricted Global Certificate representing the same number
of shares of Preferred Stock or transfer such Definitive Certificates to a
Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Certificate representing the same number of shares
of Preferred Stock at any time. Upon receipt of a request for such an
exchange or transfer, the Transfer Agent shall cancel the applicable
Unrestricted Definitive Certificate and increase or cause to be increased
the number of shares of Preferred Stock represented by one of the
Unrestricted Global Certificates.
If any such exchange or transfer from a Definitive Certificate to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Certificate has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 15.2 hereof, the Transfer Agent shall authenticate one
or more Unrestricted Global Certificate representing the number of shares of
Preferred Stock equal to the number of shares of Preferred Stock represented by
the Definitive Certificates so transferred.
(e) TRANSFER AND EXCHANGE OF DEFINITIVE CERTIFICATES FOR DEFINITIVE
CERTIFICATES. Upon request by a Holder of Definitive Certificates and such
Holder's compliance with the provisions of this Section 15.3(e), the Transfer
Agent shall register the transfer or exchange of Definitive Certificates. Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Transfer Agent the Definitive Certificates duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Transfer Agent duly executed by such Holder or by his
attorney, duly authorized in writing. In addition, the requesting Holder shall
provide any additional certifications, documents and information, as applicable,
required pursuant to the following provisions of this Section 15.3(e).
(i) RESTRICTED DEFINITIVE CERTIFICATES TO RESTRICTED DEFINITIVE
CERTIFICATES. Any Restricted Definitive Certificate may be transferred to
and registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Certificate if the Transfer Agent receives the
following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
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(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) RESTRICTED DEFINITIVE CERTIFICATES TO UNRESTRICTED
DEFINITIVE CERTIFICATES. Any Restricted Definitive Certificate may be
exchanged by the Holder thereof for an Unrestricted Definitive Certificate
or transferred to a Person or Persons who take delivery thereof in the form
of an Unrestricted Definitive Certificate if:
(A) such exchange or transfer is effected pursuant to
the Preferred Stock Exchange Offer in accordance with the Preferred
Stock Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer, (2) a Person participating in the distribution
of the New Preferred Stock or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Preferred Stock Exchange Offer
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement; or
(D) the Transfer Agent receives the following:
(1) if the Holder of such Restricted Definitive
Certificates proposes to exchange such Preferred Stock for
an Unrestricted Definitive Certificate, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Certificates proposes to transfer such Preferred Stock to a
Person who shall take delivery thereof in the form of an
Unrestricted Definitive Certificate, a certificate from such
Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Transfer
Agent so requests, an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii) UNRESTRICTED DEFINITIVE CERTIFICATES TO UNRESTRICTED
DEFINITIVE CERTIFICATES. A Holder
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of Unrestricted Definitive Certificates may transfer such Preferred
Stock to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Certificate. Upon receipt of a request to
register such a transfer, the Transfer Agent shall register the
Unrestricted Definitive Certificates pursuant to the instructions from
the Holder thereof.
(f) PREFERRED STOCK EXCHANGE OFFER. Upon the occurrence of the
Preferred Stock Exchange Offer in accordance with the Preferred Stock
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 15.1, the Transfer Agent shall
authenticate (i) one or more Unrestricted Global Certificates representing the
number of shares of Preferred Stock equal to the number of shares of Preferred
Stock represented by the beneficial interests in the Restricted Global
Certificates tendered for acceptance by Persons that certify in the applicable
Letters of Transmittal that (x) they are not broker-dealers, (y) they are not
participating in a distribution of the New Preferred Stock and (z) they are not
affiliates (as defined in Rule 144) of the Company, and accepted for exchange in
the Preferred Stock Exchange Offer and (ii) Definitive Certificates representing
the number of shares of Preferred Stock equal to the number of shares of
Preferred Stock represented by the Restricted Definitive Certificates accepted
for exchange in the Preferred Stock Exchange Offer. Concurrently with the
issuance of such Preferred Stock, the Transfer Agent shall cause the number of
shares of Preferred Stock represented by the applicable Restricted Global
Certificates to be reduced accordingly, and the Company shall execute and the
Transfer Agent shall authenticate and deliver to the Persons designated by the
Holders of Definitive Certificates so accepted Definitive Certificates
representing the appropriate number of shares.
(g) LEGENDS. The following legends shall appear on the face of all
Global Certificates and Definitive Certificates issued under this Certificate of
Designations unless specifically stated otherwise in the applicable provisions
of this Certificate of Designations.
(i) PRIVATE PLACEMENT LEGEND
(A) Except as permitted by subparagraph (B) below, each
Global Certificate and each Definitive Certificate (and all
Preferred Stock issued in exchange therefor or substitution
thereof) shall bear the legend in substantially the following form.
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE CERTIFICATE OF
DESIGNATIONS PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF PACKAGING
CORPORATION OF AMERICA THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE
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TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
IF THE COMPANY SO REQUESTS), (2) TO PACKAGING CORPORATION OF AMERICA OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM
IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global
Certificate or Definitive Certificate issued pursuant to
subparagraphs (b)(ii), (c)(ii), (c)(iii), (d)(ii), (d)(iii),
(e)(ii), (e)(iii) or (f) to this Section 15.3 (and all Preferred
Stock issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) GLOBAL CERTIFICATE LEGEND. Each Global Certificate shall
bear a legend in substantially the following form:
"THIS GLOBAL CERTIFICATE IS HELD BY THE DEPOSITARY (AS DEFINED IN
THIS CERTIFICATE OF DESIGNATIONS GOVERNING THIS SECURITY) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
TRANSFER AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT
TO SECTION 15.3 OF THE CERTIFICATE OF DESIGNATIONS, (II) THIS GLOBAL
CERTIFICATE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
15.3(a) OF THE CERTIFICATE OF DESIGNATIONS, (III) THIS GLOBAL CERTIFICATE
MAY BE DELIVERED TO THE TRANSFER AGENT FOR CANCELLATION PURSUANT TO SECTION
15.8 OF THE CERTIFICATE OF DESIGNATIONS AND (IV) THIS GLOBAL CERTIFICATE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY."
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL CERTIFICATES. At such
time as all beneficial interests in a particular Global Certificate have been
exchanged for Definitive Certificates or a particular Global Certificate has
been redeemed, repurchased or canceled in whole and not in part, each such
Global Certificate shall be returned to or retained and canceled by the
Transfer Agent in accordance with Section 15.8 hereof. At any time prior to
such cancellation, if any beneficial interest in a Global Certificate is
exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Certificate or for
Definitive Certificates, the number of shares of Preferred Stock represented
by such Global Certificate shall be reduced accordingly and an endorsement
shall be made on such Global Certificate by the Transfer Agent or by the
Depositary at the direction of the Transfer Agent to
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reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Certificate, such other Global
Certificate shall be increased accordingly and an endorsement shall be made
on such Global Certificate by the Transfer Agent or by the Depositary at the
direction of the Transfer Agent to reflect such increase.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Transfer Agent shall authenticate Global
Certificates and Definitive Certificates upon the Company's order or at the
Transfer Agent's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Certificate or to a Holder of a Definitive Certificate
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 6.2, 6.3, 8.1, 8.2 and 15.7 hereof).
(iii) The Transfer Agent shall not be required to register the
transfer of or exchange any Preferred Stock selected for redemption in
whole or in part, except the unredeemed portion of any certificate
evidencing Preferred Stock being redeemed in part.
(iv) All Global Certificates and Definitive Certificates issued
upon any registration of transfer or exchange of Global Certificates or
Definitive Certificates shall be the valid obligations of the Company,
entitled to the same benefits under this Certificate of Designations, as
the Global Certificates or Definitive Certificates surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Preferred Stock during a period
beginning at the opening of business 15 days before the day of any
selection of Preferred Stock for redemption under Section 6.3 hereof and
ending at the close of business on the day of selection, (B) to register
the transfer of or to exchange any Preferred Stock so selected for
redemption in whole or in part, except the unredeemed portion of any
certificate evidencing Preferred Stock being redeemed in part or (c) to
register the transfer of or to exchange Preferred Stock between a record
date and the next succeeding Dividend Payment Date.
(vi) Prior to due presentment for the registration of a transfer
of any Preferred Stock, the Transfer Agent, any Agent and the Company may
deem and treat the Person in whose name any Preferred Stock is registered
as the absolute owner of such Preferred Stock, and none of the Transfer
Agent, any Agent or the Company shall be affected by notice to the
contrary.
(vii) The Transfer Agent shall authenticate Global Certificates
and Definitive Certificates in accordance with the provisions of Section
15.2 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Transfer Agent pursuant to this Section
15.3 to effect a registration of transfer or exchange may be submitted by
facsimile.
61
<PAGE>
SECTION 15.4 REPLACEMENT PREFERRED STOCK
If any mutilated Preferred Stock certificate is surrendered to the
Transfer Agent or the Company and the Transfer Agent receives evidence to its
satisfaction of the destruction, loss or theft of any Preferred Stock
certificate, the Company shall issue and the Transfer Agent, upon receipt of
an Authentication Order, shall authenticate a replacement certificate
evidencing Preferred Stock if the Transfer Agent's requirements are met. If
required by the Transfer Agent or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Transfer
Agent and the Company to protect the Company, the Transfer Agent, any Agent
and any authenticating agent from any loss that any of them may suffer if a
Preferred Stock certificate is replaced. The Company may charge for its
expenses in replacing a Preferred Stock certificate.
Every replacement certificate evidencing Preferred Stock is an
additional obligation of the Company and shall be entitled to all of the
benefits of this Certificate of Designations equally and proportionately with
all other Preferred Stock duly issued hereunder.
SECTION 15.5 OUTSTANDING PREFERRED STOCK
The Preferred Stock outstanding at any time is all the Preferred Stock
authenticated by the Transfer Agent except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a
Global Certificate effected by the Transfer Agent in accordance with the
provisions hereof, and those described in this Section as not outstanding.
If a certificate evidencing Preferred Stock is replaced pursuant to
Section 15.4 hereof, it ceases to be outstanding unless the Transfer Agent
receives proof satisfactory to it that the replaced Preferred Stock is held
by a bona fide purchaser.
If the Liquidation Preference of any Preferred Stock is considered paid
under Section 13 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Preferred Stock payable on that date, then on and after
that date such Preferred Stock shall be deemed to be no longer outstanding
and shall cease to accrue interest.
SECTION 15.6 TEMPORARY PREFERRED STOCK
Until certificates representing Preferred Stock are ready for delivery,
the Company may prepare and the Transfer Agent, upon receipt of an
Authentication Order, shall authenticate temporary Preferred Stock.
Temporary Preferred Stock shall be substantially in the form of certificated
Preferred Stock but may have variations that the Company considers
appropriate for temporary Preferred Stock and as shall be reasonably
acceptable to the Transfer Agent. Without unreasonable delay, the Company
shall prepare and the Transfer Agent shall authenticate Definitive
Certificates in exchange for temporary Preferred Stock.
Holders of temporary Preferred Stock shall be entitled to all of the
benefits of this Certificate of Designations.
62
<PAGE>
SECTION 15.7 CANCELLATION
The Company at any time may deliver Preferred Stock to the Transfer
Agent for cancellation. The Transfer Agent and Paying Agent shall forward to
the Transfer Agent any Preferred Stock surrendered to them for registration
of transfer, exchange or payment. The Transfer Agent and no one else shall
cancel all Preferred Stock surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy canceled
Preferred Stock (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Preferred Stock shall
be delivered to the Company. The Company may not issue new Preferred Stock to
replace Preferred Stock that it has paid or that have been delivered to the
Transfer Agent for cancellation.
SECTION 16 HEADINGS OF SUBDIVISIONS
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the
provisions hereof.
SECTION 17 SEVERABILITY OF PROVISIONS
If any powers, preferences and relative, participating, optional and
other special rights of the Preferred Stock and the qualifications,
limitations and restrictions thereof set forth in this Certificate of
Designations (as it may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule of law or public policy,
all other powers, preferences and relative, participating, optional and other
special rights of the Preferred Stock and the qualifications, limitations and
restrictions thereof set forth in this Certificate of Designations (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable powers, preferences and relative, participating, optional and
other special rights of the Preferred Stock and the qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full
force and effect, and no powers, preferences and relative, participating,
optional or other special rights of the Preferred Stock and the
qualifications, limitations and restrictions thereof herein set forth shall
be deemed dependent upon any other such powers, preferences and relative,
participating, optional or other special rights of Preferred Stock and
qualifications, limitations and restrictions thereof unless so expressed
herein.
63
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed this 9th day of April, 1999.
PACKAGING CORPORATION OF AMERICA
By: /s/ Samuel M. Mencoff
---------------------------------
Name: Samuel M. Mencoff
Title: Vice President
64
<PAGE>
EXHIBIT 4.3
EXECUTION COPY
================================================================================
PACKAGING CORPORATION OF AMERICA
12 3/8% SUBORDINATED EXCHANGE DEBENTURES DUE 2010
EXCHANGE INDENTURE
-----------------------------------------
Dated as of April 12, 1999
-----------------------------------------
U.S. TRUST COMPANY OF TEXAS, N.A.
Trustee
-----------
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310(a)(1)......................................................... 7.10
(a)(2) ........................................................... 7.10
(a)(3)............................................................ N.A.
(a)(4)............................................................ N.A.
(a)(5)............................................................ 7.10
(b) .............................................................. 7.10
(c) .............................................................. N.A.
311(a)............................................................ 7.11
(b)............................................................... 7.11
(i)(c)............................................................ N.A.
312(a)............................................................ 2.05
(b)............................................................... 13.03
(c)............................................................... 13.03
313(a)............................................................ 7.06
(b)(2)............................................................ 7.07
(c)............................................................... 7.06; 13.02
(d)............................................................... 7.06
314(a)............................................................ 4.03; 13.02
(c)(1)............................................................ 13.04
(c)(2)............................................................ 13.04
(c)(3)............................................................ N.A.
(e)............................................................... 13.05
(f)............................................................... N.A.
315(a)............................................................ 7.01
(b) .............................................................. 7.05; 13.02
(A)(c)............................................................ 7.01
(d)............................................................... 7.01
(e)............................................................... 6.11
316(a)(last sentence)............................................. 2.09
(a)(1)(A)......................................................... 6.05
(a)(1)(B)......................................................... 6.04
(a)(2)............................................................ N.A.
(b) .............................................................. 6.07
(c)............................................................... 2.12
317(a)(1)......................................................... 6.08
(a)(2)............................................................ 6.09
(b) .............................................................. 2.04
318(a)............................................................ 13.01
(b)............................................................... N.A.
(c)............................................................... 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Exchange Indenture.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................23
Section 1.03. Trust Indenture Act Definitions............................23
Section 1.04. Rules of Construction......................................24
ARTICLE 2. THE NOTES........................................................24
Section 2.01. Form and Dating............................................24
Section 2.02. Execution and Authentication...............................25
Section 2.03. Registrar and Paying Agent.................................25
Section 2.04. Paying Agent to Hold Money in Trust........................26
Section 2.05. Holder Lists...............................................26
Section 2.06. Transfer and Exchange......................................26
Section 2.07. Replacement Notes..........................................37
Section 2.08. Outstanding Notes..........................................37
Section 2.09. Treasury Notes.............................................38
Section 2.10. Temporary Notes............................................38
Section 2.11. Cancellation...............................................38
Section 2.12. Defaulted Interest.........................................39
Section 2.13. CUSIP Numbers..............................................39
ARTICLE 3. REDEMPTION AND PREPAYMENT........................................39
Section 3.01. Notices to Trustee.........................................39
Section 3.02. Selection of Notes to Be Redeemed..........................39
Section 3.03. Notice of Redemption.......................................40
<PAGE>
Page
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Section 3.04. Effect of Notice of Redemption.............................41
Section 3.05. Deposit of Redemption Price................................41
Section 3.06. Notes Redeemed in Part.....................................41
Section 3.07. Optional Redemption........................................41
Section 3.08. Mandatory Redemption.......................................42
Section 3.09. Offer to Purchase by Application of Excess
Proceeds................................................42
ARTICLE 4. COVENANTS........................................................44
Section 4.01. Payment of Notes...........................................44
Section 4.02. Maintenance of Office or Agency............................44
Section 4.03. Reports....................................................45
Section 4.04. Compliance Certificate.....................................45
Section 4.05. Taxes......................................................46
Section 4.06. Stay, Extension and Usury Laws.............................46
Section 4.07. Restricted Payments........................................47
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries..................................49
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock.........................................50
Section 4.10. Asset Sales................................................54
Section 4.11. Transactions with Affiliates...............................56
Section 4.12. Liens......................................................57
Section 4.13. Sale and Leaseback Transactions............................57
Section 4.14. Corporate Existence........................................58
Section 4.15. Offer to Repurchase Upon Change of Control.................58
Section 4.17. Business Activities........................................59
Section 4.18. Designation of Restricted and Unrestricted
Subsidiaries............................................59
ii
<PAGE>
Page
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ARTICLE 5. SUCCESSORS.......................................................60
Section 5.01. Merger, Consolidation, or Sale of Assets...................60
Section 5.02. Successor Corporation Substituted..........................60
ARTICLE 6. DEFAULTS AND REMEDIES............................................61
Section 6.01. Events of Default..........................................61
Section 6.02. Acceleration...............................................62
Section 6.03. Other Remedies.............................................63
Section 6.04. Waiver of Past Defaults....................................63
Section 6.05. Control by Majority........................................64
Section 6.06. Limitation on Suits........................................64
Section 6.07. Rights of Holders of Notes to Receive Payment..............64
Section 6.08. Collection Suit by Trustee.................................64
Section 6.09. Trustee May File Proofs of Claim...........................65
Section 6.10. Priorities.................................................65
Section 6.11. Undertaking for Costs......................................65
ARTICLE 7. TRUSTEE..........................................................66
Section 7.01. Duties of Trustee..........................................66
Section 7.02. Rights of Trustee..........................................67
Section 7.03. Individual Rights of Trustee...............................67
Section 7.04. Trustee's Disclaimer.......................................67
Section 7.05. Notice of Defaults.........................................68
Section 7.06. Reports by Trustee to Holders of the Notes.................68
Section 7.07. Compensation and Indemnity.................................68
Section 7.08. Replacement of Trustee.....................................69
Section 7.09. Successor Trustee by Merger, etc...........................70
iii
<PAGE>
Page
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Section 7.10. Eligibility; Disqualification..............................70
Section 7.11. Preferential Collection of Claims Against
Company.................................................70
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................71
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance..............................................71
Section 8.02. Legal Defeasance and Discharge.............................71
Section 8.03. Covenant Defeasance........................................71
Section 8.04. Conditions to Legal or Covenant Defeasance.................72
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions...........73
Section 8.06. Repayment to Company.......................................73
Section 8.07. Reinstatement..............................................74
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................74
Section 9.01. Without Consent of Holders of Notes........................74
Section 9.02. With Consent of Holders of Notes...........................75
Section 9.03. Compliance with Trust Indenture Act........................76
Section 9.04. Revocation and Effect of Consents..........................76
Section 9.05. Notation on or Exchange of Notes...........................76
Section 9.06. Trustee to Sign Amendments, etc............................77
ARTICLE 10. SUBORDINATION...................................................77
Section 10.01. Agreement to Subordinate..................................77
Section 10.02. Certain Definitions.......................................77
Section 10.03. Liquidation; Dissolution; Bankruptcy......................79
Section 10.04. Default on Designated Senior Debt.........................79
Section 10.05. Acceleration of Notes.....................................80
Section 10.06. When Distribution Must Be Paid Over.......................80
iv
<PAGE>
Page
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Section 10.07. Notice by Company.........................................81
Section 10.08. Subrogation...............................................81
Section 10.09. Relative Rights...........................................81
Section 10.10. Subordination May Not Be Impaired by Company..............82
Section 10.11. Distribution or Notice to Representative..................82
Section 10.12. Rights of Trustee and Paying Agent........................82
Section 10.13. Authorization to Effect Subordination.....................83
Section 10.14. Amendments................................................83
ARTICLE 11. SATISFACTION AND DISCHARGE......................................83
Section 11.01. Satisfaction and Discharge of Indenture...................83
Section 11.02. Application of Trust Money................................84
ARTICLE 12. MISCELLANEOUS...................................................84
Section 12.01. Trust Indenture Act Controls..............................84
Section 12.02. Notices...................................................84
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes.......................................86
Section 12.04. Certificate and Opinion as to Conditions
Precedent..............................................86
Section 12.05. Statements Required in Certificate or Opinion.............86
Section 12.06. Rules by Trustee and Agents...............................86
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Shareholders.............................87
Section 12.08. Governing Law.............................................87
Section 12.09. No Adverse Interpretation of Other Agreements.............87
Section 12.10. Successors................................................87
Section 12.11. Severability..............................................87
Section 12.12. Counterpart Originals.....................................87
Section 12.13. Table of Contents, Headings, etc..........................87
v
<PAGE>
Page
----
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
vi
<PAGE>
EXCHANGE INDENTURE dated as of April 12, 1999 by and among Packaging
Corporation of America, a Delaware corporation (the "Company") and U.S. Trust
Company of Texas, N.A., a bank and trust company organized under the New York
Banking Law, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 12 3/8%
Subordinated Exchange Debentures due 2010 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to any Note on any
Redemption Date, the greater of:
(i) 1.0% of the principal amount of such Note; or
(ii) the excess of:
(A) the present value at the Redemption Date of (1) the
redemption price of such Note at April 1, 2004 (such redemption price
being set forth in the table in Section 3.07 hereof) plus (2) all required
interest payments due on such Note through April 1, 2004 (excluding
accrued but unpaid interest), computed using a discount rate equal to the
Treasury Rate at the Redemption Date plus 50 basis points; over
<PAGE>
(B) the principal amount of such Note, if greater.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and CEDEL that apply to such transfer or
exchange.
"Asset Sale" means:
(i) the sale, lease, conveyance or other disposition of any assets
or rights, other than sales of inventory in the ordinary course of business;
provided that the sale, conveyance or other disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole shall be governed by the provisions of Section 4.15 hereof and/or the
provisions of Section 5.01 hereof and not by the provisions of Section 4.10
hereof; and
(ii) the issuance of Equity Interests by any of the Company's
Restricted Subsidiaries or the sale of Equity Interests in any of the Company's
Subsidiaries.
Notwithstanding the foregoing, the following items shall not be
deemed to be Asset Sales:
(i) any single transaction or series of related transactions that
involves assets having a fair market value of less than $10.0 million;
(ii) a transfer of assets between or among the Company and its
Wholly Owned Restricted Subsidiaries;
(iii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;
(iv) the sale, license or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;
(v) the sale or other disposition of cash or Cash Equivalents or
Marketable Securities;
(vi) the transfer or disposition of assets and the sale of Equity
Interests pursuant to the Contribution;
(vii) sales of accounts receivables and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof including cash or Cash
Equivalents or Marketable Securities in an amount at least equal to 75% of the
fair market value thereof as determined in accordance with GAAP; and
(viii) a Restricted Payment or Permitted Investment that is
permitted under Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated
2
<PAGE>
using a discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. For purposes of this definition, the terms "Beneficially Owns" and
"Beneficially Owned" shall have corresponding meanings.
"Board of Directors" means:
(i) with respect to a corporation, the board of directors of the
corporation;
(ii) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(iii) with respect to any other Person, the board or committee of
such Person serving a similar function.
"Broker-Dealer" has the meaning set forth in the Preferred Stock
Registration Rights Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
3
<PAGE>
"Cash Equivalents" means:
(i) United States dollars;
(ii) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than six months from the date of
acquisition;
(iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or with
any domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above;
(v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in each
case maturing within twelve months after the date of acquisition; and
(vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) through (v) of
this definition.
"CEDEL" means CEDEL Bank, SA.
"Change of Control" means the occurrence of any of the following:
(i) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger, consolidation or transfer of the
Company's Voting Stock), in one or a series of related transactions, of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as that term is used in Section
13(d)(3) of the Exchange Act) other than to a Principal or a Related Party of a
Principal;
(ii) the adoption of a plan relating to the liquidation or
dissolution of the Company (other than a plan relating to the sale or other
disposition of timberlands);
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related Parties
or a Permitted Group, becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the Voting Stock of the Company, measured by voting power
rather than number of shares; or
(iv) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors.
"Company" means Packaging Corporation of America, and any and all
successors thereto.
4
<PAGE>
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:
(i) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income; plus
(ii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus
(iii) depletion, depreciation, amortization (including amortization
of goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents an accrual
of or reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period to the extent that such depletion,
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; plus
(iv) all one-time charges incurred in 1999 in connection with the
Contribution (including the impairment charge described under the section
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview" in the Offering Memorandum) to the extent such charges
were deducted in computing such Consolidated Net Income; plus
(v) all restructuring charges incurred prior to the Issue Date
(including the restructuring charge that was added to pro forma EBITDA to
calculate adjusted pro forma EBITDA as set forth in footnote 4 under the section
"Selected Combined Financial and Other Data" in the Offering Memorandum); minus
(vi) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depletion, depreciation and amortization and other non-cash
expenses of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute Consolidated Cash Flow of the Company only to
the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
5
<PAGE>
"Consolidated Indebtedness" means, with respect to any Person as of
any date of determination, the sum, without duplication, of:
(i) the total amount of Indebtedness of such Person and its
Restricted Subsidiaries; plus
(ii) the total amount of Indebtedness of any other Person, to the
extent that such Indebtedness has been Guaranteed by the referent Person or one
or more of its Restricted Subsidiaries; plus
(iii) the aggregate liquidation value of all Disqualified Stock of
such Person and all preferred stock of Restricted Subsidiaries of such Person,
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Wholly Owned Restricted
Subsidiary thereof;
(ii) the Net Income of any Restricted Subsidiary shall be excluded
to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded;
(iv) the cumulative effect of a change in accounting principles
shall be excluded; and
(v) for purposes of calculating Consolidated Cash Flow to determine
the Debt to Cash Flow Ratio or the Fixed Charge Coverage Ratio, the Net Income
(but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the specified Person or one of its Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(i) was a member of such Board of Directors on the Issue Date; or
(ii) was nominated for election or elected to such Board of
Directors either (A) with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election or (B)
pursuant to and in accordance with the terms of the Stockholders Agreement as in
effect on the Issue Date.
"Contribution" means the Contribution contemplated by the
Contribution Agreement.
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"Contribution Agreement" means that certain Contribution Agreement
dated as of January 25, 1999 among TPI, PCA Holdings and the Company as the same
is in effect on the Issue Date.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of
the date hereof by and among the Company, J.P. Morgan Securities Inc. and BT
Alex.Brown Incorporated, as co-lead arrangers, Bankers Trust Company, as
syndication agent, and Morgan Guaranty Trust Company of New York, as
administrative agent, and the other lenders party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Credit Facilities" means one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables), working capital loans, swing lines,
advances or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced, restructured or refinanced in whole or in part from
time to time.
"Debt to Cash Flow Ratio" means, as of any date of determination,
the ratio of:
(i) the Consolidated Indebtedness of the Company as of such date to
(ii) the Consolidated Cash Flow of the Company for the four most
recent full fiscal quarters ending immediately prior to such date for which
internal financial statements are available, determined on a pro forma basis
after giving effect to all acquisitions or dispositions of assets made by the
Company and its Restricted Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any related
financing transactions) as if such acquisitions and dispositions had occurred at
the beginning of such four-quarter period.
In addition, for purposes of making the computation referred to
above:
(i) acquisitions that have been made by the Company or any
Restricted Subsidiary of the Company, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the date of determination shall be given pro forma effect as if they
had occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a pro
forma basis in accordance with Regulation S-X under the Securities Act and
including those cost savings that management reasonably expects to realize
within six months of the consummation of the acquisition, but without giving
effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income;
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(ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the date of determination, shall be excluded;
(iii) for any four-quarter reference period that includes any period
of time prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions and the related corporate overhead
savings and cost savings that were added to pro forma EBITDA to calculate
adjusted pro forma EBITDA as set forth in footnote 4 under the section "Selected
Combined Financial and Other Data" in the Offering Memorandum, all as calculated
in good faith by a responsible financial or accounting officer of the Company,
as if they had occurred on the first day of such four-quarter reference period;
and
(iv) the impact of the Treasury Lock shall be excluded.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Exchange Indenture.
"Designated Noncash Consideration" means any non-cash consideration
received by the Company or one of its Restricted Subsidiaries in connection with
an Asset Sale that is designated as Designated Noncash Consideration pursuant to
an Officers' Certificate executed by the principal executive officer and the
principal financial officer of the Company or such Restricted Subsidiary. Such
Officers' Certificate shall state the basis of such valuation, which shall be a
report of a nationally recognized investment banking firm with respect to the
receipt in one or a series of related transactions of Designated Noncash
Consideration with a fair market value in excess of $10.0 million. A particular
item of Designated Noncash Consideration shall no longer be considered to be
outstanding when it has been sold for cash or redeemed or paid in full in the
case of non-cash consideration in the form of promissory notes or equity.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.07
hereof. The Preferred Stock as in effect on the date of this Exchange Indenture
shall not constitute Disqualified Stock for purposes of this Exchange Indenture.
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"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Indenture" means this Exchange Indenture, as amended or
supplemented from time to time.
"Exchange Offer" means the exchange and issuance by the Company of
New Notes, as applicable, which shall be registered pursuant to a registration
statement, in an amount equal to the aggregate principal amount of all Notes
that are tendered by the Holders thereof in connection with such exchange or
issuance.
"Exchange Offer Registration Statement" means the registration
statement relating to the Exchange Offer, including the related prospectus.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the Issue Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of:
(i) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, including,
without limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
excluding amortization of debt issuance costs and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(ii) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon; plus
(iv) the product of (A) all cash dividends, whether paid or accrued,
times (B) a fraction, the numerator of which is one and the denominator of which
is one minus the Company's then current effective combined federal, state and
local tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that
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<PAGE>
the specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(i) acquisitions that have been made by the specified Person or any
of its Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be given pro forma effect as if they had occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated on a pro forma basis in accordance with Regulation
S-X under the Securities Act and including those cost savings that management
reasonably expects to realize within six months of the consummation of the
acquisition, but without giving effect to clause (iii) of the proviso set forth
in the definition of Consolidated Net Income;
(ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded;
(iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the Calculation
Date;
(iv) for any four-quarter reference period that includes any period
of time prior to the consummation of the Contribution, pro forma effect shall be
given for such period to the Transactions and the related corporate overhead
savings and cost savings that were added to pro forma EBITDA to calculate
adjusted pro forma EBITDA as set forth in footnote 4 under the section "Selected
Combined Financial and Other Data" in the Offering Memorandum, all as calculated
in good faith by a responsible financial or accounting officer of the Company,
as if they had occurred on the first day of such four-quarter reference period;
and
(v) the impact of the Treasury Lock shall be excluded.
"Foreign Subsidiary Working Capital Indebtedness" means Indebtedness
of a Restricted Subsidiary that is organized outside of the United States under
lines of credit extended after the Issue Date to any such Restricted Subsidiary
by Persons other than the Company or any Restricted Subsidiary of the Company,
the proceeds of which are used for such Restricted Subsidiary's working capital
purposes.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
10
<PAGE>
other statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Exchange Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee of all or any part of any Indebtedness
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), including, without limitation, by way of a pledge
of assets or through letters of credit or reimbursement agreements in respect
thereof.
"Hedging Obligations" means, with respect to any specified Person,
the obligations of such Person under:
(i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(ii) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
(5) in respect of the deferred balance of the purchase price of any
property outside of the ordinary course of business which remains unpaid,
except any such balance that constitutes an operating lease payment,
accrued expense, trade payable or similar current liability; or
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(6) in respect of any Hedging Obligations or Other Hedging Agreements,
if and to the extent any of the preceding items (other than letters of credit,
Hedging Obligations and Other Hedging Agreements) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of others secured
by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included,
the Guarantee by the specified Person of any Indebtedness of any other Person.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Purchasers" means J.P. Morgan Securities Inc. and BT
Alex.Brown Incorporated.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, which is not also a QIB.
"Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07 hereof. The
acquisition by the Company or any Subsidiary of the Company of a Person that
holds an Investment in a third Person shall be deemed to be an Investment by the
Company or such Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person in such third Person
in an amount determined as provided in the final paragraph of Section 4.07
hereof.
"Issue Date" means the closing date for sale and original issuance
of the Preferred Stock.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement.
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"Liquidated Damages" means all amounts owing pursuant to Section 5
of the Preferred Stock Registration Rights Agreement.
"Marketable Securities" means publicly traded debt or equity
securities that are listed for trading on a national securities exchange and
that were issued by a corporation whose debt securities are rated in one of the
three highest rating categories by either Standard & Poor's Rating Services or
Moody's Investors Service, Inc.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (or loss), together with any related provision for taxes on such gain (or
loss), realized in connection with (A) any Asset Sale or (B) the disposition of
any securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary gain (or loss), together with any
related provision for taxes on such extraordinary gain (or loss).
"New Notes" means the Company's 12 3/8% Subordinated Exchange
Debentures due 2010 issued pursuant to this Exchange Indenture (i) in the
Exchange Offer or (ii) in connection with a resale of Notes in reliance on a
shelf registration statement.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any Restricted Subsidiary of the Company in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, sales commissions, any relocation
expenses incurred as a result thereof, all taxes of any kind paid or payable as
a result thereof and reasonable reserves established to cover any indemnity
obligations incurred in connection therewith, in each case, after taking into
account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien
on the asset or assets that were the subject of such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness:
(i) as to which neither the Company nor any Restricted Subsidiary of
the Company (A) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (B) is directly or
indirectly liable as a guarantor or otherwise, or (C) constitutes the lender;
(ii) with respect to which no default (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness (other than the Notes) of the Company or any Restricted
Subsidiary of the Company to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(iii) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Company or any
Restricted Subsidiary of the Company.
"Non-U.S. Person" means a Person who is not a U.S. Person.
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"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" has the meaning given to such term in the preamble hereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, expenses, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Initial Notes by the Company.
"Offering Memorandum" means the Offering Memorandum, dated March 31,
1999, pursuant to which the Initial Notes were offered and sold.
"Officer" means, with respect to the Company or any Guarantor, any
Chairman of the Board, President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Senior Vice President, Vice President,
Treasurer, Secretary or Assistant Secretary of such Person.
"Officers' Certificate" means a certificate that meets the
requirements of Section 13.5 and has been signed by two Officers.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Other Hedging Agreements" means any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
"PCA Holdings" means PCA Holdings LLC, a Delaware limited liability
company.
"Participant" means, with respect to the Depositary, Euroclear or
CEDEL, a Person who has an account with the Depositary, Euroclear or CEDEL,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and CEDEL).
"Permitted Business" means the containerboard, paperboard and
packaging products business and any business in which the Company and its
Restricted Subsidiaries are engaged on the Issue Date or any business reasonably
related, incidental or ancillary to any of the foregoing.
"Permitted Group" means any group of investors that is deemed to be
a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any
time prior to the Company's initial public offering of common stock, by virtue
of the Stockholders Agreement, as the same may be amended, modified or
supplemented from time to time, provided that no single Person (other than the
Principals and their Related Parties) Beneficially Owns (together with its
Affiliates) more of the Voting Stock of the Company that is Beneficially Owned
by such group of investors than is then collectively Beneficially Owned by the
Principals and their Related Parties in the aggregate.
"Permitted Investments" means:
(i) any Investment in the Company or in a Restricted Subsidiary of
the Company;
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(ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company;
(iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof;
(v) any acquisition of assets to the extent acquired in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(vi) Hedging Obligations and Other Hedging Agreements;
(vii) any Investment existing on the Issue Date;
(viii) loans and advances to employees and officers of the Company
and its Restricted Subsidiaries in the ordinary course of business;
(ix) any Investment in securities of trade creditors or customers
received in compromise of obligations of such persons incurred in the ordinary
course of business, including pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers;
(x) negotiable instruments held for deposit or collection in the
ordinary course of business;
(xi) loans, guarantees of loans and advances to officers, directors,
employees or consultants of the Company or a Restricted Subsidiary of the
Company not to exceed $7.5 million in the aggregate outstanding at any time;
(xii) any Investment by the Company or any Restricted Subsidiary of
the Company in a Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person in connection with a Qualified Receivables
Transaction; provided that each such Investment is in the form of a Purchase
Money Note, an equity interest or interests in accounts receivables generated by
the Company or any Restricted Subsidiary of the Company; and
(xiii) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (xiii) that are at the time
outstanding not to exceed the greater of $50.0 million or 5% of Total Assets.
"Permitted Liens" means:
(i) Liens of the Company and its Restricted Subsidiaries securing
Senior Debt that was permitted by the terms of this Exchange Indenture to be
incurred;
(ii) Liens in favor of the Company or its Restricted Subsidiaries;
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(iii) Liens on property of a Person existing at the time such Person
is merged with or into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or the Subsidiary;
(iv) Liens on property existing at the time of acquisition thereof
by the Company or any Subsidiary of the Company, provided that such Liens were
in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of Section 4.09
hereof covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the Issue Date together with any Liens
securing Permitted Refinancing Indebtedness incurred under clause (v) of the
second paragraph of Section 4.09 hereof in order to refinance the Indebtedness
secured by Liens existing on the date of this Exchange Indenture; provided that
the Liens securing the Permitted Refinancing Indebtedness shall not extend to
property other than that pledged under the Liens securing the Indebtedness being
refinanced;
(viii) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(ix) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(x) Liens to secure Foreign Subsidiary Working Capital Indebtedness
permitted by this Exchange Indenture to be incurred so long as any such Lien
attached only to the assets of the Restricted Subsidiary which is the obligor
under such Indebtedness;
(xi) Liens securing Attributable Debt;
(xii) Liens on assets of a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction; and
(xiii) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $15.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any Restricted Subsidiary of the Company issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Company or any Restricted Subsidiary of the
Company (other than intercompany Indebtedness); provided that:
(i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the
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Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus all accrued interest thereon and the amount of all expenses and premiums
incurred in connection therewith);
(ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(iv) such Indebtedness is incurred either by the Company or by the
Subsidiary who is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"Preferred Stock" means the Company's 12 3/8% Senior Exchangeable
Preferred Stock due 2010.
"Preferred Stock Registration Rights Agreement" means the
registration rights agreement to be entered into by the Company on or before the
Issue Date relating to the registration of the Notes with the SEC.
"Principals" means (i) Madison Dearborn Partners, LLC and its
Affiliates and (ii) TPI and its Affiliates.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Exchange Indenture except
where otherwise permitted by the provisions of this Exchange Indenture.
"Purchase Money Note" means a promissory note evidencing a line of
credit, which may be irrevocable, from, or evidencing other Indebtedness owed
to, the Company or any Restricted Subsidiary of the Company in connection with a
Qualified Receivables Transaction, which note shall be repaid from cash
available to the maker of such note, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated receivables.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any Restricted
Subsidiary of the Company pursuant to which the Company or any Restricted
Subsidiary of the Company may sell, convey or otherwise transfer to (i) a
Receivables Subsidiary (in the case of a transfer by the Company or any
Restricted Subsidiary of the Company) and (ii) any other Person (in the case of
a transfer by a Receivables Subsidiary), or may grant a security interest in,
any accounts receivable (whether now existing or arising in the future) of the
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Company or any Restricted Subsidiary of the Company, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets
that are customarily transferred, or in respect of which security interests are
customarily granted, in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the
Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary and
(i) has no Indebtedness or other Obligations (contingent or
otherwise) that (A) are guaranteed by the Company or any Restricted Subsidiary
of the Company, other than contingent liabilities pursuant to Standard
Securitization Undertakings, (B) are recourse to or obligate the Company or any
Restricted Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (C) subjects any property or asset of the Company
or any Restricted Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(ii) has no contract, agreement, arrangement or undertaking (except
in connection with a Purchase Money Note or Qualified Receivables Transaction)
with the Company or its Restricted Subsidiaries other than on terms no less
favorable to the Company or such Restricted Subsidiaries than those that might
be obtained at the time from Persons that are not Affiliates of the Company,
other than fees payable in the ordinary course of business in connection with
servicing accounts receivable; and
(iii) neither the Company nor any Restricted Subsidiary of the
Company has any obligation to maintain or preserve the Receivables Subsidiary's
financial condition or cause the Receivables Subsidiary to achieve certain
levels of operating results.
Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying, to the best of such
officers' knowledge and belief after consulting with counsel, that such
designation complied with the foregoing conditions.
"Regulation S Global Note" means a global Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee, issued in a denomination equal to the outstanding principal
amount of Notes transferred in reliance on Rule 903 of Regulation S.
"Related Party" means:
(i) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or
(ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (i).
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"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Subordinated Notes" means the Company's 9 5/8% Senior
Subordinated Notes due 2009 issued under the Senior Subordinated Notes
Indenture.
"Senior Subordinated Notes Indenture" means the Indenture among the
Company, the guarantors named therein and United States Trust Company of New
York, as trustee, governing the Senior Subordinated Notes.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Preferred Stock Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary of the Company that are reasonably customary in an
accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
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repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders Agreement" means that certain Stockholders Agreement
dated April 12, 1999 by and among PCA Holdings, TPI and the Company, as in
effect on the Issue Date.
"Subsidiary" means, with respect to any specified Person:
(i) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
(ii) any partnership (A) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (B)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb) as in effect on the date on which this Exchange Indenture
is qualified under the TIA.
"TPI" means Tenneco Packaging Inc., a Delaware corporation.
"Timberlands Net Proceeds" means the Net Proceeds from Timberlands
Sales in excess of $500.0 million, up to a maximum of $100.0 million (or such
larger amount as may be necessary to repurchase or redeem all outstanding
Preferred Stock or Notes in the event of a repurchase or redemption of all
outstanding Preferred Stock or Notes), as long as at least $500.0 million of Net
Proceeds have been applied to repay Indebtedness under the Credit Agreement.
"Timberlands Repurchase" means the repurchase or redemption of,
payment of a dividend on, or return of capital with respect to any Equity
Interests of the Company, or the repurchase or redemption of the Notes in
accordance with the terms of this Exchange Indenture.
"Timberlands Sale" means a sale or series of sales by the Company or
a Restricted Subsidiary of the Company of timberlands.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet.
"Transacations" has the meaning given to such term in the Offering
Memorandum.
"Transaction Agreements" means:
(i) those certain Purchase/Supply Agreements between the Company and
each of TPI, Tenneco Automotive, Inc. and Tenneco Packaging Specialty and
Consumer Products, Inc. each dated the Issue Date;
(ii) that certain Facilities Use Agreement between the Company and
TPI, dated the Issue Date;
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(iii) that certain Human Resources Agreement among the Company, TPI
and Tenneco Inc., dated the Issue Date;
(iv) that certain Transition Services Agreement between the Company
and TPI, dated the Issue Date;
(v) that certain Holding Company Support Agreement between the
Company and PCA Holdings, dated the Issue Date;
(vi) that certain Registration Rights Agreement among the Company,
PCA Holdings and TPI, dated the Issue Date; and
(vii) the Stockholders Agreement.
"Treasury Lock" means the interest rate protection agreement dated
as of March 5, 1999 between the Company and J.P. Morgan Securities Inc.
"Treasury Rate" means, as of any redemption date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to April 1, 2004; provided,
however, that if the period from the redemption date to April 1, 2004 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named in the preamble until a successor
replaces it in accordance with the applicable provisions of this Exchange
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company;
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(iii) is a Person with respect to which neither the Company nor any
Restricted Subsidiary of the Company has any direct or indirect obligation (A)
to subscribe for additional Equity Interests or (B) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and
(iv) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any Restricted Subsidiary
of the Company.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted under Section 4.07 hereof. If, at any
time, any Unrestricted Subsidiary would fail to meet the preceding requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Exchange Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of Section 4.09. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (x) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period and (y) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under
the Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by multiplying (A) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
thereof, by (B) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment; by
(ii) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means
any Wholly Owned Subsidiary of such Person which at the time of determination is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any specified Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
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SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
---- -------
"Affiliate Transaction" 4.11
"Asset Sale Offer" 4.10
"Authentication Order" 2.02
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
"Designated Senior Debt" 10.02
"Designation" 4.07
"Event of Default" 6.01
"Exchange Indenture Permitted Indebtedness" 4.09
"Excess Proceeds" 4.10
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Blockage Notice" 10.04
"Permitted Junior Securities" 10.02
"Purchase Date" 3.09
"Redemption Date" 3.07
"Registrar" 2.03
"Representative" 10.02
"Restricted Payments" 4.07
"Revocation" 4.07
"Senior Debt" 10.02
SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS
Whenever this Exchange Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this Exchange
Indenture.
The following TIA terms used in this Exchange Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Exchange Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
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All other terms used in this Exchange Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular;
(e) provisions apply to successive events and transactions;
and
(f) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Exchange Indenture and the Company
and the Trustee, by their execution and delivery of this Exchange Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Exchange Indenture, the provisions of this Exchange Indenture shall govern
and be controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes
issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the
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aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Exchange Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Exchange Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Exchange Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
The Trustee is authorized to enter into a letter of representations
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee in writing of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary. All
Global Notes will be exchanged by the Company for Definitive Notes if (i) the
Company gives written notice to the Trustee from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes shall be issued in such names as the Depositary
shall instruct the Trustee. Global Notes also may be exchanged or replaced, in
whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes.
The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Exchange Indenture and the Applicable
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Procedures. Beneficial interests in the Restricted Global Notes shall be subject
to restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. Transfers of beneficial interests in the Global
Notes also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Exchange Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of
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Exhibit B hereto, including the certifications and certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Preferred Stock Registration
Rights Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of
Transmittal or via the Depositary's book-entry system that it is not
(1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Preferred Stock Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
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Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of
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such beneficial interest shall instruct the Registrar through written
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained
therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Preferred Stock Registration
Rights Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Preferred Stock Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a Definitive Note
that does not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section
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2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount
of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and the Trustee
shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iii) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear
the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
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(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (c) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Preferred Stock Registration
Rights Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Preferred Stock Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Note.
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(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest in a Global Note is effected pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then
the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Preferred Stock Registration
Rights Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person
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participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Preferred Stock
Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Preferred Stock Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably acceptable
to the Company to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
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(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Preferred Stock Registration Rights Agreement, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letters of Transmittal or via the
Depositary's book-entry system that (x) they are not broker-dealers, (y) they
are not participating in a distribution of the Exchange Notes and (z) they are
not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Exchange Indenture unless
specifically stated otherwise in the applicable provisions of this Exchange
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY REQUIRED UNDER THE EXCHANGE INDENTURE
PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT TO THE
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RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR, (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET
FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE EXCHANGE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT
OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE
EXCHANGE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE EXCHANGE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE EXCHANGE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Exchange Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of the mailing of notice of
redemption under Section 3.02 hereof and ending at the close of business
on such day, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (C) to register the transfer of or
to exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Exchange Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(ii) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser or protected purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Exchange Indenture.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirements of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation for which the
Company has received notice of cancellation from the Trustee..
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Exchange Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Notes to be redeemed, (iv) the redemption price and (v)
the CUSIP numbers of the Notes to be redeemed.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select Notes for redemption as follows
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(a) if the Notes are listed, in compliance with the requirements of
the principal national securities exchange on which the Notes are listed; or
(b) if the Notes are not so listed, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate.
In the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Exchange Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(vi) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(vii) the paragraph of the Notes and/or Section of this Exchange
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
Prior to 9:00 a.m. (New York City time) on the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(i) Except as provided below, the Notes shall not be redeemable at
the Company's option prior to April 1, 2004. Thereafter, the Company may redeem
all or a part of the Notes upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 1 of the years indicated below:
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Year Percentage
---- ----------
2004......................................................106.1875%
2005......................................................104.6406%
2006......................................................103.0938%
2007......................................................101.5469%
2008 and thereafter.......................................100.0000%
(ii) Notwithstanding the foregoing, at any time prior to April 1,
2002, the Company may on any one occasion redeem all, or on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes originally
issued under this Exchange Indenture at a redemption price of 112.375% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
one or more offerings of common stock of the Company or a capital contribution
to the Company's common equity made with the net cash proceeds of an offering of
common stock of the Company's direct or indirect parent or with Timberlands Net
Proceeds (which amount shall be reduced on a dollar for dollar basis by the
amount of Timberlands Net Proceeds used to make a Timberlands Repurchase in
accordance with the fourth paragraph of Section 4.10 hereof); provided that:
(A) except in the case of a redemption of all of the then
outstanding Notes, at least 65% of the aggregate principal
amount of Notes issued under this Exchange Indenture remains
outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its
Subsidiaries); and
(B) the redemption must occur within 60 days of the date of the
closing of such offering, the making of such capital
contribution or the consummation of a Timberlands Sale.
(iii) At any time prior to April 1, 2004, the Company may also
redeem the Notes, in whole but not in part, upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days' prior written notice, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest and Liquidated
Damages, if any, thereon, to, the date of redemption.
(iv) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof. Nothing in this
Exchange Indenture prohibits the Company from acquiring the Notes by means other
than a redemption, whether pursuant to an issuer tender offer or otherwise,
assuming such acquisition does not otherwise violate the terms of this Exchange
Indenture.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
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The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period") No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(ii) the Offer Amount, the purchase price and the Purchase Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(vi) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer the Note by book-entry transfer, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(viii) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
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(ix) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer)
On or before 10:00 a.m. on the Purchase Date, the Company shall, to
the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest and Liquidated Damages, if any, shall be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest and Liquidated Damages, if any,
then due. The Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Preferred Stock
Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
On or prior to April 1, 2004, the Company may, at its option, make
interest payments (1) in cash or (2) in additional Notes having an aggregate
principal amount equal to the amount of such interest. After April 1, 2004, the
Company shall pay interest in cash only.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-
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registrar) where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Exchange Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
SECTION 4.03. REPORTS.
(a) Whether or not required by the SEC, so long as any Notes are
outstanding, the Company shall furnish to the Trustee and the Holders of Notes,
within the time periods specified in the SEC's rules and regulations:
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report on the annual financial statements by
the Company's certified independent accountants; and
(ii) all current reports that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports.
In addition, following the consummation of the Exchange Offer
contemplated by the Preferred Stock Registration Rights Agreement, whether or
not required by the rules and regulations of the SEC, the Company shall file a
copy of all the information and reports referred to in clauses (i) and (ii)
above with the SEC for public availability within the time periods specified in
the SEC's rules and regulations (unless the SEC will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request. The Company shall at all times comply with TIA ss.314(a)
(b) For so long as any Notes remain outstanding, the Company shall
furnish to the Trustee and the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
If the Company designates any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
clauses (i) and (ii) above shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the
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financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Exchange Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Exchange Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Exchange
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto. For purposes of this paragraph, such compliance shall
be determined without regard to any period of grace or requirement of notice
provided under this Exchange Indenture.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 hereof shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, promptly upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto unless such Default or Event of Default is no longer continuing.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
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covenants or the performance of this Exchange Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted Subsidiaries'
Equity Interests, including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries or to the direct or indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests other than dividends or distributions
payable (A) in Equity Interests (other than Disqualified Stock) of the Company
or (B) to the Company or a Restricted Subsidiary of the Company;
(ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company; or
(iii) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iii) above being collectively referred
to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted
Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(iii) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum, without duplication, of:
(A) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the Issue Date to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus
(B) 100% of the aggregate net cash proceeds received by the
Company since the Issue Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of convertible
or exchangeable Disqualified Stock or convertible
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or exchangeable debt securities of the Company that have been converted
into or exchanged for such Equity Interests (other than Equity Interests
(or Disqualified Stock or debt securities) sold to a Subsidiary of the
Company), together with the net proceeds received by the Company upon such
conversion or exchange, if any, plus
(C) to the extent that any Restricted Investment that was made
after the Issue Date is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (i) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (ii)
the initial amount of such Restricted Investment.
The preceding provisions shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Exchange Indenture;
(ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of, Equity Interests of the Company (other
than Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (iii)(B) of the preceding
paragraph;
(iii) so long as no Default or Event of Default has occurred and is
continuing or would be caused thereby, any Timberlands Repurchase pursuant to
and in accordance with the fourth paragraph of Section 4.10 hereof;
(iv) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its common Equity Interests on a pro rata basis;
(v) so long as no Default or Event of Default has occurred and is
continuing or would be caused thereby, the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any current or former officers,
directors or employees of the Company (or any of its Restricted Subsidiaries')
pursuant to any management equity subscription agreement, stock option agreement
or stock plan entered into in the ordinary course of business; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $5.0 million in any calendar year;
(vi) repurchases of Equity Interests of the Company deemed to occur
upon exercise of stock options to the extent Equity Interests represent a
portion of the exercise price of such options;
(vii) cash payments, advances, loans or expense reimbursements made
to PCA Holdings to permit PCA Holdings to pay its general operating expenses
(other than management, consulting or similar fees payable to Affiliates of the
Company), franchise tax obligations, accounting, legal, corporate reporting and
administrative expenses incurred in the ordinary course of its business in an
amount not to exceed $1.0 million in the aggregate in any fiscal year; and
(viii) so long as no Default or Event of Default has occurred and is
continuing or would be caused thereby, other Restricted Payments in an aggregate
amount not to exceed $25.0 million since the Issue Date.
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The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this covenant shall be determined by the Board of Directors whose resolution
with respect thereto shall be conclusive. The Board of Directors' determination
must be based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if the fair market value exceeds
$25.0 million.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(iii) transfer any of its properties or assets to the Company or any
of its Restricted Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances
or restrictions existing under or by reason of:
(i) Existing Indebtedness as in effect on the Issue Date;
(ii) the Senior Subordinated Notes Indenture, the Senior
Subordinated Notes and the subsidiary guarantees of the Senior Subordinated
Notes;
(iii) this Exchange Indenture;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Exchange Indenture to be
incurred;
(vi) non-assignment provisions in leases, licenses or similar
agreements entered into in the ordinary course of business and consistent with
past practices;
(vii) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the property so acquired
of the nature described in clause (iii) of the first paragraph of this Section
4.08;
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(viii) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(ix) Liens securing Indebtedness that limit the right of the debtor
to dispose of the assets subject to such Lien;
(x) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business;
(xi) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(xii) the Credit Agreement as in effect on the Issue Date;
(xiii) restrictions on the transfer of assets subject to any Lien
permitted under this Exchange Indenture imposed by the holder of such Lien;
(xiv) any Purchase Money Note or other Indebtedness or other
contractual requirements of a Receivables Subsidiary in connection with a
Qualified Receivables Transaction; provided that such restrictions apply only to
such Receivables Subsidiary;
(xv) encumbrances or restrictions existing under or arising pursuant
to Credit Facilities entered into in accordance with this Exchange Indenture;
provided that the encumbrances or restrictions in such Credit Facilities are not
materially more restrictive than those contained in the Credit Agreement as in
effect on the Issue Date; and
(xvi) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (i) through (xv) above; provided, that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board of
Directors of the Company, not materially more restrictive with respect to such
dividend and other payment restrictions than those contained in the dividends or
other payment restrictions prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue Disqualified Stock, and the Restricted Subsidiaries of
the Company may incur Indebtedness or issue preferred stock, if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock or preferred stock is issued would have been at least 2.0 to 1 or, if a
Timberlands Repurchase has occurred pursuant to and in accordance with the
fourth paragraph of Section 4.10 hereof, 2.25 to 1, in either case determined on
a pro forma basis (including a pro forma application of the net
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proceeds therefrom), as if the additional Indebtedness had been incurred or the
preferred stock or Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The first paragraph of this Section 4.09 shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Exchange Indenture Permitted Indebtedness"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
additional Indebtedness under Credit Facilities and letters of credit under
Credit Facilities in an aggregate principal amount at any one time outstanding
under this clause (i) (with letters of credit being deemed to have a principal
amount equal to the face amount) not to exceed $1.51 billion less the aggregate
amount of all Net Proceeds of Asset Sales that have been applied by the Company
or any of its Restricted Subsidiaries since the Issue Date to permanently repay
Indebtedness under a Credit Facility pursuant to Section 4.10 hereof and less
the amount of Indebtedness outstanding under clause (xviii) below; provided that
the amount of Indebtedness permitted to be incurred pursuant to Credit
Facilities in accordance with this clause (i) shall be in addition to any
Indebtedness permitted to be incurred pursuant to Credit Facilities, in reliance
on, and in accordance with, clauses (iv) and (xix) below or in the first
paragraph hereof;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company and its Restricted Subsidiaries
of Indebtedness represented by the Notes to be issued on the Issue Date and the
New Notes to be issued pursuant to the Preferred Stock Registration Rights
Agreement;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiary, in an aggregate principal amount (which amount
may, but need not be, incurred in whole or in part under Credit Facilities),
including all Permitted Refinancing Indebtedness incurred to refund, refinance,
replace, amend, restate, modify or renew, in whole or in part, any Indebtedness
incurred pursuant to this clause (iv), not to exceed the greater of 7.5% of
Total Assets as of the date of incurrence and $50.0 million at any time
outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance, replace, amend, restate, modify
or renew, in whole or in part, Indebtedness (other than intercompany
Indebtedness) that was permitted by this Exchange Indenture to be incurred under
the first paragraph hereof or clauses (ii), (iii), (iv), (xv) or (xix) of this
paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Restricted Subsidiaries; provided, however, that each of the following
shall be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vi):
(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
the Company or a Restricted Subsidiary thereof; and
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(B) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Restricted Subsidiary thereof;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate risk with respect to any floating or fixed rate
Indebtedness that is permitted by the terms of this Exchange Indenture to be
outstanding and the incurrence of Indebtedness under Other Hedging Agreements
providing protection against fluctuations in currency values or in the price of
energy, commodities and raw materials in connection with the Company's or any of
its Restricted Subsidiaries' operations so long as management of the Company or
such Restricted Subsidiary, as the case may be, has determined that the entering
into of such Other Hedging Agreements are bona fide hedging activities;
(viii) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the
Company that was permitted to be incurred by another provision of this Section
4.09;
(ix) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (ix);
(x) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 4.09; provided, in
each such case, that the amount thereof is included in Fixed Charges and
Consolidated Indebtedness of the Company as accrued;
(xi) the incurrence by the Company of Indebtedness and the issuance
by the Company of preferred stock, in each case, that is deemed to be incurred
or issued, as the case may be, in connection with the Contribution;
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of obligations pursuant to foreign currency agreements entered into
in the ordinary course of business and not for speculative purposes;
(xiii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of financing such
acquisition; provided, however, that:
(A) such Indebtedness is not reflected on the balance sheet of
the Company or any Restricted Subsidiary (contingent obligations referred
to in a footnote to financial statements and not otherwise reflected on
the balance sheet will not be deemed to be reflected on such balance sheet
for purposes of this clause (A)) and
(B) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including noncash
proceeds (the fair market value of such
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noncash proceeds being measured at the time received and without giving
effect to any subsequent changes in value) actually received by the
Company and its Restricted Subsidiaries in connection with such
disposition;
(xiv) the incurrence of obligations in respect of performance and
surety bonds and completion guarantees provided by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;
(xv) the incurrence of Indebtedness by any Restricted Subsidiary
that is organized outside of the United States in connection with the
acquisition of assets or a new Restricted Subsidiary in an aggregate principal
amount, including all Permitted Refinancing Indebtedness incurred to refund,
refinance, replace, amend, restate, modify or renew, in whole or in part, any
Indebtedness incurred pursuant to this clause (xv), not to exceed $25.0 million
at any one time outstanding; provided that such Indebtedness was incurred by the
prior owner of such asset or such Restricted Subsidiary prior to such
acquisition by the Restricted Subsidiary and was not incurred in connection
with, or in contemplation of, such acquisition by the Restricted Subsidiary;
(xvi) the incurrence of Indebtedness consisting of guarantees of
loans made to management for the purpose of permitting management to purchase
Equity Interests of the Company, in an amount not to exceed $7.5 million at any
one time outstanding;
(xvii) Indebtedness of the Company that may be deemed to exist under
the Contribution Agreement as a result of the Company's obligation to pay
purchase price adjustments; provided that the incurrence of Indebtedness to pay
the purchase price adjustment shall be deemed to constitute an incurrence of
Indebtedness that was not permitted by this clause (xvii);
(xviii) the incurrence of Indebtedness by a Receivables Subsidiary
in a Qualified Receivables Transaction that is not recourse to the Company or
any of its Subsidiaries (except for Standard Securitization Undertakings);
provided that the aggregate principal amount of Indebtedness outstanding under
this clause (xviii) and clause (i) above does not exceed $1.51 billion less the
aggregate amount of all Net Proceeds of Asset Sales that have been applied by
the Company or any of its Restricted Subsidiaries since the Issue Date to
permanently repay Indebtedness under a Credit Facility pursuant to Section 4.10
hereof; and
(xix) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) (which amount may,
but need not be, incurred in whole or in part under the Credit Facilities) at
any time outstanding, including all Permitted Refinancing Indebtedness incurred
to refund, refinance, replace, amend, restate, modify or renew, in whole or in
part, any Indebtedness incurred pursuant to this clause (xix), not to exceed
$75.0 million.
For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Exchange Indenture Permitted Indebtedness described in
clauses (i) through (xix) above, or is entitled to be incurred pursuant to the
first paragraph of this Section 4.09, the Company shall be permitted to classify
or later reclassify such item of Indebtedness in any manner that complies with
this Section 4.09. Indebtedness under Credit Facilities outstanding on the Issue
Date shall be deemed to have been incurred on such date in reliance on the
exception provided by clause (i) of the definition of Exchange Indenture
Permitted Indebtedness.
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SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(i) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale which, taken as a whole,
is at least equal to the fair market value of the assets or Equity Interests
issued or sold or otherwise disposed of;
(ii) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee; and
(iii) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents
or Marketable Securities.
For purposes of this provision, each of the following shall be
deemed to be cash:
(i) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any Restricted
Subsidiary (other than contingent liabilities that are assumed by the transferee
of any such assets;
(ii) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
converted, sold or exchanged by the Company or such Restricted Subsidiary into
cash within 30 days of the related Asset Sale (to the extent of the cash
received in that conversion); and
(iii) any Designated Noncash Consideration received by the Company
or any of its Restricted Subsidiaries in such Asset Sale having an aggregate
fair market value, taken together with all other Designated Noncash
Consideration received since the Issue Date pursuant to this clause (iii) that
is at that time outstanding, not to exceed 10% of Total Assets at the time of
the receipt of such Designated Noncash Consideration (with the fair market value
of each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value)
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds at its option:
(i) to repay Senior Debt and, if the Senior Debt repaid is revolving
credit Indebtedness, to correspondingly reduce commitments with respect thereto;
(ii) to invest in or to acquire other properties or assets to
replace the properties or assets that were the subject of the Asset Sale or that
will be used in businesses of the Company or its Restricted Subsidiaries, as the
case may be, existing at the time such assets are sold;
(iii) to make a capital expenditure or commit, or cause such
Restricted Subsidiary to commit, to make a capital expenditure (such commitments
to include amounts anticipated to be expended pursuant to the Company's capital
investment plan as adopted by the Board of Directors of the Company) within 24
months of such Asset Sale; or
(iv) to make a Timberlands Repurchase in accordance with Section
3.07(ii) hereof.
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Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Exchange Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph shall constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
make an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Exchange Indenture with respect to offers to purchase or
redeem with the proceeds of sales of assets to purchase the maximum principal
amount of Notes and such other pari passu Indebtedness that may be purchased out
of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal
to 100% of the principal amount plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase, and shall be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by this
Exchange Indenture. If the aggregate principal amount of Notes and such other
pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Notwithstanding the three preceding paragraphs, the Company shall be
permitted to apply up to $100.0 million of Timberlands Net Proceeds (which
amount shall be reduced on a dollar for dollar basis by the amount of
Timberlands Net Proceeds used to make a Timberlands Repurchase in accordance
with Section 3.07(ii) hereof) to repurchase or redeem, or pay a dividend on, or
a return of capital with respect to, any Equity Interests of the Company, or
repurchase or redeem Notes, if:
(i) the repurchase, redemption, dividend or return of capital is
consummated within 90 days of the final sale of such Timberlands Sale;
(ii) the Company's Debt to Cash Flow Ratio at the time of such
Timberlands Repurchase, after giving pro forma effect to (A) such repurchase,
redemption, dividend or return of capital, (B) the Timberlands Sale and the
application of the net proceeds therefrom and (C) any increase or decrease in
fiber, stumpage or similar costs as a result of the Timberlands Sale as if the
same had occurred at the beginning of the most recently ended four full fiscal
quarter period of the Company for which internal financial statements are
available, would have been no greater than 5.0 to 1; and
(iii) in the case of a repurchase or redemption of all of the then
outstanding Preferred Stock or Notes, no Timberlands Net Proceeds have
previously been applied to redeem Notes or repurchase or redeem, or pay a
dividend on, or a return of capital with respect to, any other Equity Interests
of the Company.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.10, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
the provisions of this Section 4.10 by virtue of such conflict.
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SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms taken as a whole that are
no less favorable to the Company or the relevant Restricted Subsidiary than
those that could have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person; and
(ii) the Company delivers to the Trustee:
(A) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess
of $5.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies
with this Section 4.11 and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of
Directors; and
(B) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess
of $25.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal, investment banking or advisory firm of national
standing; provided that this clause (B) shall not apply to transactions
with TPI and its subsidiaries in the ordinary course of business at a time
when Madison Dearborn Partners, LLC and its Affiliates are entitled,
directly or indirectly, to elect a majority of the Board of Directors of
the Company.
Notwithstanding the foregoing, the following items shall not be
deemed to be Affiliate Transactions and, therefore, will not be subject to the
provisions of the first paragraph of this Section 4.11:
(i) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary;
(ii) transactions between or among the Company and/or its Restricted
Subsidiaries;
(iii) transactions with a Person that is an Affiliate of the Company
solely because the Company owns an Equity Interest in such Person;
(iv) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company;
(v) sales of Equity Interests (other than Disqualified Stock) to
Affiliates of the Company;
(vi) the payment of transaction, management, consulting and advisory
fees and related expenses to Madison Dearborn Partners, LLC and its Affiliates;
provided that such fees shall not,
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in the aggregate, exceed $15.0 million (plus out-of-pocket expenses) in
connection with the Contribution or $2.0 million in any twelve-month period
commencing after the date of the Contribution;
(vii) the payment of fees and expenses related to the Contribution
other than fees and expenses paid to Madison Dearborn Partners, LLC and its
Affiliates;
(viii) Restricted Payments that are permitted by Section 4.07
hereof;
(ix) transactions described in clause (xi) of the definition of
Permitted Investments;
(x) reasonable fees and expenses and compensation paid to, and
indemnity provided on behalf of, officers, directors or employees of the Company
or any Subsidiary as determined in good faith by the Board of Directors of the
Company or senior management;
(xi) payments made to PCA Holdings for the purpose of allowing PCA
Holdings to pay its general operating expenses, franchise tax obligations,
accounting, legal, corporate reporting and administrative expenses incurred in
the ordinary course of its business in an amount not to exceed $1.0 million in
the aggregate in any fiscal year;
(xii) transactions contemplated by the Contribution Agreement and
the Transaction Agreements as the same are in effect on the Issue Date;
(xiii) transactions in connection with a Qualified Receivables
Transaction; and
(xiv) transactions with either of the Initial Purchasers or any of
their respective Affiliates.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired securing
Indebtedness, Attributable Debt or trade payables, except Permitted Liens.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:
(i) either (A) the Company or that Restricted Subsidiary, as
applicable, could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction under the
Fixed Charge Coverage Ratio test in the first paragraph of Section 4.09 hereof
or (B) the Net Proceeds of such sale and leaseback transaction are applied to
repay outstanding Senior Debt; and
(ii) the transfer of assets in that sale and leaseback transaction
is permitted by, and the Company applies the net proceeds of such transaction in
compliance with, Section 4.10 hereof.
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SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect:
(i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary; and
(ii) the rights (charter and statutory), licenses and franchises of
the Company and its Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) If a Change of Control occurs, each Holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") on the terms set forth in this
Section 4.15. In the Change of Control Offer, the Company shall offer a payment
in cash equal to 101% of the aggregate principal amount of Notes repurchased
plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
date of purchase (the "Change of Control Payment") Within thirty (30) days
following any Change of Control, the Company shall mail a notice to the Trustee
and each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by this Exchange Indenture and described in
such notice.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue of such conflict.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful:
(i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so
tendered; and
(iii) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being
purchased by the Company.
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The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book-entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.
Prior to complying with any of the provisions of this Section 4.15,
but in any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of Notes required by this Section 4.15. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(c) The Company shall first comply with the first sentence in the
immediately preceding paragraph before it shall be required to repurchase Notes
pursuant to the provisions described above. The Company's failure to comply with
the first sentence in the immediately preceding paragraph may (with notice and
lapse of time) constitute an Event of Default described in clause (iii) of
Section 6.01 but shall not constitute an Event of Default described in clause
(ii) of Section 6.01.
(d) Notwithstanding anything to the contrary in this Section 4.15,
the Company shall not be required to make a Change of Control Offer upon the
occurrence of a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.15 and all other provisions of this
Exchange Indenture applicable to a Change of Control Offer made by the Company
and purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
This Section 4.15 shall be applicable regardless of whether any
other provisions of this Exchange Indenture are applicable.
SECTION 4.17. BUSINESS ACTIVITIES
The Company shall not, and shall not permit any of Restricted
Subsidiary of the Company to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Company and
its Restricted Subsidiaries taken as a whole.
SECTION 4.18. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary so designated shall be deemed to be an
Investment made as of the time of such designation and shall either reduce the
amount available for Restricted Payments under the first paragraph of Section
4.07 hereof or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments, as the Company shall
determine. That designation shall only be permitted if such Investment would be
permitted at that time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may redesignate
any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not, directly or indirectly:
(i) consolidate or merge with or into another Person (whether or not
the Company is the surviving corporation); or
(ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another
Person;
unless:
(i) either: (A) the Company is the surviving corporation; or (B) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes, this Exchange Indenture and the
Preferred Stock Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists; and
(iv) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made will,
on the date of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof.
In addition, the Company shall not, directly or indirectly, lease
all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions,
to any other Person. This Section 5.01 shall not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among the Company
and any of its Wholly Owned Restricted Subsidiaries.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Exchange Indenture referring to the
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"Company" shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company under this
Exchange Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal of and interest
on the Notes except in the case of a sale of all of the Company's assets that
meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following is an Event of Default:
(i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by
Article 10 hereof);
(ii) default in payment when due of the principal of, or premium, if
any, on the Notes (whether or not prohibited by Article 10 hereof);
(iii) failure by the Company or any of its Restricted Subsidiaries
to comply with Sections 4.10, 4.15 or 5.01 hereof;
(iv) failure by the Company or any of its Restricted Subsidiaries
for 30 days after notice by the Trustee or by the Holders of at least 25% in
principal amount of the Notes to comply with any of the other agreements in this
Exchange Indenture;
(v) default under any mortgage, indenture or instrument under which
there is issued and outstanding any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of this
Exchange Indenture, if that default:
(A) is caused by a failure to pay principal at the final
stated maturity of such Indebtedness (a "Payment Default"); or
(B) results in the acceleration of such Indebtedness prior to
its express maturity;
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $25.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to
pay final nonappealable judgments aggregating in excess of $25.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days;
(vii) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
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(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a custodian of it or for
all or substantially all of its property;
(D) makes a general assignment for the benefit of its
creditors; or
(E) generally is not paying its debts as they become due; or
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries;
(B) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs (other than an Event of Default
specified in clause (viii) or (ix) of Section 6.01 hereof with respect to the
Company) and is continuing, the Trustee, upon request of the Holders of at least
25% in principal amount of the Notes then outstanding, or the Holders of at
least 25% in principal amount of the Notes then outstanding may declare the
principal of, premium and accrued interest and Liquidated Damages, if any, on
all the Notes to be due and payable by notice in writing to the Company and the
Trustee specifying the respective Event of Default and that such notice is a
"notice of acceleration" (the "Acceleration Notice"), and the same (i) shall
become immediately due and payable or (ii) if there are any amounts outstanding
under the Credit Agreement, shall become immediately due and payable upon the
first to occur of (x) an acceleration under the Credit Agreement or (y) five
Business Days after receipt by the Company and the Representative under the
Credit Agreement of such Acceleration Notice but only if such Event of Default
is then continuing. Notwithstanding the foregoing, if an Event of Default
specified in clause (viii) or (ix) of Section 6.01 hereof occurs with respect to
the Company, all outstanding Notes shall be due and payable immediately without
further action or notice. The Holders of a majority in aggregate principal
amount of the Notes then outstanding by written notice to the Trustee may on
behalf of the Holders rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) have been cured or waived.
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If an Event of Default occurs on or after April 1, 2004 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company in bad faith with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Exchange Indenture or in the Notes to
the contrary notwithstanding. If an Event of Default occurs prior to April 1,
2004 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company in bad faith with the intention of avoiding the
prohibition on redemption of the Notes prior to April 1, 2004, then, upon
acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, for each of the years beginning on
April 1 of the years set forth below, as set forth below (expressed as a
percentage of the aggregate principal amount to the date of payment that would
otherwise be due but for the provisions of this sentence):
Year Percentage
---- ----------
1999...............................................113.9220%
2000...............................................112.3751%
2001...............................................110.8282%
2002...............................................109.2813%
2003...............................................107.344%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Exchange Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration) Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Exchange Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee
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or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Exchange
Indenture that the Trustee determines may be unduly prejudicial to the rights of
other Holders of Notes or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Exchange
Indenture or the Notes only if:
(i) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(iii) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Exchange Indenture to prejudice
the rights of another Holder of a Note or to obtain a preference or priority
over another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Exchange Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other
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obligor upon the Notes), its creditors or its property and shall be entitled and
empowered to collect, receive and distribute any money or other property payable
or deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Exchange Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
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ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Exchange Indenture, and use the same degree of care and skill in its exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Exchange Indenture and the Trustee need perform
only those duties that are specifically set forth in this Exchange
Indenture and no others, and no implied covenants or obligations shall be
read into this Exchange Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Exchange
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Exchange Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts purported to be stated
therein)
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Exchange Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.
(e) No provision of this Exchange Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under this
Exchange Indenture at the request of any Holders, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel
or both. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel of its selection and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Exchange Indenture.
(e) Unless otherwise specifically provided in this Exchange
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Exchange Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Exchange Indenture or the Notes, it shall
not be accountable for the Company's use of the proceeds from the Notes or any
money paid to the Company or upon the Company's direction under any provision of
this Exchange Indenture, it shall not be responsible for the use or application
of any money received by any Paying Agent other than the Trustee, and it shall
not be responsible for any statement or recital herein or any statement in the
Notes or any other document in connection with the sale of the Notes or pursuant
to this Exchange Indenture other than its certificate of authentication.
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SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is actually known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it becomes known
to the Trustee. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as its board of directors, its executive
committee or a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
Notwithstanding anything to the contrary expressed in this Exchange Indenture,
the Trustee shall not be deemed to have knowledge of any Default or Event of
Default hereunder, except in the case of an Event of Default under Section
6.01(i) or (ii) hereof (provided that the Trustee is the Paying Agent), unless
and until a Responsible Officer shall have actual knowledge thereof or shall
have received written notice, at its Principal Corporate Trust Office as
specified in Section 11.02 hereof, from the Company or any Holder of Senior
Notes that such a Default or an Event of Default has occurred.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Exchange Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted) The Trustee also
shall comply with TIA ss. 313(b)(2) The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c)
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d) The
Company shall promptly notify the Trustee when the Notes are listed on any
securities exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Exchange Indenture and services
hereunder as the Company and the Trustee shall agree. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel and any taxes.
The Company shall indemnify the Trustee and its officers, directors,
shareholders, agents and employees (each an "Indemnified Party") for and hold
each Indemnified Party harmless against any and all losses, liabilities or
expenses incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Exchange Indenture, including the costs
and expenses of enforcing this Exchange Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee and its officers, directors, shareholders,
agents and employees in its capacity as Paying Agent, Registrar, and Custodian
and Agent for services of notices and demands shall have the full benefit of the
foregoing indemnity. An
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Indemnified Party shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by an Indemnified Party to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and an Indemnified Party shall cooperate in the defense. An
Indemnified Party may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Exchange Indenture.
To secure the Company's payment obligations in this Section with
respect to compensation and indemnity, the Trustee shall have a Lien prior to
the Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Exchange Indenture. The Trustee's
right to receive payment of any amounts under this Exchange Indenture shall not
be subordinated to any other liability or any of the Indebtedness of the
Company.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(viii) or (ix) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Exchange Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50.0 million as set forth in its most recent published annual report of
condition.
This Exchange Indenture shall always have a Trustee who satisfies
the requirements of TIA ss. 310(a)(1), (2) and (5) The Trustee is subject to TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which any other
securities, or certificates of interest or participation in any other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310 (b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b) A Trustee who has resigned or been removed
shall be subject to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its Obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance") For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Exchange
Indenture referred to in (i) and (ii) below, and to have satisfied all of its
obligations under such Notes and this Exchange Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:
(i) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section 8.04, payments in respect of the principal of and premium,
interest and Liquidated Damages, if any, on such Notes when such payments are
due;
(ii) the Company's obligations with respect to such Notes under
Article 2 and Section 4.02 hereof;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith; and
(iv) this Article 8.
Subject to compliance with this Article 8, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from their
respective obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that
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such Notes shall not be deemed outstanding for accounting purposes) For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Exchange Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(iii) through 6.01(vii) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
(i) the Company must irrevocably deposit, with the Trustee, in
trust, for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium and Liquidated
Damages, if any, on the outstanding Notes on the stated maturity thereof or on
the applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(ii) in the case of Legal Defeasance, the Company must deliver to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (B) since the date of
this Exchange Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company must deliver
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on (A) the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit) or
(B) insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Exchange
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Indenture but in any event including the Credit Agreement) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(vi) the Company must deliver to the Trustee an Opinion of Counsel
in the United States to the effect that, assuming no intervening bankruptcy of
the Company between the date of deposit and the 91st day following the deposit
and assuming that no Holder is an "insider" of the Company under applicable
bankruptcy law, after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights and remedies
generally;
(vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of the Notes over other creditors of the Company, or
with the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(viii) the Company must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating that
all conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Exchange Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(ii) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest
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has become due and payable shall be paid to the Company on its request or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as a secured creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times
(national edition) and The Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Exchange Indenture and
the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 8.02 or
8.03 hereof, as the case may be; provided, however, that, if the Company makes
any payment of principal of, premium, if any, or interest on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Exchange Indenture or the Notes without the consent of
any Holder of a Note:
(i) to cure any ambiguity, defect, error or inconsistency;
(ii) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(iii) to provide for the assumption of the Company's obligations to
the Holders of the Notes by a successor to the Company pursuant to Article 5
hereof;
(iv) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; and
(v) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Exchange Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental indenture authorized or permitted by the terms of this
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Exchange Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Exchange Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Exchange Indenture (including Sections
3.09, 4.10 and 4.15 hereof) or the Notes with the consent of the Holders of at
least a majority in principal amount of Notes then outstanding voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Exchange
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class (including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes. Without the consent of at least 75% in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), no waiver or amendment to this Exchange Indenture may make any change in
the provisions of Article 10 hereof that adversely affects the rights of any
Holder of Notes. Section 2.08 hereof shall determine which Notes are considered
to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee's own
rights, duties or immunities under this Exchange Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes (including
Additional Notes, if any) then outstanding voting as a single class may waive
compliance in a particular instance by the Company with any provision of this
Exchange Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not, with respect
to any Notes held by a non-consenting Holder:
(i) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
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(ii) reduce the principal of or change the fixed maturity of any
Note or alter or waive any of the provisions with respect to the redemption of
the Notes, other than provisions relating to Sections 3.09, 4.10 or 4.15 hereof;
(iii) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(iv) waive a Default or Event of Default in the payment of principal
of, or premium, or Liquidated Damages, if any, or interest on the Notes (except
a rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration;
(v) make any Note payable in money other than that stated in the
Notes;
(vi) make any change in the provisions of this Exchange Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, interest or Liquidated Damages, if
any, on the Notes;
(vii) waive a redemption payment with respect to any Note, other
than a payment required by Section 3.09, 4.10 or 4.15 hereof; or
(viii) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Exchange Indenture or the
Notes shall be set forth in a amended or supplemental indenture that complies
with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon an Officer's Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Exchange Indenture and that such amendment is
the legal, valid and binding obligation of the Company, enforceable against them
in accordance with their terms, subject to customary exceptions, and complies
with the provisions hereof (including Section 9.03)
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that
the principal of and premium, interest and Liquidated Damages, if any, and any
other Obligations on, or relating to the Notes are subordinated and junior in
right of payment, to the extent and in the manner provided in this Article 10,
to the prior payment in full in cash or Cash Equivalents (other than Cash
Equivalents of the type referred to in clauses (iii) and (iv) of the definition
thereof) of all Senior Debt of the Company (whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of and shall be enforceable by, the holders of
Senior Debt of the Company, and that each holder of Senior Debt of the Company
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired such Senior Debt in reliance upon the covenants
and provisions contained in this Exchange Indenture and the Notes.
SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Debt" means:
(i) any Indebtedness under or in respect of the Credit Agreement and
the Senior Subordinated Notes Indenture; and
(ii) any other Senior Debt permitted under this Exchange Indenture
the principal amount of which is $25.0 million or more and that has been
designated by the Company in the instrument or agreement relating to the same as
"Designated Senior Debt;"
provided, that for purposes of clause (ii) of Section 10.04 hereof, the Senior
Subordinated Notes Indenture shall not be deemed to be Designated Senior Debt so
long as the Credit Agreement is still in effect.
"Permitted Junior Securities" means debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all then
outstanding Senior Debt of the Company at least to the same extent that the
Notes are subordinated to the payment of all Senior Debt of the Company on the
Issue Date, so long as:
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(i) the effect of the use of this defined term in the provisions of
Article 10 hereof is not to cause the Notes to be treated as part of (A) the
same class of claims as the Senior Debt of the Company or (B) any class of
claims pari passu with, or senior to, the Senior Debt of the Company for any
payment or distribution in any case or proceeding or similar event relating to
the liquidation, insolvency, bankruptcy, dissolution, winding up or
reorganization of the Company; and
(ii) to the extent that any Senior Debt of the Company outstanding
on the date of consummation of any such plan of reorganization or readjustment
is not paid in full in cash or Cash Equivalents (other than Cash Equivalents of
the type referred to in clauses (iii) and (iv) of the definition thereof) on
such date, either (A) the holders of any such Senior Debt not so paid in full in
cash or Cash Equivalents (other than Cash Equivalents of the type referred to in
clauses (iii) and (iv) of the definition thereof) have consented to the terms of
such plan of reorganization or readjustment or (B) such holders receive
securities which constitute Senior Debt of the Company (which securities, if the
Senior Debt not so paid in full in cash or Cash Equivalents is guaranteed, are
also guaranteed pursuant to guarantees constituting Senior Debt of the relevant
guarantor) and which have been determined by the relevant court to constitute
satisfaction in full in money or money's worth of any Senior Debt of the Company
(and any related Senior Debt of the guarantors) not paid in full in cash or Cash
Equivalents (other than Cash Equivalents of the type referred to in clauses
(iii) and (iv) of the definition thereof)
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided that if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Senior Debt" means:
(i) all Indebtedness outstanding under all Credit Facilities, all
Hedging Obligations and Other Hedging Agreements (including guarantees thereof)
with respect thereto of the Company and its Restricted Subsidiaries, whether
outstanding on the Issue Date or thereafter incurred;
(ii) all Indebtedness of the Company and its Restricted Subsidiaries
outstanding under the Senior Subordinated Notes or the guarantees of the Senior
Subordinated Notes;
(iii) any other Indebtedness incurred by the Company and its
Restricted Subsidiaries under the terms of this Exchange Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes; and
(iv) all Obligations with respect to the items listed in the
preceding clauses (i), (ii) and (iii) (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law)
Notwithstanding anything to the contrary in the preceding, Senior
Debt shall not include:
(i) any liability for federal, state, local or other taxes owed or
owing by the Company or its Restricted Subsidiaries;
(ii) any Indebtedness of the Company or any of its Restricted
Subsidiaries to any of its Subsidiaries;
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(iii) any trade payables; or
(iv) the portion of any Indebtedness that is incurred in violation
of this Exchange Indenture (but only to the extent so incurred)
A "distribution" may consist of cash, securities or other property,
by set-off or otherwise.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors of the
Company in a liquidation or dissolution of the Company, in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, in an assignment for the benefit of creditors or in any
marshalling of the Company's assets and liabilities:
(i) holders of Senior Debt of the Company shall receive payment in
full in cash or Cash Equivalents (other than Cash Equivalents of the type
referred to in clauses (iii) and (iv) of the definition thereof) of all
Obligations due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt, whether or not such interest is an allowable claim) before Holders
of the Notes shall be entitled to receive any payment or distribution of any
kind or character with respect to any Obligations on, or relating to, the Notes
(except that Holders may receive and retain (A) Permitted Junior Securities and
(B) payments and other distributions made from any defeasance trust created
pursuant to Article 8 hereof, so long as the trust was created in accordance
with all relevant conditions specified in Article 8 hereof); and
(ii) until all Obligations with respect to Senior Debt of the
Company (as provided in subsection (i) above) are paid in full, in cash or Cash
Equivalents (other than Cash Equivalents of the type referred to in clauses
(iii) and (iv) of the definition thereof), any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to which Holders would be entitled but for this Article 10 shall be
made to holders of such Senior Debt (except that Holders of Notes may receive
(A) Permitted Junior Securities and (B) payments and other distributions made
from any defeasance trust created pursuant to Article 8 hereof, so long as the
trust was created in accordance with all relevant conditions specified in
Article 8 hereof), as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution of any kind or
character to the Trustee or any Holder with respect to any Obligations on, or
relating to, the Notes and may not acquire from the Trustee or any Holder any
Notes for cash or property (other than (x) Permitted Junior Securities and (y)
payments and other distributions made from any defeasance trust created pursuant
to Article 8 hereof, so long as the trust was created in accordance with all
relevant conditions specified in Article 8 hereof) until all principal and other
Obligations with respect to the Senior Debt have been paid in full in cash or
Cash Equivalents (other than Cash Equivalents of the type referred to in clauses
(iii) and (iv) of the definition thereof) if:
(i) a default in the payment when due, whether at maturity, upon
redemption, declaration or otherwise, of any principal of, interest on,
unpaid drawings for letters of credit issued in respect of, or any other
Obligations with respect to any Designated Senior Debt of the Company
occurs and is continuing; or
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(ii) a default, other than a default referred to in clause (i) of
this Section 10.04, on Designated Senior Debt of the Company occurs and is
continuing that then permits holders of such Designated Senior Debt to
accelerate its maturity and the Trustee receives a written notice of such
default (a "Payment Blockage Notice") from the holders or a Representative
of such Designated Senior Debt. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section 10.04 unless and until at least 360 days
shall have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been waived for a period of not less
than 90 consecutive days.
The Company may and shall resume payments on and distributions with
respect to any Obligations on, or with respect to, the Notes and may acquire
them upon the earlier of:
(i) in the case of a default referred to in clause (i) of the
immediately preceding paragraph, the date upon which the default is cured or
waived, or
(ii) in the case of a default referred to in clause (ii) of the
immediately preceding paragraph, the earlier of (A) the date on which all
nonpayment defaults are cured or waived, (B) 179 days after the date of delivery
of the applicable Payment Blockage Notice or (C) the date on which the Trustee
receives notice from the Representative for such Designated Senior Debt
rescinding the Payment Blockage Notice, unless the maturity of any such
Designated Senior Debt has been accelerated.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the Company
of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment or
distribution of any kind or character, whether in cash, properties or
securities, in respect of any Obligations with respect to the Notes (other than
(x) Permitted Junior Securities and (y) payments and other distributions made
from any defeasance trust created pursuant to Article 8 hereof) at a time when
such payment or distribution is prohibited by Section 10.03 or 10.04 hereof,
such payment shall be held by the Trustee or such Holder, in trust for the
benefit of, and shall be paid forthwith over and delivered, upon written
request, (on a pro rata basis based on the aggregate principal amount of such
Senior Debt held by such holders), to the holders of Senior Debt of the Company
or their Representative under the indenture or other agreement (if any) pursuant
to which such Senior Debt may have been issued for application to the payment of
all Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and (iv) of the
definition thereof) in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior Debt.
If any Holder or the Trustee is required by any court or otherwise
to deliver payments it received by the Company or Guarantor to a holder of
Senior Debt, any amount so paid to the extent theretofore discharged, shall be
reinstated in full force and effect.
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With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Exchange Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt of the Company, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.
To the extent any payment of Senior Debt of the Company (whether by
or on behalf of the Company, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set aside
or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt of the Company or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent
in writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt of the Company as provided in this Article 10.
SECTION 10.08. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and (iv) of the
definition thereof) of all Senior Debt of the Company, Holders of Notes shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Notes) to the rights of holders of Senior Debt of the Company to receive
payments or distributions of cash, properties or securities of the Company
applicable to the Senior Debt of the Company until the Notes have been paid in
full. A distribution made under this Article 10 to holders of Senior Debt of the
Company that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company to or on account of
Senior Debt of the Company.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt of the Company. Nothing in this Exchange Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest and Liquidated Damages, if any, on the Notes in accordance with
their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt of the
Company; or
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(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt of the Company to receive distributions and
payments otherwise payable to Holders of Notes.
The failure to make a payment on account of principal of, or
interest on, the Notes by reason of any provision of this Article 10 will not be
construed as preventing the occurrence of a Default or Event of Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes as provided herein
shall at any time in any way be prejudiced or be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Exchange Indenture, regardless of any knowledge
thereof which any such Holder may have otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt of the Company may, at any time and from
time to time, without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article 10 or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Debt of the
Company, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior
Debt of the Company, or otherwise amend or supplement in any manner Senior Debt
of the Company, or any instrument evidencing the same or any agreement under
which Senior Debt of the Company is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt of the Company; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt of the Company; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred
to in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Exchange Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment or distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Notes, unless the Trustee shall have received
at its Corporate Trust Office at least three Business Days prior to the date
upon which such payment would otherwise
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become due and payable written notice of facts that would cause the payment of
any Obligations with respect to the Notes to violate this Article 10. Only the
Company, the holders of Senior Debt of the Company or a Representative therefor
may give any such notice. Nothing in this Article 10 shall impair the claims of,
or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt of the Company with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, holders of Senior Debt of the Company or their Representatives are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the parties holding a majority of the outstanding
Indebtedness under each credit agreement included in the Credit Facilities.
ARTICLE 11.
SATISFACTION AND DISCHARGE
SECTION 11.01. SATISFACTION AND DISCHARGE OF EXCHANGE INDENTURE.
This Exchange Indenture shall be discharged and shall cease to be of
further effect as to all Notes issued hereunder, when:
(i) either:
(A) all such Notes theretofore authenticated (except lost,
stolen or destroyed Notes that have been replaced or paid and Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or
(B) all such Notes not theretofore delivered to such Trustee
for cancellation have become due and payable by reason of the making
of a notice of redemption or otherwise, in cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in
such amounts as will be sufficient without consideration of any
reinvestment of interest, to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the Trustee
for cancellation for principal, premium and Liquidated Damages, if
any, and accrued interest to the date of maturity or redemption;
(ii) no Default or Event of Default with respect to this Exchange
Indenture or the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such
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deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company is a party
or by which the Company is bound;
(iii) the Company has paid or caused to be paid all sums payable by
it under this Exchange Indenture; and
(iv) the Company has delivered irrevocable instructions to the
Trustee under this Exchange Indenture to apply the deposited money toward the
payment of such Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and
an Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
SECTION 11.02. APPLICATION OF TRUST MONEY
Subject to the provisions of the last paragraph of Section 4.19
hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Exchange Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to Persons entitled thereto, of the principal (and
premium, if any), interest and Liquidated Damages, if any, for whose payment
such money has been deposited with the Trustee.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Exchange Indenture and the
Notes shall be revived and reinstated as though such deposit had occurred
pursuant to Section 11.01 hereof; provided that if the Company has made any
payment of principal of, premium, if any, or interest on any Notes because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Exchange Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall
control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
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If to the Company:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Telecopier No.: (847) 482-4559
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telecopier No.: (312) 861-2200
Attention: William S. Kirsch, P.C.
If to the Trustee:
U.S. Trust Company of Texas, N.A.
114 West 47th Street
New York, New York 10036
Telecopier No.: (212) 852-1626
Attention: John Guiliano
With a copy to:
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
Telecopier No.: (212) 753-0751
Attention: Jeffrey Spindler
The Company, or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
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If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Exchange Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c)
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Exchange Indenture, the Company shall furnish to the
Trustee:
(i) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Exchange
Indenture relating to the proposed action have been satisfied; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Exchange Indenture (other than a
certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the
provisions of TIA ss. 314(e) and shall include:
(i) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of such Person, he or she has
or they have made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
SHAREHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Exchange Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SECTION 12.08. GOVERNING LAW.
THIS EXCHANGE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Exchange Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Exchange Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Exchange Indenture and the
Notes shall bind its successors. All agreements of the Trustee in this Exchange
Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Exchange Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Exchange
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Exchange Indenture have been inserted for
convenience of reference only, are not to be considered a part of this Exchange
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.
[Exchange Indenture signature page follows]
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DATED APRIL 12, 1999 PACKAGING CORPORATION OF AMERICA
BY: /s/ Richard B. West
---------------------------
Name: Richard B. West
Title: Chief Financial
Officer, Secretary
and Treasurer
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
BY: /s/ John Guiliano
---------------------------
Name: John Guiliano
Title: Authorized Signatory
<PAGE>
EXHIBIT 4.4
EXECUTION COPY
================================================================================
NOTES REGISTRATION RIGHTS AGREEMENT
Dated as of April 12, 1999
by and among
PACKAGING CORPORATION OF AMERICA,
the Guarantors Signatories Hereto
and
J. P. MORGAN SECURITIES INC.
and
BT ALEX.BROWN INCORPORATED
================================================================================
<PAGE>
This Notes Registration Rights Agreement (this "Agreement") is made and
entered into as of April 12, 1999, by and among Packaging Corporation of
America, a Delaware corporation (the "Company"), the subsidiaries of the Company
listed on the signature pages hereto (the "Guarantors" and together with the
Company, the "Issuers") and J.P. Morgan Securities Inc. and BT Alex.Brown
Incorporated (each an "Initial Purchaser" and, collectively, the "Initial
Purchasers"), each of whom has agreed to purchase the Company's 9 5/8% Senior
Subordinated Notes due 2009 (the "Series A Notes") pursuant to the Purchase
Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 30,
1999 (the "Purchase Agreement"), by and among the Issuers and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Series A
Notes, the Issuers have agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 6 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Indenture, dated April 12, 1999, by and
among the Issuers and United States Trust Company of New York, as Trustee (the
"Trustee"), relating to the Series A Notes and the Series B Notes (as defined in
Section 1 herein) (the "Indenture").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York on which banks are authorized or ordered to close.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of such
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) hereof and (c) the delivery by the Company to the
Registrar under the Indenture of the Series B Notes to be registered in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
tendered by the Holders thereof pursuant to the Exchange Offer.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the
<PAGE>
outstanding principal amount of Series A Notes that are tendered by such Holders
in connection with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Guarantors: The Guarantors defined in the preamble hereto and any Person
which becomes a guarantor of Notes after the date hereof pursuant to the terms
of the Indenture.
Holder: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indemnified Person: As defined in Section 8(c) hereof.
Indemnifying Person: As defined in Section 8(c) hereof.
Liquidated Damages: As defined in Section 5 hereof.
Notes: Series A Notes and Series B Notes (including guarantees thereof by
the Guarantors).
Person: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers relating
to (a) an offering of any Series B Notes (including guarantees thereof by the
Guarantors) pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
each case, (i) that is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 9 5/8% Series B Senior Subordinated Notes
due 2009 to be issued pursuant to the Indenture: (i) in the Exchange Offer or
(ii) as contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
<PAGE>
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in an Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by an Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law or policy of the Commission (after the procedures set forth in Section
6(a)(i) below have been complied with), the Issuers shall use all commercially
reasonable efforts to (i) cause the Exchange Offer Registration Statement to be
filed with the Commission on or prior to the date that is 60 days after the
Closing Date (such 60th day being the "Filing Deadline"), (ii) use all
commercially reasonable efforts to cause such Exchange Offer Registration
Statement to become effective on or prior to the date that is 150 days after the
Closing Date (such 150th day being the "Effectiveness Deadline"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement, use
all commercially reasonable efforts to commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and to permit resales of Series B
Notes by any Broker-Dealer that tendered into the Exchange Offer for Series A
Notes that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) as contemplated by
Section 3(c) below.
(b) The Issuers shall use all commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Issuers shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Series B Notes and the guarantees thereof, and the New Preferred Stock or, if
issued in exchange therefor, the New Exchange Debentures, shall be included in
the Exchange Offer Registration Statement. The Issuers shall use all
commercially reasonable efforts to cause the Exchange Offer to be Consummated on
or prior to the date that is 30 Business Days after the Exchange Offer
Registration Statement has become effective, or longer, if required by the
federal securities laws.
<PAGE>
(c) The Issuers shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that (i) any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company),
may exchange such Transfer Restricted Securities pursuant to the Exchange Offer,
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer and (ii) the
Prospectus contained in the Exchange Offer Registration Statement may be used to
satisfy such prospectus delivery requirement. Such "Plan of Distribution"
section shall also contain all other information with respect to such sales by
such Broker-Dealers that the Commission may require in order to permit such
sales pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Transfer Restricted Securities held by
any such Broker-Dealer, except to the extent required by the Commission as a
result of a change in policy, rules or regulations after the date of this
Agreement.
To the extent necessary to ensure that the Exchange Offer Registration
Statement is available for sales of Series B Notes by Broker-Dealers, the
Issuers agree to use all commercially reasonable efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of 180 days from
the date on which the Exchange Offer is Consummated, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Issuers shall
promptly provide sufficient copies of the latest version of such Prospectus to
such Broker-Dealers promptly upon request, and in no event later than one day
after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law or policy of the Commission (after the Issuers have complied with
the procedures set forth in Section 6(a)(i) below) or (ii) any Holder of
Transfer Restricted Securities shall notify the Company in writing within 20
Business Days following the Consummation of the Exchange Offer that (A) upon
advice of counsel such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the Series
B Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Company or any of its Affiliates, then the Issuers shall:
(x) use all commercially reasonable efforts to cause to be filed, on or
prior to 60 days after the earlier of (i) the date on which the Company
determines that the Exchange Offer Registration Statement cannot be filed as a
result of clause (a)(i) above and (ii) the date on which the Company receives
the notice specified in clause (a)(ii) above, (such earlier date, the "Filing
Deadline"), a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (the
"Shelf Registration Statement")), relating to all Transfer Restricted Securities
of Holders which shall have provided the information required pursuant to
Section 4(b) hereof, and
(y) use all commercially reasonable efforts to cause such Shelf
Registration Statement to become effective on or prior to 120 days after the
Filing Deadline (such 120th day the "Effectiveness Deadline").
<PAGE>
If, after the Issuers have filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law or policy of the
Commission (i.e., clause (a)(i) above), then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause (x)
above; provided that, in such event, the Issuers shall remain obligated to meet
the Effectiveness Deadline set forth in clause (y).
The Issuers shall use all commercially reasonable efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and to ensure that it conforms with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as extended pursuant to Section 6(c)(i)) following the Closing
Date, or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 10 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information (it being understood that Liquidated Damages shall cease to accrue
for the benefit of any Holder who fails to provide such information). Each
selling Holder agrees to promptly furnish additional information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) subject to
Section 6(c)(i), any Registration Statement required by this Agreement is filed
and declared effective but thereafter ceases to be effective or fails to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then, subject to Section
4(b), the Issuers hereby jointly and severally agree to pay to each Holder of
Transfer Restricted Securities affected thereby liquidated damages ("Liquidated
Damages"), with respect to the first 90-day period immediately following the
occurrence of the first Registration Default in an amount equal to a per annum
rate of 0.25% on the principal amount of Transfer Restricted Securities held by
such Holder. The amount of Liquidated Damages described in the preceding
sentence shall increase by an additional per annum rate of 0.25% with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of Liquidated Damages for all Registration Defaults of
1.00% per annum on the principal amount of Notes constituting Transfer
Restricted Securities; provided that the Issuers shall in no event be required
to pay Liquidated Damages for more than one Registration Default at any given
time. Notwithstanding
<PAGE>
anything to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the Liquidated Damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. All obligations of the Issuers set forth in the preceding paragraph that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Issuers shall (x) comply with all applicable provisions of Section
6(c) below, (y) use all commercially reasonable efforts to effect such exchange
and to permit the resale of Series B Notes by any Broker-Dealer that tendered in
the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own
account as a result of its market making activities or other trading activities
(other than Series A Notes acquired directly from the Company or any of its
Affiliates) being sold in accordance with the intended method or methods of
distribution thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Issuers hereby agree to seek a no-action
letter or other favorable decision from the Commission allowing the
Issuers to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Issuers hereby agree to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Issuers hereby agree to take all such other actions as may be
requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (A) participating
in telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Issuers (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is acquiring
the Series B Notes in its ordinary course
<PAGE>
of business. Each Holder using the Exchange Offer to participate in a
distribution of the Series B Notes hereby acknowledges and agrees that, if
the resales are of Series B Notes obtained by such Holder in exchange for
Notes acquired directly from the Company or an Affiliate thereof, it (1)
could not, under Commission policy as in effect on the date of this
Agreement, rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the
Commission (A) stating that the Issuers are registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co.,
Inc. (available June 5, 1991) as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that the Issuers have not entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Issuers'
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and (C)
any other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use all commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Company pursuant to Section
4(b) hereof), and pursuant thereto the Issuers will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Issuers shall:
(i) use all commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Issuers shall file promptly an
appropriate amendment to such Registration Statement curing such defect,
and, if Commission review is required, use all commercially reasonable
efforts to cause such amendment to be declared effective as soon as
practicable. Notwithstanding the foregoing, if the Board of Directors of
the
<PAGE>
Company determines in good faith that it is in the best interests of the
Issuers not to disclose the existence of facts surrounding any proposed or
pending material corporate transaction or other material development
involving the Issuers, the Issuers may allow the Shelf Registration to
fail to be effective or the Prospectus contained therein to be unusable as
a result of such nondisclosure for up to 60 days in any year during the
two-year period of effectiveness required by Section 4 hereof.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions of the
Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii) with respect to a Shelf Registration Statement, advise the
selling Holders promptly and, if requested by such Persons, confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D)
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Issuers shall use all commercially reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(v) furnish to the Initial Purchasers and with respect to a Shelf
Registration Statement, each selling Holder named in any Registration
Statement or Prospectus in connection with such sale, if any, before
filing with the Commission, copies of any Registration Statement or any
<PAGE>
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents incorporated
by reference after the initial filing of such Registration Statement),
which documents will be subject to the review and comment of such Holders
in connection with such sale, if any, for a period of at least five
Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holders of the Transfer
Restricted Securities covered by such Registration Statement in connection
with such sale, if any, shall reasonably object within five Business Days
after the receipt thereof. A selling Holder shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply
with the applicable requirements of the Act;
(vi) with respect to a Shelf Registration Statement, promptly prior
to the filing of any document that is to be incorporated by reference into
a Registration Statement or Prospectus, provide copies of such document to
the selling Holders in connection with such sale, if any, make the
Issuers' representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders may
reasonably request;
(vii) with respect to a Shelf Registration Statement, make available
at reasonable times for inspection by the selling Holders participating in
any disposition pursuant to such Registration Statement and any attorney
or accountant retained by such selling Holders, all financial and other
records, pertinent corporate documents of the Issuers and cause the
Issuers' officers, directors and employees to supply all information
reasonably requested by any such selling Holder, attorney or accountant in
connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(viii) with respect to a Shelf Registration Statement, if requested
by any selling Holders in connection with such sale, if any, promptly
include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as
such selling Holders may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities; and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(ix) with respect to a Shelf Registration Statement, furnish to each
selling Holder in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) with respect to a Shelf Registration Statement, deliver to each
selling Holder, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Issuers hereby consent
to the use (in accordance with law) of the Prospectus and any amendment or
supplement thereto by each of the selling Holders in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
<PAGE>
(xi) with respect to a Shelf Registration Statement, upon the
request of any selling Holder, enter into such agreements (including, if
the Issuers elect to conduct an underwritten offering, an underwriting
agreement on customary terms) and make such representations and warranties
and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by any Holder of Transfer
Restricted Securities in connection with any sale or resale pursuant to
any applicable Shelf Registration Statement. In such connection, the
Issuers shall:
(A) upon the reasonable request of any selling Holder, furnish
(or in the case of paragraph (2), upon the reasonable request of
Holders representing at least 50% of the aggregate principal amount
of Transfer Restricted Securities to be sold pursuant to the Shelf
Registration Statement, use all commercially reasonable efforts to
cause to be furnished) to each selling Holder, upon the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated such date, signed on behalf of
the Company and each Guarantor by (x) the President or any
Vice President and (y) a principal financial or accounting
officer of the Company and such Guarantor, confirming, as of
the date thereof, the matters, to the extent applicable, set
forth in paragraphs (a) and (b) of Section 6 of the Purchase
Agreement and such other similar matters as the selling
Holders may reasonably request; and
(2) a customary comfort letter or letters, dated the
date of effectiveness of the Shelf Registration Statement,
from the Company's independent accountants, in the customary
form and covering matters of the type customarily covered in
comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 6(f) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance
with clause (A) above and with any customary conditions contained in
any agreement entered into by the Issuers pursuant to this clause
(xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that none of the
Issuers shall be required to register or qualify as a foreign corporation
where such Issuer is not now so qualified or to take any action that would
subject such Issuer to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where such Issuer is not now so subject;
(xiii) issue, upon the request of any Holder of Series A Notes
covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to
the aggregate principal amount of Series A Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such Holder,
such Series B Notes to be registered in the name of such Holder or in the
name of the purchaser(s) of such Series B Notes;
<PAGE>
in return, the Series A Notes held by such Holder shall be surrendered to
the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and
such names as the selling Holders may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with The Depository Trust
Company;
(xvi) otherwise use all commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to their security holders with regard to any
applicable Registration Statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective date
of the Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use all commercially reasonable efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(i) or Section 6(c)(iii)(D) hereof (in each
case, a "Suspension Notice"), such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder
is advised in writing by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus (in each case, the
"Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees
that it will either (i) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the Company
with more recently dated Prospectuses or (ii) deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the Recommencement Date.
<PAGE>
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Issuers; (v) all application and filing fees in connection with listing the
Series B Notes on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Issuers (including the expenses
of any comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any Person retained by the Issuers.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel (not to exceed
$25,000 if such counsel is Latham & Watkins), who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless (i) each Holder and (ii) each Person, if any, who controls any Holder
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act (any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person") and (iii) the respective officers,
directors, partners, employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder") from and against any and
all losses, claims, damages and liabilities (including without limitation the
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto if
the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any of the Holders furnished in writing to the Company by such Holder expressly
for use therein.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Issuers, their directors, their
officers and each person who controls the Issuers within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Issuers to each of the Indemnified Holders, but
only with reference to
<PAGE>
information relating to such Indemnified Holder furnished to the Company by such
Indemnified Holder expressly for use in any Registration Statement or any
amendment or supplement thereto.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to Section 8(a)
or 8(b) hereof, such person (the "Indemnified Person") shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Indemnified Persons, and that all such reasonable fees and expenses shall be
reimbursed as they are incurred. Any such separate firm for the Indemnified
Holders shall be designated in writing by a majority of the Indemnified Holders
and any such separate firm for the Issuers, their directors, their officers and
such control persons shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in Section 8(a) or 8(b) is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers on the one
hand and the Indemnified Holder on the other hand from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Issuers on the one hand and the Indemnified Holder on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Issuers on the one hand and the
Indemnified Holder on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuers or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
<PAGE>
The Issuers and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Holders or the Issuers were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall a Holder or
its related Indemnified Holders be required to contribute any amount in excess
of the amount by which the total received by such Holder with respect to the
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds the sum of (A) the amount paid by such Holder for such Transfer
Restricted Securities plus (B) the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of the
Transfer Restricted Securities held by each Holder hereunder and not joint. The
Issuers' obligations to contribute pursuant to this Section 8 are joint and
several.
The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. RULE 144A AND OTHER INFORMATION
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Issuers are not subject to Section 13 or 15(d) of the Exchange Act, to make
available to the Initial Purchasers and, upon request of any Holder of Transfer
Restricted Securities, to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
The Issuers hereby agree with each of the Initial Purchasers, until the
Consummation of the Exchange Offer, for a period of three years from the Closing
Date, to furnish to the Initial Purchasers (i) copies of all reports or other
communications (financial or other) furnished to shareholders of the Company in
their capacity as such, (ii) copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange or
inter-dealer quotation system and (iii) such additional information concerning
the business and financial condition of the Issuers as the Initial Purchasers
may reasonably request.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Issuers acknowledge and agree that any failure by the
Issuers to comply with their obligations under Sections 3 and 4 hereof may
result in material irreparable injury to the Initial Purchasers or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Issuers' obligations under Sections 3 and 4
hereof. The Issuers further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
<PAGE>
(b) No Inconsistent Agreements. The Issuers will not, on or after the date
of this Agreement, enter into any agreement with respect to their securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Issuers' securities under any agreement
in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose securities are being tendered pursuant to the Exchange Offer,
and that does not affect directly or indirectly the rights of other Holders
whose securities are not being tendered pursuant to such Exchange Offer, may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuers, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Issuers:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Telecopier No.: (847) 482-4559
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telecopier No.: (312) 861-2200
Attention: William S. Kirsch, P.C.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if
<PAGE>
mailed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to the Initial
Purchasers in the form attached hereto as Exhibit A.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Transfer Restricted
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PACKAGING CORPORATION OF AMERICA
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Cheif Financial Officer,
Secretary and Treasurer
DAHLONEGA PACKAGING CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
DIXIE CONTAINER CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
PCA HYDRO, INC.
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
PCA TOMAHAWK CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
PCA VALDOSTA CORPORATION
BY: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Secretary
<PAGE>
J.P. MORGAN SECURITIES INC.
BT ALEX.BROWN INCORPORATED
BY: J.P. MORGAN SECURITIES INC.
BY: /s/ Kenneth A. Lang
------------------------------------
Name: Kenneth A. Lang
Title: Managing Director
<PAGE>
EXHIBIT 4.5
EXECUTION COPY
================================================================================
PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of April 12, 1999
by and among
PACKAGING CORPORATION OF AMERICA,
and
J. P. MORGAN SECURITIES INC.
and
BT ALEX.BROWN INCORPORATED
================================================================================
<PAGE>
This Preferred Stock Registration Rights Agreement (this "Agreement") is
made and entered into as of April 12, 1999, by and among Packaging Corporation
of America, a Delaware corporation (the "Company") and J. P. Morgan Securities
Inc. and BT Alex.Brown Incorporated (each an "Initial Purchaser" and,
collectively, the "Initial Purchasers"), each of whom has agreed to purchase the
Company's 12 3/8% Senior Exchangeable Preferred Stock due 2010 (including all
additional shares of Preferred Stock issued in lieu of payment of cash dividends
in accordance with the terms of the Certificate of Designations (as defined),
the "Preferred Stock") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 30,
1999 (the "Purchase Agreement"), by and among the Company, the guarantors listed
on the signature pages thereto and the Initial Purchasers. In order to induce
the Initial Purchasers to purchase the Preferred Stock, the Company has agreed
to provide the registration rights set forth in this Agreement. Pursuant to the
Certificate of Designations, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof (the "Certificate of Designations") relating to the
Preferred Stock and the New Preferred Stock (as defined in Section 1 herein) and
under the terms of the Purchase Agreement, all outstanding shares of Preferred
Stock may under certain conditions and at the Company's option be exchanged for
the Company's 12 3/8% Senior Subordinated Exchange Debentures due 2010
(including all additional shares of Exchange Debentures issued in lieu of
payment of cash interest in accordance with the terms of the Exchange Indenture
(as defined), the "Exchange Debentures").
The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 6 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Certificate of Designations, with respect to
the Preferred Stock, and in the indenture dated April 12, 1999 (the "Exchange
Indenture"), by and between the Company and United States Trust Company of
Texas, N.A., as trustee (the "Exchange Trustee"), relating to the Exchange
Debentures and the New Exchange Debentures (as defined in Section 1 herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York on which banks are authorized or ordered to close.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New
Preferred Stock or, if the Preferred Stock has been exchanged for Exchange
Debentures, the New Exchange Debentures, to be issued in the Exchange Offer, (b)
the maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of
<PAGE>
such Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) hereof and (c) the delivery by the Company to the
Registrar of (i) New Preferred Stock under the Certificate of Designations, to
be registered in the same aggregate liquidation preference as the aggregate
liquidation preference of the Preferred Stock tendered by the Holders thereof
pursuant to the Exchange Offer, or (ii) if the Preferred Stock has been
exchanged for Exchange Debentures, New Exchange Debentures under the Exchange
Indenture, to be registered in the same aggregate principal amount as the
aggregate principal amount of the Exchange Debentures tendered by the Holders
thereof pursuant to the Exchange Offer.
Debentures: The Exchange Debentures and the New Exchange Debentures.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Company of (a) an
aggregate liquidation preference of New Preferred Stock (which shall be
registered pursuant to the Exchange Offer Registration Statement) equal to the
outstanding aggregate liquidation preference of Preferred Stock that is tendered
by such Holders in connection with such exchange and issuance, or (b) if the
Preferred Stock has been exchanged for Exchange Debentures, a principal amount
of New Exchange Debentures (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Exchange Debentures that are tendered by such Holders in connection with such
exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holder: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indemnified Person: As defined in Section 8(c) hereof.
Indemnifying Person: As defined in Section 8(c) hereof.
Liquidated Damages: As defined in Section 5 hereof.
New Exchange Debentures: The Company's 12 3/8% Senior Subordinated
Exchange Debentures due 2010 to be issued pursuant to the Exchange Indenture (i)
in the Exchange Offer or (ii) as contemplated by Section 4 hereof and including,
without limitation, all additional New Exchange Debentures issued in lieu of
payment of cash interest in accordance with the terms of the Exchange Indenture.
New Preferred Stock: The Company's 12 3/8% Senior Exchangeable Preferred
Stock due 2010 to be issued pursuant to the Certificate of Designations (i) in
the Exchange Offer or (ii) as contemplated by Section 4 hereof and including,
without limitation, all additional shares of New Preferred Stock issued in lieu
of payment of dividends in accordance with the terms of the Certificate of
Designations.
2
<PAGE>
Person: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) an offering of New Preferred Stock or New Exchange Debentures pursuant to
an Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Rule 144: Rule 144 promulgated under the Act.
Shelf Registration Statement: As defined in Section 4 hereof.
Stock: The Preferred Stock and the New Preferred Stock.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Agent: United States Trust Company of New York.
Transfer Restricted Securities: Each share of Stock or Debenture, as the
case may be, until the earliest to occur of (a) the date on which such share of
Stock or such Debenture is exchanged in an Exchange Offer for a share of New
Preferred Stock or a New Debenture, as the case may be, that is entitled to be
resold to the public by the Holder thereof without complying with the prospectus
delivery requirements of the Act, (b) the date on which such share of Stock or
such Debenture, as the case may be, has been disposed of in accordance with a
Shelf Registration Statement, (c) the date on which such share of Stock or such
Debenture, as the case may be, is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by an Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein) or (d) the date on
which such share of Stock or such Debenture, as the case may be, is distributed
to the public pursuant to Rule 144 under the Act.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
3
<PAGE>
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law or policy of the Commission (after the procedures set forth in Section
6(a)(i) below have been complied with), the Company shall use all commercially
reasonable efforts to (i) cause the Exchange Offer Registration Statement to be
filed with the Commission on or prior to the date that is 60 days after the
Closing Date (such 60th day being the "Filing Deadline"), (ii) use all
commercially reasonable efforts to cause such Exchange Offer Registration
Statement to become effective on or prior to the date that is 150 days after the
Closing Date (such 150th day being the "Effectiveness Deadline"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the New Preferred Stock or the New Exchange Debentures, as the
case may be, to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, use all
commercially reasonable efforts to commence and Consummate the Exchange Offer.
The Exchange Offer shall be on the appropriate form permitting registration of
the New Preferred Stock or the New Exchange Debentures, as the case may be, to
be offered in exchange for the Preferred Stock or the Exchange Debentures,
respectively, that are Transfer Restricted Securities and to permit resales of
New Preferred Stock or New Exchange Debentures, as the case may be, by any
Broker-Dealer that tendered into the Exchange Offer for Preferred Stock or
Exchange Debentures, respectively, that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Preferred Stock or, if issued in exchange therefor, Exchange
Debentures acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company shall use all commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Preferred Stock or, if issued in exchange therefor, the New Exchange Debentures,
and the Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use all commercially reasonable efforts to cause the Exchange
Offer to be Consummated on or prior to the date that is 30 Business Days after
the Exchange Offer Registration Statement has become effective, or longer, if
required by the federal securities laws.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that (i) any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company),
may exchange such Transfer Restricted Securities pursuant to the Exchange Offer,
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any New Preferred
Stock or New Exchange Debentures, as the case may be, received by such
Broker-Dealer in the Exchange Offer and (ii) the Prospectus contained in the
Exchange Offer Registration Statement may be used to satisfy such prospectus
delivery requirement. Such "Plan of Distribution" section shall also contain all
other information with respect to such sales by such Broker-Dealers that the
Commission may require in order to permit such sales pursuant thereto, but such
"Plan of Distribution" shall not name any such Broker-Dealer or disclose the
amount of Transfer Restricted Securities held by any such Broker-Dealer, except
to the extent required by the Commission as a result of a change in policy,
rules or regulations after the date of this Agreement.
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To the extent necessary to ensure that the Exchange Offer Registration
Statement is available for sales of New Preferred Stock or New Exchange
Debentures, as the case may be, by Broker-Dealers, the Company agrees to use all
commercially reasonable efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Section 6(c) hereof and in conformity with the requirements of
this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of 180 days from the
date on which the Exchange Offer is Consummated, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto. The Company shall promptly provide
sufficient copies of the latest version of such Prospectus to such
Broker-Dealers promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law or policy of the Commission (after the Company has complied with
the procedures set forth in Section 6(a)(i) below) or (ii) any Holder of
Transfer Restricted Securities shall notify the Company in writing within 20
Business Days following the Consummation of the Exchange Offer that (A) upon
advice of counsel such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the New
Preferred Stock or New Exchange Debentures, as the case may be, acquired by it
in the Exchange Offer to the public without delivering a prospectus, and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Preferred Stock or, if issued in exchange therefor,
Exchange Debentures acquired directly from the Company or any of its Affiliates,
then the Company shall:
(x) use all commercially reasonable efforts to cause to be filed, on or
prior to 60 days after the earlier of (i) the date on which the Company
determines that the Exchange Offer Registration Statement cannot be filed as a
result of clause (a)(i) above and (ii) the date on which the Company receives
the notice specified in clause (a)(ii) above, (such earlier date, the "Filing
Deadline"), a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (the
"Shelf Registration Statement")), relating to all Transfer Restricted Securities
of Holders which shall have provided the information required pursuant to
Section 4(b) hereof, and
(y) use all commercially reasonable efforts to cause such Shelf
Registration Statement to become effective on or prior to 120 days after the
Filing Deadline (such 120th day the "Effectiveness Deadline").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law or policy of the
Commission (i.e., clause (a)(i) above), then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause (x)
above; provided that, in such event, the Company shall remain obligated to meet
the Effectiveness Deadline set forth in clause (y).
The Company shall use all commercially reasonable efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and to ensure that it conforms with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as extended pursuant to Section 6(c)(i)) following the Closing
Date, or such shorter period as will terminate
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when all Transfer Restricted Securities covered by such Shelf Registration
Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 10 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information (it being understood that Liquidated Damages shall cease to accrue
for the benefit of any Holder who fails to provide such information). Each
selling Holder agrees to promptly furnish additional information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) subject to
Section 6(c)(i) any Registration Statement required by this Agreement is filed
and declared effective but thereafter ceases to be effective or fails to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then, subject to Section
4(b), the Company hereby agrees to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages ("Liquidated Damages"), with
respect to the first 90-day period immediately following the occurrence of the
first Registration Default in an amount equal to a per annum rate of 0.25% on
(x) the liquidation preference (in the case of Preferred Stock) or (y) the
principal amount (in the case of Exchange Debentures), of Transfer Restricted
Securities held by such Holder. The amount of Liquidated Damages described in
the preceding sentence shall increase by an additional per annum rate of 0.25%
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of Liquidated Damages for all
Registration Defaults of 1.00% per annum on (x) the liquidation preference (in
the case of Preferred Stock) or (y) the principal amount (in the case of
Exchange Debentures), constituting Transfer Restricted Securities; provided that
the Company shall in no event be required to pay Liquidated Damages for more
than one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
Liquidated Damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of dividends in the Certificate
of Designations, on each Dividend Payment Date, as more fully set forth in the
Certificate of Designations and the Preferred Stock or, if the Preferred Stock
has been exchanged for Exchange Debentures, in the manner provided for the
payment of interest in the
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Exchange Indenture, on each Interest Payment Date, as more fully set forth in
the Exchange Indenture and the Exchange Debentures. All obligations of the
Company set forth in the preceding paragraph that are outstanding with respect
to any Transfer Restricted Security at the time such security ceases to be a
Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall (x) comply with all applicable provisions of Section
6(c) below, (y) use all commercially reasonable efforts to effect such exchange
and to permit the resale of New Preferred Stock or New Exchange Debentures, as
the case may be, by any Broker-Dealer that tendered in the Exchange Offer
Preferred Stock or Exchange Debentures, respectively, that such Broker-Dealer
acquired for its own account as a result of its market making activities or
other trading activities (other than Preferred Stock or, if issued in exchange
therefor, Exchange Debentures acquired directly from the Company or any of its
Affiliates) being sold in accordance with the intended method or methods of
distribution thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company hereby agrees to seek a no-action
letter or other favorable decision from the Commission allowing the
Company to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Company hereby agrees to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Company hereby agrees to take all such other actions as may be
requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (A) participating
in telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the New
Preferred Stock or the New Exchange Debentures, as the case may be, to be
issued in the Exchange Offer and (C) it is acquiring the New Preferred
Stock or the New Exchange Debentures, as the case may be, in its ordinary
course of business. Each Holder using the Exchange Offer to participate in
a distribution of the New Preferred Stock or the New Exchange Debentures,
as the case may be, hereby acknowledges and agrees that, if the resales
are of New Preferred Stock or New Exchange Debentures, as the case may be,
obtained by such Holder in exchange for Preferred Stock or Exchange
Debentures, respectively, acquired directly from the Company or an
Affiliate thereof, it (1) could not, under Commission policy as in effect
on the date of this Agreement, rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991)
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<PAGE>
and Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July
2, 1993, and similar no-action letters (including, if applicable, any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co.,
Inc. (available June 5, 1991) as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the New Preferred Stock or the
New Exchange Debentures, as the case may be, to be received in the
Exchange Offer and that, to the best of the Company's information and
belief, each Holder participating in the Exchange Offer is acquiring the
New Preferred Stock or the New Exchange Debentures, as the case may be, in
its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the New Preferred
Stock or the New Exchange Debentures, as the case may be, received in the
Exchange Offer and (C) any other undertaking or representation required by
the Commission as set forth in any no-action letter obtained pursuant to
clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use all commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Company pursuant to Section
4(b) hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company shall:
(i) use all commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement curing such defect,
and, if Commission review is required, use all commercially reasonable
efforts to cause such amendment to be declared effective as soon as
practicable. Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that it is in the best interests of
the Company not to disclose the existence of facts surrounding any
proposed or pending material corporate transaction or other material
development involving the Company, the Company may allow the Shelf
Registration to fail to be effective or the Prospectus contained therein
to be unusable as a result of such nondisclosure
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<PAGE>
for up to 60 days in any year during the two-year period of effectiveness
required by Section 4 hereof.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions of the
Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii) with respect to a Shelf Registration Statement, advise the
selling Holders promptly and, if requested by such Persons, confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D)
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Company shall use all commercially reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(v) furnish to the Initial Purchasers and with respect to a Shelf
Registration Statement, each selling Holder named in any Registration
Statement or Prospectus in connection with such sale, if any, before
filing with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents incorporated
by reference after the initial filing of such Registration Statement),
which documents will be subject to the review and comment of such Holders
in connection with such sale, if any, for a period of at least five
Business Days, and the
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Company will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which the
selling Holders of the Transfer Restricted Securities covered by such
Registration Statement in connection with such sale, if any, shall
reasonably object within five Business Days after the receipt thereof. A
selling Holder shall be deemed to have reasonably objected to such filing
if such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable requirements of the Act;
(vi) with respect to a Shelf Registration Statement, promptly prior
to the filing of any document that is to be incorporated by reference into
a Registration Statement or Prospectus, provide copies of such document to
the selling Holders in connection with such sale, if any, make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders may
reasonably request;
(vii) with respect to a Shelf Registration Statement, make available
at reasonable times for inspection by the selling Holders participating in
any disposition pursuant to such Registration Statement and any attorney
or accountant retained by such selling Holders, all financial and other
records, pertinent corporate documents of the Company and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such selling Holder, attorney or accountant in
connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(viii) with respect to a Shelf Registration Statement, if requested
by any selling Holders in connection with such sale, if any, promptly
include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as
such selling Holders may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities; and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(ix) with respect to a Shelf Registration Statement, furnish to each
selling Holder in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) with respect to a Shelf Registration Statement, deliver to each
selling Holder, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby
consents to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) with respect to a Shelf Registration Statement, upon the
request of any selling Holder, enter into such agreements (including, if
the Company elects to conduct an underwritten offering, an underwriting
agreement on customary terms) and make such representations and warranties
and take all such other actions in connection therewith in order to
expedite or facilitate
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the disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Securities in
connection with any sale or resale pursuant to any applicable Shelf
Registration Statement. In such connection, the Company shall:
(A) upon the reasonable request of any selling Holder, furnish
(or in the case of paragraph (2), upon the reasonable request of
Holders representing at least 50% of the aggregate liquidation
preference or principal amount, as applicable, of Transfer
Restricted Securities to be sold pursuant to the Shelf Registration
Statement, use all commercially reasonable efforts to cause to be
furnished) to each selling Holder, upon the effectiveness of the
Shelf Registration Statement:
(1) a certificate, dated such date, signed on behalf of
the Company by (x) the President or any Vice President and (y)
a principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters, to the extent
applicable, set forth in paragraphs (a) and (b) of Section 6
of the Purchase Agreement and such other similar matters as
the selling Holders may reasonably request; and
(2) a customary comfort letter or letters, dated the
date of effectiveness of the Shelf Registration Statement,
from the Company's independent accountants, in the customary
form and covering matters of the type customarily covered in
comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 6(f) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance
with clause (A) above and with any customary conditions contained in
any agreement entered into by the Company pursuant to this clause
(xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation
where the Company is not now so qualified or to take any action that would
subject the Company to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where the Company is not now so subject;
(xiii) issue, upon the request of any Holder of Preferred Stock or
Exchange Debentures covered by any Shelf Registration Statement
contemplated by this Agreement, New Preferred Stock or New Exchange
Debentures, respectively, having an aggregate liquidation preference or an
aggregate principal amount, as the case may be, equal to the aggregate
liquidation preference of Preferred Stock or aggregate principal amount of
Exchange Debentures surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder, such New Preferred Stock or New
Exchange Debentures to be registered in the name of such Holder or in the
name of the purchaser(s) of such New Preferred Stock or New Exchange
Debentures, as the case may be; in
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return, the Preferred Stock or Exchange Debentures, as the case may be,
held by such Holder shall be surrendered to the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and
such names as the selling Holders may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Transfer Agent under
the Certificate of Designations or, if the Exchange Debentures have been
issued in exchange for the Preferred Stock, the Exchange Trustee under the
Exchange Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with The Depository
Trust Company;
(xvi) otherwise use all commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xvii) cause the Exchange Indenture to be qualified under the TIA
not later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Exchange Trustee and the Holders to effect such changes to the
Exchange Indenture as may be required for such Exchange Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use all
commercially reasonable efforts to cause the Exchange Trustee to execute,
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Exchange Indenture to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(i) or Section 6(c)(iii)(D) hereof (in each
case, a "Suspension Notice"), such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder
is advised in writing by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus (in each case, the
"Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees
that it will either (i) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the Company
with more recently dated Prospectuses or (ii) deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in
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Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the New Preferred
Stock or New Exchange Debentures to be issued in the Exchange Offer and printing
of Prospectuses), messenger and delivery services and telephone; (iv) all fees
and disbursements of counsel for the Company; (v) all application and filing
fees in connection with listing the New Preferred Stock or New Exchange
Debentures on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any Person retained by
the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel (not to exceed
$25,000 if such counsel is Latham & Watkins), who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder and
(ii) each Person, if any, who controls any Holder within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder") from and against any and all losses, claims, damages and
liabilities (including without limitation the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Company by such Holder expressly for use therein.
13
<PAGE>
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers and each person who controls the Company within the meaning of Section
15 of the Act and Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each of the Indemnified Holders, but
only with reference to information relating to such Indemnified Holder furnished
to the Company by such Indemnified Holder expressly for use in any Registration
Statement or any amendment or supplement thereto.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant Section 8(a) or
8(b) hereof, such person (the "Indemnified Person") shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Indemnified Persons, and that all such reasonable fees and expenses shall be
reimbursed as they are incurred. Any such separate firm for the Indemnified
Holders shall be designated in writing by a majority of the Indemnified Holders
and any such separate firm for the Company, their directors, their officers and
such control persons shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in Section 8(a) or 8(b) is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Indemnified Holder on the other hand from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Indemnified Holder on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and the
Indemnified Holder on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied
14
<PAGE>
by the Company or by the Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Holders or the Company were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall a Holder or
its related Indemnified Holders be required to contribute any amount in excess
of the amount by which the total received by such Holder with respect to the
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds the sum of (A) the amount paid by such Holder for such Transfer
Restricted Securities plus (B) the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal amount of the
Transfer Restricted Securities held by each Holder hereunder and not joint.
The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. RULE 144A AND OTHER INFORMATION
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available to the Initial Purchasers and, upon request of any Holder of Transfer
Restricted Securities, to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
The Company hereby agrees with each of the Initial Purchasers, until the
Consummation of the Exchange Offer, for a period of three years from the Closing
Date, to furnish to the Initial Purchasers (i) copies of all reports or other
communications (financial or other) furnished to shareholders of the Company in
their capacity as such, (ii) copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange or
inter-dealer quotation system and (iii) such additional information concerning
the business and financial condition of the Company as the Initial Purchasers
may reasonably request.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Sections 3 and 4 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations
15
<PAGE>
under Sections 3 and 4 hereof. The Company further agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose securities are being tendered pursuant to the Exchange Offer,
and that does not affect directly or indirectly the rights of other Holders
whose securities are not being tendered pursuant to such Exchange Offer, may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder of Stock, at the address set forth on the records
of the Registrar under the Exchange Indenture, with a copy to such
Registrar and if to a Holder of Debentures, at the address set forth on
the records of the Registrar under the Certificate of Designations, with a
copy to such Registrar; and
(ii) if to the Company, to:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Telecopier No.: (847) 482-4559
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telecopier No.: (312) 861-2200
Attention: William S. Kirsch, P.C.
16
<PAGE>
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Transfer Agent at
the address specified in the Certificate of Designations, or, if Exchange
Debentures are issued in exchange for Preferred Stock, to the Exchange Trustee
at the address specified in the Exchange Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to the Initial
Purchasers in the form attached hereto as Exhibit A.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement, the Certificate of Designations or the Exchange Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
------------------------------------
Name: Richard B. West
Title: Chief Financial Officer,
Secretary and Treasurer
18
<PAGE>
J.P. MORGAN SECURITIES INC.
BT ALEX.BROWN INCORPORATED
BY: J.P. MORGAN SECURITIES INC.
BY: /s/ Kenneth A. Lang
----------------------------
Name: Kenneth A. Lang
Title: Managing Director
19
<PAGE>
EXHIBIT 4.6
(FACE OF NOTE)
- -------------------------------------------------------------------------------
CUSIP____________
9 5/8% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2009
No. _________ $ ___________
PACKAGING CORPORATION OF AMERICA
promises to pay to ___________________________________________________________
or registered assigns, the principal sum of ___________________________________
Dollars on April 1, 2009.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
PACKAGING CORPORATION OF AMERICA
BY:
----------------------------
Name:
Title:
BY:
----------------------------
Name:
Title:
This is one of the
[Global] Notes referred to in the
within-mentioned Indenture:
(SEAL)
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: Dated: April 12, 1999
----------------------------
Name:
Title:
- -------------------------------------------------------------------------------
1
<PAGE>
(BACK OF NOTE)
9 5/8% [Series A] [Series B] Senior Subordinated Notes due 2009
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE,
IF ANY REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED)
AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO
THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR, (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
2
<PAGE>
1. INTEREST. Packaging Corporation of America, a Delaware
corporation (the "COMPANY"), promises to pay interest on the principal amount
of this Note at 9 5/8% per annum from April 12, 1999 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company shall pay interest and
Liquidated Damages semi-annually on April 1 and October 1 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "INTEREST PAYMENT DATE"). Interest on the Notes shall accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; PROVIDED that if there is no existing
Default in the payment of interest, and if this Note is authenticated between
a record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; PROVIDED, further, that the first Interest Payment Date shall
be October 1, 1999. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1.0% per annum
in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the Holders at their addresses set forth in
the register of Holders; PROVIDED, that payment by wire transfer of
immediately available funds shall be required with respect to principal of
and interest, premium and Liquidated Damages on, all Global Notes and all
other Notes the Holders of which own at least $1 million in aggregate
principal amount of Notes and shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust
Company of New York, the Trustee under the Indenture, shall act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries may act
in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of April 12, 1999 ("INDENTURE") among the Company, the Guarantors
and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are referred to
the Indenture and the TIA for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.
The Notes are obligations of the Company limited under the Indenture to
$750.0 million in aggregate principal amount plus amounts, if any, issued to
pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2
hereof.
5. OPTIONAL REDEMPTION.
3
<PAGE>
(a) Except as provided below, the Notes will not be redeemable at
the Company's option prior to April 1, 2004. Thereafter, the Company may
redeem all or a part of the Notes upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on April 1 of the years indicated
below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2004.............................................................. 104.8125%
2005.............................................................. 103.2083%
2006.............................................................. 101.6042%
2007 and thereafter............................................... 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time or times on or
before April 1, 2002, the Company may on any one or more occasions redeem up
to 35% of the aggregate principal amount of Notes issued under this Indenture
at a redemption price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date, with the net cash proceeds of one or more offerings of common stock of
the Company or a capital contribution to the Company's common equity made
with the net cash proceeds of an offering of common stock of the Company's
direct or indirect parent or with Timberlands Net Proceeds (which amount
shall be reduced on a dollar for dollar basis by the amount of Timberlands
Net Proceeds used to make a Timberlands Repurchase in accordance with the
fourth paragraph of Section 4.10 of the Indenture); PROVIDED that:
(1) at least 65% of the aggregate principal amount of Notes issued
under the Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the
Company and its Subsidiaries); and
(2) such redemption shall occur within 60 days of the date of the
closing of such offering, the making of such capital
contribution or the consummation of a Timberlands Sale.
(c) At any time prior to April 1, 2004, the Company may also
redeem the Notes, in whole but not in part, upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days' prior written
notice, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued and unpaid interest and
Liquidated Damages, if any, thereon, to, the date of redemption.
4
<PAGE>
6. MANDATORY REDEMPTION.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of repurchase (the "CHANGE OF CONTROL PAYMENT"). Within 30 days
following any Change of Control, the Company shall mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales,
when the aggregate amount of Excess Proceeds exceeds $25.0 million, the
Company shall be required to make an offer to all Holders of Notes and all
holders of other Indebtedness that is PARI PASSU with the Notes containing
provisions similar to those set forth in the Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (an "ASSET SALE
OFFER") to purchase the maximum principal amount of Notes and such other PARI
PASSU Indebtedness that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase, in accordance with the procedures set forth in the
Indenture and such other Indebtedness. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount of Notes and such other PARI PASSU
Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other PARI PASSU Indebtedness to be purchased on a PRO RATA
basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero. Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Company prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes.
Notwithstanding the preceding paragraph and the first two
paragraphs of Section 4.10 of the Indenture , the Company shall be permitted
to apply up to $100.0 million of Timberlands Net Proceeds (which amount shall
be reduced on a dollar for dollar basis by the amount of Timberlands Net
Proceeds used to make a Timberlands Repurchase in accordance with Section
3.07(ii) of the Indenture) to repurchase or redeem, or pay a dividend on, or
a return of capital with respect to, any Equity Interests of the Company, or
repurchase or redeem Subordinated Exchange Debentures, if:
(i) the repurchase, redemption, dividend or return of capital is
consummated within 90 days of the final sale of such Timberlands Sale;
(ii) the Company's Debt to Cash Flow Ratio at the time of such
Timberlands Repurchase, after giving pro forma effect to (A) such repurchase,
redemption, dividend or return of capital, (B) the Timberlands Sale and the
application of the net proceeds therefrom and (C) any increase or decrease in
fiber, stumpage or similar costs as a result of the Timberlands Sale as if
the same had occurred at the beginning of the most recently ended four full
fiscal quarter period of the Company for which internal financial statements
are available, would have been no greater than 4.5 to 1; and
5
<PAGE>
(iii) in the case of a repurchase or redemption of all of the then
outstanding Preferred Stock or Subordinated Exchange Debentures, no
Timberlands Net Proceeds have previously been applied to redeem Notes or
repurchase or redeem, or pay a dividend on, or a return of capital with
respect to, any other Equity Interests of the Company.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before a redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest shall cease to accrue on
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may
be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected
for redemption, except for the unredeemed portion of any Note being redeemed
in part. Also, the Company need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest
Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes under the Indenture.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Notes or the Subsidiary Guarantees may be
amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes (and Additional
Notes, if any) voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Notes or the Subsidiary
Guarantees may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (and Additional Notes, if any)
voting as a single class. Without the consent of any Holder of a Note, the
Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented to cure any ambiguity, defect, error or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA,
to provide for the issuance of Additional Notes in accordance with the
limitations set forth in the Indenture or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Subsidiary Guarantee with
respect to the Notes.
12. DEFAULTS AND REMEDIES.
(a) Events of Default under the Indenture include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages
with respect to, the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment when due of the
principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company
or any of its Subsidiaries to comply with the provisions of Sections 4.10 or
5.01 of the Indenture; (iv) failure by the Company or any of its Subsidiaries
for 30 days
6
<PAGE>
after notice by the Trustee or by the Holders of at least 25% in principal
amount of the Notes to comply with any of its other agreements in the
Indenture; (v) default under any mortgage, indenture or instrument under
which there is issued and outstanding any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, if that default (a) is caused by a failure to pay principal at the
final stated maturity of such Indebtedness (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final nonappealable judgments
aggregating in excess of $25.0 million, which judgments are not paid,
discharged or stayed for a period of 90 days; (vii) except as permitted by
the Indenture, any Subsidiary Guarantee by a Guarantor that is a Significant
Subsidiary shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor that is a Significant Subsidiary, or any Person acting on behalf of
any Guarantor that is a Significant Subsidiary, shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries.
(b) If any Event of Default occurs and is continuing, the
Trustee, upon request of the Holders of at least 25% in principal amount of
the Notes then outstanding, or the Holders of at least 25% in principal
amount of the Notes then outstanding may declare principal of, premium and
accrued interest and Liquidated Damages, if any, on the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that such notice is an Acceleration Notice,
and the same (i) shall become immediately due and payable or (ii) if there
are any amounts outstanding under the Credit Agreement, shall become
immediately due and payable upon the first to occur of (x) an acceleration
under the Credit Agreement or (y) five Business Days after receipt by the
Company and the Representative under the Credit Agreement of such
Acceleration Notice but only if such Event of Default is then continuing.
Notwithstanding the foregoing, in the case of an Event of Default arising
from certain events of bankruptcy or insolvency with respect to the Company,
all outstanding Notes shall become due and payable without further action or
notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture, except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages on, or principal of, the Notes.
The Company shall deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company, upon becoming aware of any
Default or Event of Default, deliver to the Trustee a statement specifying
such Default or Event of Default.
13. SUBORDINATION. Each Holder by accepting a Note agrees that
the Indebtedness evidenced by the Note is subordinated and junior in right of
payment, to the extent and in the manner provided in Article 10 of the
Indenture, prior to the payment in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and (iv) of
the definition thereof) of all Senior Debt of the Company (whether
outstanding on the date of the Indenture or thereafter created, incurred,
7
<PAGE>
assumed or guaranteed), and that the subordination is for the benefit of, and
shall be enforceable directly by, the holders of Senior Debt of the Company.
14. SUBSIDIARY GUARANTEES. The payment of principal of, premium,
and interest and Liquidated Damages, if any, on the Notes are unconditionally
guaranteed, jointly and severally, on a senior subordinated basis (as
provided in the Indenture) by the Guarantors.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall
have any liability for any obligations of the Company or any Guarantor under
the Notes, the Subsidiary Guarantees, the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.
17. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entirety), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Initial Notes shall have all the rights
set forth in the Registration Rights Agreement or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes
shall have the rights set forth in one or more registration rights
agreements, if any, between the Company and the other parties thereto,
relating to rights given by the Company to the purchasers of any Additional
Notes.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
8
<PAGE>
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Telecopier No.: (847) 482-4559
Attention: Chief Financial Officer
9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date:
------------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
--------------------------
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:
------------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
--------------------------
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this Global
Note, have been made:
<TABLE>
<CAPTION>
Principal
Amount
Amount of Amount of of this Global Signature of
decrease increase Note authorized
in Principal in Principal following such officer of
Date of Amount of this Amount of this decrease Trustee or
Exchange Global Note Global Note (or increase) Note Custodian
- -------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
12
<PAGE>
FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of April 12, 1999 (the
"Indenture") among Packaging Corporation of America (the "Company"), the
Guarantors signatories thereto and United States Trust Company of New York,
as trustee (the "Trustee"), (a) the due and punctual payment of the principal
of, premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee
and the Indenture are expressly set forth in Article 11 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantee. Pursuant to Section 11.02 of the Indenture, the
Obligations of each Guarantor under the Subsidiary Guarantee are subordinated
and junior in right of payment to the prior payment of all Senior Debt (as
defined in the Indenture) of each Guarantor on the same basis as the
obligations on, or relating to the Notes, are subordinated and junior in
right of payment to the prior payment of all Senior Debt of the Company
pursuant to Article 10 of the Indenture. Each Holder of a Note, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
the Trustee, on behalf of such Holder, to make such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for
such purpose; PROVIDED, HOWEVER, that the Indebtedness evidenced by this
Subsidiary Guarantee shall cease to be so subordinated and subject in right
of payment upon any defeasance of this Note in accordance with the provisions
of the Indenture.
[Guarantor]
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.7
(FACE OF REGULATION S TEMPORARY GLOBAL NOTE)
- -------------------------------------------------------------------------------
CUSIP _________
9 5/8% [SERIES A] SENIOR SUBORDINATED NOTES DUE 2009
No. _____________ $ __________
PACKAGING CORPORATION OF AMERICA
promises to pay to _____________________________________________________
or registered assigns, the principal sum of __________________________________
Dollars on April 1, 2009.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
PACKAGING CORPORATION OF AMERICA
BY:
----------------------------
Name:
Title:
BY:
----------------------------
Name:
Title:
This is one of the
Global Notes referred to in the
within-mentioned Indenture:
(SEAL)
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By: Dated: April 12, 1999
----------------------------
Name:
Title:
- -------------------------------------------------------------------------------
1
<PAGE>
(BACK OF REGULATION S TEMPORARY GLOBAL NOTE)
9 5/8% Series A Senior Subordinated Notes due 2009
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE,
IF ANY REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED)
AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO
THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR, (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
2
<PAGE>
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Packaging Corporation of America, a Delaware
corporation (the "COMPANY"), promises to pay interest on the principal amount
of this Note at 9 5/8% per annum from April 12, 1999 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company shall pay interest and
Liquidated Damages semi-annually on April 1 and October 1 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "INTEREST PAYMENT DATE"). Interest on the Notes shall accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; PROVIDED that if there is no existing
Default in the payment of interest, and if this Note is authenticated between
a record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; PROVIDED, further, that the first Interest Payment Date shall
be October 1, 1999. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1.0% per annum
in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one
or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be
entitled to the same benefits as other Notes under the Indenture.
2. METHOD OF PAYMENT. The Company shall pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the Holders at their addresses set forth in
the register of Holders; PROVIDED, that payment by wire transfer of
immediately available funds shall be required with respect to principal of
and interest, premium and Liquidated Damages on, all Global Notes and all
other Notes the Holders of which own at least $1 million in aggregate
principal amount of Notes and shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust
Company of New York, the Trustee under the Indenture, shall act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries may act
in any such capacity.
3
<PAGE>
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of April 12, 1999 ("INDENTURE") among the Company, the Guarantors
and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are referred to
the Indenture and the TIA for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.
The Notes are obligations of the Company limited under the Indenture to
$750.0 million in aggregate principal amount plus amounts, if any, issued to
pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2
hereof.
5. OPTIONAL REDEMPTION.
(a) Except as provided below, the Notes will not be redeemable at
the Company's option prior to April 1, 2004. Thereafter, the Company may
redeem all or a part of the Notes upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on April 1 of the years indicated
below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2004.............................................................. 104.8125%
2005.............................................................. 103.2083%
2006.............................................................. 101.6042%
2007 and thereafter............................................... 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time or times on or
before April 1, 2002, the Company may on any one or more occasions redeem up
to 35% of the aggregate principal amount of Notes issued under this Indenture
at a redemption price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date, with the net cash proceeds of one or more offerings of common stock of
the Company or a capital contribution to the Company's common equity made
with the net cash proceeds of an offering of common stock of the Company's
direct or indirect parent or with Timberlands Net Proceeds (which amount
shall be reduced on a dollar for dollar basis by the amount of Timberlands
Net Proceeds used to make a Timberlands Repurchase in accordance with the
fourth paragraph of Section 4.10 of the Indenture); PROVIDED that:
(1) at least 65% of the aggregate principal amount of Notes issued
under the Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the
Company and its Subsidiaries); and
(2) such redemption shall occur within 60 days of the date of the
closing of such offering, the making of such capital
contribution or the consummation of a Timberlands Sale.
(c) At any time prior to April 1, 2004, the Company may also
redeem the Notes, in whole but not in part, upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days' prior written
notice, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued and unpaid interest and
Liquidated Damages, if any, thereon, to, the date of redemption.
4
<PAGE>
6. MANDATORY REDEMPTION.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of repurchase (the "CHANGE OF CONTROL PAYMENT"). Within 30 days
following any Change of Control, the Company shall mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales,
when the aggregate amount of Excess Proceeds exceeds $25.0 million, the
Company shall be required to make an offer to all Holders of Notes and all
holders of other Indebtedness that is PARI PASSU with the Notes containing
provisions similar to those set forth in the Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (and "ASSET SALE
OFFER") to purchase the maximum principal amount of Notes and such other PARI
PASSU Indebtedness that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase, in accordance with the procedures set forth in the
Indenture and such other Indebtedness. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount of Notes and such other PARI PASSU
Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other PARI PASSU Indebtedness to be purchased on a PRO RATA
basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero. Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Company prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes.
Notwithstanding the preceding paragraph and the first two
paragraphs of Section 4.10 of the Indenture , the Company shall be permitted
to apply up to $100.0 million of Timberlands Net Proceeds (which amount shall
be reduced on a dollar for dollar basis by the amount of Timberlands Net
Proceeds used to make a Timberlands Repurchase in accordance with Section
3.07(ii) of the Indenture) to repurchase or redeem, or pay a dividend on, or
a return of capital with respect to, any Equity Interests of the Company, or
repurchase or redeem Subordinated Exchange Debentures, if:
(i) the repurchase, redemption, dividend or return of capital is
consummated within 90 days of the final sale of such Timberlands Sale;
(ii) the Company's Debt to Cash Flow Ratio at the time of such
Timberlands Repurchase, after giving pro forma effect to (A) such repurchase,
redemption, dividend or return of capital, (B) the Timberlands Sale and the
application of the net proceeds therefrom and (C) any increase or decrease in
fiber, stumpage or similar costs as a result of the Timberlands Sale as if
the same had occurred at the beginning of the most recently ended four full
fiscal quarter period of the Company for which internal financial statements
are available, would have been no greater than 4.5 to 1; and
5
<PAGE>
(iii) in the case of a repurchase or redemption of all of the then
outstanding Preferred Stock or Subordinated Exchange Debentures, no
Timberlands Net Proceeds have previously been applied to redeem Notes or
repurchase or redeem, or pay a dividend on, or a return of capital with
respect to, any other Equity Interests of the Company.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before a redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest shall cease to accrue on
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may
be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected
for redemption, except for the unredeemed portion of any Note being redeemed
in part. Also, the Company need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest
Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Global Notes only (i) on or after the termination of
the 40-day restricted period (as defined in Regulation S) and (ii) upon
presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this
Regulation S Temporary Global Note for one or more Global Notes, the Trustee
shall cancel this Regulation S Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes under the Indenture.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Notes or the Subsidiary Guarantees may be
amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes (and Additional
Notes, if any) voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Notes or the Subsidiary
Guarantees may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (and Additional Notes, if any)
voting as a single class. Without the consent of any Holder of a Note, the
Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented to cure any ambiguity, defect, error or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA,
to provide for the issuance of Additional Notes in accordance with the
limitations set forth in the Indenture or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Subsidiary Guarantee with
respect to the Notes.
12. DEFAULTS AND REMEDIES.
6
<PAGE>
(a) Events of Default under the Indenture include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages
with respect to, the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment when due of the
principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company
or any of its Subsidiaries to comply with the provisions of Sections 4.10 or
5.01 of the Indenture; (iv) failure by the Company or any of its Subsidiaries
for 30 days after notice by the Trustee or by the Holders of at least 25% in
principal amount of the Notes to comply with any of its other agreements in
the Indenture; (v) default under any mortgage, indenture or instrument under
which there is issued and outstanding any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, if that default (a) is caused by a failure to pay principal at the
final stated maturity of such Indebtedness (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final nonappealable judgments
aggregating in excess of $25.0 million, which judgments are not paid,
discharged or stayed for a period of 90 days; (vii) except as permitted by
the Indenture, any Subsidiary Guarantee by a Guarantor that is a Significant
Subsidiary shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor that is a Significant Subsidiary, or any Person acting on behalf of
any Guarantor that is a Significant Subsidiary, shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries.
(b) If any Event of Default occurs and is continuing, the
Trustee, upon request of the Holders of at least 25% in principal amount of
the Notes then outstanding, or the Holders of at least 25% in principal
amount of the Notes then outstanding may declare principal of, premium and
accrued interest and Liquidated Damages, if any, on the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that such notice is an Acceleration Notice,
and the same (i) shall become immediately due and payable or (ii) if there
are any amounts outstanding under the Credit Agreement, shall become
immediately due and payable upon the first to occur of (x) an acceleration
under the Credit Agreement or (y) five Business Days after receipt by the
Company and the Representative under the Credit Agreement of such
Acceleration Notice but only if such Event of Default is then continuing.
Notwithstanding the foregoing, in the case of an Event of Default arising
from certain events of bankruptcy or insolvency with respect to the Company,
all outstanding Notes shall become due and payable without further action or
notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture, except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages on, or principal of, the Notes.
The Company shall deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company, upon becoming aware of any
Default or Event of Default, deliver to the Trustee a statement specifying
such Default or Event of Default.
7
<PAGE>
13. SUBORDINATION. Each Holder by accepting a Note agrees that
the Indebtedness evidenced by the Note is subordinated and junior in right of
payment, to the extent and in the manner provided in Article 10 of the
Indenture, prior to the payment in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and (iv) of
the definition thereof) of all Senior Debt of the Company (whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed), and that the subordination is for the benefit of, and
shall be enforceable directly by, the holders of Senior Debt of the Company.
14. SUBSIDIARY GUARANTEES. The payment of principal of, premium,
and interest and Liquidated Damages, if any, on the Notes are unconditionally
guaranteed, jointly and severally, on a senior subordinated basis (as
provided in the Indenture) by the Guarantors.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall
have any liability for any obligations of the Company or any Guarantor under
the Notes, the Subsidiary Guarantees, the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.
17. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entirety), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Initial Notes shall have all the rights
set forth in the Registration Rights Agreement or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes
shall have the rights set forth in one or more registration rights
agreements, if any, between the Company and the other parties thereto,
relating to rights given by the Company to the purchasers of any Additional
Notes.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
8
<PAGE>
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Telecopier No.: (847) 482-4559
Attention: Chief Financial Officer
9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date:
------------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
--------------------------
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
- -------------------------------------------------------------------------------
Date:
------------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
--------------------------
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
11
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Principal
Amount
Amount of Amount of of this Global Signature of
decrease increase Note authorized
in Principal in Principal following such officer of
Date of Amount of this Amount of this decrease Trustee or
Exchange Global Note Global Note (or increase) Note Custodian
- -------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
12
<PAGE>
FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of April 12, 1999 (the
"Indenture") among Packaging Corporation of America (the "Company"), the
Guarantors signatories thereto and United States Trust Company of New York,
as trustee (the "Trustee"), (a) the due and punctual payment of the principal
of, premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee
and the Indenture are expressly set forth in Article 11 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantee. Pursuant to Section 11.02 of the Indenture, the
Obligations of each Guarantor under the Subsidiary Guarantee are subordinated
and junior in right of payment to the prior payment of all Senior Debt (as
defined in the Indenture) of each Guarantor on the same basis as the
obligations on, or relating to the Notes, are subordinated and junior in
right of payment to the prior payment of all Senior Debt of the Company
pursuant to Article 10 of the Indenture. Each Holder of a Note, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
the Trustee, on behalf of such Holder, to make such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for
such purpose; PROVIDED, HOWEVER, that the Indebtedness evidenced by this
Subsidiary Guarantee shall cease to be so subordinated and subject in right
of payment upon any defeasance of this Note in accordance with the provisions
of the Indenture.
[Guarantor]
By:
-----------------------
Name:
Title:
<PAGE>
EXHIBIT 4.8
FORM OF
SENIOR EXCHANGEABLE PREFERRED STOCK
CERTIFICATE
[FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF
SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE CERTIFICATE OF DESIGNATIONS
PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S
THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF PACKAGING CORPORATION OF
AMERICA THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO
PACKAGING CORPORATION OF AMERICA OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE.
THIS GLOBAL CERTIFICATE IS HELD BY THE DEPOSITARY (AS DEFINED IN THIS
CERTIFICATE OF DESIGNATIONS GOVERNING THIS SECURITY) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
TRANSFER AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 15.3 OF THE CERTIFICATE OF DESIGNATIONS, (II) THIS GLOBAL CERTIFICATE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 15.3(a) OF THE
CERTIFICATE OF
1
<PAGE>
DESIGNATIONS, (III) THIS GLOBAL CERTIFICATE MAY BE DELIVERED TO THE TRANSFER
AGENT FOR CANCELLATION PURSUANT TO SECTION 15.8 OF THE CERTIFICATE OF
DESIGNATIONS AND (IV) THIS GLOBAL CERTIFICATE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
2
<PAGE>
Certificate Number: 1 CUSIP No.:
Number of Shares of Preferred Stock:
12 3/8% [Series B] Senior Exchangeable Preferred Stock due 2010
(par value $0.01 per share) (liquidation preference $100 per share)
of
Packaging Corporation of America
Packaging Corporation of America, a Delaware corporation (the
"COMPANY"), hereby certifies that __________________________________________
_______________________________________ (the "HOLDER") is the registered
owner of fully paid and non-assessable preferred securities of the Company
designated the 12 3/8% [Series B] Senior Exchangeable Preferred Stock due
2010 (par value $0.01 per share) (liquidation preference $100 per share) (the
"PREFERRED STOCK"). The shares of Preferred Stock are transferable on the
books and records of the Registrar, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Stock represented hereby are
issued and shall in all respects be subject to the provisions of the
Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions Thereof, dated April 9, 1999, as the same may be
amended from time to time (the "CERTIFICATE OF DESIGNATIONS"). The number of
shares of Preferred Stock evidenced by this certificate shall be increased,
from time to time, upon notice from the Company, for the payment of dividends
in accordance with Section 3 of the Certificate of Designations. Capitalized
terms used herein but not defined shall have the meaning given them in the
Certificate of Designations. The Company will provide a copy of the
Certificate of Designations to a Holder without charge upon written request
to the Company at its principal place of business.
Reference is hereby made to select provisions of the Preferred Stock set
forth on the reverse hereof, and to the Certificate of Designations, which
select provisions and the Certificate of Designations shall for all purposes
have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Certificate
of Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication hereon has
been properly executed, these shares of Preferred Stock shall not be entitled
to any benefit under the Certificate of Designations or be valid or
obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Company has executed this certificate this ___
day of_______, ____.
PACKAGING CORPORATION OF AMERICA
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
4
<PAGE>
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
This certificate evidences the number of shares of the Preferred Stock
set forth on the face hereof, which Preferred Stock is referred to in the
within-mentioned Certificate of Designations.
Dated:
---------------
UNITED STATES TRUST COMPANY OF NEW YORK,
as Transfer Agent,
By:
--------------------------------------
Authorized Signatory
5
<PAGE>
[REVERSE OF SECURITY]
Dividends on each share of Preferred Stock shall be payable at a rate
per annum set forth in the face hereof or as provided in the Certificate of
Designations.
The shares of Preferred Stock shall be redeemable as provided in the
Certificate of Designations. The shares of Preferred Stock shall be
exchangeable at the Company's option into the Company's 12 3/8% Subordinated
Exchange Debentures due 2010 in the manner and according to the terms set
forth in the Certificate of Designations.
As required under Delaware law, the Company shall furnish to any Holder
upon request and without charge, a full summary statement of the
designations, voting rights, preferences, limitations and special rights of
the shares of each class or series authorized to be issued by the Company so
far as they have been fixed and determined and the authority of the Board of
Directors to fix and determine the designations, voting rights, preferences,
limitations and special rights of the class and series of shares of the
Company.
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Preferred Stock evidenced hereby to: _________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints:
______________________________________________________________________________
______________________________________________________________________________
agent to transfer the shares of Preferred Stock evidenced hereby on the books
of the Transfer Agent and Registrar. The agent may substitute another to act
for him or her.
Date:
-------------------------
Signature:
--------------------------
(Sign exactly as your name appears on the other side of this Preferred
Stock Certificate)
Signature Guarantee:*
----------------------------------
- ---------------------
*(Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.)
7
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
$550,000,000
9 5/8% Senior Subordinated Notes due 2009
$100,000,000
12 3/8% Senior Exchangeable Preferred Stock due 2010
PACKAGING CORPORATION OF AMERICA
and the
GUARANTORS
Signatories Hereto
Purchase Agreement
March 30, 1999
J.P. Morgan Securities Inc.
BT Alex.Brown Incorporated
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
Packaging Corporation of America, a Delaware corporation (the "Company"),
proposes to issue and sell to the several Initial Purchasers listed in Schedule
I hereto (the "Initial Purchasers") $550.0 million in aggregate principal amount
of its 9 5/8% Senior Subordinated Notes due 2009 (the "Notes") and $100.0
million in aggregate liquidation preference of its 12 3/8% Senior Exchangeable
Preferred Stock due 2010 (the "Preferred Stock"). The Notes will be issued
pursuant to the provisions of an Indenture to be dated as of April 12, 1999 (the
"Indenture") among the Company, the guarantors listed on the signature pages
hereof (the "Guarantors") and United States Trust Company of New York, as
trustee (the "Trustee") and will be fully and unconditionally guaranteed (the
"Guarantees"), jointly and severally, on a senior subordinated basis by each of
the Guarantors. The Company and the Guarantors are collectively
<PAGE>
referred to herein as the "Issuers." The Preferred Stock will be issued pursuant
to a Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions Thereof (the "Certificate of Designations") to be
filed by the Company with the Delaware Secretary of State as an amendment to the
Company's certificate of incorporation. The transfer agent of the Preferred
Stock will be United States Trust Company of New York. The Preferred Stock may,
under certain circumstances, be exchanged for the Company's 123/8% Subordinated
Exchange Debentures due 2010 (the "Exchange Debentures" and, together with the
Notes, the Preferred Stock and the Guarantees, the "Securities"). The Exchange
Debentures, if issued, will be issued pursuant to an indenture (the "Exchange
Indenture") between the Company and United States Trust Company of Texas, N.A.,
as trustee (the "Exchange Trustee").
The offering of the Securities is being made in connection with (i) the
contribution (the "Contribution") by Tenneco Packaging Inc. ("TPI"), a wholly
owned subsidiary of Tenneco Inc. ("Tenneco"), of its containerboard and
corrugated packaging products business to the Company pursuant to that certain
Contribution Agreement, dated as of January 25, 1999, among TPI, PCA Holdings
and the Company (as the same may be amended or amended and restated, the
"Contribution Agreement") and (ii) that certain bank credit facility (the
"Senior Bank Financing") among TPI, as borrower until the Contribution is
consummated, the Company, as borrower after the Contribution is consummated,
various lenders, J.P. Morgan Securities Inc. and BT Alex.Brown Incorporated, as
co-lead arrangers, Bankers Trust Company, as syndication agent and Morgan Trust
Company of New York, as administrative agent. References in this Agreement to
the "Transactions" shall include the offerings of the Notes and the Preferred
Stock and the application of net proceeds therefrom, the Contribution, the
Senior Bank Financing and the other transactions defined in the Offering
Memorandum (as defined) as the "Transactions."
References in this Agreement to the "Company," to "subsidiaries" of the
Company, to "Issuers" or to "Guarantors" shall be deemed to be references to
such entities both before and immediately after giving effect to the
Transactions (it being understood that prior to the Transactions the Company has
no subsidiaries). Notwithstanding any of the provisions of this Agreement, all
of the representations, warranties, covenants and agreements with respect to the
Guarantors will become effective only as of the Closing Date.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum dated March 16, 1999 (the "Preliminary
Memorandum") and has prepared a final offering memorandum dated the date hereof
(the "Final Memorandum" and together with the Preliminary Memorandum, the
"Offering Memorandum"), for the information of the Initial Purchasers and for
delivery to prospective purchasers of the Securities. Any references herein to
the Preliminary Memorandum, the Final Memorandum or the Offering Memorandum
shall be deemed to include all amendments and supplements thereto.
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The Initial Purchasers and their direct and indirect transferees will be
entitled to the benefits of (i) a registration rights agreement with respect to
the Notes (the "Notes Registration Rights Agreement"), to be dated as of the
Closing Date (as defined) and to be substantially in the form attached hereto as
Exhibit A, pursuant to which the Issuers will file one or more registration
statements with the Securities and Exchange Commission (the "Commission")
registering with the Commission the Company's 9 5/8% Senior Subordinated Notes
due 2009 with terms substantially identical to those of the Notes (the "Exchange
Notes") to be offered in exchange for the Notes, including guarantees
substantially identical to those of the Guarantees (the "Exchange Guarantees"),
and (ii) a registration rights agreement with respect to the Preferred Stock and
the Exchange Debentures (the "Preferred Stock Registration Rights Agreement"),
to be dated as of the Closing Date and to be substantially in the form attached
hereto as Exhibit B, pursuant to which the Issuers will file one or more
registration statements with the Commission registering with the Commission (a)
the Company's 12 3/8% Senior Exchangeable Preferred Stock due 2010 with terms
substantially identical to those of the Preferred Stock (the "New Preferred
Stock") to be offered in exchange for the Preferred Stock and (b) the Company's
12 3/8% Subordinated Exchange Debentures due 2010 with terms substantially
identical to those of the Exchange Debentures (the "New Exchange Debentures").
The Issuers agree with the Initial Purchasers as follows:
1. Upon the consummation of the Contribution, the Company agrees to issue
and sell the Securities to the several Initial Purchasers as hereinafter
provided, and each Initial Purchaser, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees to purchase, severally and not jointly, the aggregate principal amount of
Notes from the Issuers and the aggregate liquidation preference of Preferred
Stock from the Company set forth opposite such Initial Purchaser's name in
Schedule I hereto at a price (the "Purchase Price") equal to 97.0% of the
principal amount of the Notes plus accrued interest, if any, from March 30, 1999
to the date of payment and delivery and 96.5% of the liquidation preference of
the Preferred Stock plus accrued dividends, if any, from March 30, 1999 to the
date of payment and delivery.
2. The Issuers understand that the Initial Purchasers intend (i) to offer
the Securities to "qualified institutional buyers" within the meaning of Rule
144A under the Securities Act, and to also offer the Notes pursuant to
Regulation S under the Securities Act ("Regulation S"), their respective
portions of the Securities as soon after this Agreement has become effective as
in the judgment of the Initial Purchasers is advisable and (ii) initially to
offer the Securities upon the terms set forth in this Agreement and in the
Offering Memorandum.
The Issuers confirm that they have authorized the Initial Purchasers,
subject to the restrictions set forth below, to distribute copies of the
Offering Memorandum in connection with the offering of the Securities. Each
Initial Purchaser hereby makes to the Issuers the following representations and
agreements:
(i) it is a "qualified institutional buyer" within the meaning of Rule
144A under the Securities Act; and
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(ii) (A) it will not solicit offers for, or offer to sell, the Securities
by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act ("Regulation D")) and (B) it will
solicit offers for the Securities only from, and will offer the Securities only
to, persons whom it reasonably believes to be, (x) in the case of offers of the
Securities inside the United States, "qualified institutional buyers" within the
meaning of Rule 144A under the Securities Act, and (y) in the case of offers of
the Notes outside the United States, persons other than U.S. persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)) that, in each case, in purchasing the
Securities are deemed to have represented and agreed as provided in the Offering
Memorandum.
With respect to offers and sales outside the United States, as described in
clause (ii)(B)(y) above, each Initial Purchaser hereby represents and agrees
with the Issuers that:
(i) it understands that no action has been or will be taken by the
Issuers that would permit a public offering of the Notes, or possession or
distribution of the Offering Memorandum or any other offering or publicity
material relating to the Notes, in any country or jurisdiction where
action for that purpose is required;
(ii) it will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Notes or has
in its possession or distributes the Offering Memorandum or any such other
material, in all cases at its own expense;
(iii) the Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold
only in offshore transactions;
(iv) the sale of the Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Securities Act;
(v) it understands that the Notes have not been and will not be
registered under the Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Securities Act or
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act;
(vi) it has not offered the Notes and will not offer and sell the
Notes (a) as part of its distribution at any time and (b) otherwise prior
to 40 days after the later of the commencement of the offering and the
Closing Date, in either case except in accordance with Rule 903 of
Regulation S (or Rule 144A, if available). Accordingly, neither such
Initial Purchaser, nor any of its affiliates, nor any persons acting on
its behalf has engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Notes, and such
Initial Purchaser, its affiliates and any such persons have complied and
will comply with the offering restrictions requirement of Regulation S;
and
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<PAGE>
(vii) it agrees that, at or prior to confirmation of sales of the
Notes, it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise prior to 40 days after
the closing of the offering, except in either case in accordance
with Regulation S (or Rule 144A, if available) under the Securities
Act. Terms used above have the meaning given to them by Regulation
S."
Terms used in this Section 2 and not otherwise defined in this Agreement have
the meanings given to them by Regulation S.
3. Payment for the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Initial Purchasers on April 12, 1999, or at such other time on the same or such
other date, not later than the tenth Business Day thereafter, as the Initial
Purchasers and the Company may agree upon in writing. The time and date of such
payment are referred to herein as the "Closing Date." As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City.
Payment for the Securities shall be made against delivery to the nominee
of The Depository Trust Company for the respective accounts of the several
Initial Purchasers of the Securities of one or more global notes (collectively,
the "Global Note") representing the Notes and one or more global certificates
(collectively, the "Global Certificate") representing the Preferred Stock. The
Global Note and the Global Certificate will be made available for inspection by
the Initial Purchasers at the office of Latham & Watkins, 885 Third Avenue, New
York, New York 10022, not later than 1:00 P.M., New York City time, on the
Business Day prior to the Closing Date.
4. The Issuers, jointly and severally, represent and warrant to each
Initial Purchaser that:
(a) the Preliminary Memorandum did not, as of its date, and the Final
Memorandum will not, in the form used by the Initial Purchasers to confirm sales
of the Securities and as of the Closing Date, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information relating to any Initial Purchaser furnished
to the Company in writing by such Initial Purchaser expressly for use therein;
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<PAGE>
(b) the financial statements, and the related notes thereto, included in
the Offering Memorandum present fairly the consolidated financial position of
the Company and its subsidiaries as of the dates indicated and the results of
their operations and the changes in their consolidated cash flows for the
periods specified; and said financial statements have been prepared in
conformity with generally accepted accounting principles and practices applied
on a consistent basis; and the pro forma financial information, and the related
notes thereto, included in the Offering Memorandum is based upon good faith
estimates and assumptions believed by the Issuers to be reasonable;
(c) since the respective dates as of which information is given in the
Preliminary Memorandum and the Final Memorandum, there has not been any material
adverse change, or any development which would reasonably be expected to result
in a material adverse change, in or affecting the business, senior management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Final Memorandum;
(d) the statistical and market-related data included in the Offering
Memorandum are based on or derived from sources which the Issuers believe to be
reliable and accurate in all material respects;
(e) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with power and
authority to own its properties and conduct its business as described in the
Final Memorandum, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business,
other than where the failure to be so qualified or in good standing would not,
singly or in the aggregate, reasonably be expected to have a material adverse
effect on the business, senior management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect");
(f) each of the Company's subsidiaries has been duly incorporated and is
validly existing as a corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering Memorandum, and
has been duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material Adverse Effect;
(g) upon the consummation of the Transactions, the authorized capital
stock of the Company will consist of (i) 1,000,000 shares of common stock, par
value $.01 per share, and (ii) 3,100,000 shares of preferred stock consisting of
(x) 3,000,000 shares of Preferred Stock and (y) 100 shares of junior preferred
stock, par value $.01 per share. The outstanding capital stock of the Company
has been duly authorized and is validly issued, fully-paid and non-assessable;
upon the consummation of the Transactions, all of the outstanding shares of
capital stock of each
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<PAGE>
subsidiary of the Company will be duly authorized, validly issued, fully-paid
and non-assessable, and (except for any directors' qualifying shares) will be
owned by the Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims other than liens, encumbrances,
security interests and claims created pursuant to the Senior Bank Financing;
(h) this Agreement has been duly authorized, executed and delivered by the
Issuers;
(i) the Notes have been duly authorized by the Company and, when issued
and delivered pursuant to this Agreement and authenticated by the Trustee in
accordance with the Indenture and payment therefor is received, will be duly
executed, authenticated, issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits provided by the
Indenture, enforceable against the Company in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles; the Indenture has been duly authorized by the Issuers
and, when executed and delivered by the Issuers (assuming due execution and
delivery by the Trustee), the Indenture will constitute a valid and binding
instrument of the Issuers, enforceable against the Issuers in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Notes and the Indenture will
conform in all material respects to the descriptions thereof in the Final
Memorandum;
(j) the Guarantees have been duly authorized by the Guarantors and, when
issued and delivered as contemplated by this Agreement and the Indenture, will
be duly executed, issued and delivered and will constitute valid and binding
obligations of the Guarantors entitled to the benefits provided by the
Indenture, enforceable against the Guarantors in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles; and the Guarantees will conform in all material
respects to the descriptions thereof in the Final Memorandum;
(k) the Exchange Notes have been duly authorized by the Company and, if
and when duly issued and authenticated in accordance with the terms of the
Indenture and, assuming due authentication of the Exchange Notes by the Trustee,
upon delivery in accordance with the exchange offer provided for in the Notes
Registration Rights Agreement, will be duly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Company
entitled to the benefits provided by the Indenture, enforceable against the
Company in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles; and
the Exchange Notes will conform in all material respects to the descriptions
thereof in the Final Memorandum;
(l) the Exchange Guarantees have been duly authorized by the Guarantors
and, if and when, issued and delivered in accordance with the terms of the Notes
Registration Rights Agreement and the Indenture, will be duly executed, issued
and delivered and will constitute
7
<PAGE>
valid and binding obligations of the Guarantors entitled to the benefits
provided by the Indenture, enforceable against the Guarantors in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Exchange Guarantees
will conform in all material respects to the descriptions thereof in the Final
Memorandum;
(m) the Notes Registration Rights Agreement has been duly authorized by
the Issuers and, when duly executed and delivered by the Issuers (assuming due
execution and delivery by the Initial Purchasers), will constitute a valid and
binding agreement of the Issuers, enforceable against the Issuers in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, except that the
enforceability of any indemnification or contribution provisions thereof may be
limited under applicable securities laws or the public policies underlying such
laws; and the Notes Registration Rights Agreement will conform in all material
respects to the descriptions thereof in the Final Memorandum;
(n) the shares of Preferred Stock have been duly authorized by the Company
and, when issued and delivered pursuant to this Agreement, will be validly
issued, fully-paid and non-assessable and entitled to the rights, privileges and
preferences set forth in the Certificate of Designations, and the issuance of
such shares will not be subject to any preemptive or similar rights; the
Certificate of Designations has been duly authorized by all necessary corporate
and all necessary stockholder action of the Company and, on the Closing Date,
will have been duly executed by the Company and filed with the Secretary of
State of Delaware; and the Preferred Stock and the Certificate of Designations
will conform in all material respects to the descriptions thereof in the Final
Memorandum;
(o) the unissued shares of New Preferred Stock have been duly authorized
by the Company and, if and when issued by the Company in accordance with the
exchange offer provided for in the Preferred Stock Registration Rights
Agreement, will be fully-paid and non-assessable and entitled to the rights,
privileges and preferences set forth in the Certificate of Designations, and the
issuance of such shares will not be subject to any preemptive or similar rights;
and the New Preferred Stock will conform in all material respects to the
descriptions thereof in the Final Memorandum;
(p) the Preferred Stock Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered by the Company
(assuming due execution and delivery by the Initial Purchasers), will constitute
a valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles, except that the
enforceability of any indemnification or contribution provisions thereof may be
limited under applicable securities laws or the public policies underlying such
laws; and the Preferred Stock Registration Rights Agreement will conform in all
material respects to the descriptions thereof in the Final Memorandum;
8
<PAGE>
(q) the Contribution Agreement has been duly authorized, executed and
delivered by the Company;
(r) the filing of the Certificate of Designations by the Company with the
Secretary of State of Delaware does not conflict with or result in a breach or
violation of any of the terms or provisions of, or (with the giving of notice or
the lapse of time or both) constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the properties or assets of the
Company or any of its subsidiaries is subject;
(s) neither the Company nor any of its subsidiaries is, or with the giving
of notice or lapse of time or both would be, in violation of or in default
under, its certificate of incorporation or by-laws or any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them or
any of their respective properties is bound, except, in the case of any
indenture, mortgage, deed of trust, loan agreement or other agreement, for
violations and defaults which would not have a Material Adverse Effect;
(t) the execution and delivery of this Agreement, the Certificate of
Designations, the Notes Registration Rights Agreement, the Preferred Stock
Registration Rights Agreement, the Exchange Indenture and the Indenture, the
performance by the Company and the Guarantors of their respective obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby will not (i) violate the certificate or articles of
incorporation (as applicable) or bylaws of the Company or any Guarantor, (ii)
constitute a violation by the Company or any Guarantor of any applicable
provision of any law, statute or regulation, except for violations which would
not have a Material Adverse Effect, or (iii) breach, or result in a default
under any agreement known to the Company's executive officers to be material to
the Company and its subsidiaries taken as a whole, except for conflicts or
breaches which would not have a Material Adverse Effect, and no consent,
approval, authorization, order, license, registration or qualification of or
with any such court or governmental agency or body is required for the issue and
sale of the Securities or the consummation by the Issuers of the other
Transactions, except such consents, approvals, authorizations, orders, licenses,
registrations or qualifications (i) as have been obtained, (ii) as may be
required under (A) state securities or blue sky laws in connection with the
purchase and distribution of the Securities by the Initial Purchasers, (B) the
Securities Act with respect to the registration of the Exchange Notes, the New
Preferred Stock and the New Exchange Debentures pursuant to the terms of the
Notes Registration Rights Agreement and the Preferred Stock Registration Rights
Agreement, as applicable or (C) the Trust Indenture Act of 1939, as amended (the
"TIA"), with respect to the registration of the Exchange Notes and the New
Exchange Debentures pursuant to the terms of the Notes Registration Rights
Agreement and the Preferred Stock Registration Rights Agreement, as applicable
or (iii) the failure to obtain of which would not have a Material Adverse
Effect;
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<PAGE>
(u) the fair saleable value of the assets of the Company exceeds the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of the Company as they
mature; the assets of the Company do not constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted; the
Company does not intend to, and does not believe that it will, incur debts
beyond its ability to pay such debts as they mature; upon the consummation of
the Transactions, the fair saleable value of the assets of the Company and its
subsidiaries taken as a whole, will exceed the amount that will be required to
be paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of the Company and its subsidiaries, taken as a whole,
as they mature; the assets of the Company and its subsidiaries do not, and upon
the consummation of the Transactions will not, constitute unreasonably small
capital for the Company and its subsidiaries to carry out their respective
businesses as now conducted or as proposed to be conducted including the capital
needs of the Company and its subsidiaries, and projected capital requirements of
the business conducted by the Company and each of its subsidiaries, and
projected capital requirements and capital availability thereof; and the Company
does not intend to, and does not intend to permit any of its subsidiaries to,
incur debts beyond their respective ability to pay such debts as they mature;
(v) other than as set forth or contemplated in the Final Memorandum, there
are no legal or governmental investigations of which the Company has received
notice or proceedings pending against or affecting the Company or any of its
subsidiaries or any of their respective properties which, if determined
adversely to the Company or any of its subsidiaries, would reasonably be
expected to have a Material Adverse Effect; and, to the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(w) there are no court and administrative orders, writs, judgments and
decrees specifically directed to the Company or any of its subsidiaries and
known to the Company's executive officers to be material to the Company and its
subsidiaries taken as a whole;
(x) the Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described or referred to in the Offering
Memorandum or such as would not have a Material Adverse Effect; and any real
property and buildings held under lease or cutting rights by the Company and its
subsidiaries are held by them under valid, existing and enforceable leases or
other agreements with such exceptions as would not have a Material Adverse
Effect;
(y) each of the Company and its subsidiaries owns, possesses or has
obtained all licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including foreign
regulatory agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case may be,
and to operate its properties and to carry on its business as conducted as of
the date hereof and as of the Closing Date in each case except as disclosed in
the Offering Memorandum and except where such
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failure to own, possess or obtain necessary licenses, permits, certificates,
consents, orders, approvals or authorizations or failure to make necessary
declarations and filings would not, singly or in the aggregate, have a Material
Adverse Effect, and neither the Company nor any such subsidiary has received any
actual notice of any proceeding relating to revocation or modification of any
such license, permit, certificate, consent, order, approval or other
authorization, except as described in the Offering Memorandum and except as
would not have a Material Adverse Effect; and each of the Company and its
subsidiaries is in compliance with all laws and regulations (other than
Environmental Laws (as defined herein)) relating to the conduct of its business
as conducted as of the date hereof and as of the Closing Date, except where the
failure to comply would not have a Material Adverse Effect;
(z) the Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except as disclosed in the Offering Memorandum or except
where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a Material Adverse Effect;
(aa) in the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities; on the basis of such
review, the Company has reasonably concluded that, except as disclosed in the
Offering Memorandum, such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect;
(bb) when the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning of
Rule 144A under the Securities Act) as any securities that are listed on a
national securities exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. automated inter-dealer quotation system;
(cc) neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D) of the Company has directly, or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security which is or will be integrated with the sale of the Securities in a
manner that would require the registration under the Securities Act of the
offering and sale of the Securities;
(dd) none of the Issuers, any affiliate of the any Issuer or any person
acting on its or their behalf (other than the Initial Purchasers, as to whom the
Issuers make no representation) has offered or sold any Securities by means of
any general solicitation or general advertising within the meaning of Rule
502(c) under the Act or, with respect to Notes sold outside the United States to
non-U.S. persons (as defined in Rule 902 under the Securities Act), by means of
any directed
11
<PAGE>
selling efforts within the meaning of Rule 902 under the Securities Act and the
Company, any affiliate of the Company and any person acting on its or their
behalf has complied with and will implement the "offering restrictions"
requirements of Regulation S;
(ee) the Notes offered and sold in reliance on Regulation S have been and
will be offered and sold only in offshore transactions;
(ff) prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Securities;
(gg) none of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any regulation promulgated
thereunder, including, without limitation, Regulations T, U, and X of the Board
of Governors of the Federal Reserve System;
(hh) Arthur Andersen LLP, who has certified certain historical financial
information of the containerboard and corrugated packaging products group of TPI
and its subsidiaries and Ernst & Young LLP, who has certified certain pro forma
financial information of the Company and its subsidiaries, are each, to the
Company's knowledge, independent public accountants as required by the
Securities Act;
(ii) no Issuer is, or after giving effect to the offering and sale of the
Securities and the application of the proceeds therefrom as described in the
Final Memorandum, will be an "investment company" or an entity "controlled" by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act"); and
(jj) assuming the accuracy of the representations of the Initial
Purchasers contained in Section 2 hereof, it is not necessary in connection with
the offer, sale and delivery of the Securities in the manner contemplated by
this Agreement and the Offering Memorandum to register the Securities under the
Securities Act or to qualify the Indenture or the Exchange Indenture under the
TIA.
5. The Issuers, jointly and severally, covenant and agree with each of the
several Initial Purchasers as follows:
(a) to deliver to the Initial Purchasers as many copies of the Preliminary
Memorandum and the Final Memorandum (including all amendments and supplements
thereto) as the Initial Purchasers or their counsel may reasonably request;
(b) before distributing any amendment or supplement to the Offering
Memorandum, to furnish to the Initial Purchasers a copy of the proposed
amendment or supplement for review
12
<PAGE>
and not to distribute any such proposed amendment or supplement to which the
Initial Purchasers or their counsel reasonably object;
(c) if, at any time prior to the expiration of nine months after the date
of the Final Memorandum, any event shall occur as a result of which it is
necessary in the reasonable opinion of counsel to the Initial Purchasers to
amend or supplement the Final Memorandum in order to make the statements
contained therein, in the light of the circumstances when such Final Memorandum
is delivered, not misleading, or if in the reasonable opinion of counsel to the
Initial Purchasers it is necessary to amend or supplement the Final Memorandum
to comply with law, forthwith to prepare and furnish, at the expense of the
Issuers, to the Initial Purchasers and to the dealers (whose names and addresses
the Initial Purchasers will furnish to the Issuers) to which Securities may have
been sold by the Initial Purchasers and to any other dealers upon request, such
reasonable number of amendments or supplements to the Final Memorandum as may be
necessary so that the statements in the Final Memorandum as so amended or
supplemented will not, in light of the circumstances when the Final Memorandum
is delivered, be misleading or so that the Final Memorandum will comply with
law;
(d) to cooperate with the Initial Purchasers and their counsel in
connection with the qualification of the Securities for offer and sale under the
state securities or blue sky laws of such jurisdictions as the Initial
Purchasers shall reasonably request and to comply with such laws and to continue
such qualification in effect so long as reasonably required for distribution of
the Securities; provided that none of the Issuers shall be required to qualify
as a foreign corporation or to file a general consent to service of process in
any jurisdiction;
(e) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of their obligations hereunder,
including all fees, costs and expenses (i) incurred by the Company incident to
the preparation, issuance, execution, authentication and delivery of the
Securities, including any expenses of the Trustee or the Exchange Trustee, (ii)
incurred by the Company incident to the preparation, printing and distribution
of the Preliminary Memorandum and the Final Memorandum (including in each case
all exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the Initial
Purchasers may reasonably designate (including reasonable fees of counsel for
the Initial Purchasers and their reasonable disbursements in connection
therewith), (iv) in connection with the approval for trading of the Securities
on any securities exchange or inter-dealer quotation system (as well as in
connection with the designation of the Securities as PORTAL securities, if so
requested), (v) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Indenture, the
Certificate of Designations, the Exchange Indenture and the Preliminary and
Final Blue Sky Memoranda and the furnishing to the Initial Purchasers and
dealers of copies of the Offering Memorandum, including mailing and shipping, as
herein provided and (vi) payable to rating agencies in connection with the
rating of the Securities; provided, however, that except as provided in this
Section and Sections 1, 7 and 10 hereof, the Initial Purchasers will pay all of
their own fees, costs and expenses incurred in their capacity as Initial
Purchasers, including the fees and expenses of their counsel, transfer
13
<PAGE>
taxes on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make; provided further, however, that the
Company agrees to pay or cause to be paid 50% of all fees, costs and expenses in
connection with "road show" presentations to potential investors in an amount
not to exceed $150,000;
(f) to use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified and under the circumstances
assumed in the Final Memorandum under the caption "Use of Proceeds";
(g) during the period beginning after the date hereof and continuing until
the date six months after the Closing Date, not to offer, sell, contract to
sell, or otherwise dispose of any securities of the Company that are
substantially similar to the Securities without the consent of the Initial
Purchasers;
(h) not to take any action prohibited by Regulation M under the Exchange
Act in connection with the distribution of the Securities contemplated hereby;
(i) that none of the Issuers, any of their affiliates (as defined in Rule
501(b) under the Securities Act) or any person acting on behalf of the Company
or such affiliate will solicit any offer to buy or offer or sell the Securities
by means of any form of general solicitation or general advertising, including:
(i) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio; and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising;
(j) that none of the Issuers, any of their affiliates (as defined in Rule
144(a)(1) under the Securities Act) or any person acting on behalf of any of the
foregoing will engage in any directed selling efforts with respect to the
Securities within the meaning of Regulation S;
(k) that none of the Company, any of its affiliates (as defined in
Regulation 501(b) of Regulation D) or any person acting on behalf of any of the
foregoing will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) which
will be integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities and the
Issuers will take all action that is appropriate or necessary to assure that
their offerings of other securities will not be integrated for purposes of the
Securities Act with the offerings contemplated hereby;
(l) to obtain the approval of DTC for "book-entry" transfer of the
Securities;
(m) if requested by the Initial Purchasers, to use their best efforts to
cause the Securities to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc.;
(n) in the case of the Company, to cause the Guarantors to become party to
this Agreement by executing the signature pages hereto immediately after the
consummation of the Contribution; and
14
<PAGE>
(o) to use their reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by them
prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Securities.
6. The several obligations of the Initial Purchasers hereunder to purchase
the Securities on the Closing Date are subject to the performance by the Issuers
of their obligations hereunder and to the following additional conditions:
(a) the representations and warranties of the Issuers contained herein are
true and correct on and as of the Closing Date as if made on and as of the
Closing Date and the Issuers shall have complied with all agreements and all
conditions on their part to be performed or satisfied hereunder at or prior to
the Closing Date;
(b) subsequent to the execution and delivery of this Agreement and prior
to the Closing Date, there shall not have occurred any downgrading, suspension
or withdrawal in the rating accorded any securities of the Company by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act and no such organization
shall have publicly announced that it has under surveillance or review, with
negative implications, its rating of any of the Company's securities;
(c) since the respective dates as of which information is given in the
Offering Memorandum there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any material adverse
change or any development which would reasonably be expected to result in a
material adverse change, in or affecting the business, senior management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Final Memorandum, the effect of which in the judgment of the
Initial Purchasers makes it impracticable or inadvisable to proceed with the
offerings or the delivery of the Securities on the Closing Date on the terms and
in the manner contemplated in the Offering Memorandum;
(d) the Initial Purchasers shall have received on and as of the Closing
Date a certificate of an officer of each of the Issuers, with specific knowledge
about such Issuers' financial matters, reasonably satisfactory to the Initial
Purchasers to the effect set forth in subsections (a) and (b) of this Section;
(e) Kirkland & Ellis, counsel for the Company, shall have furnished to the
Initial Purchasers its written opinion, substantially in the form of Exhibit A
attached hereto;
(f) Jenner & Block, counsel for TPI, shall have furnished to the Initial
Purchasers its written opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers, to the effect that:
(i) each of the Guarantors has been duly incorporated; and
(ii) each of the Guarantors has all necessary corporate power and
authority necessary to own its properties and to conduct its
containerboard and corrugated
15
<PAGE>
packaging products business in the manner and in the locations presently
owned and conducted;
(g) on the date of the Offering Memorandum and on the Closing Date, Arthur
Andersen LLP and Ernst & Young LLP shall have each furnished to the Initial
Purchasers letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to the Initial Purchasers, containing statements and
information of the type customarily included in accountants "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Offering Memorandum;
(h) the Initial Purchasers shall have received an opinion of Latham &
Watkins, counsel to the Initial Purchasers, dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers;
(i) the Initial Purchasers shall have received a certificate of the
Company, dated the Closing Date, in form and substance satisfactory to the
Initial Purchasers and counsel for the Initial Purchasers, as to the solvency of
the Company following the Transactions;
(j) the Securities shall have been approved for trading and duly listed on
PORTAL;
(k) the Initial Purchasers shall have received counterparts, conformed as
executed, of the Indenture which shall have been entered into by the Company,
the Guarantors and the Trustee;
(l) the Certificate of Designations shall have been duly filed and
recorded with the Secretary of State of Delaware;
(m) the Initial Purchasers shall have received counterparts, conformed as
executed, of the Exchange Indenture which shall have been entered into by the
Company and the Exchange Trustee;
(n) the Initial Purchasers shall have received counterparts, conformed as
executed, of the Notes Registration Rights Agreement which shall have been
entered into by the Company and the Initial Purchasers;
(o) the Initial Purchasers shall have received counterparts, conformed as
executed, of the Preferred Stock Registration Rights Agreement which shall have
been entered into by the Company and the Initial Purchasers;
(p) the Contribution and the Senior Bank Financing shall be consummated
prior to or simultaneously with the offering of the Securities on the terms
described in the Offering Memorandum and the Initial Purchasers shall have
received counterparts, conformed as executed, of the exhibits to the
Contribution Agreement described in the Offering Memorandum under the caption
"Certain Transactions," the documents governing the Senior Bank Financing and
such other documentation as they deem necessary to evidence the consummation
thereof;
16
<PAGE>
(q) in the case of the offering and sale of the Notes, the offering and
sale of the Preferred Stock shall have been consummated prior to or
simultaneously with the offering and sale of the Notes; and
(r) on or prior to the Closing Date the Company shall have furnished to
the Initial Purchasers such further certificates and documents as the Initial
Purchasers shall reasonably request.
7. The Issuers, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser, each affiliate of any Initial Purchaser which
assists such Initial Purchaser in the distribution of the Securities and each
person, if any, who controls any Initial Purchaser within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including without
limitation the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Offering
Memorandum (and any amendment or supplement thereto if the Company shall have
furnished any amendments or supplements thereto) or any preliminary offering
memorandum, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Initial Purchaser furnished to the Company in writing by such
Initial Purchaser expressly for use therein; provided, however, that the
indemnification contained in this paragraph shall not inure to the benefit of
the Initial Purchasers (or to the benefit of any person controlling the Initial
Purchasers) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Securities by the Initial Purchasers to any person
if a copy of the Final Memorandum (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) shall not
have been delivered or sent to such person and any untrue statement of a
material fact contained in, and any omission or alleged omission of a material
fact from, such Offering Memorandum was corrected in the Final Memorandum (as so
amended or supplemented) and it shall have been determined that any Initial
Purchaser and each person, if any, who controls such Initial Purchasers would
not have incurred such losses, claims, damages, liabilities and expenses had the
Final Memorandum been delivered or sent.
Each Initial Purchaser agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, their directors, their officers and each person who
controls the Issuers within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Issuers to each Initial Purchaser, but only with reference to
information relating to such Initial Purchaser furnished to the Company in
writing by such Initial Purchaser expressly for use in the Offering Memorandum
or any amendment or supplement thereto.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "Indemnified
17
<PAGE>
Person") shall promptly notify the person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such reasonable fees
and expenses shall be reimbursed as they are incurred. Any such separate firm
for the Initial Purchasers, each affiliate of any Initial Purchaser which
assists such Initial Purchaser in the distribution of the Securities and such
control persons of the Initial Purchasers shall be designated in writing by J.P.
Morgan Securities Inc. and any such separate firm for the Issuers, their
directors, their officers and such control persons of the Issuers shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Issuers on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Issuers on the one
hand and the Initial Purchasers on the other in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuers on the one hand and the Initial Purchasers on the other
shall be deemed to be in the same respective proportions as the net proceeds
from the offering (before deducting expenses) received
18
<PAGE>
by the Issuers and the total discounts and commissions received by the Initial
Purchasers, bear to the aggregate offering price of the Securities. The relative
fault of the Issuers on the one hand and the Initial Purchasers on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Issuers or by
the Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuers and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Initial Purchasers or the Issuers were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an Initial
Purchaser be required to contribute any amount in excess of the amount by which
the total price at which the Securities purchased by it were offered exceeds the
amount of any damages that such Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 7 are several in
proportion to the respective principal amount of the Securities set forth
opposite their names in Schedule I hereto, and not joint. The Issuers'
obligations to contribute pursuant to this Section 7 are joint and several.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Issuers and the Initial Purchasers set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Initial Purchaser or any person controlling any Initial
Purchaser or by or on behalf of the Issuers, their officers, their directors or
any other person controlling the Issuers and (iii) acceptance of and payment for
any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Initial Purchasers, by notice given
to the Issuers, if after the execution and delivery of this Agreement and prior
to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago
19
<PAGE>
Board of Trade, (ii) trading of any securities of or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by Federal, New York State or Illinois authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Initial Purchasers, is material and adverse and which, in the judgment of
the Initial Purchasers, makes it impracticable to market the Securities on the
terms and in the manner contemplated in the Offering Memorandum.
9. This Agreement shall become effective as to the Company and the Initial
Purchasers upon the execution and delivery hereof by the Company and the Initial
Purchasers. This Agreement shall become effective as to the Guarantors upon the
execution and delivery hereof by the Guarantors.
If, on the Closing Date, either of the Initial Purchasers shall fail or
refuse to purchase Securities which it has agreed to purchase hereunder on such
date, and the aggregate principal amount or liquidation preference of the
Securities which such defaulting Initial Purchaser agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount or
liquidation preference of the Securities to be purchased on such date, the other
Initial Purchaser shall be obligated to purchase the Securities which such
defaulting Initial Purchaser agreed but failed or refused to purchase on such
date; provided that in no event shall the principal amount or liquidation
preference of the Securities that any Initial Purchaser has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 9 by an amount in
excess of one-tenth of such principal amount or liquidation preference of the
Securities without the written consent of such Initial Purchaser. If, on the
Closing Date, any Initial Purchaser shall fail or refuse to purchase Securities
which it has agreed to purchase hereunder on such date, and the aggregate
principal amount or liquidation preference of Securities with respect to which
such default occurs is more than one-tenth of the aggregate principal amount or
liquidation preference of the Securities to be purchased on such date, and
arrangements satisfactory to the Initial Purchasers and the Company for the
purchase of such Securities are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company. In any such case either the
Initial Purchasers or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Offering Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
10. If this Agreement shall be terminated by the Initial Purchasers, or
either of them, because of any failure or refusal on the part of any of the
Issuers to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Issuers shall be unable to perform their
obligations under this Agreement or any condition of the Initial Purchasers'
obligations cannot be fulfilled, the Issuers agree to reimburse the Initial
Purchasers or such Initial Purchaser as has so terminated this Agreement with
respect to itself, for all out-of-pocket
20
<PAGE>
expenses (including the reasonable fees and expenses of its counsel) reasonably
incurred by such Initial Purchaser in connection with this Agreement or the
offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Issuers, the Initial Purchasers, each affiliate of any Initial Purchaser which
assists such Initial Purchaser in the distribution of the Securities, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such purchase.
12. Any action by the Initial Purchasers hereunder may be taken by the
Initial Purchasers jointly or by J.P. Morgan Securities Inc. alone on behalf of
the Initial Purchasers, and any such action taken by the Initial Purchasers
jointly or by J.P. Morgan Securities Inc. alone shall be binding upon the
Initial Purchasers. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Initial Purchasers shall
be given to the Initial Purchasers at J.P. Morgan Securities Inc., 60 Wall
Street, New York, New York 10260 (telefax: 212-648-5560), Attention: Syndicate
Department, with a copy to Latham & Watkins, 885 Third Avenue, New York, New
York 10022 (telefax: (212) 751-4864), Attention: Kirk A. Davenport. Notices to
the Issuers shall be given to them at Packaging Corporation of America, 1900
West Field Court, Lake Forest, Illinois 60045 (telefax: (847)-482-4738),
Attention: Paul T. Stecko, with a copy to Kirkland & Ellis, 200 East Randolph
Drive, Chicago, Illinois 60601 (telefax: (312) 861-2200), Attention: William S.
Kirsch, P.C.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
[signature page follows]
21
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return six counterparts hereof.
Very truly yours,
PACKAGING CORPORATION OF AMERICA
By: /s/ Thomas S. Souleles
---------------------------------
Name: Thomas S. Souleles
Title: Vice President and Secretary
DAHLONEGA PACKAGING CORPORATION
By: /s/ Richard B. West
---------------------------------
Name: Richard B. West
Title: Secretary
DIXIE CONTAINER CORPORATION
By: /s/ Richard B. West
---------------------------------
Name: Richard B. West
Title: Secretary
PCA HYDRO, INC.
By: /s/ Richard B. West
---------------------------------
Name: Richard B. West
Title: Secretary
PCA TOMAHAWK CORPORATION
By: /s/ Richard B. West
---------------------------------
Name: Richard B. West
Title: Secretary
22
<PAGE>
PCA VALDOSTA CORPORATION
By: /s/ Richard B. West
---------------------------------
Name: Richard B. West
Title: Secretary
23
<PAGE>
Accepted: March 30, 1999
J.P. MORGAN SECURITIES INC.
BT ALEX.BROWN INCORPORATED
By: J.P. Morgan Securities Inc.
By: /s/ Douglas A. Cruikshank
---------------------------------
Name: Douglas A. Cruikshank
Title: Vice President
24
<PAGE>
EXHIBIT A
April 12, 1999
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies/Gentlemen:
We are issuing this opinion letter in our capacity as special legal counsel
to Packaging Corporation of America (the "COMPANY") in response to the
requirement in Section 6(e) of the Purchase Agreement (the "PURCHASE AGREEMENT")
dated as of March 30, 1999 among the Company and J.P. Morgan Securities Inc. and
BT Alex. Brown Incorporated (collectively, the "INITIAL PURCHASERS"), and the
Guarantors (as defined below).
All capitalized terms used herein and not defined herein shall have the
meanings given to such terms in the Purchase Agreement. Together, the Purchase
Agreement, the Indenture, the Exchange Indenture, the Certificate of
Designations, the Notes Registration Rights Agreement, the Preferred Stock
Registration Rights Agreement, the Notes, the Preferred Stock and the Guarantees
are referred to herein as the "TRANSACTION AGREEMENTS." The following
subsidiaries of the Company are referred to herein as the "GUARANTORS":
Dahlonega Packaging Corporation ("DPC"), Dixie Container Corporation ("DCC"),
PCA Hydro, Inc. ("PCA HYDRO"), PCA Tomahawk Corporation ("PCA TOMAHAWK") and PCA
Valdosta Corporation ("PCA VALDOSTA").
In arriving at the opinions expressed herein, among other things, we have
examined the following:
(a) the Offering Memorandum of the Company, dated March 30, 1999,
covering the offering and sale of the Notes and Preferred Stock
(the "OFFERING MEMORANDUM");
(b) executed originals of the Purchase Agreement and the Certificate
of Designations;
(c) executed originals of the Indenture, the Exchange Indenture, the
Notes Registration Rights Agreement, the Preferred Stock
Registration Rights Agreement, the Notes, the Preferred Stock and
the Guarantees to be delivered on the date hereof; and
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 2
(d) copies of all certificates and other documents delivered in
connection with the sale of the Notes and Preferred Stock on the
date hereof and the consummation of the other transactions
contemplated by the Purchase Agreement.
Subject to the assumptions, qualifications, exclusions and other
limitations which are identified in this letter, we advise you that:
1. The Company was duly incorporated under the General Corporation Law of the
State of Delaware.
2. The Company is existing and in good standing under the General Corporation
Law of the State of Delaware. For purposes of the opinions in this
paragraph, we have relied exclusively upon the certificates issued by the
governmental authorities in the State of Delaware and such opinions are not
intended to provide any conclusion or assurance beyond that conveyed by
such certificates.
3. Each of DPC, PCA Hydro, PCA Tomahawk and PCA Valdosta is existing and in
good standing under the General Corporation Law of the State of Delaware.
DCC is existing and in good standing under the Virginia Stock Corporation
Act. For purposes of the opinions in this paragraph, we have relied
exclusively upon the certificates issued by the governmental authorities in
the required jurisdictions and such opinions are not intended to provide
any conclusion or assurance beyond that conveyed by such certificates.
4. As of the date hereof, the authorized capital stock of the Company consists
of (A) 1,000,000 shares of common stock, par value $0.01 per share, and
(B) 3,000,100 shares of preferred stock consisting of (x) 3,000,000 shares
of Senior Exchangeable Preferred Stock due 2010, par value $0.01 per share,
and (y) 100 shares of Junior Preferred Stock, par value $0.01 per share.
The outstanding capital stock of the Company has been duly authorized and
is validly issued, fully paid and non-assessable.
5. As of the date hereof, based solely upon our review of the stock ledgers of
each of the Guarantors, the Company is the record holder of all of the
outstanding shares of capital stock of each of the Guarantors.
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 3
6. Each of the Company and each Guarantor has the corporate power to enter
into and perform its obligations under the Transaction Agreements to which
it is a party, including, in the case of the Company, the corporate power
to issue, sell and deliver the Notes and the Preferred Stock and, in the
case of the Guarantors, to issue and deliver the Guarantees, in each case
as contemplated by the Purchase Agreement. The Company has the corporate
power to own and lease its properties and to conduct its business as
described in the Offering Memorandum.
7. The Board of Directors of each of the Company and the Guarantors has
adopted by requisite vote the resolutions necessary to authorize the
execution, delivery and performance of the Transaction Agreements to which
the Company or a Guarantor is a party, as the case may be. No approval by
the stockholders of the Company or the Guarantors is required.
8. Each of the Company and each Guarantor has duly executed and delivered the
Purchase Agreement, the Indenture, the Exchange Indenture, the Notes
Registration Rights Agreement and the Preferred Stock Registration Rights
Agreement.
9. Each of the Indenture, the Exchange Indenture, the Notes Registration
Rights Agreement and the Preferred Stock Registration Rights Agreement is a
valid and binding obligation of the Company and each Guarantor and
(assuming the due authorization, execution and delivery thereof by the
other parties thereto) is enforceable against each of the Company and each
Guarantor in accordance with its terms.
10. The Notes have been duly executed and delivered by the Company and, when
paid for by the Initial Purchasers in accordance with the terms of the
Purchase Agreement (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication by the Trustee in
accordance with the Indenture), will have been validly issued and will
constitute the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to the
benefits of the Indenture.
11. The Guarantees have been duly executed and delivered by each of the
Guarantors and, when the Notes are duly and validly authorized, executed,
issued and authenticated in accordance with the terms of the Indenture and
delivered against payment therefor in accordance with the terms of the
Purchase Agreement, will have been validly issued and will be the valid and
binding obligations of each of the Guarantors, enforceable against each of
the Guarantors in accordance with their terms and entitled to the benefits
of the Indenture.
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 4
12. The shares of Preferred Stock have been duly delivered by the Company and,
when paid for by the Initial Purchasers in accordance with the terms of the
Purchase Agreement, will have been validly issued, fully-paid and
non-assessable, and nothing has come to our attention that has caused us to
conclude that the issuance of such shares will be subject to any preemptive
or similar rights. The Company has duly authorized and executed the
Certificate of Designations and filed the Certificate of Designations with
the Secretary of State of Delaware.
13. The Board of Directors of each of the Company and the Guarantors has
adopted by requisite vote the resolutions necessary to authorize the
execution, delivery and performance of, in the case of the Company, the
Exchange Notes and the New Preferred Stock and, in the case of the
Guarantors, the Exchange Guarantees. No approval by the stockholders of
the Company or the Guarantors is required.
14. The information in the Offering Memorandum under the headings "Description
of Notes" and "Description of Preferred Stock," insofar as such statements
purport to summarize certain provisions of the Indenture, the Exchange
Indenture, the Certificate of Designations, the Notes, the Preferred Stock,
the Guarantees, the Notes Registration Rights Agreement or the Preferred
Stock Registration Rights Agreement, is correct in all material respects.
15. The execution and delivery of the Purchase Agreement, the Certificate of
Designations, the Notes Registration Rights Agreement, the Preferred Stock
Registration Rights Agreement, the Exchange Indenture and the Indenture,
the performance by the Company and the Guarantors of their respective
obligations thereunder and the consummation of the transactions
contemplated thereby do not and will not (i) violate the certificate or
articles of incorporation (as applicable) or bylaws of the Company or any
Guarantor, (ii) constitute a violation by the Company or any Guarantor of
any applicable provision of any law, statute or regulation (except that we
express no opinion in this paragraph with respect to compliance with any
disclosure requirement or any prohibition against fraud or
misrepresentation or as to whether performance of the indemnification or
contribution provisions in the Purchase Agreement, the Notes Registration
Rights Agreement or the Preferred Stock Registration Rights Agreement would
be permitted) or (iii) breach, or result in a default under, any existing
obligation of the Company or any Guarantor under any of its Other Specified
Agreements. The term "Other Specified Agreements" in the preceding
sentence means those agreements set forth on SCHEDULE A attached hereto.
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 5
16. To our actual knowledge, no consent, waiver, approval, authorization or
order of any court or governmental authority is required for the issuance
and sale by the Company of the Notes or the Preferred Stock, or the
issuance of the Guarantees by the Guarantors to the Initial Purchasers or
the consummation by the Company and the Guarantors of the other
transactions contemplated by the Transaction Agreements, except such as may
be required under the Act, the Exchange Act and the Trust Indenture Act of
1939, as amended (the "1939 ACT"), in connection with the Notes
Registration Rights Agreement and the Preferred Stock Registration Rights
Agreement.
17. To our actual knowledge, no legal or governmental investigations or
proceedings are pending or overtly threatened to which the Company or the
Guarantors is a party or to which the property or assets of the Company or
the Guarantors is subject (i) that would be required under Item 103 of
Regulation S-K under the Act to be disclosed in a registration statement or
a prospectus delivered at the time of confirmation of the sale of any
offering of securities registered under the Act (assuming for purposes
hereof that such Item would be applicable to the Offering Memorandum
(although it is not)) that are not described in the Offering Memorandum or
(ii) which seeks to restrain, enjoin or prevent the consummation of or
otherwise challenge the issuance or sale of the Notes or the Preferred
Stock to be sold to the Initial Purchasers or the consummation of the other
transactions contemplated by the Transaction Agreements.
18. No registration under the Act of the Notes or the Preferred Stock is
required in connection with the sale of the Notes or the Preferred Stock to
the Initial Purchasers in the manner contemplated by the Purchase Agreement
and the Offering Memorandum or in connection with the initial resale of the
Notes and the Preferred Stock by the Initial Purchasers in accordance with
Section 2 of the Purchase Agreement, and prior to the consummation of the
exchange offer provided for in the Notes Registration Rights Agreement or
the effectiveness of the Shelf Registration Statement (as defined in the
Notes Registration Rights Agreement), the Indenture is not required to be
qualified under the 1939 Act, in each case assuming (i) that the purchasers
who buy such Notes or Preferred Stock in the initial resale thereof are,
(x) in the case of offers of the Notes or Preferred Stock made within the
United States, "qualified institutional buyers" as defined in Rule 144A as
promulgated under the Act and (y) in the case of offers of the Notes made
outside the United States, to persons other than "U.S. persons" as defined
in Regulation S as promulgated under the Act, (ii) the accuracy and
completeness of the representations of the Company (other than those
contained in
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 6
Section 4(jj)) and of the Initial Purchasers contained in the Purchase
Agreement in connection with the sale of the Notes and the Preferred Stock
to the Initial Purchasers and the initial resale thereof and (iii) the due
performance by the Initial Purchasers of the agreements set forth in the
Purchase Agreement.
19. As of the date hereof, neither the Notes nor the Preferred Stock is of the
same class (within the meaning of Rule 144A under the Act) as securities of
the Company or any Guarantor that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted
in a United States automated inter-dealer quotation system.
20. Neither the Company nor any Guarantor is, or immediately after the sale of
the Notes and the Preferred Stock to the Initial Purchasers and application
of the net proceeds therefrom as described in the Offering Memorandum under
the caption "Use of Proceeds" will be, an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended.
------------
The purpose of our professional engagement was not to establish factual
matters, and preparation of the Offering Memorandum involved many determinations
of a wholly or partially nonlegal character. We make no representation that we
have independently verified the accuracy, completeness or fairness of the
Offering Memorandum or that the actions taken in connection with the preparation
of the Offering Memorandum (including the actions described in the next
paragraph) were sufficient to cause the Offering Memorandum to be accurate,
complete or fair. We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the Offering Memorandum except to
the extent otherwise explicitly indicated in numbered paragraph 14 above.
We can, however, confirm that we have participated in conferences with
representatives of the Company, representatives of the Initial Purchasers,
counsel for the Initial Purchasers and representatives of the independent
accountants for the Company during which disclosures in the Offering Memorandum
and related matters were discussed. In addition, we have reviewed certain
corporate records furnished to us by the Company.
Based upon our participation in the conferences and our document review
identified in the preceding paragraph, our understanding of applicable law and
the experience we have gained in our
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 7
practice thereunder and relying as to materiality to the extent we deem
appropriate upon the opinions and statements of officers of the Company, we can,
however, advise you that nothing has come to our attention that has caused us to
conclude that the Offering Memorandum (other than the financial statements and
related notes and the other financial, statistical and accounting data included
in the Offering Memorandum, as to which no advice is given) as of its date or as
of the date hereof, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
------------
Except for the activities described in the immediately preceding section of
this letter, we have not undertaken any search of court records or undertaken
any other investigation to determine the facts upon which the advice in this
letter is based.
We have assumed for purposes of this letter: each document we have
reviewed for purposes of this letter is accurate and complete, each such
document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine; that the Purchase Agreement and every other agreement we have examined
for purposes of this letter constitutes a valid and binding obligation of each
party to that document and that each such party has satisfied all legal
requirements that are applicable to such party to the extent necessary to
entitle such party to enforce such agreement (except that we make no such
assumptions with respect to the Company and the Guarantors); and that you have
acted in good faith and without notice of any fact which has caused you to reach
any conclusion contrary to any of the advice provided in this letter. We have
also made other assumptions which we believe to be appropriate for purposes of
this letter.
In preparing this letter we have relied without independent verification
upon: (i) information contained in certificates obtained from governmental
authorities; (ii) factual information represented to be true in the Purchase
Agreement and other documents specifically identified at the beginning of this
letter as having been read by us; (iii) factual information provided to us by
the Company and the Guarantors or their representatives; and (iv) factual
information we have obtained from such other sources as we have deemed
reasonable. We have assumed that there has been no relevant change or
development between the dates as of which the information cited in the preceding
sentence was given and the date of this letter and that the information upon
which we have relied is accurate and does not omit disclosures necessary to
prevent such information from being misleading.
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 8
We confirm that we do not have any actual knowledge which has caused us to
conclude that our reliance and assumptions cited in the two immediately
preceding paragraphs are unwarranted. The term "ACTUAL KNOWLEDGE" whenever it
is used in this letter with respect to our firm means conscious awareness at the
time this letter is delivered on the date it bears by the following Kirkland &
Ellis lawyers, who constitute all of the Kirkland & Ellis lawyers who have
devoted a significant amount of time to the negotiation or preparation of the
Transaction Agreements, the Offering Memorandum and the due diligence associated
therewith (herein called "OUR DESIGNATED TRANSACTION LAWYERS"): William S.
Kirsch, P.C., James S. Rowe, Wendy L. Chronister, Rebekah R. Eubanks and
Andrew M. Kaufman.
Each opinion (an "enforceability opinion") in this letter that any
particular contract is a valid and binding obligation or is enforceable in
accordance with its terms is subject to: (i) the effect of bankruptcy,
insolvency, fraudulent conveyance and other similar laws and judicially
developed doctrines in this area such as substantive consolidation and equitable
subordination; (ii) the enforceability of any indemnification or contribution
provision contained in such contract under applicable securities laws or the
public policies underlying such laws; and (iii) the effect of general principles
of equity. "General principles of equity" include but are not limited to:
principles limiting the availability of specific performance and injunctive
relief; principles which limit the availability of a remedy under certain
circumstances where another remedy has been elected; principles requiring
reasonableness, good faith and fair dealing in the performance and enforcement
of an agreement by the party seeking enforcement; principles which may permit a
party to cure a material failure to perform its obligations under certain
circumstances; and principles affording equitable defenses such as waiver,
laches and estoppel. In addition, we express no opinion with respect to the
enforceability of any provision in any of the Transaction Agreements which
purports to waive the benefit of usury laws. It is possible that terms in a
particular contract covered by our enforceability opinion may not prove
enforceable for reasons other than those explicitly cited in this letter should
an actual enforcement action be brought, but (subject to all the exceptions,
qualifications, exclusions and other limitations contained in this letter) such
unenforceability would not in our opinion prevent the party entitled to enforce
that contract from realizing the principal benefits purported to be provided to
that party by the terms in that contract which are covered by our enforceability
opinion.
The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances particular to the
case and would also depend on how the court involved chose to exercise the wide
discretionary authority generally available to it. This letter is not intended
to guarantee the outcome of any legal dispute which may arise in the future.
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 9
Our advice on every legal issue addressed in this letter is based
exclusively on the internal laws of New York and Illinois and the federal law of
the United States except that certain of the opinions in paragraphs 1 through 8,
10 through 13, 15 and 18 are based on the Delaware General Corporation Law (in
the case of the Company, DPC, PCA Hydro, PCA Tomahawk and PCA Valdosta) and on
the Virginia Stock Corporation Act (in the case of DCC). With respect to any
opinion or other advice based on the Virginia Stock Corporation Act, we note
that we do not practice in Virginia, and our opinions and advice based on the
Virginia Stock Corporation Act are limited to the statutory provisions set forth
in Michie's Code of Virginia 1950 Annotated (1993 Replacement Volume, 1998
Cumulative Supplement) without regard to regulations promulgated thereunder or
any judicial interpretations thereof.
None of the opinions or other advice contained in this letter considers or
covers: (i) any state securities (or "blue sky") laws or regulations; (ii) any
financial statements or supporting schedules (or any notes to any such
statements or schedules) or other financial or statistical information set forth
in (or omitted from) the Offering Memorandum; or (iii) any rules and regulations
of the National Association of Securities Dealers, Inc. relating to the
compensation of underwriters. This letter does not cover any other laws,
statutes, governmental rules or regulations or decisions which in our experience
are not generally applicable to transactions of the kind covered by the Purchase
Agreement or covered by opinions typically delivered in connection with
transactions of the kind covered by the Purchase Agreement.
This letter speaks as of the time of its delivery on the date it bears. We
do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which our Designated Transaction Lawyers did
not have actual knowledge at the time, by reason of any change subsequent to
that time in any law, other governmental requirement or interpretation thereof
covered by any of our opinions or advice, or for any other reason.
<PAGE>
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
April 12, 1999
Page 10
This letter may be relied upon by the Initial Purchasers only for the
purpose served by the provision in the Purchase Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. Without
our written consent: (i) no person other than the Initial Purchasers may rely
on this letter for any purpose; (ii) this letter may not be cited or quoted in
any financial statement, prospectus, private placement memorandum or other
similar document; (iii) this letter may not be cited or quoted in any other
document or communication which might encourage reliance upon this letter by any
person or for any purposes excluded by the restrictions in this paragraph; and
(iv) copies of this letter may not be furnished to anyone for purposes of
encouraging such reliance; except that the trustee under the Indenture, United
States Trust Company of New York, and the trustee under the Exchange Indenture,
United States Trust Company of Texas, N.A., may rely upon paragraphs 7 through
11 of this letter to the same extent as if each were an addressee hereof.
Sincerely,
Kirkland & Ellis
<PAGE>
SCHEDULE A
1. Contribution Agreement
2. Senior Bank Financing
<PAGE>
EXHIBIT 10.2
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CREDIT AGREEMENT
AMONG
TENNECO PACKAGING, INC.,
VARIOUS LENDERS,
J.P. MORGAN SECURITIES INC.
AND
BT ALEX. BROWN INCORPORATED,
AS CO-LEAD ARRANGERS,
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT
AND
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
AS ADMINISTRATIVE AGENT
----------------------------------
DATED AS OF APRIL 12, 1999
----------------------------------
$1,460,000,000
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
GOLDMAN SACHS CREDIT PARTNERS L.P.
AND
THE CHASE MANHATTAN BANK,
AS CO-DOCUMENTATION AGENTS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . . . . .1
1.01 The Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.02 Minimum Amount of Each Borrowing; Limitation on Number of
Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.03 Notice of Borrowing. . . . . . . . . . . . . . . . . . . . . . . . .5
1.04 Disbursement of Funds. . . . . . . . . . . . . . . . . . . . . . . .6
1.05 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.06 Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.07 Pro Rata Borrowings. . . . . . . . . . . . . . . . . . . . . . . . 10
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.10 Increased Costs, Illegality, etc.. . . . . . . . . . . . . . . . . 12
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . 15
1.13 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.01 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 17
2.02 Letter of Credit Requests, etc.. . . . . . . . . . . . . . . . . . 18
2.03 Letter of Credit Participations. . . . . . . . . . . . . . . . . . 19
2.04 Agreement to Repay Letter of Credit Drawings . . . . . . . . . . . 21
2.05 Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3. Commitment Commission; Fees; Reductions of Commitment. . . . . . . . . 23
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.02 Voluntary Termination or Reduction of Unutilized Revolving
Loan Commitments. . . . . . . . . . . . . . . . . . . . . . . . 24
3.03 Mandatory Reduction of Commitments . . . . . . . . . . . . . . . . 25
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . . . . 26
4.01 Voluntary Prepayments. . . . . . . . . . . . . . . . . . . . . . . 26
4.02 Mandatory Repayments and Commitment Reductions . . . . . . . . . . 27
4.03 Method and Place of Payment. . . . . . . . . . . . . . . . . . . . 37
4.04 Net Payments; Taxes. . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5. Conditions Precedent to Loans. . . . . . . . . . . . . . . . . . . . . 40
5.01 Execution of Agreement; Notes. . . . . . . . . . . . . . . . . . . 40
5.02 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.03 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . . 40
5.04 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . . . 41
5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Debt Agreements; Tax Sharing
Agreements; Employment Agreements; Collective Bargaining
Agreements and Material Contracts. . . . . . . . . . . . . . . . 41
5.06 Capitalization; Contribution; etc. . . . . . . . . . . . . . . . . 43
5.07 Refinancing; Existing Indebtedness . . . . . . . . . . . . . . . . 43
5.08 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.09 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.10 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . 45
5.11 Mortgages; Title Insurance; Surveys; etc.. . . . . . . . . . . . . 46
5.12 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.13 Material Adverse Change, etc.. . . . . . . . . . . . . . . . . . . 47
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.15 Solvency Certificate; Insurance. . . . . . . . . . . . . . . . . . 47
5.16 Pro Forma Balance Sheet; Financial Statements; Projections . . . . 48
5.17 Market Disruption, etc.. . . . . . . . . . . . . . . . . . . . . . 48
5.18 PCA Acknowledgement and Agreement . . . . . . . . . . . . . . . . 48
5.19 Bank Credit Agreement Assignment and Assumption Agreement. . . . . 48
SECTION 6. Conditions Precedent to All Credit Events. . . . . . . . . . . . . . . 48
6.01 No Default; Representations and Warranties . . . . . . . . . . . . 48
6.02 Notice of Borrowing; Letter of Credit Request. . . . . . . . . . . 49
SECTION 7A. Representations, Warranties and Agreements. . . . . . . . . . . . . . 49
7A.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 49
7A.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 49
7A.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7A.04 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 50
7A.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7A.06 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 50
7A.07 TPI Security Agreement. . . . . . . . . . . . . . . . . . . . . . 51
7A.08 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 51
7A.09 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 51
7A.10 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7A.11 Conditions to the Contribution. . . . . . . . . . . . . . . . . . 51
SECTION 7B. Representations, Warranties and Agreements. . . . . . . . . . . . . . 51
7B.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 52
7B.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 52
7B.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7B.04 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 52
7B.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc . . . . . . . . . . . . . . . . . 53
</TABLE>
(ii)
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7B.06 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7B.07 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 54
7B.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 55
7B.09 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 55
7B.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 55
7B.11 The Security Documents. . . . . . . . . . . . . . . . . . . . . . 57
7B.12 Representations and Warranties in Other Documents . . . . . . . . 58
7B.13 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7B.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 58
7B.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7B.16 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 59
7B.17 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 59
7B.18 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 59
7B.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 60
7B.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 60
7B.21 Patents, Licenses, Franchises and Formulas. . . . . . . . . . . . 61
7B.22 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7B.23 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7B.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7B.25 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . 62
7B.26 Special Purpose Corporation . . . . . . . . . . . . . . . . . . . 62
7B.27 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 62
8.01 Information Covenants. . . . . . . . . . . . . . . . . . . . . . . 63
8.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . . 66
8.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . 66
8.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . . 67
8.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . 67
8.06 Compliance with Environmental Laws . . . . . . . . . . . . . . . . 67
8.07 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . . 69
8.09 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.10 Ownership of Subsidiaries. . . . . . . . . . . . . . . . . . . . . 70
8.11 Additional Security; Further Assurances; Surveys . . . . . . . . . 70
8.12 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . 72
8.13 Permitted Acquisitions . . . . . . . . . . . . . . . . . . . . . . 72
8.14 Foreign Subsidiaries Security. . . . . . . . . . . . . . . . . . . 74
8.15 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . 75
8.16 Permitted Receivables Facility Transaction . . . . . . . . . . . . 75
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.01 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.. . . . . . 79
</TABLE>
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9.03 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
9.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.05 Advances, Investments and Loans. . . . . . . . . . . . . . . . . . 86
9.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 89
9.07 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . 90
9.08 Consolidated Interest Coverage Ratio . . . . . . . . . . . . . . . 91
9.09 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 92
9.10 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . . 93
9.11 Limitation on Modifications of Indebtedness; Modifications
of Certificate of Incorporation, By-Laws and Certain Other
Agreements; etc. . . . . . . . . . . . . . . . . . . . . . . . . 94
9.12 Limitation on Certain Restrictions on Subsidiaries . . . . . . . . 95
9.13 Limitation on Issuance of Capital Stock. . . . . . . . . . . . . . 96
9.14 Limitation on Creation of Subsidiaries and Joint Ventures. . . . . 96
9.15 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
9.16 Designated Senior Debt . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 97
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 97
10.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 98
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
10.07 Security Documents. . . . . . . . . . . . . . . . . . . . . . . . 99
10.08 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . 99
10.11 Permitted Receivables Facility. . . . . . . . . . . . . . . . . . 99
SECTION 11. Definitions and Accounting Terms. . . . . . . . . . . . . . . . . . .100
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . .100
SECTION 12. The Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . .141
12.02 Nature of Duties. . . . . . . . . . . . . . . . . . . . . . . . .141
12.03 Lack of Reliance on the Administrative Agent and the
Syndication Agent . . . . . . . . . . . . . . . . . . . . . . .142
12.04 Certain Rights of the Administrative Agent. . . . . . . . . . . .142
12.05 Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .143
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .143
12.07 Agents in their Individual Capacity . . . . . . . . . . . . . . .143
12.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .144
12.09 Resignation by the Agents . . . . . . . . . . . . . . . . . . . .144
12.10 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . .145
12.11 Exculpatory Provisions. . . . . . . . . . . . . . . . . . . . . .145
</TABLE>
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12.12 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . .145
12.13 Special Provisions Regarding the Co-Lead Arrangers and
Co-Documentation Agents . . . . . . . . . . . . . . . . . . . .146
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . .146
13.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . .146
13.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . .147
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148
13.04 Benefit of Agreement. . . . . . . . . . . . . . . . . . . . . . .148
13.05 No Waiver; Remedies Cumulative. . . . . . . . . . . . . . . . . .150
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . .150
13.07 Calculations; Computations. . . . . . . . . . . . . . . . . . . .151
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . .151
13.09 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .153
13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . .153
13.11 Headings Descriptive. . . . . . . . . . . . . . . . . . . . . . .153
13.12 Amendment or Waiver; etc. . . . . . . . . . . . . . . . . . . . .153
13.13 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . .155
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . .155
13.15 Limitation on Additional Amounts, etc.. . . . . . . . . . . . . .155
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . .156
13.17 Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . .156
</TABLE>
(v)
<PAGE>
SCHEDULE I - COMMITMENTS
SCHEDULE II - LENDER ADDRESSES
SCHEDULE III - REAL PROPERTY
SCHEDULE IV - EXISTING LIENS
SCHEDULE V - EXISTING INDEBTEDNESS
SCHEDULE VI - INSURANCE
SCHEDULE VII - ERISA
SCHEDULE VIII - SUBSIDIARIES
SCHEDULE IX - PROJECTIONS
SCHEDULE X - TAXES
SCHEDULE XI - POST-CLOSING DELIVERIES
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Tranche A Term Note
EXHIBIT B-2 Form of Tranche B Term Note
EXHIBIT B-3 Form of Tranche C Term Note
EXHIBIT B-4 Form of Revolving Note
EXHIBIT B-5 Form of Swingline Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of Jenner & Block
EXHIBIT E-2 Form of Opinion of Kirkland & Ellis
EXHIBIT F Form of Officer's Certificate
EXHIBIT G-1 Form of Subsidiaries Guaranty
EXHIBIT G-2 Form of Tenneco Guaranty
EXHIBIT H Form of Pledge Agreement
EXHIBIT I-1 Form of TPI Security Agreement
EXHIBIT I-2 Form of PCA Security Agreement
EXHIBIT J Form of Consent Letter
EXHIBIT K Form of Solvency Certificate
EXHIBIT L Form of Assignment and Assumption Agreement
EXHIBIT M Form of Subordination Provisions
EXHIBIT N Form of PCA Acknowledgement and Agreement
EXHIBIT O Form of Bank Credit Agreement Assignment and Assumption Agreement
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of April 12, 1999, among TENNECO
PACKAGING, INC., a Delaware corporation ("TPI"), the Lenders party hereto from
time to time, J.P. MORGAN SECURITIES INC. and BT ALEX. BROWN INCORPORATED, as
Co-Lead Arrangers (in such capacity, each a "CO-LEAD ARRANGER" and,
collectively, the "CO-LEAD ARRANGERS"), BANKERS TRUST COMPANY, as Syndication
Agent (in such capacity, the "SYNDICATION AGENT"), and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT") (all capitalized terms used herein and defined in
Section 11 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, TPI and Packaging Corporation of America, a Delaware
corporation ("PCA"), have entered into the Contribution Agreement pursuant to
which TPI will, inter alia, contribute the Containerboard Business to PCA on the
terms and conditions set forth therein;
WHEREAS, TPI has requested that the Lenders make available to TPI
the credit facilities provided for herein for purposes including to enable TPI
to repay certain outstanding Indebtedness of TPI and its Subsidiaries prior to
(or concurrently with) the Contribution;
WHEREAS, upon the consummation of the Refinancing and pursuant to
the Contribution, TPI will contribute, and PCA will assume, all of TPI's rights,
liabilities and obligations under this Agreement and the other Credit Documents,
whereupon PCA shall become the Borrower for all purposes of this Agreement and
TPI shall be released from all obligations and liabilities as the Borrower;
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Lenders are willing to make available to (i) TPI on the Initial
Borrowing Date and prior to the Contribution Effective Time and (ii) PCA on and
after the Contribution Effective Time, the respective credit facilities provided
for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 THE COMMITMENTS. (a) Subject to and upon the terms and
conditions set forth herein, each Lender with a Tranche A Term Loan Commitment
severally agrees to make, on the Initial Borrowing Date, a term loan (each, a
"TRANCHE A TERM LOAN" and, collectively, the "TRANCHE A TERM LOANS") to the
Borrower, which Tranche A Term Loans (i) except as hereafter provided, shall be
made and initially maintained as a single Borrowing of Base Rate Loans and after
the third Business Day following the Initial Borrowing Date, shall, at the
option of the Borrower, be maintained as, and/or converted into, Base Rate Loans
or Eurodollar Loans, provided, that (x) except as otherwise specifically
provided in Section 1.10(b), all Tranche A Term Loans made as part of the same
Borrowing shall at all times consist of Tranche A Term
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Loans of the same Type and (y) unless the Syndication Date has occurred (at
which time this clause (y) shall no longer be applicable), no more than three
Borrowings of Tranche A Term Loans to be maintained as Eurodollar Loans may
be incurred prior to the 90th day after the Initial Borrowing Date (or, if
later, the last day of the Interest Period applicable to the third Borrowing
of Eurodollar Loans referred to below), each of which Borrowings of
Eurodollar Loans may only have an Interest Period of one month, and the first
of which Borrowings may only be made on or after the third Business Day after
the Initial Borrowing Date and on or prior to the fifth Business Day after
the Initial Borrowing Date, the second of which Borrowings may only be made
on the last day of the Interest Period of the first such Borrowing and the
third of which Borrowings may only be made on the last day of the Interest
Period of the second such Borrowing and (ii) shall be made by each Lender in
that initial aggregate principal amount as is equal to the Tranche A Term
Loan Commitment of such Lender on such date (before giving effect to any
reductions thereto on such date pursuant to Section 3.03(b)(i) but after
giving effect to any reductions thereto on or prior to such date pursuant to
Section 3.03(b)(ii)). Once repaid, Tranche A Term Loans incurred hereunder
may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth
herein, each Lender with a Tranche B Term Loan Commitment severally agrees to
make, on the Initial Borrowing Date, a term loan (each, a "TRANCHE B TERM LOAN"
and, collectively, the "TRANCHE B TERM LOANS") to the Borrower, which Tranche B
Term Loans (i) except as hereafter provided, shall be made and initially
maintained as a single Borrowing of Base Rate Loans and after the third Business
Day following the Initial Borrowing Date, shall, at the option of the Borrower,
be maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
PROVIDED, that (x) except as otherwise specifically provided in Section 1.10(b),
all Tranche B Term Loans made as part of the same Borrowing shall at all times
consist of Tranche B Term Loans of the same Type and (y) unless the Syndication
Date has occurred (at which time this clause (y) shall no longer be applicable),
no more than three Borrowings of Tranche B Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 90th day after the Initial
Borrowing Date (or, if later, the last day of the Interest Period applicable to
the third Borrowing of Eurodollar Loans referred to below), each of which
Borrowings of Eurodollar Loans may only have an Interest Period of one month,
and the first of which Borrowings may only be made on the same date as the
initial Borrowing of Tranche A Term Loans that are maintained as Eurodollar
Loans, the second of which Borrowings may only be made on the last day of the
Interest Period of the first such Borrowing and the third of which Borrowings
may only be made on the last day of the Interest Period of the second such
Borrowing and (ii) shall be made by each Lender in that initial aggregate
principal amount as is equal to the Tranche B Term Loan Commitment of such
Lender on such date (before giving effect to any reductions thereto on such date
pursuant to Section 3.03(c)(i) but after giving effect to any reductions thereto
on or prior to such date pursuant to Section 3.03(c)(ii)). Once repaid, Tranche
B Term Loans incurred hereunder may not be reborrowed.
(c) Subject to and upon the terms and conditions set forth
herein, each Lender with a Tranche C Term Loan Commitment severally agrees to
make, on the Initial Borrowing Date, a term loan (each, a "TRANCHE C TERM LOAN"
and, collectively, the "TRANCHE C TERM LOANS") to the Borrower, which Tranche C
Term Loans (i) except as hereafter provided, be made
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and initially maintained as a single Borrowing of Base Rate Loans and after
the third Business Day following the Initial Borrowing Date, shall, at the
option of the Borrower, be maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, PROVIDED, that (x) except as otherwise
specifically provided in Section 1.10(b), all Tranche C Term Loans made as
part of the same Borrowing shall at all times consist of Tranche C Term Loans
of the same Type and (y) unless the Syndication Date has occurred (at which
time this clause (y) shall no longer be applicable), no more than three
Borrowings of Tranche C Term Loans to be maintained as Eurodollar Loans may
be incurred prior to the 90th day after the Initial Borrowing Date (or, if
later, the last day of the Interest Period applicable to the third Borrowing
of Eurodollar Loans referred to below), each of which Borrowings of
Eurodollar Loans may only have an Interest Period of one month, and the first
of which Borrowings may only be made on the same date as the initial
Borrowing of Tranche A Term Loans that are maintained as Eurodollar Loans,
the second of which Borrowings may only be made on the last day of the
Interest Period of the first such Borrowing and the third of which Borrowings
may only be made on the last day of the Interest Period of the second such
Borrowing and (ii) shall be made by each Lender in that initial aggregate
principal amount as is equal to the Tranche C Term Loan Commitment of such
Lender on such date (before giving effect to any reductions thereto on such
date pursuant to Section 3.03(d)(i) but after giving effect to any reductions
thereto on or prior to such date pursuant to Section 3.03(d)(ii)). Once
repaid, Tranche C Term Loans incurred hereunder may not be reborrowed.
(d) Subject to and upon the terms and conditions set forth
herein, each Lender with a Revolving Loan Commitment severally agrees, at any
time and from time to time on and after the Initial Borrowing Date and the
Contribution Effective Time and prior to the Revolving Loan Maturity Date, to
make a revolving loan or revolving loans (each, a "REVOLVING LOAN" and,
collectively, the "REVOLVING LOANS") to the Borrower, which Revolving Loans (i)
except as hereafter provided, shall, at the option of the Borrower, be incurred
and maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
PROVIDED, that (x) except as otherwise specifically provided in Section 1.10(b),
all Revolving Loans made as part of the same Borrowing shall at all times
consist of Revolving Loans of the same Type and (y) unless the Syndication Date
has occurred (at which time this clause (y) shall no longer be applicable), no
more than three Borrowings of Revolving Loans to be maintained as Eurodollar
Loans may be incurred prior to the 90th day after the Initial Borrowing Date
(or, if later, the last day of the Interest Period applicable to the third
Borrowing of Eurodollar Loans referred to below), each of which Borrowings of
Eurodollar Loans may only have an Interest Period of one month, and the first of
which Borrowings may only be made on the same date as the initial Borrowing of
Tranche A Term Loans that are maintained as Eurodollar Loans, the second of
which Borrowings may only be made on the last day of the Interest Period of the
first such Borrowing and the third of which Borrowings may only be made on the
last day of the Interest Period of the second such Borrowing, (ii) may be repaid
and reborrowed in accordance with the provisions hereof, (iii) shall not exceed
for any Lender at any time outstanding that aggregate principal amount which,
when added to the product of (x) such Lender's Adjusted Percentage and (y) the
sum of (I) the aggregate amount of all Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) at such
time and (II) the aggregate principal amount of all Swingline Loans
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(exclusive of Swingline Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the Available Revolving Loan Commitment of
such Lender at such time and (iv) shall not exceed for all Lenders at any
time outstanding that aggregate principal amount which, when added to (x) the
amount of all Letter of Credit Outstandings (exclusive of Unpaid Drawings
which are repaid with the proceeds of, and simultaneously with the incurrence
of, the respective incurrence of Revolving Loans) at such time, and (y) the
aggregate principal amount of all Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Total Available Revolving Loan Commitment at such
time.
(e) Subject to and upon the terms and conditions herein set
forth, the Swingline Lender in its individual capacity agrees to make at any
time and from time to time on and after the Initial Borrowing Date and the
Contribution Effective Time and prior to the Swingline Expiry Date, a revolving
loan or revolving loans (each, a "SWINGLINE LOAN" and, collectively, the
"SWINGLINE LOANS") to the Borrower, which Swingline Loans (i) shall be made and
maintained as Base Rate Loans, (ii) may be repaid and reborrowed in accordance
with the provisions hereof, (iii) shall not exceed in aggregate principal amount
at any time outstanding, when added to (x) the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Lenders then outstanding and (y) the
Letter of Credit Outstandings at such time, an amount equal to the Adjusted
Total Available Revolving Loan Commitment at such time (after giving effect to
any reductions to the Adjusted Total Available Revolving Loan Commitment on such
date), (iv) shall not exceed at any time outstanding the Maximum Swingline
Amount and (v) shall not be extended if the Swingline Lender receives a written
notice from the Administrative Agent or the Required Lenders that has not been
rescinded that there is a Default or an Event of Default in existence hereunder.
(f) On any Business Day, the Swingline Lender may, in its
sole discretion, give notice to the other Lenders that its outstanding Swingline
Loans shall be funded with a Borrowing of Revolving Loans (PROVIDED that such
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10), in which case a
Borrowing of Revolving Loans constituting Base Rate Loans (each such Borrowing,
a "MANDATORY BORROWING") shall be made on the immediately succeeding Business
Day by all Lenders with a Revolving Loan Commitment (without giving effect to
any reductions thereto pursuant to the last paragraph of Section 10) PRO RATA
based on each Lender's Adjusted Percentage (determined before giving effect to
any termination of the Revolving Loan Commitments pursuant to the last paragraph
of Section 10) and the proceeds thereof shall be paid directly to the Swingline
Lender to repay the Swingline Lender for such outstanding Swingline Loans. Each
such Lender hereby irrevocably agrees to make Revolving Loans upon one Business
Day's notice pursuant to each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the date specified in writing
by the Swingline Lender notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the minimum amount for Borrowings otherwise
required hereunder, (ii) whether any conditions specified in Section 6 are then
satisfied, (iii) whether a Default or an Event of Default then exists,
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(iv) the date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Loan Commitment, the Total Available Revolving Loan Commitment, the
Adjusted Total Revolving Loan Commitment or the Adjusted Total Available
Revolving Loan Commitment at such time. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date
the Mandatory Borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior to such
purchase) from the Swingline Lender such participations in the outstanding
Swingline Loans as shall be necessary to cause such Lenders to share in such
Swingline Loans ratably based upon their respective Adjusted Percentages
(determined before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 10), PROVIDED that (x)
all interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date
and (y) at the time any purchase of participations pursuant to this sentence
is actually made, the purchasing Lender shall be required to pay the
Swingline Lender interest on the principal amount of participation purchased
for each day from and including the day upon which the Mandatory Borrowing
would otherwise have occurred to but excluding the date of payment for such
participation, at the overnight Federal Funds Rate for the first three days
and at the rate otherwise applicable to Revolving Loans maintained as Base
Rate Loans hereunder for each day thereafter.
1.02 MINIMUM AMOUNT OF EACH BORROWING; LIMITATION ON NUMBER OF
BORROWINGS. The aggregate principal amount of each Borrowing of Loans shall not
be less than the Minimum Borrowing Amount applicable thereto; PROVIDED that
Mandatory Borrowings shall be made in the amounts required by Section 1.01(f).
More than one Borrowing may be incurred on the same date, but at no time shall
there be outstanding more than fifteen Borrowings of Eurodollar Loans in the
aggregate under all Tranches.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to
make Borrowing hereunder (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), it shall give the Administrative Agent at its Notice Office at
least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of each Base Rate Loan and at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) of
each Eurodollar Loan to be made hereunder, PROVIDED that any such notice shall
be deemed to have been given on a certain day only if given before 11:00 A.M.
(New York time). Each such written notice or written confirmation of telephonic
notice (each, a "NOTICE OF BORROWING"), except as otherwise expressly provided
in Section 1.10, shall be irrevocable and shall be given by the Borrower in the
form of Exhibit A, appropriately completed to specify: (i) the aggregate
principal amount of the Loans to be made pursuant to such Borrowing, the date of
such Borrowing (which shall be a Business Day), (ii) whether the Loans being
made pursuant to such Borrowing shall constitute Tranche A Term Loans, Tranche B
Term Loans, Tranche C Term Loans or Revolving Loans, (iii) whether the Loans
being made pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
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initial Interest Period to be applicable thereto and (iv) in the case of a
Borrowing of Revolving Loans the proceeds of which are to be utilized to
finance, in whole or in part, the consideration for a Permitted Acquisition,
(x) a reference to the officer's certificate, if any, delivered in accordance
with Section 8.13, (y) the aggregate principal amount of such Revolving Loans
to be utilized in connection with such Permitted Acquisition and (z) the
Total Available Unutilized Revolving Loan Commitment then in effect after
giving effect to the respective Permitted Acquisition (and all payments to be
made in connection therewith). The Administrative Agent shall promptly give
each Lender which is required to make Loans of the Tranche specified in the
respective Notice of Borrowing, notice of such proposed Borrowing, of such
Lender's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give the Swingline Lender not later than
1:00 P.M. (New York time) on the date that a Swingline Loan is to be made,
written notice (or telephonic notice promptly confirmed in writing) of each
Swingline Loan to be made hereunder. Each such notice shall be irrevocable and
specify in each case (A) the date of Borrowing (which shall be a Business Day)
and (B) the aggregate principal amount of the Swingline Loans to be made
pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(f), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of the Mandatory Borrowings as
set forth in Section 1.01(f).
(c) Without in any way limiting the obligation of the
Borrower to confirm in writing any telephonic notice of any Borrowing of Loans,
the Administrative Agent or the Swingline Lender, as the case may be, may act
without liability upon the basis of telephonic notice of such Borrowing,
believed by the Administrative Agent or the Swingline Lender, as the case may
be, in good faith to be from the Chief Executive Officer, the Chief Financial
Officer, the President or the Treasurer of the Borrower (or any other officer or
representative of the Borrower designated in writing to the Administrative Agent
and the Swingline Lender by the Chief Executive Officer, the Chief Financial
Officer, the President or the Treasurer as being authorized to give such notices
under this Agreement) prior to receipt of written confirmation. In each such
case, the Borrower hereby waives the right to dispute the Administrative Agent's
and the Swingline Lender's record of the terms of such telephonic notice of such
Borrowing of Loans, absent manifest error.
1.04 DISBURSEMENT OF FUNDS. Except as otherwise specifically
provided in the immediately succeeding sentence, no later than 12:00 Noon
(New York time) on the date specified in each Notice of Borrowing (or (x) in the
case of Swingline Loans, not later than 3:00 P.M. (New York time) on the date
specified pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory
Borrowings, not later than 12:00 Noon (New York time) on the date specified in
Section 1.01(f)), each Lender with a Commitment of the respective Tranche will
make available its PRO RATA portion of each such Borrowing requested to be made
on such date (or in the case of Swingline Loans, the Swingline Lender shall make
available the full amount thereof). All such
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amounts shall be made available in Dollars and in immediately available funds
at the Payment Office of the Administrative Agent, and, except in the case of
Mandatory Borrowings, the Administrative Agent will make available to the
Borrower at the Payment Office the aggregate of the amounts so made available
by the Lenders (for Loans other than Swingline Loans, prior to 1:00 P.M. (New
York time) on such day, to the extent of funds actually received by the
Administrative Agent prior to 12:00 Noon (New York time) on such day),
PROVIDED that all proceeds of the Term Loans shall be deposited by the
Administrative Agent in the Restricted Account and disbursed therefrom as
provided in the TPI Security Agreement. Unless the Administrative Agent shall
have been notified by any Lender prior to the date of Borrowing that such
Lender does not intend to make available to the Administrative Agent such
Lender's portion of any Borrowing to be made on such date, the Administrative
Agent may assume that such Lender has made such amount available to the
Administrative Agent on such date of Borrowing and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the Borrower and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover on demand from such Lender or the
Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower until the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (i) if recovered from such Lender, at the overnight Federal
Funds Rate and (ii) if recovered from the Borrower, the rate of interest
applicable to the respective Borrowing, as determined pursuant to Section
1.08. Nothing in this Section 1.04 shall be deemed to relieve any Lender
from its obligation to make Loans hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any failure by such
Lender to make Loans hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Lender shall, if requested by such
Lender, be evidenced (i) if Tranche A Term Loans, by a promissory note duly
executed and delivered by the Borrower substantially in the form of Exhibit B-1
with blanks appropriately completed in conformity herewith (each, a "TRANCHE A
TERM NOTE" and, collectively, the "TRANCHE A TERM NOTES"), (ii) if Tranche B
Term Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-2, with blanks appropriately completed in
conformity herewith (each, a "TRANCHE B TERM NOTE" and, collectively, the
"TRANCHE B TERM NOTES"), (iii) if Tranche C Term Loans, by a promissory note
duly executed and delivered by the Borrower substantially in the form of Exhibit
B-3, with blanks appropriately completed in conformity herewith (each, a
"TRANCHE C TERM NOTE" and, collectively, the "TRANCHE C TERM NOTES"), (iv) if
Revolving Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-4, with blanks appropriately
completed in conformity herewith (each, a "REVOLVING NOTE" and, collectively,
the "REVOLVING NOTES") and (v) if Swingline Loans, by a promissory note duly
executed and delivered by the Borrower
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substantially in the form of Exhibit B-5, with blanks appropriately completed
in conformity herewith (the "SWINGLINE NOTE").
(b) The Tranche A Term Note issued to each Lender with a
Tranche A Term Loan Commitment or outstanding Tranche A Term Loans shall (i) be
executed by the Borrower, (ii) be payable to the order of such Lender and be
dated the Initial Borrowing Date (or, in the case of Tranche A Term Notes issued
after the Initial Borrowing Date, be dated the date of the issuance thereof),
(iii) be in a stated principal amount equal to the Tranche A Term Loan made by
such Lender on the Initial Borrowing Date (or, in the case of any Tranche A Term
Note issued after the Initial Borrowing Date, be in a stated principal amount
equal to the outstanding principal amount of the Tranche A Term Loan of such
Lender on the date of the issuance thereof) and be payable in the principal
amount of Tranche A Term Loans evidenced thereby, (iv) mature on the Tranche A
Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause
of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (vi) be subject to voluntary prepayment and
mandatory repayment as provided in Sections 4.01 and 4.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(c) The Tranche B Term Note issued to each Lender with a
Tranche B Term Loan Commitment or outstanding Tranche B Term Loans shall (i) be
executed by the Borrower, (ii) be payable to the order of such Lender and be
dated the Initial Borrowing Date (or, in the case of Tranche B Term Notes issued
after the Initial Borrowing Date, be dated the date of the issuance thereof),
(iii) be in a stated principal amount equal to the Tranche B Term Loan made by
such Lender on the Initial Borrowing Date (or, in the case of any Tranche B Term
Note issued after the Initial Borrowing Date, be in a stated principal amount
equal to the outstanding principal amount of the Tranche B Term Loan of such
Lender on the date of the issuance thereof) and be payable in the principal
amount of Tranche B Term Loans evidenced thereby, (iv) mature on the Tranche B
Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause
of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (vi) be subject to voluntary prepayment and
mandatory repayment as provided in Sections 4.01 and 4.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(d) The Tranche C Term Note issued to each Lender with a
Tranche C Term Loan Commitment or outstanding Tranche C Term Loans shall (i) be
executed by the Borrower, (ii) be payable to the order of such Lender and be
dated the Initial Borrowing Date (or, in the case of Tranche C Term Notes issued
after the Initial Borrowing Date, be dated the date of the issuance thereof),
(iii) be in a stated principal amount equal to the Tranche C Term Loan made by
such Lender on the Initial Borrowing Date (or, in the case of any Tranche C Term
Note issued after the Initial Borrowing Date, be in a stated principal amount
equal to the outstanding principal amount of the Tranche C Term Loan of such
Lender on the date of the issuance thereof) and be payable in the principal
amount of Tranche C Term Loans evidenced thereby, (iv) mature on the Tranche C
Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause
of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (vi) be subject to voluntary prepayment and
mandatory repayment as
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provided in Sections 4.01 and 4.02 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(e) The Revolving Note issued to each Lender with a Revolving
Loan Commitment shall (i) be executed by the Borrower, (ii) be payable to the
order of such Lender and be dated the Initial Borrowing Date (or, in the case of
Revolving Notes issued after the Initial Borrowing Date, be dated the date of
the issuance thereof), (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such Lender and be payable in the principal amount
of the Revolving Loans evidenced thereby, (iv) mature on the Revolving Loan
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment and mandatory
repayment as provided in Sections 4.01 and 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(f) The Swingline Note shall (i) be executed by the Borrower,
(ii) be payable to the order of the Swingline Lender and be dated the Initial
Borrowing Date (or, in the case of any Swingline Note issued after the Initial
Borrowing Date, be dated the date of the issuance thereof), (iii) be in a stated
principal amount equal to the Maximum Swingline Amount and be payable in the
principal amount of the outstanding Swingline Loans evidenced thereby, (iv)
mature on the Swingline Expiry Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans evidenced
thereby, (vi) be subject to voluntary prepayment and mandatory repayment as
provided in Sections 4.01 and 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(g) Each Lender will note on its internal records the amount
of each Loan made by it and each payment in respect thereof and will prior to
any transfer of any of its Notes endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation or any error in any such notation or endorsement shall not affect
the Borrower's obligations in respect of such Loans.
(h) Notwithstanding anything to the contrary contained above
or elsewhere in this Agreement, Tranche A Term Notes, Tranche B Term Notes,
Tranche C Term Notes, Revolving Notes and the Swingline Note shall only be
delivered to Lenders which at any time specifically request the delivery of such
Notes and no Notes shall be delivered prior to the Contribution Effective Time.
No failure of any Lender to request or obtain a Note evidencing its Loans to the
Borrower shall affect or in any manner impair the obligations of the Borrower to
pay the Loans (and all related Obligations) which would otherwise be evidenced
thereby in accordance with the requirements of this Agreement, and shall not in
any way affect the security or guaranties therefor provided pursuant to the
various Credit Documents. Any Lender which does not have a Note evidencing its
outstanding Loans shall in no event be required to make the notations otherwise
described in preceding clause (g). At any time when any Lender requests the
delivery of a Note to evidence any of its Loans, the Borrower shall promptly
execute and deliver to the respective Lender the requested Note or Notes in the
appropriate amount or amounts to evidence such Loans.
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1.06 CONVERSIONS. The Borrower shall have the option to convert,
on any Business Day occurring on or after the third Business Day after the
Initial Borrowing Date, all or a portion of the outstanding principal amount of
Loans made pursuant to one or more Borrowings (so long as of the same Tranche)
of one or more Types of Loans into a Borrowing (of the same Tranche) of another
Type of Loan, PROVIDED that (i) except as provided in Section 1.10(b) or unless
the Borrower pays all breakage costs and other amounts owing to each Lender
pursuant to Section 1.11 concurrently with any such conversion, Eurodollar Loans
may be converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Loans being converted, (ii) no partial conversion of a
Borrowing of Eurodollar Loans shall reduce the outstanding principal amount of
the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (iii) unless the Required Lenders otherwise
agree in writing, Base Rate Loans may only be converted into Eurodollar Loans if
no Default or Event of Default is in existence on the date of the conversion,
(iv) no conversion pursuant to this Section 1.06 shall result in a greater
number of Borrowings of Eurodollar Loans than is permitted under Section 1.02,
(v) unless the Syndication Date has occurred (at which time this clause (v)
shall no longer be applicable), prior to the 90th day after the Initial
Borrowing Date, conversions of Base Rate Loans into Eurodollar Loans may only be
made if any such conversion is effective on the first day of the first, second
or third Interest Period referred to in clause (y) of each of Sections
1.01(a)(i), 1.01(b)(i), 1.01(c)(i) and 1.01(d)(i) and so long as such conversion
does not result in a greater number of Borrowings of Eurodollar Loans prior to
the 90th day after the Initial Borrowing Date as are permitted under Sections
1.01(a)(i), 1.01(b)(i), 1.01(c)(i) and 1.01(d)(i) and (vi) Swingline Loans may
not be converted pursuant to this Section 1.06. Each such conversion shall be
effected by the Borrower by giving the Administrative Agent at its Notice Office
prior to 12:00 Noon (New York time) at least (x) in the case of a conversion to
Eurodollar Loans, three Business Days' prior written notice and (y) in the case
of a conversion to Base Rate Loans, one Business Day's prior written notice
(each, a "NOTICE OF CONVERSION"), specifying the Loans to be so converted, the
Borrowing(s) pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Lender prompt notice of any such proposed
conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All Borrowings of Tranche A Term
Loans, Tranche B Term Loans, Tranche C Term Loans and Revolving Loans under this
Agreement shall be incurred from the Lenders PRO RATA on the basis of their
Tranche A Term Loan Commitments, Tranche B Term Loan Commitments, Tranche C Term
Loan Commitments or Revolving Loan Commitments, as the case may be, PROVIDED
that all Borrowings of Revolving Loans made pursuant to a Mandatory Borrowing
shall be incurred from the Lenders PRO RATA on the basis of their Adjusted
Percentages. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make Loans hereunder and that
each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to make its Loans
hereunder.
1.08 INTEREST. (a) The Borrower shall pay interest in respect
of the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such
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Base Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar
Loan pursuant to Section 1.06, at a rate per annum which shall be equal to
the sum of the relevant Applicable Margin PLUS the Base Rate, each as in
effect from time to time.
(b) The Borrower shall pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the earlier of (i) the maturity (whether by
acceleration or otherwise) of such Eurodollar Loan and (ii) the conversion of
such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06, 1.09 or
1.10(b), as applicable, at a rate per annum which shall, during each Interest
Period applicable thereto, be equal to the sum of the relevant Applicable Margin
PLUS the Eurodollar Rate for such Interest Period, each as in effect from time
to time.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to the
greater of (x) 2% per annum in excess of the rate otherwise applicable to Base
Rate Loans of the respective Tranche of Loans from time to time (or, if such
overdue amount is not interest or principal in respect of a Loan, 2% per annum
in excess of the rate otherwise applicable to Base Rate Loans maintained as
Revolving Loans from time to time) and (y) the rate which is 2% in excess of the
rate then borne by such Loans, in each case with such interest to be payable on
demand.
(d) Accrued (and theretofore unpaid) interest shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date
of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09 or
1.10(b), as applicable (on the amount converted) and (y) the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, on any
repayment or prepayment (except repayments and prepayments of Base Rate Loans
which are Revolving Loans or Swingline Loans, in instances where the Total
Revolving Loan Commitment remains in effect in an amount greater than zero) on
the amount repaid or prepaid, at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Lenders thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
(f) All computations of interest hereunder shall be made in
accordance with Section 13.07(b).
1.09 INTEREST PERIODS. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the expiration
of an Interest Period applicable to such Borrowing of Eurodollar Loans (in the
case of any subsequent Interest Period), the Borrower shall have the right to
elect, by giving the
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Administrative Agent written notice thereof, the interest period (each, an
"INTEREST PERIOD") applicable to such Eurodollar Loans, which Interest Period
shall, at the option of the Borrower (but otherwise subject to clause (y) of
the proviso to Sections 1.01(a)(i), 1.01(b)(i), 1.01(c)(i) and 1.01(d)(i) and
to clause (v) of the proviso to Section 1.06), be a one, two, three or six
month period or, to the extent agreed to by each Lender with Loans and/or
Commitments under the respective Tranche, a two-week or twelve month period,
PROVIDED that:
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing (including
the date of any conversion thereto from a Borrowing of Base Rate Loans)
and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding Interest
Period applicable thereto expires;
(iii) if any Interest Period relating to a Borrowing of
Eurodollar Loans begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such
calendar month;
(iv) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; PROVIDED, HOWEVER, that if any Interest
Period for a Borrowing of Eurodollar Loans would otherwise expire on a
day which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(v) unless the Required Lenders otherwise agree in writing,
no Interest Period may be selected at any time when a Default or Event of
Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any
Tranche of Loans shall be selected which extends beyond the respective
Maturity Date for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of Tranche
A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case
may be, shall be selected which extends beyond any date upon which a
mandatory repayment of such Tranche of Term Loans will be required to be
made under Section 4.02(b), (c) or (d) as the case may be, if, after
giving effect to the election of such Interest Period, the aggregate
principal amount of Tranche A Term Loans, Tranche B Term Loans or Tranche
C Term Loans, as the case may be, which have Interest Periods which will
expire after such date will be in excess of the aggregate principal
amount of Tranche A Term Loans, Tranche B Term Loans or Tranche C Term
Loans, as the case may be, then outstanding LESS the aggregate amount of
such required prepayment.
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If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that
any Lender shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but, with
respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition
of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the date
of this Agreement in any applicable law or governmental rule, regulation,
order, guideline or request (whether or not having the force of law) or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Lender of the principal
of or interest on such Eurodollar Loan or any other amounts payable
hereunder (except for changes in the rate of tax on, or determined by
reference to, the net income or profits of such Lender, or any franchise
tax based on the net income or profits of such Lender, in either case
pursuant to the laws of the United States of America, the jurisdiction in
which it is organized or in which its principal office or applicable
lending office is located or any subdivision thereof or therein), but
without duplication of any amounts payable in respect of Taxes pursuant
to Section 4.04(a), or (B) a change in official reserve requirements but,
in all events, excluding reserves required under Regulation D and/or (y)
other circumstances since the date of this Agreement affecting such
Lender or the interbank Eurodollar market or the position of such Lender
in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, and/or (y) impossible by compliance by any
Lender in good faith with any governmental request (whether or not having
force of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the
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case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice by the Administrative
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed instead to have
contained a request for Base Rate Loans, (y) in the case of clause (ii) above,
the Borrower shall, subject to the provisions of Section 13.15 (to the extent
applicable), pay to such Lender, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as shall be required to compensate such Lender for such increased
costs or reductions in amounts received or receivable hereunder (a written
notice as to the additional amounts owed to such Lender, showing in reasonable
detail the basis for and the calculation thereof, submitted to the Borrower by
such Lender in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto, although the failure to give any such
notice shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this Section 1.10(a) upon the subsequent receipt
of such notice) and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 1.10(b) as promptly as possible
and, in any event, within the time period required by law. Each of the
Administrative Agent and each Lender agrees that if it gives notice to the
Borrower of any of the events described in clause (i) or (iii) above, it shall
promptly notify the Borrower and, in the case of any such Lender, the
Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Lender, the obligations
of such Lender to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and,
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii), shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Lender
or the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if
the affected Eurodollar Loan is then outstanding, upon at least three Business
Days' written notice to the Administrative Agent, require the affected Lender to
convert such Eurodollar Loan into a Base Rate Loan on the earlier of the date
required by law or the last day of the Interest Period applicable to such
Eurodollar Loans, PROVIDED that, if more than one Lender is affected at any
time, then all affected Lenders must be treated the same pursuant to this
Section 1.10(b).
(c) If at any time after the date of this Agreement any
Lender determines that the introduction of or any change in any applicable law
or governmental rule, regulation, order, guideline, directive or request
(whether or not having the force of law) concerning capital adequacy, or any
change in interpretation or administration thereof by any governmental
authority, central bank or comparable agency, in each case introduced or changed
after the date hereof, will have the effect of increasing the amount of capital
required or requested to be maintained by such Lender or any corporation
controlling such Lender based on the existence of such Lender's Commitments
hereunder or its obligations hereunder, then the Borrower shall, subject to the
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provisions of Section 13.15 (to the extent applicable), pay to such Lender, upon
its written demand therefor, such additional amounts as shall be required to
compensate such Lender or such other corporation for the increased cost to such
Lender or such other corporation or the reduction in the rate of return to such
Lender or such other corporation as a result of such increase of capital. In
determining such additional amounts, each Lender will act reasonably and in good
faith and will use averaging and attribution methods which are reasonable,
PROVIDED that such Lender's determination of compensation owing under this
Section 1.10(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto. Each Lender, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower, which notice shall show in
reasonable detail the basis for and calculation of such additional amounts,
although the failure to give any such notice shall not release or diminish the
Borrower's obligation to pay additional amounts pursuant to this Section 1.10(c)
upon the subsequent receipt of such notice.
1.11 COMPENSATION. The Borrower shall, subject to the provisions
of Section 13.15 (to the extent applicable), compensate each Lender, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting and the calculation of such compensation), for all losses,
expenses and liabilities (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or reemployment of deposits or
other funds required by such Lender to fund its Eurodollar Loans but excluding
any loss of anticipated profit) which such Lender may sustain: (i) if for any
reason (other than a default by such Lender or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any repayment (including any repayment made pursuant
to Section 4.02 or as a result of an acceleration of the Loans pursuant to
Section 10) or conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of an Interest Period with respect thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any
other default by the Borrower to repay its Loans when required by the terms of
this Agreement or any Note held by such Lender or (y) any election made pursuant
to Section 1.10(b). Each Lender's calculation of the amount of compensation
owing pursuant to this Section 1.11 shall be made in good faith. A Lender's
basis for requesting compensation pursuant to this Section 1.11 and a Lender's
calculation of the amount thereof, shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
1.12 CHANGE OF LENDING OFFICE. Each Lender agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Lender) to designate another lending
office for any Loans or Letters of Credit affected by such event, PROVIDED that
such designation is made on such terms that, in the sole judgment of such
Lender, such Lender and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this
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Section 1.12 shall affect or postpone any of the obligations of the Borrower or
the right of any Lender provided in Sections 1.10, 2.05 and 4.04.
1.13 REPLACEMENT OF LENDERS. (x) If any Lender becomes a
Defaulting Lender or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings, (y) upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or
Section 4.04 with respect to any Lender which results in such Lender charging to
the Borrower increased costs in excess of those being generally charged by the
other Lenders, or (z) in the case of certain refusals by a Lender to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Lenders as provided in
Section 13.12(b), the Borrower shall have the right, if no Default or Event of
Default then exists or would exist immediately after giving effect to the
respective replacement, to either replace such Lender (the "REPLACED LENDER")
with one or more other Eligible Transferee or Transferees, none of whom shall
constitute a Defaulting Lender at the time of such replacement (collectively,
the "REPLACEMENT LENDER") and each of whom shall be reasonably acceptable to the
Administrative Agent or, at the option of the Borrower, to replace only (a) the
Revolving Loan Commitment (and outstandings pursuant thereto) of the Replaced
Lender with an identical Revolving Loan Commitment provided by the Replacement
Lender or (b) in the case of a replacement as provided in Section 13.12(b) where
the consent of the respective Lender is required with respect to less than all
Tranches of its Loans or Commitments, the Commitments and/or outstanding Term
Loans of such Lender in respect of each Tranche where the consent of such Lender
would otherwise be individually required, with identical Commitments and/or
Loans of the respective Tranche provided by the Replacement Lender, PROVIDED
that:
(i) at the time of any replacement pursuant to this Section
1.13, the Replacement Lender shall enter into one or more Assignment and
Assumption Agreements pursuant to Section 13.04(b) (and with all fees
payable pursuant to said Section 13.04(b) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire all of the
Commitments and outstanding Loans (or, in the case of the replacement of
only (a) the Revolving Loan Commitment, the Revolving Loan Commitment and
outstanding Revolving Loans or (b) the outstanding Term Loans of one or
more Tranches, the outstanding Term Loans of the respective Tranche or
Tranches) of, and in each case (except for the replacement of only the
outstanding Term Loans of one or more Tranches of the respective Lender)
participations in Letters of Credit by, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect
thereof an amount equal to the sum (without duplication) of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding
Loans (or, in the case of the replacement of only (I) the Revolving Loan
Commitment, the outstanding Revolving Loans or (II) the Term Loans of one
or more Tranches, the outstanding Term Loans of such Tranche or Tranches)
of the Replaced Lender, (B) except in the case of the replacement of only
the outstanding Term Loans of one or more Tranches of a Replaced Lender,
an amount equal to all Unpaid Drawings that have been funded by (and not
reimbursed to) such Replaced Lender, together with all then unpaid
interest with respect thereto at such time and (C) an amount equal to all
accrued, but
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theretofore unpaid, Fees owing to the Replaced Lender (but only with
respect to the relevant Tranche, in the case of the replacement of
less than all Tranches of Loans then held by the respective Replaced
Lender) pursuant to Section 3.01, (y) except in the case of the
replacement of only the outstanding Term Loans of one or more Tranches
of a Replaced Lender, the respective Issuing Bank n amount equal to
such Replaced Lender's Adjusted Percentage (for this purpose,
determined as if the adjustment described in clause (y) of the
immediately succeeding sentence had been made with respect to such
Replaced Lender) of any Unpaid Drawing (which at such time remains an
Unpaid Drawing) to the extent such amount was not theretofore funded
by such Replaced Lender and (z) in the case of any replacement of
Revolving Loan Commitments, the Swingline Lender an amount equal to
such Replaced Lender's Adjusted Percentage of any Mandatory Borrowing
to the extent such amount was not theretofore funded by such Replaced
Lender; and
(ii) all obligations of the Borrower owing to the Replaced
Lender (other than those (a) specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is
concurrently being, paid or (b) relating to any Tranche of Loans and/or
Commitments of the respective Replaced Lender which will remain
outstanding after giving effect to the respective replacement) shall be
paid in full to such Replaced Lender concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, the recordation of
the assignment on the Register by the Administrative Agent pursuant to Section
13.17 and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Note or Notes executed by the Borrower,
(x) the Replacement Lender shall become a Lender hereunder and, unless the
respective Replaced Lender continues to have outstanding Term Loans and/or a
Revolving Loan Commitment hereunder, the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05,
4.04, 13.01 and 13.06), which shall survive as to such Replaced Lender and (y)
in the case of a replacement of a Defaulting Lender with a Non-Defaulting
Lender, the Adjusted Percentages of the Lenders shall be automatically adjusted
at such time to give effect to such replacement (and to give effect to the
replacement of a Defaulting Lender with one or more Non-Defaulting Lenders).
SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that any Issuing Bank
issue, at any time and from time to time after the Initial Borrowing Date and
the Contribution Effective Time and prior to the date which is 30 days prior to
the Revolving Loan Maturity Date, (x) for the account of the Borrower and for
the benefit of any holder (or any trustee, agent or other similar representative
for any such holders) of L/C Supportable Indebtedness of the Borrower or any of
its Subsidiaries, an irrevocable sight standby letter of credit, in a form
customarily used by such Issuing Bank or in such other form as has been approved
by such Issuing Bank (each such standby letter of credit, a
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"STANDBY LETTER OF CREDIT") in support of such L/C Supportable Indebtedness
and (y) for the account of the Borrower and for the benefit of sellers of
goods or materials to the Borrower or any of its Subsidiaries, an irrevocable
sight commercial letter of credit in a form customarily used by such Issuing
Bank or in such other form as has been approved by such Issuing Bank (each
such commercial letter of credit, a "TRADE LETTER OF CREDIT", and each such
Trade Letter of Credit and each Standby Letter of Credit, a "LETTER OF
CREDIT") in support of trade obligations of the Borrower and its Subsidiaries
that arise in the ordinary course of business.
(b) Subject to the terms and conditions contained herein,
each Issuing Bank hereby agrees that it will, at any time and from time to time
on or after the Initial Borrowing Date and the Contribution Effective Time and
prior to the date which is 30 days prior to the Revolving Loan Maturity Date,
following its receipt of the respective Letter of Credit Request, issue for the
account of the Borrower one or more Letters of Credit (x) in the case of Standby
Letters of Credit, in support of such L/C Supportable Indebtedness of the
Borrower or any of its Subsidiaries as is permitted to remain outstanding
without giving rise to a Default or Event of Default hereunder and (y) in the
case of Trade Letters of Credit, in support of sellers of goods or materials as
referenced in Section 2.01(a), PROVIDED that the respective Issuing Bank shall
be under no obligation to issue any Letter of Credit of the types described
above if at the time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or restrain
such Issuing Bank from issuing such Letter of Credit or any requirement
of law applicable to such Issuing Bank or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Issuing Bank shall prohibit, or request that
such Issuing Bank refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon
such Issuing Bank with respect to such Letter of Credit any restriction
or reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in effect or
known to such Issuing Bank as of the date hereof and which such Issuing
Bank in good faith deems material to it; or
(ii) such Issuing Bank shall have received notice from any
Lender prior to the issuance of such Letter of Credit of the type
described in the second sentence of Section 2.02(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $50,000,000 or (y) when added to (I) the aggregate principal
amount of all Revolving Loans made by Non-Defaulting Lenders and then
outstanding and (II) the principal amount of all Swingline Loans then
outstanding, an amount equal to the Adjusted Total Available Revolving Loan
Commitment at such time, (ii) each Letter of Credit shall be denominated in
Dollars, (iii) each Letter of Credit shall by its terms terminate (x) in the
case of Standby Letters of Credit, on or before the earlier of (A) the date
which occurs 12 months
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after the date of the issuance thereof (although any such Standby Letter of
Credit may be automatically extendible for successive periods of up to 12
months, but not beyond the 5th Business Day prior to the Revolving Loan
Maturity Date, on terms acceptable to the Issuing Bank thereof) and (B) the
5th Business Day prior to the Revolving Loan Maturity Date, and (y) in the
case of Trade Letters of Credit, on or before the earlier of (A) the date
which occurs 180 days after the date of issuance thereof and (B) the date
which is 10 days prior to the Revolving Loan Maturity Date and (iv) the
Stated Amount of each Letter of Credit upon issuance shall be not less than
$50,000 or such lesser amount as is acceptable to the respective Issuing Bank.
(d) Notwithstanding the foregoing, in the event a Lender
Default exists, no Issuing Bank shall be required to issue any Letter of Credit
unless the respective Issuing Bank has entered into arrangements satisfactory to
it and the Borrower to eliminate such Issuing Bank's risk with respect to the
participation in Letters of Credit of the Defaulting Lender or Lenders,
including by cash collateralizing such Defaulting Lender or Lenders' Adjusted
Percentage of the Letter of Credit Outstandings, as the case may be.
2.02 LETTER OF CREDIT REQUESTS, ETC. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Administrative Agent and the respective Issuing Bank written notice
thereof prior to 12:00 Noon (New York time) at least three Business Days' (or
such shorter period as is acceptable to the respective Issuing Bank) prior to
the proposed date of issuance (which shall be a Business Day). Each notice
shall be in the form of Exhibit C (each, a "LETTER OF CREDIT REQUEST").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 2.01(c). Unless the respective Issuing Bank has received notice
from any Lender before it issues a Letter of Credit that one or more of the
conditions specified in Section 5 or Section 6, as applicable, are not then
satisfied, or that the issuance of such Letter of Credit would violate Section
2.01(c), then such Issuing Bank shall issue the requested Letter of Credit for
the account of the Borrower in accordance with such Issuing Bank's usual and
customary practices.
(c) Each Issuing Bank shall, promptly after each issuance of,
or amendment or modification to, a Standby Letter of Credit issued by it, give
the Administrative Agent (and the Administrative Agent shall in turn promptly
forward same to each Participant and the Borrower) written notice of the
issuance of, or amendment or modification to, such Standby Letter of Credit,
which notice shall be accompanied by a copy of the Standby Letter of Credit or
Standby Letters of Credit issued by it and each such amendment or modification
thereto.
(d) Each Issuing Bank (other than Morgan Guaranty) shall
deliver to the Administrative Agent, promptly on the first Business Day of each
week, by facsimile transmission, the aggregate daily Stated Amount available to
be drawn under the outstanding Trade Letters of Credit issued by such Issuing
Bank for the previous week. The Administrative Agent shall, within 10 days
after the last Business Day of each calendar month, deliver to each Participant
a report setting forth for such preceding calendar month the aggregate daily
Stated
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Amount available to be drawn under all outstanding Trade Letters of Credit
during such calendar month.
2.03 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall be
deemed to have sold and transferred to each Lender with a Revolving Loan
Commitment, other than such Issuing Bank (each such Lender, in its capacity
under this Section 2.03, a "PARTICIPANT"), and each such Participant shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted Percentage, in such
Letter of Credit, each drawing made thereunder and the obligations of the
Borrower under this Agreement with respect thereto (although Letter of Credit
Fees shall be payable directly to the Administrative Agent for the account of
the Participants as provided in Section 3.01(b) and the Participants shall have
no right to receive any portion of any Facing Fees with respect to such Letters
of Credit), and any security therefor or guaranty pertaining thereto. Upon any
change in the Revolving Loan Commitments or Adjusted Percentages of the Lenders
pursuant to Section 1.13 or 13.04 or as a result of a Lender Default, it is
hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings, there shall be an automatic adjustment to the participations pursuant
to this Section 2.03 to reflect the new Adjusted Percentages of the assignor and
assignee Lender or of all Lenders with Revolving Loan Commitments, as the case
may be.
(b) In determining whether to pay under any Letter of Credit,
no Issuing Bank shall have any obligation relative to the other Lenders other
than to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Subject to
the provisions of the immediately preceding sentence, any action taken or
omitted to be taken by any Issuing Bank under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct, as determined by a court of competent jurisdiction, shall not create
for such Issuing Bank any resulting liability to any Credit Party or any Lender.
(c) In the event that any Issuing Bank makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to such Issuing Bank pursuant to Section 2.04(a), such Issuing
Bank shall promptly notify the Administrative Agent, which shall promptly notify
each Participant, of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted Percentage of the amount of such payment
available to such Issuing Bank, such Participant agrees to pay to such Issuing
Bank, forthwith on demand such amount, together with interest thereon, for each
day from such date until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate. The failure of any Participant to
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make available to such Issuing Bank its Adjusted Percentage of any payment
under any Letter of Credit shall not relieve any other Participant of its
obligation hereunder to make available to such Issuing Bank its Adjusted
Percentage of any Letter of Credit on the date required, as specified above,
but no Participant shall be responsible for the failure of any other
Participant to make available to such Issuing Bank such other Participant's
Adjusted Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, such Issuing Bank shall forward such
payment to the Administrative Agent, which in turn shall distribute to each
Participant which has paid its Adjusted Percentage thereof, in Dollars and in
same day funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.
(e) Upon the request of any Participant, each Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to
each Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Issuing Bank, any Participant, or
any other Person, whether in connection with this Agreement, any Letter
of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
or any of its Subsidiaries and the beneficiary named in any such Letter
of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
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2.04 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The
Borrower hereby agrees to reimburse the respective Issuing Bank, by making
payment to the Administrative Agent in immediately available funds at the
Payment Office, for any payment or disbursement made by such Issuing Bank under
any Letter of Credit (each such amount, so paid until reimbursed, an "UNPAID
DRAWING"), immediately after, and in any event on the date of such payment or
disbursement, with interest on the amount so paid or disbursed by such Issuing
Bank, to the extent not reimbursed prior to 12:00 Noon (New York time) on the
date of such payment or disbursement, from and including the date paid or
disbursed to but excluding the date such Issuing Bank was reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time PLUS the Applicable Margin for Revolving Loans maintained as
Base Rate Loans as in effect from time to time, such interest to be payable on
demand; PROVIDED, HOWEVER, to the extent such amounts are not reimbursed prior
to 12:00 Noon (New York time) on the third Business Day following receipt of
notice of such payment or disbursement, interest shall thereafter accrue on the
amounts so paid or disbursed by such Issuing Bank (and until reimbursed by the
Borrower) at a rate per annum which shall be the Base Rate in effect from time
to time PLUS the Applicable Margin for Revolving Loans maintained as Base Rate
Loans as in effect from time to time PLUS 2%, in each such case, with interest
to be payable on demand. The respective Issuing Bank shall give the Borrower
prompt notice of each Drawing under any Letter of Credit issued by it, PROVIDED
that the failure of, or delay in, giving any such notice shall in no way affect,
impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.04
to reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each, a "DRAWING") (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower or any of its
Subsidiaries may have or have had against any Lender (including in its capacity
as issuer of the Letter of Credit or as Participant), or any nonapplication or
misapplication by the beneficiary of the proceeds of such Drawing, the
respective Issuing Bank's only obligation to the Borrower being to confirm that
any documents required to be delivered under such Letter of Credit appear to
have been delivered and that they appear to substantially comply on their face
with the requirements of such Letter of Credit. Subject to the provisions of
the immediately preceding sentence, any action taken or omitted to be taken by
any Issuing Bank under or in connection with any Letter of Credit if taken or
omitted in the absence of gross negligence or willful misconduct as determined
by a court of competent jurisdiction, shall not create for such Issuing Bank any
resulting liability to the Borrower or any other Credit Party.
2.05 INCREASED COSTS. If at any time after the date of this
Agreement, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Participant with any request or directive by any such authority (whether or
not having the force of law), shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
letters of credit issued by any Issuing Bank or participated in by any
Participant, or (ii) impose on any Issuing Bank or any Participant any other
conditions relating, directly or indirectly, to this Agreement, any Letter of
Credit or such Participant's participation
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therein; and the result of any of the foregoing is to increase the cost to
any Issuing Bank or any Participant of issuing, maintaining or participating
in any Letter of Credit, or reduce the amount of any sum received or
receivable by any Issuing Bank or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of Credit (except for
changes in the rate of tax on, or determined by reference to, the net income
or profits of such Issuing Bank or such Participant, or any franchise tax
based on the net income or profits of such Issuing Bank or Participant, in
either case pursuant to the laws of the United States of America, the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein),
but without duplication of any amounts payable in respect of Taxes pursuant
to Section 4.04(a), then, upon demand to the Borrower by such Issuing Bank or
any Participant (a copy of which demand shall be sent by such Issuing Bank or
such Participant to the Administrative Agent) and subject to the provisions
of Section 13.15 (to the extent applicable), the Borrower shall pay to such
Issuing Bank or such Participant such additional amount or amounts as will
compensate such Issuing Bank or such Participant for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital. Any Issuing Bank or any Participant, upon determining that any
additional amounts will be payable pursuant to this Section 2.05, will give
prompt written notice thereof to the Borrower, which notice shall include a
certificate submitted to the Borrower by such Issuing Bank or such
Participant (a copy of which certificate shall be sent by such Issuing Bank
or such Participant to the Administrative Agent), setting forth in reasonable
detail the basis for and the calculation of such additional amount or amounts
necessary to compensate such Issuing Bank or such Participant. The
certificate required to be delivered pursuant to this Section 2.05 shall, if
delivered in good faith and absent manifest error, be final and conclusive
and binding on the Borrower, although the failure to deliver any such
certificate shall not release or diminish the Borrower's obligations to pay
additional amounts pursuant to this Section 2.05 upon subsequent receipt of
such certificate.
SECTION 3. COMMITMENT COMMISSION; FEES; REDUCTIONS OF COMMITMENT.
3.01 FEES. (a) The Borrower shall pay the Administrative
Agent for distribution to each Non-Defaulting Lender with a Revolving Loan
Commitment a commitment commission (the "COMMITMENT COMMISSION") for the
period from the Effective Date to and including the Revolving Loan Maturity
Date (or such earlier date as the Total Revolving Loan Commitment shall have
been terminated), computed at a rate for each day equal to the relevant
Applicable Margin then in effect on the daily average Unutilized Revolving
Loan Commitment of such Non-Defaulting Lender. Accrued Commitment Commission
shall be due and payable quarterly in arrears on each Quarterly Payment Date
and on the Revolving Loan Maturity Date (or such earlier date upon which the
Total Revolving Loan Commitment is terminated).
(b) The Borrower shall pay to the Administrative Agent for
PRO RATA distribution to each Non-Defaulting Lender with a Revolving Loan
Commitment (based on their respective Adjusted Percentages), a fee in respect of
each Letter of Credit issued hereunder (the "LETTER OF CREDIT FEE"), for the
period from and including the date of issuance of such Letter of Credit to and
including the termination of such Letter of Credit, computed at a rate per annum
equal to the Applicable Margin then in effect for Revolving Loans maintained as
Eurodollar
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<PAGE>
Loans on the daily average Stated Amount of such Letter of Credit. Accrued
Letter of Credit Fees shall be due and payable quarterly in arrears on each
Quarterly Payment Date and upon the first day on or after the termination of
the Total Revolving Loan Commitment upon which no Letters of Credit remain
outstanding.
(c) The Borrower shall pay to each Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued by such Issuing
Bank hereunder (the "FACING FEE"), for the period from and including the date of
issuance of such Letter of Credit to and including the termination of such
Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the daily
average Stated Amount of such Letter of Credit (or such lesser percentage as
shall be agreed by the respective Issuing Bank). Facing Fees shall be due and
payable quarterly in arrears on each Quarterly Payment Date and on the date upon
which the Total Revolving Loan Commitment has been terminated and such Letter of
Credit has been terminated in accordance with its terms.
(d) The Borrower shall pay to each Issuing Bank, upon each
payment under, issuance of, or amendment to, any Letter of Credit issued by such
Issuing Bank, such amount as shall at the time of such event be the
administrative charge which such Issuing Bank is generally imposing in
connection with such occurrence with respect to letters of credit issued by it.
(e) PCA shall pay to each Agent, for its own account, such
other fees as have been agreed to in writing by PCA Holdings and/or PCA and such
Agent.
3.02 VOLUNTARY TERMINATION OR REDUCTION OF UNUTILIZED REVOLVING
LOAN COMMITMENTS. (a) Upon at least three Business Days' prior notice to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Lenders), the Borrower shall have the
right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in whole or in part,
in integral multiples of $5,000,000 in the case of partial reductions to the
Total Unutilized Revolving Loan Commitment, PROVIDED that (i) each such
reduction shall apply proportionately to permanently reduce the Revolving Loan
Commitment of each Lender with such a Commitment and (ii) no reduction to the
Total Unutilized Revolving Loan Commitment shall be in an amount which would
cause the Revolving Loan Commitment of any Lender to be reduced (as required by
preceding clause (i)) by an amount which exceeds the remainder of (x) the
Unutilized Revolving Loan Commitment of such Lender as in effect immediately
before giving effect to such reduction MINUS (y) such Lender's Adjusted
Percentage of the aggregate principal amount of Swingline Loans then
outstanding. If at the time of any reduction to the Total Unutilized Revolving
Loan Commitment pursuant to the preceding provisions of this Section 3.02(a) the
amount of the Blocked Commitment is in excess of $0, the Borrower may specify
(in its notice of the reduction to the Total Unutilized Revolving Loan
Commitment pursuant to this Section 3.02(a)) that the amount of the reduction
shall also apply to reduce the amount of the Blocked Commitment as then in
effect (in which case the amount of the Blocked Commitment shall be so reduced)
by an amount equal to the lesser of (x) the amount of the Blocked Commitment as
in effect prior to the reduction pursuant to this sentence and (y) the amount of
the reduction to the Total Unutilized Revolving Loan Commitment then being
effected to this
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<PAGE>
Section 3.02(a); PROVIDED that if at any time the amount of the Blocked
Commitment is in excess of $0 and, as a result of any reduction to the Total
Unutilized Revolving Loan Commitment pursuant to this Section 3.02(a), any
repayment of Loans or establishment of cash collateral arrangements would be
required pursuant to Section 4.02(a), the Borrower shall make any such
required repayment or establish such cash collateral arrangements
concurrently with any such reduction.
(b) In the event of certain refusals by a Lender to consent
to certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Lenders as provided in
Section 13.12(b), the Borrower may, subject to the requirements of said Section
13.12(b), upon five Business Days' prior written notice to the Administrative
Agent at its Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Lenders), terminate all of the Revolving Loan Commitment
of such Lender so long as all Loans, together with accrued and unpaid interest,
fees and all other amounts, owing to such Lender (including all amounts, if any,
owing pursuant to Section 1.11 but excluding amounts owing in respect of any
Tranche of Term Loans maintained by such Lender, if such Term Loans are not
being repaid pursuant to Section 13.12(b)) are repaid concurrently with the
effectiveness of such termination (at which time Schedule I shall be deemed
modified to reflect such changed amounts), and at such time, unless the
respective Lender continues to have outstanding Term Loans hereunder, such
Lender shall no longer constitute a "Lender" for purposes of this Agreement,
except with respect to indemnification provisions under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and
13.06), which shall survive as to such repaid Lender.
3.03 MANDATORY REDUCTION OF COMMITMENTS. (a) The Total
Commitments (and the Tranche A Term Loan Commitment, the Tranche B Term Loan
Commitment, the Tranche C Term Loan Commitment and the Revolving Loan Commitment
of each Lender) shall terminate in its entirety on June 30, 1999 unless the
Initial Borrowing Date shall have occurred on or prior to such date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Tranche A Term Loan Commitment (and the
Tranche A Term Loan Commitment of each Lender with such a Commitment) shall (i)
terminate in its entirety on the Initial Borrowing Date (after giving effect to
the making of the Tranche A Term Loans on such date) and (ii) prior to the
termination of the Total Tranche A Term Loan Commitment as provided in clause
(i) above, be reduced from time to time to the extent required by Section 4.02.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Tranche B Term Loan Commitment (and the
Tranche B Term Loan Commitment of each Lender with such a Commitment) shall (i)
terminate in its entirety on the Initial Borrowing Date (after giving effect to
the making of the Tranche B Term Loans on such date) and (ii) prior to the
termination of the Total Tranche B Term Loan Commitment as provided in clause
(i) above, be reduced from time to time to the extent required by Section 4.02.
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<PAGE>
(d) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total Tranche C Term Loan
Commitment (and the Tranche C Term Loan Commitment of each Lender with such a
Commitment) shall (i) terminate in its entirety on the Initial Borrowing Date
(after giving effect to the making of the Tranche C Term Loans on such date)
and (ii) prior to the termination of the Total Tranche C Term Loan Commitment
as provided in clause (i) above, be reduced from time to time to the extent
required by Section 4.02.
(e) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total Revolving Loan Commitment
(and the Revolving Loan Commitment of each Lender with such a Commitment)
shall terminate in its entirety on the Revolving Loan Maturity Date.
(f) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, on each date after the Initial
Borrowing Date upon which a mandatory repayment of Term Loans pursuant to any
of Sections 4.02(e) through (j), inclusive, is required (and exceeds in
amount the aggregate principal amount of Term Loans then outstanding) or
would be required if Term Loans were then outstanding, the Total Revolving
Loan Commitment shall be permanently reduced by the amount, if any, by which
the amount required to be applied pursuant to said Sections (determined as if
an unlimited amount of Term Loans were actually outstanding) exceeds the
aggregate principal amount of Term Loans then outstanding.
(g) In addition to any other mandatory commitment reduction
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Lender with such a Commitment) shall
terminate in its entirety at 5:00 P.M. (New York time) on the Initial
Borrowing Date unless the Contribution Effective Time shall have occurred
prior to such time.
(h) Each reduction to the Total Tranche A Term Loan
Commitment, the Total Tranche B Term Loan Commitment, the Total Tranche C
Term Loan Commitment and the Total Revolving Loan Commitment pursuant to this
Section 3.03 shall be applied proportionately to reduce the Tranche A Term
Loan Commitment, the Tranche B Term Loan Commitment, the Tranche C Term Loan
Commitment or the Revolving Loan Commitment, as the case may be, of each
Lender with such a Commitment.
SECTION 4. PREPAYMENTS; PAYMENTS; TAXES.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right
to prepay the Loans, without premium or penalty except as provided by law, in
whole or in part, at any time and from time to time on the following terms
and conditions: (i) the Borrower shall give the Administrative Agent prior
to 12:00 Noon (New York time) at its Notice Office (x) at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay Term Loans or Revolving Loans maintained as
Base Rate Loans, (y) same day prior written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay Swingline Loans and
(z) at least three Business Days' (or in the case of a prepayment of
Eurodollar Loans at the end of the Interest Period therefor, one Business
Day's) prior written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay Eurodollar
-26-
<PAGE>
Loans, whether Tranche A Term Loans, Tranche B Term Loans, Tranche C Term
Loans, Revolving Loans or Swingline Loans shall be prepaid, the amount of
such prepayment, the Types of Loans to be prepaid and, in the case of
Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which
made, which notice the Administrative Agent shall (except in the case of
Swingline Loans) promptly transmit to each of the Lenders; (ii) each
prepayment shall be in an aggregate principal amount of at least $1,000,000
(or $50,000 in the case of Swingline Loans) and, in each case, if greater, in
integral multiples of $100,000 (or $50,000 in the case of Swingline Loans)
(or, in each case, such lesser amount of a Borrowing which is outstanding),
PROVIDED that if any partial prepayment of Eurodollar Loans made pursuant to
any Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, then such Borrowing may not be continued as a Borrowing of
Eurodollar Loans and any election of an Interest Period with respect thereto
given by the Borrower shall have no force or effect; (iii) at the time of any
prepayment of Eurodollar Loans pursuant to this Section 4.01 on any date
other than the last day of the Interest Period applicable thereto, the
Borrower shall pay the amounts required pursuant to Section 1.11; (iv) in the
event of certain refusals by a Lender as provided in Section 13.12(b) to
consent to certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the Required Lenders,
the Borrower may, upon five Business Days' prior written notice to the
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Lenders) repay all Loans,
together with accrued and unpaid interest, Fees, and other amounts owing to
such Lender (or owing to such Lender with respect to each Tranche which gave
rise to the need to obtain such Lender's individual consent) in accordance
with said Section 13.12(b) so long as (A) in the case of the repayment of
Revolving Loans of any Lender pursuant to this clause (iv), the Revolving
Loan Commitment of such Lender is terminated concurrently with such repayment
(at which time Schedule I shall be deemed modified to reflect the changed
Revolving Loan Commitments) and (B) the consents required by Section 13.12(b)
in connection with the repayment pursuant to this clause (iv) have been
obtained; (v) except as expressly provided in the preceding clause (iv), each
voluntary prepayment of Term Loans pursuant to this Section 4.01 shall be
applied, subject to modification of such application as set forth in Section
4.02(o), to the Tranche A Term Loans, Tranche B Term Loans and the Tranche C
Term Loans on a PRO RATA basis (based upon the then outstanding principal
amount of Tranche A Term Loans, Tranche B Term Loans and Tranche C Term
Loans); (vi) except as expressly provided in the preceding clause (iv), each
prepayment in respect of any Loans made pursuant to a Borrowing shall be
applied PRO RATA among the Loans comprising such Borrowing; PROVIDED that at
the Borrower's election in connection with any prepayment of Revolving Loans
pursuant to this Section 4.01, such prepayment shall not be applied to any
Revolving Loan of a Defaulting Lender; and (vii) each prepayment of principal
of any Tranche of Term Loans pursuant to this Section 4.01 shall be applied
to reduce the then remaining Scheduled Repayments of the respective Tranche
of Term Loans PRO RATA based upon the then remaining principal amounts of the
Scheduled Repayments of the respective Tranche after giving effect to all
prior reductions thereto; PROVIDED that unless the Borrower notifies the
Administrative Agent in writing that it does not desire that prepayments be
applied as provided in this proviso, any such prepayment of the respective
Tranche of Term Loans shall first be applied in direct order of maturity to
those Scheduled Repayments of the respective Tranche which are due within 24
months after the date of such prepayment (based upon the then
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<PAGE>
remaining principal amounts of such Scheduled Repayments after giving effect
to all prior reductions thereto), with any excess amount of such prepayment
to be applied to the then remaining Scheduled Repayments of the respective
Tranche of Term Loans on a PRO RATA basis as otherwise provided in this
clause (vii) above.
4.02 MANDATORY REPAYMENTS AND COMMITMENT REDUCTIONS. (a)(i)
On any date on which the sum of the aggregate outstanding principal amount of
the Revolving Loans made by Non-Defaulting Lenders, the outstanding principal
amount of the Swingline Loans and the Letter of Credit Outstandings on such
date exceeds the Adjusted Total Available Revolving Loan Commitment as then
in effect, the Borrower shall prepay on such date the principal of Swingline
Loans and, after the Swingline Loans have been repaid in full, Revolving
Loans of Non-Defaulting Lenders in an amount equal to such excess. If, after
giving effect to the prepayment of all outstanding Swingline Loans and all
outstanding Revolving Loans of Non-Defaulting Lenders, the aggregate amount
of the Letter of Credit Outstandings exceeds the Adjusted Total Available
Revolving Loan Commitment as then in effect, the Borrower shall pay to the
Administrative Agent at the Payment Office on such date an amount in cash
and/or Cash Equivalents equal to the amount of such excess (up to a maximum
amount equal to the Letter of Credit Outstandings at such time), such cash
and/or Cash Equivalents to be held as security for all obligations of the
Borrower to Non-Defaulting Lenders hereunder in a cash collateral account to
be established by the Administrative Agent pursuant to a cash collateral
agreement to be entered into in form and substance reasonably satisfactory to
the Administrative Agent.
(ii) On any date on which the aggregate outstanding
principal amount of the Revolving Loans made by any Defaulting Lender exceeds
the Revolving Loan Commitment of such Defaulting Lender, the Borrower shall
prepay on such date principal of Revolving Loans of such Defaulting Lender in
an amount equal to such excess.
(b) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date set forth
below, the Borrower shall be required to repay that principal amount of
Tranche A Term Loans, to the extent then outstanding, as is set forth
opposite such date (each such repayment, as the same may be reduced as
provided in Sections 4.01 and 4.02(k), a "TRANCHE A SCHEDULED REPAYMENT," and
each such date, a "TRANCHE A SCHEDULED REPAYMENT DATE"):
<TABLE>
<CAPTION>
Tranche A
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
September 30, 1999 $8,000,000
December 31, 1999 $8,000,000
March 31, 2000 $10,000,000
June 30, 2000 $10,000,000
September 30, 2000 $10,000,000
December 31, 2000 $10,000,000
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<PAGE>
March 31, 2001 $15,000,000
June 30, 2001 $15,000,000
September 30, 2001 $15,000,000
December 31, 2001 $15,000,000
March 31, 2002 $22,500,000
June 30, 2002 $22,500,000
September 30, 2002 $22,500,000
December 31, 2002 $22,500,000
March 31, 2003 $25,000,000
June 30, 2003 $25,000,000
September 30, 2003 $25,000,000
December 31, 2003 $25,000,000
March 31, 2004 $30,000,000
June 30, 2004 $30,000,000
September 30, 2004 $30,000,000
December 31, 2004 $30,000,000
Tranche A Term Loan Maturity Date $34,000,000
</TABLE>
(c) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date set forth
below, the Borrower shall be required to repay that principal amount of
Tranche B Term Loans, to the extent then outstanding, as is set forth
opposite such date (each such repayment, as the same may be reduced as
provided in Sections 4.01 and 4.02(k), a "TRANCHE B SCHEDULED REPAYMENT," and
each such date, a "TRANCHE B SCHEDULED REPAYMENT DATE"):
<TABLE>
<CAPTION>
Tranche B
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
September 30, 1999 $937,500
December 31, 1999 $937,500
March 31, 2000 $937,500
June 30, 2000 $937,500
September 30, 2000 $937,500
December 31, 2000 $937,500
March 31, 2001 $937,500
June 30, 2001 $937,500
September 30, 2001 $937,500
December 31, 2001 $937,500
March 31, 2002 $937,500
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<PAGE>
June 30, 2002 $937,500
September 30, 2002 $937,500
December 31, 2002 $937,500
March 31, 2003 $937,500
June 30, 2003 $937,500
September 30, 2003 $937,500
December 31, 2003 $937,500
March 31, 2004 $937,500
June 30, 2004 $937,500
September 30, 2004 $937,500
December 31, 2004 $937,500
March 31, 2005 $937,500
June 30, 2005 $937,500
September 30, 2005 $937,500
December 31, 2005 $937,500
March 31, 2006 $937,500
June 30, 2006 $87,421,875
September 30, 2006 $87,421,875
December 31, 2006 $87,421,875
Tranche B Term Loan Maturity Date $87,421,875
</TABLE>
(d) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date set forth
below, the Borrower shall be required to repay that principal amount of
Tranche C Term Loans, to the extent then outstanding, as is set forth
opposite such date (each such repayment, as the same may be reduced as
provided in Sections 4.01 and 4.02(k), a "TRANCHE C SCHEDULED REPAYMENT," and
each such date, a "TRANCHE C SCHEDULED REPAYMENT DATE"):
<TABLE>
<CAPTION>
Tranche C
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
September 30, 1999 $937,500
December 31, 1999 $937,500
March 31, 2000 $937,500
June 30, 2000 $937,500
September 30, 2000 $937,500
December 31, 2000 $937,500
March 31, 2001 $937,500
June 30, 2001 $937,500
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<PAGE>
September 30, 2001 $937,500
December 31, 2001 $937,500
March 31, 2002 $937,500
June 30, 2002 $937,500
September 30, 2002 $937,500
December 31, 2002 $937,500
March 31, 2003 $937,500
June 30, 2003 $937,500
September 30, 2003 $937,500
December 31, 2003 $937,500
March 31, 2004 $937,500
June 30, 2004 $937,500
September 30, 2004 $937,500
December 31, 2004 $937,500
March 31, 2005 $937,500
June 30, 2005 $937,500
September 30, 2005 $937,500
December 31, 2005 $937,500
March 31, 2006 $937,500
June 30, 2006 $937,500
September 30, 2006 $937,500
December 31, 2006 $937,500
March 31, 2007 $937,500
June 30, 2007 $86,484,375
September 30, 2007 $86,484,375
December 31, 2007 $86,484,375
Tranche C Term Loan Maturity Date $86,484,375
</TABLE>
(e) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date after the
Effective Date upon which the Borrower or any of its Subsidiaries receives
any proceeds from any sale or issuance of equity of (or cash capital
contributions to) the Borrower or any of its Subsidiaries (other than (v) the
Secondary Common Equity Issuance, (w) issuances of Borrower Common Stock to
management of the Borrower and its Subsidiaries (including, without
limitation, as a result of the exercise of options with respect to Borrower
Common Stock), (x) the Preferred Equity Issuance, (y) the issuance of
Exchange Borrower PIK Preferred Stock in accordance with the requirements of
the definition thereof and (z) the issuance of the Preferred Stock referred
to in clause (iii) of the first sentence of Section 7B.14 on the Initial
Borrowing Date) an amount equal to 50% of the cash proceeds of the respective
sale or issuance (net of underwriting discounts and commissions and other
direct
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<PAGE>
costs associated therewith, including, without limitation, legal fees and
expenses) shall be applied as a mandatory repayment of principal of
outstanding Term Loans (or, if the Initial Borrowing Date has not yet
occurred, such amounts shall be applied as a mandatory reduction to the Total
Term Loan Commitment) in accordance with the requirements of Sections 4.02(k)
and (l).
(f) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date after the
Effective Date upon which the Borrower or any of its Subsidiaries receives
any proceeds from any incurrence by the Borrower or any of its Subsidiaries
of Indebtedness (other than (x) at any time prior to the Contribution
Effective Time, Indebtedness existing pursuant to this Agreement and the
Subordinated Promissory Notes and (y) at any time thereafter, Indebtedness
permitted to be incurred pursuant to Section 9.04), an amount equal to the
cash proceeds (net of underwriting discounts and commissions and other costs
associated therewith including, without limitation, legal fees and expenses)
of the respective incurrence of Indebtedness shall be applied as a mandatory
repayment of principal of outstanding Term Loans (or, if the Initial
Borrowing Date has not yet occurred, such amounts shall be applied as a
mandatory reduction to the Total Term Loan Commitment) in accordance with the
requirements of Sections 4.02(k) and (l).
(g) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date after the
Contribution Effective Time upon which the Borrower or any of its
Subsidiaries receives any Net Asset Sale Proceeds, an amount equal to 100% of
such Net Asset Sale Proceeds shall be applied as a mandatory repayment of
principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(k) and (l); PROVIDED that:
(I) the Net Asset Sale Proceeds received by the Borrower or any of
its Subsidiaries in connection with a sale or other disposition of a
Converting Plant shall not give rise to a mandatory repayment on the date
of the receipt of such Net Asset Sale Proceeds so long as (i) no Default
or Event of Default shall have occurred and be continuing on the date of
receipt of such Net Asset Sale Proceeds, (ii) the aggregate amount of Net
Asset Sale Proceeds from such sale or other disposition of such
Converting Plant, when added to the aggregate amount of Net Asset Sale
Proceeds from all other sales or dispositions of Converting Plants
consummated in the twelve-month period prior to the respective sale or
disposition of such Converting Plant, does not exceed $60,000,000 and
(iii) the Borrower delivers an officer's certificate to the
Administrative Agent on or before the date of receipt of such Net Asset
Sale Proceeds stating that the conditions set forth in clauses (i) and
(ii) are satisfied, and that an amount equal to such Net Asset Sale
Proceeds shall be used to purchase or invest in other Converting Plants
within one year following the date of receipt of such Net Asset Sale
Proceeds (which certificate shall set forth the estimates of the proceeds
to be so expended, the proposed use of such Net Asset Sale Proceeds and
such other information with respect to such reinvestment as the
Administrative Agent may reasonably request);
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<PAGE>
(II) the Net Asset Sale Proceeds received by the Borrower or
any of its Subsidiaries in connection with any Asset Sale (other than
a Timberlands Disposition, any Asset Sale pursuant to a Permitted
Sale-Leaseback Transaction and an Asset Sale constituting a sale or
disposition of a Converting Plant) shall not give rise to a mandatory
repayment on the date of the receipt of such Net Asset Sale Proceeds
so long as (i) no Default or Event of Default shall have occurred and
be continuing on the date of receipt of such Net Asset Sale Proceeds,
(ii) the aggregate amount of Net Asset Sale Proceeds (exclusive of the
Excluded Proceeds) from the Contribution Effective Time to (and
including) the date of receipt of such Net Asset Sale Proceeds does
not exceed 5.0% of Total Relevant Assets (as determined on the last
day of the most recently ended fiscal quarter for which financial
statements have been made available to the Lenders) and (iii) the
Borrower delivers an officer's certificate to the Administrative Agent
on or before the date of receipt of such Net Asset Sale Proceeds
stating that the conditions set forth in clauses (i) and (ii) are
satisfied, and that an amount equal to such Net Asset Sale Proceeds
shall be used to purchase equipment or other productive assets of the
general type used in a Permitted Business (including capital stock of
a corporation engaged in such business) of the Borrower and its
Subsidiaries (such equipment and other assets being "ELIGIBLE ASSETS")
within one year following the date of receipt of such Net Asset Sale
Proceeds (which certificate shall set forth the estimates of the
proceeds to be so expended, the proposed use of such Net Asset Sale
Proceeds and such other information with respect to such reinvestment
as the Administrative Agent may reasonably request); and
(III) up to the Excluded Timberlands Proceeds Maximum Amount of
the Net Asset Sale Proceeds from the Timberlands Disposition (or such
lesser amount of the Net Asset Sale Proceeds from the Timberlands
Disposition as may remain after giving effect to such additional
repayments of Term Loans with such Net Asset Sale Proceeds as may be
required to establish compliance with the Leverage Ratio specified
below) (the amount of any such Net Asset Sale Proceeds excluded from
the repayment requirements of this Section 4.02(g) by virtue of this
clause (III), the "EXCLUDED TIMBERLANDS DISPOSITION PROCEEDS") shall
not give rise to a mandatory repayment on the date of receipt of such
Net Asset Sale Proceeds, so long as (i) no Default or Event of Default
shall have occurred and be continuing on the date of receipt of such
Net Asset Sale Proceeds, (ii) at least $500,000,000 of the Net Asset
Sale Proceeds received by the Borrower and its Subsidiaries from
Timberlands Dispositions have first been applied as a mandatory
repayment of principal of Term Loans as provided in this Section
4.02(g) (without regard to this proviso), (iii) the Leverage Ratio for
the Test Period then most recently ended prior to the Timberland
Dispositions resulting in such Excluded Timberlands Disposition
Proceeds is less than or equal to 4.5:1.0 after giving effect, on a
PRO FORMA Basis, to the sale of all Timberland Properties theretofore
consummated and the Capitalized Lease Obligations and operating lease
obligations, if any, incurred in connection with any leasing
arrangements with respect to Timberland Properties theretofore sold
pursuant to the Timberlands Dispositions, any increase or decrease in
fiber, stumpage or similar costs as a result of the Timberlands
Disposition and the application of such Excluded Timberlands
Disposition Proceeds as contemplated by clause (iv) below (with the
requirements described in preceding clauses (i), (ii) and (iii) being
herein called the
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"TIMBERLANDS DISPOSITION RECAPTURE/RESTRICTED PAYMENTS REQUIREMENTS")
and (iv) the Borrower delivers an officer's certificate to the
Administrative Agent on or before the date of receipt of such Excluded
Timberlands Disposition Proceeds stating that the Timberlands
Disposition Recapture/Restricted Payments Requirements are satisfied
and that such Excluded Timberlands Disposition Proceeds are to be
applied within 60 days of receipt of such Excluded Timberlands
Disposition Proceeds to the cash redemption of, or payment of cash
Dividends in respect of Borrower Common Stock, the cash redemption of
Borrower PIK Preferred Stock and/or the redemption of Senior
Subordinated Notes in accordance with the relevant provisions of this
Agreement;
PROVIDED, that (x) if all or any portion of such Net Asset Sale Proceeds
referred to in preceding clauses (I) and (II) are not so used within the one
year period following the date of the respective receipt of such Net Asset
Sale Proceeds (or, in any such case, if during such one year period the
Borrower delivers to the Administrative Agent an officer's certificate
certifying that the Board of Directors of the Borrower has adopted an
investment plan to so use such portion of such Net Asset Sale Proceeds within
the two year period following the date of the respective receipt of such Net
Asset Sale Proceeds, within such two year period), such remaining portion not
so used shall be applied on the last day of such one year (or two year, as
the case may be) period as a mandatory repayment of principal of outstanding
Term Loans in accordance with the requirements of Sections 4.02(k) and (l)
and (y) if all or any portion of the Excluded Timberlands Disposition
Proceeds are not applied as contemplated by the preceding clause III(iv) by
the 60th day following the receipt of such Excluded Timberlands Disposition
Proceeds, such remaining portion not so used shall be applied on such
Business Day as a mandatory prepayment of principal of outstanding Term Loans
in accordance with the requirements of Section 4.02(k) and (l). The use of
the Net Asset Sale Proceeds pending the reinvestment thereof pursuant to
clause (I) and (II) above shall be subject to Section 4.02(p). If the
Borrower is required to apply any portion of asset sale proceeds to prepay or
offer to prepay Indebtedness evidenced by the Senior Subordinated Notes
(under the terms of the Senior Subordinated Notes Indenture), then
notwithstanding anything contained in this Agreement to the contrary the
Borrower shall apply such asset sale proceeds as a mandatory prepayment of
the principal of outstanding Term Loans in accordance with requirements of
Sections 4.02(k) and (l).
(h) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, within 10 days following
each date after the Contribution Effective Time on which the Borrower or any
of its Subsidiaries receives any Net Insurance/Condemnation Proceeds, an
amount equal to 100% of such Net Insurance/Condemnation Proceeds shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Sections 4.02(k) and (l); PROVIDED that
the Net Insurance/Condemnation Proceeds received by the Borrower or any of
its Subsidiaries shall not give rise to a mandatory repayment within such 10
day period so long as (i) no Default or Event of Default shall have occurred
and be continuing and (ii) to the extent that (a) the amount of such Net
Insurance/Condemnation Proceeds, together with other cash available to the
Borrower and its Subsidiaries and permitted to be spent by them on Capital
Expenditures during the relevant period, equals at least 100% of the cost of
replacement or restoration of the properties or assets in respect of which
such Net Insurance/Condemnation Proceeds were paid as determined by the
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Borrower and as supported by such estimates or bids from contractors or
subcontractors or such other supporting information as the Administrative
Agent may reasonably accept, (b) the Borrower delivers an officer's
certificate to the Administrative Agent within such 10 day period (x) stating
that such Net Insurance/Condemnation Proceeds have been or shall be used
(and, if not so used, have been committed to be used) within one year of such
date of receipt of such Net Insurance/Condemnation Proceeds to replace or
restore any properties or assets in respect of which such Net
Insurance/Condemnation Proceeds were paid, (y) setting forth the proposed use
of Net Insurance/Condemnation Proceeds and such other information with
respect to such proposed use as the Administrative Agent may reasonably
request and (z) certifying its determination as required by preceding clause
(a) and the sufficiency of business interruption insurance as required by
succeeding clause (c), if applicable, and (c) if the amount of such Net
Insurance/Condemnation Proceeds exceeds $100,000,000, the Borrower delivers
such evidence as the Administrative Agent may reasonably request in form and
substance reasonably satisfactory to the Administrative Agent establishing
that the Borrower has sufficient business interruption insurance and will
receive payment thereunder in such amounts and at such times as are necessary
to satisfy all obligations and expenses of the Borrower (including, without
limitation, all debt service requirements, including pursuant to this
Agreement), without any delay or extension thereof, for the period from the
date of the respective casualty, condemnation or other event giving rise to
the receipt of such Net Insurance/Condemnation Proceeds and continuing
through the completion of the replacement or restoration of respective
properties or assets; PROVIDED HOWEVER, that if all or any portion of such
Net Insurance/Condemnation Proceeds not required to be applied as a mandatory
repayment pursuant to the preceding proviso are not so used within one year
after the date of the receipt of such Net Insurance/Condemnation Proceeds
(or, in any such case, if during such one year period the Borrower delivers
an officer's certificate to the Administrative Agent certifying that the
Board of Directors of the Borrower has adopted an investment plan to so use
such portion of such Net Insurance/Condemnation Proceeds within the two year
period following the date of the respective receipt of such Net
Insurance/Condemnation Proceeds, within such two year period), then such
remaining portion not so used shall be applied on the last day of such one
year (or two year, as the case may be) period to prepay Term Loans in
accordance with the requirements of Sections 4.02(k) and (l). The use of the
Net Insurance/Condemnation Proceeds pending the application thereof as
contemplated above shall be subject to Section 4.02(p).
(i) In addition to any other mandatory repayments pursuant
to this Section 4.02, on each Excess Cash Payment Date, an amount equal to
the Applicable Excess Cash Flow Percentage of the Excess Cash Flow for the
relevant Excess Cash Payment Period shall be applied as a mandatory repayment
of principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(k) and (l).
(j) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, (i) on the Permitted
Receivables Facility Transaction Date an amount equal to the Initial
Permitted Receivables Facility Proceeds received by the Receivables Sellers
on such date and (ii) on each date after the Permitted Receivables Facility
Transaction Date upon which the Attributed Receivables Facility Indebtedness
is incurred, the amount (if any) by which the aggregate Attributed
Receivables Facility Indebtedness at such time exceeds
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the Permitted Receivables Facility Threshold Amount as then in effect, in
each case shall be applied as a mandatory repayment of principal of
outstanding Term Loans in accordance with the requirements of Sections
4.02(k) and (l).
(k) Each amount required to be applied to Term Loans (or to
the Total Term Loan Commitment) pursuant to Sections 4.02(e), (f), (g), (h),
(i) and (j) shall be applied, subject to modification of such application as
set forth in Section 4.02(o), PRO RATA to each Tranche of Term Loans based
upon the then remaining principal amounts of the respective Tranches (with
each Tranche of Term Loans to be allocated that percentage of the amount to
be applied as is equal to a fraction (expressed as a percentage) the
numerator of which is the then outstanding principal amount of such Tranche
of Term Loans (or, if the Initial Borrowing Date has not yet occurred, the
aggregate Term Loan Commitments of the Lenders with respect to such Tranche)
and the denominator of which is equal to the then outstanding principal
amount of all Term Loans (or, if the Initial Borrowing Date has not yet
occurred, the then Total Term Loan Commitment)). Any amount required to be
applied to any Tranche of Term Loans pursuant to Sections 4.02(e), (f), (g),
(h), (i) and (j) shall be applied to repay the outstanding principal amount
of Term Loans of the respective Tranche then outstanding (or, if the Initial
Borrowing Date has not yet occurred, to reduce the Total Tranche A Term Loan
Commitment, the Total Tranche B Term Loan Commitment or the Total Tranche C
Term Loan Commitment, as the case may be). The amount of each principal
repayment of Term Loans (and the amount of each reduction to the Term Loan
Commitments) made as required by Sections 4.02(e), (f), (g), (h), (i) and (j)
shall be applied to reduce the then remaining Scheduled Repayments of the
respective Tranche on a PRO RATA basis (based upon the then remaining
principal amounts of the Scheduled Repayments of the respective Tranche after
giving effect to all prior reductions thereto); PROVIDED that unless the
Borrower notifies the Administrative Agent in writing that it does not desire
that such repayment (or reduction) be applied as provided in this proviso,
any such repayment (or reduction) shall first be applied in direct order of
maturity to reduce the then remaining Scheduled Repayments of the respective
Tranche of Term Loans which are due within 24 months after the date of such
repayment (or reduction), with any excess amount of such repayment (or
reduction) to be applied to the then remaining Scheduled Repayments on a PRO
RATA basis as otherwise provided above in this sentence.
(l) With respect to each repayment of Loans required by
this Section 4.02, the Borrower may designate the Types of Loans of the
respective Tranche which are to be repaid and, in the case of Eurodollar
Loans, the specific Borrowing or Borrowings of the respective Tranche
pursuant to which made, PROVIDED that: (i) repayments of Eurodollar Loans
pursuant to this Section 4.02 may only be made on the last day of an Interest
Period applicable thereto unless all Eurodollar Loans of the respective
Tranche with Interest Periods ending on such date of required repayment and
all Base Rate Loans of the respective Tranche have been paid in full; (ii) if
any repayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to an
amount less than the Minimum Borrowing Amount with respect thereto, such
Borrowing shall be converted at the end of the then current Interest Period
into a Borrowing of Base Rate Loans; and (iii) each repayment of any Loans
made pursuant to a Borrowing shall be applied PRO RATA among such Loans. In
the
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absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion.
(m) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, (i) all then outstanding Swingline Loans shall
be repaid in full on the Swingline Expiry Date and (ii) all other then
outstanding Loans shall be repaid in full on the respective Maturity Date for
such Loans.
(n) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, all then outstanding Loans shall be repaid in
full at 5:00 P.M. (New York time) on the Initial Borrowing Date unless the
Contribution Effective Time shall have occurred prior to such time.
(o) Notwithstanding anything to the contrary contained in
this Section 4.02 or elsewhere in this Agreement, (x) the Borrower shall have
the option, in its sole discretion, to give the Lenders with outstanding
Tranche B Term Loans (the "TRANCHE B TERM LENDERS") and Tranche C Term Loans
(the "TRANCHE C TERM LENDERS") the option to waive a voluntary prepayment of
such Loans pursuant to Section 4.01 (a "WAIVABLE VOLUNTARY REPAYMENT") and
(y) the Tranche B Lenders and Tranche C Lenders shall have the option,
without the consent of the Borrower, to waive a mandatory repayment of such
Loans pursuant to Section 4.02(e), (f), (g), (h), (i) and/or (j) (other than
a mandatory repayment of such Loans pursuant to Section 4.02(g) required to
be made with the Net Asset Sale Proceeds of the Timberlands Dispositions)
(each such repayment, a "WAIVABLE MANDATORY REPAYMENT") upon the terms and
provisions set forth in this Section 4.02(o). The Borrower shall give the
Administrative Agent written notice at least five Business Days prior to (i)
the date of each Waivable Voluntary Repayment, if it elects to exercise the
option in clause (x) of the immediately preceding sentence and (ii) the date
of each Waivable Mandatory Repayment, which notice the Administrative Agent
shall promptly forward to all Tranche B Term Lenders and Tranche C Term
Lenders (indicating in such notice the amount of such repayment to be applied
to each such Lender's outstanding Term Loans under such Tranches). The
Borrower's offer to permit such Lenders to waive any such Waivable Voluntary
Prepayment may apply to all or part of such repayment, PROVIDED that any
offer to waive part of such repayment must be made ratably to such Lenders on
the basis of their outstanding Tranche B Term Loans and Tranche C Term Loans.
In the event any such Tranche B Term Lender or Tranche C Term Lender desires
to waive such Lender's right to receive any such Waivable Voluntary Repayment
or Waivable Mandatory Repayment, as the case may be, in whole or in part,
such Lender shall so advise the Administrative Agent no later than the close
of business two Business Days after the date of such notice from the
Administrative Agent, which notice shall also include the amount such Lender
desires to receive in respect of such repayment. If any Lender does not
reply to the Administrative Agent within such two Business Day period, it
will be deemed not to have waived any part of such repayment. If any Lender
does not specify an amount it wishes to receive, it will be deemed to have
accepted 100% of the total payment. In the event that any such Lender waives
all or part of such right to receive any such Waivable Voluntary Repayment or
Waivable Mandatory Repayment, the Administrative Agent shall apply 100% of
the amount so waived by such Lender to the Tranche A Term Loans in accordance
with Section 4.01 or Section 4.02(k), as the case may be. Notwithstanding
the foregoing, in no event
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shall the amount of a Waivable Repayment exceed the aggregate principal
amount of Tranche A Term Loans that will be outstanding after Lenders with
outstanding Tranche A Term Loans receive their respective shares of voluntary
prepayments or mandatory repayments, as the case may be, pursuant to Section
4.01 or 4.02(k), as the case may be (I.E., before giving effect to any
application of such Waivable Repayment to Tranche A Loans pursuant to this
Section 4.02(o)).
(p) Notwithstanding anything to the contrary set forth
above, if at any time the aggregate amount of Net Asset Sale Proceeds not
theretofore reinvested in Converting Plants or Eligible Assets as permitted
pursuant to clause (I) or (II) of Section 4.02(g), when added to the
aggregate amount of Net Insurance/Condemnation Proceeds not theretofore used
to replace or restore any properties or assets as provided in Section
4.02(h), exceeds $100,000,000, then the entire amount of such Net Asset Sale
Proceeds and/or Net Insurance/Condemnation Proceeds and not just the portion
in excess of $100,000,000 shall be deposited with the Administrative Agent in
a cash collateral account (the "CASH COLLATERAL ACCOUNT") pursuant to cash
collateral arrangements reasonably satisfactory to the Administrative Agent
whereby such proceeds shall be disbursed to the Borrower from time to time as
needed to pay or reimburse the Borrower or such Subsidiary for actual costs
incurred by it in connection with the purchase of Converting Plants or
Eligible Assets or the replacement or restoration of the respective
properties or assets giving rise to the receipt of such Net
Insurance/Condemnation Proceeds, as the case may be, PROVIDED that (1) at any
time while an Event of Default has occurred and is continuing, the Required
Lenders may direct the Administrative Agent (in which case the Administrative
Agent shall, and is hereby authorized by the Borrower to, follow said
directions) to apply any or all proceeds then on deposit in the Cash
Collateral Account to the repayment of Obligations hereunder in the same
manner as proceeds would be applied pursuant to the PCA Security Agreement
and (2) at the election of the Borrower (which election shall be notified in
writing to the Administrative Agent) all or a portion of the amount otherwise
required to be deposited in the Cash Collateral Account shall not be required
to be so deposited but instead shall be applied to repay outstanding
Revolving Loans (whereupon an amount equal to the aggregate principal amount
of Revolving Loans so repaid shall be added to the Blocked Commitment and a
portion of the Total Revolving Loan Commitment equal to the Blocked
Commitment then in effect shall automatically (and without further action) be
blocked), PROVIDED that the Borrower shall not have the right to make such an
election to the extent that, after giving effect thereto, the Total Revolving
Loan Commitment would not exceed the Blocked Commitment by at least
$50,000,000.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Administrative Agent for the account of the Lender or
Lenders entitled thereto not later than 12:00 Noon (New York time) on the
date when due and shall be made in Dollars in immediately available funds at
the Payment Office. Any payments under this Agreement or under any Note
which are made later than 12:00 Noon (New York time) shall be deemed to have
been made on the next succeeding Business Day. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable at the applicable rate during such extension.
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4.04 NET PAYMENTS; TAXES. (a) All payments made by any
Credit Party hereunder or under any Note will be made without setoff,
counterclaim or other defense. Except as provided in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by
any jurisdiction or by any political subdivision or taxing authority thereof
or therein with respect to such payments (but excluding, except as provided
in the second succeeding sentence, any tax imposed on or measured by the net
income or net profits of a Lender pursuant to the laws of the jurisdiction in
which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Lender is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect to such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"TAXES"). If any Taxes are so levied or imposed, the Borrower agrees to pay
the full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note.
If any amounts are payable in respect of Taxes pursuant to the preceding
sentence, the Borrower agrees to reimburse each Lender, upon the written
request of such Lender, for taxes imposed on or measured by the net income or
net profits of such Lender pursuant to the laws of the jurisdiction in which
such Lender is organized or in which the principal office or applicable
lending office of such Lender is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which such Lender
is organized or in which the principal office or applicable lending office of
such Lender is located and for any withholding of taxes as such Lender shall
determine are payable by, or withheld from, such Lender, in respect of such
amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Lender
pursuant to this sentence. The Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any Taxes is due pursuant
to applicable law certified copies of tax receipts or, to the extent such tax
receipts are not available, other items reasonably evidencing such payment by
the Borrower. The Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes agrees to deliver to the Borrower and the Administrative Agent
on or prior to the Effective Date, or in the case of a Lender that is an
assignee or transferee of an interest under this Agreement pursuant to
Section 1.13 or 13.04 (unless the respective Lender was already a Lender
hereunder immediately prior to such assignment or transfer), on the date of
such assignment or transfer to such Lender, (i) two accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments to be
made under this Agreement and under any Note, or (ii) if the Lender is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause
(i) above, (x) a certificate substantially in the form of Exhibit D (any such
certificate, a "SECTION
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4.04(b)(ii) CERTIFICATE") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Lender's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made under this
Agreement and under any Note. In addition, each Lender agrees that from time
to time after the Effective Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in
any material respect, it will deliver to the Borrower and the Administrative
Agent two new accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii)
Certificate, as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Lender to a continued
exemption from or reduction in United States withholding tax with respect to
payments under this Agreement and any Note, or it shall immediately notify
the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate, in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this Section 4.04(b).
Notwithstanding anything to the contrary contained in Section 4.04(a), but
subject to Section 13.04(b) and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or
any political subdivision or taxing authority thereof or therein) from
interest, Fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the
extent that such Lender has not provided to the Borrower U.S. Internal
Revenue Service Forms that establish a complete exemption from such deduction
or withholding and (y) the Borrower shall not be obligated pursuant to
Section 4.04(a) hereof to gross-up payments to be made to a Lender in respect
of income or similar taxes imposed by the United States if (I) such Lender
has not provided to the Borrower the Internal Revenue Service Forms required
to be provided to the Borrower pursuant to this Section 4.04(b) or (II) in
the case of a payment, other than interest, to a Lender described in clause
(ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section
4.04 and except as set forth in Section 13.04(b), the Borrower agrees to pay
any additional amounts and to indemnify each Lender in the manner set forth
in Section 4.04(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any Taxes deducted or
withheld by it as described in the immediately preceding sentence as a result
of any changes after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of such Taxes.
(c) If the Borrower pays any additional amount under this
Section 4.04 to a Lender and such Lender determines in its sole discretion
that it has actually received or realized in connection therewith any refund
or any reduction of, or credit against, its tax liabilities in or with
respect to the taxable year in which the additional amount is paid (a "Tax
Benefit"), such Lender shall pay to the Borrower an amount that the Lender
shall, in its sole discretion, determine is equal to the net benefit, after
tax, which was obtained by the Lender in such year as a consequence of such
Tax Benefit; provided, however, that (i) any Lender may determine, in its
sole discretion consistent with the policies of such Lender, whether to seek
a Tax Benefit; (ii) any Taxes that are imposed on a Lender as a result of a
disallowance or reduction (including
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through the expiration of any tax credit carryover or carryback of such
Lender that otherwise would not have expired) of any Tax Benefit with respect
to which such Lender has made a payment to the Borrower pursuant to this
Section 4.04(c) shall be treated as a Tax for which the Borrower is obligated
to indemnify such Lender pursuant to this Section 4.04 without any exclusions
or defenses; and (iii) nothing in this Section 4.04(c) shall require the
Lender to disclose any confidential information to the Borrower (including,
without limitation, its tax returns).
(d) The provisions of this Section 4.04 are subject to the
provisions of Section 13.15 (to the extent applicable).
SECTION 5. CONDITIONS PRECEDENT TO LOANS. The obligation of
each Lender to make Loans, and the obligation of each Issuing Bank to issue
Letters of Credit, in each case on the Initial Borrowing Date, is subject at
the time of the making of such Loans or the issuance of such Letters of
Credit to the satisfaction of the following conditions:
5.01 EXECUTION OF AGREEMENT; NOTES. On or prior to the
Initial Borrowing Date (i) the Effective Date shall have occurred and (ii)
there shall have been delivered to the Administrative Agent for the account
of each Lender which has requested the same and for delivery after the
Contribution Effective Time, the appropriate Tranche A Term Note, Tranche B
Term Note, Tranche C Term Note and/or Revolving Note and to the Swingline
Lender if so requested, the Swingline Note, in each case executed by the
Borrower and in the amount, maturity and as otherwise provided herein.
5.02 FEES, ETC. On the Initial Borrowing Date, all costs,
fees and expenses and all other compensation (including, without limitation,
legal fees and expenses, title insurance premiums, survey charges and
recording taxes and fees) payable to the Agents, the Co-Lead Arrangers and
the Lenders shall have been paid to the extent then due and to the extent
that a statement or statements for such amounts shall have been provided to
the Borrower by no later than the Business Day immediately preceding the
Initial Borrowing Date.
5.03 OPINIONS OF COUNSEL. On the Initial Borrowing Date, the
Administrative Agent shall have received from (i) Jenner & Block, special
counsel to Tenneco and TPI and its Subsidiaries, an opinion addressed to the
Agents, the Collateral Agent and each of the Lenders and dated the Initial
Borrowing Date covering the matters set forth in Exhibit E-1 and such other
matters incident to the transactions contemplated herein as the Agents and
the Required Lenders may reasonably request and in form and substance
reasonably satisfactory to the Agents and the Required Lenders, (ii) Kirkland
& Ellis, special counsel to PCA and its Subsidiaries, which opinion shall
cover the matters contained in Exhibit E-2 and such other matters incident to
the transactions contemplated herein as the Agents and the Required Lenders
may reasonably request and in form and substance reasonably satisfactory to
the Agents and the Required Lenders, (iii) counsel rendering such opinions,
reliance letters addressed to each Agent and each of the Lenders and dated
the Initial Borrowing Date, with respect to certain other legal opinions
delivered in connection with the Transaction, which opinions shall cover such
matters as the Agents may reasonably request and be in form and substance
reasonably satisfactory to the Agents and (iv)
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local counsel satisfactory to the Administrative Agent, opinions each of
which (x) shall be addressed to each Agent, the Collateral Agent and each of
the Lenders and be dated the Initial Borrowing Date, (y) shall be in form and
substance reasonably satisfactory to the Agents and the Required Lenders and
(z) shall cover the perfection of security interests granted pursuant to the
PCA Security Agreement and the Mortgages and such other matters incident to
the transactions contemplated herein as the Agents may reasonably request.
5.04 CORPORATE DOCUMENTS; PROCEEDINGS; ETC. (a) On the
Initial Borrowing Date, the Administrative Agent shall have received a
certificate, dated the Initial Borrowing Date, signed by the Chairman of the
Board, the Chief Financial Officer, the President or any Vice President of
each Credit Party, and attested to by the Secretary or any Assistant
Secretary of such Credit Party, as the case may be, in the form of Exhibit F
with appropriate insertions, together with copies of the Certificate of
Incorporation and By-Laws (or equivalent organizational documents) of such
Credit Party and the resolutions of such Credit Party referred to in such
certificate, and the foregoing shall be reasonably satisfactory to the Agents.
(b) All corporate and legal proceedings and all material
instruments and agreements in connection with the transactions contemplated
by this Agreement and the other Documents shall be reasonably satisfactory in
form and substance to the Agents and the Required Lenders, and the
Administrative Agent shall have received all information and copies of all
documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams
or facsimiles, if any, which any Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
(c) On the Initial Borrowing Date and after giving effect
to the Transaction, the ownership and capital structure (including, without
limitation, the terms of any capital stock, options, warrants or other
securities issued by the Borrower or any of its Subsidiaries), and management
of PCA and its Subsidiaries shall be in form and substance satisfactory to
the Agents and the Required Lenders.
5.05 EMPLOYEE BENEFIT PLANS; SHAREHOLDERS' AGREEMENTS;
MANAGEMENT AGREEMENTS; DEBT AGREEMENTS; TAX SHARING AGREEMENTS; EMPLOYMENT
AGREEMENTS; COLLECTIVE BARGAINING AGREEMENTS AND MATERIAL CONTRACTS. (a) On
the Initial Borrowing Date, there shall have been made available or delivered
to the Administrative Agent true and correct copies, certified as true and
complete by an appropriate officer of PCA, of the following documents, in
each case as the same will be in effect on the Initial Borrowing Date after
the consummation of the Transaction:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of the
most recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined
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in Section 3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees
of the PCA or any of its Subsidiaries or any ERISA Affiliate (provided
that the foregoing shall apply in the case of any multiemployer plan,
as defined in 4001(a)(3) of ERISA, only to the extent that any
document described therein is in the possession of TPI, PCA or any of
their respective Subsidiaries or any ERISA Affiliate or reasonably
available thereto from the sponsor or trustee of any such plan)
(collectively, the "EMPLOYEE BENEFIT PLANS").
(b) On the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent true and correct copies, certified as true
and complete by an officer of PCA, of the following documents, in each case as
the same will be in effect on the Initial Borrowing Date after the consummation
of the Transaction:
(i) all agreements entered into by PCA or any of its
Subsidiaries governing the terms and relative rights of its capital stock
and any agreements entered into by shareholders relating to any such
entity with respect to its capital stock (collectively, the
"SHAREHOLDERS' AGREEMENTS");
(ii) all agreements with members of, or with respect to, the
management of PCA or any of its Subsidiaries after giving effect to the
Transaction (collectively, the "MANAGEMENT AGREEMENTS");
(iii) all agreements evidencing or relating to Indebtedness of
PCA or any of its Subsidiaries which is to remain outstanding immediately
after giving effect to the Transaction (collectively, the "DEBT
AGREEMENTS");
(iv) all tax sharing, tax allocation and other similar
agreements entered into by PCA or any of its Subsidiaries (collectively,
the "TAX SHARING AGREEMENTS");
(v) any material employment agreements to which PCA or any of
its Subsidiaries is a party after giving effect to the Transaction
(collectively, the "EMPLOYMENT AGREEMENTS");
(vi) all collective bargaining agreements applying or relating
to any employee of PCA or any of its Subsidiaries after giving effect to
the Transaction (collectively, the "COLLECTIVE BARGAINING AGREEMENTS");
and
(vii) all other material contracts and licenses of PCA and any
of its Subsidiaries after giving effect to the Transaction (collectively,
the "MATERIAL CONTRACTS");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Debt Agreements, Tax Sharing Agreements, Employment Agreements,
Collective Bargaining Agreements and Material Contracts shall be in form and
substance reasonably satisfactory to the Agents and shall be in full force and
effect on the Initial Borrowing Date.
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5.06 CAPITALIZATION; CONTRIBUTION; ETC. (a) On or prior to
the Initial Borrowing Date, (i) PCA shall have received cash proceeds in an
amount equal to at least $236,500,000 from the issuance of Borrower Common
Stock to PCA Holdings and the Management Participants (the "INITIAL COMMON
EQUITY ISSUANCE"), (ii) TPI shall have received gross cash proceeds from the
issuance of the Subordinated Promissory Notes in an aggregate principal
amount of $550,000,000 and deposited the full amount of such proceeds in the
Sub Debt Restricted Account as security for the obligations of TPI under the
Subordinated Promissory Notes Documents, (iii) PCA shall have received gross
cash proceeds of approximately $100,000,000 from the issuance of Borrower PIK
Preferred Stock (the "PREFERRED EQUITY ISSUANCE"), (iv) the cash proceeds
received from the Initial Common Equity Issuance, the Preferred Equity
Issuance and the issuance of the Subordinated Promissory Notes, when added to
the aggregate principal amount of Term Loans and Revolving Loans incurred on
the Initial Borrowing Date, shall be sufficient to effect the Transaction and
to pay fees and expenses in connection therewith and (v) the amounts on
deposit in the Sub Debt Restricted Account and the Restricted Account shall
be sufficient to effect the Refinancing.
(b) On the Initial Borrowing Date, the Administrative Agent
shall have received true and correct copies of all Contribution Documents,
Common Equity Financing Documents, Borrower Preferred Stock Documents,
Subordinated Promissory Notes Documents and Senior Subordinated Notes
Documents, all of which shall be in full force and effect, and all terms and
conditions of the foregoing Documents (including, without limitation, in the
case of the Subordinated Promissory Notes Documents and the Senior
Subordinated Notes Documents, amortization, maturities, interest rates,
covenants, defaults, remedies, sinking fund provisions and subordination
provisions and, in the case of Borrower PIK Preferred Stock, maturity,
limitation on cash dividends payable, dividend rate, conversion features,
covenants and redemption provisions) shall be in form and substance
reasonably satisfactory to the Agents and Required Lenders.
(c) On the Initial Borrowing Date, all conditions precedent
to the consummation of the Transaction as set forth in the Contribution
Documents, the Common Equity Financing Documents, the Borrower Preferred
Stock Documents, the Subordinated Promissory Notes Documents and the Senior
Subordinated Note Documents shall have been satisfied in all material
respects, and not waived unless consented to by the Administrative Agent and
the Required Lenders, to the satisfaction of the Administrative Agent and the
Required Lenders except, (x) in the case of the Contribution Documents, the
consummation of the Refinancing from funds on deposit in the Sub Debt
Restricted Account and the Restricted Account and (y) in the case of the
Exchange, the consummation of the Refinancing and the Contribution.
(d) On the Initial Borrowing Date, each of the Initial
Common Equity Issuance, the Borrower Preferred Stock Issuance and the
issuance of the Subordinated Promissory Notes shall have been consummated in
accordance with the terms and conditions of the applicable Documents and all
applicable law.
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5.07 REFINANCING; EXISTING INDEBTEDNESS. (a) On the Initial
Borrowing Date (but prior to or concurrently with the consummation of the
Contribution and concurrently with the assumption of the Loans by PCA on such
date), all Indebtedness to be Refinanced shall have been repaid in full by
TPI and all commitments in respect thereof shall have been terminated and all
Liens and guaranties in connection therewith shall have been terminated (and
all appropriate releases, termination statements or other instruments of
assignment with respect thereto shall have been obtained) to the reasonable
satisfaction of the Agents. Without limiting the foregoing, there shall have
been delivered to the Administrative Agent (x) proper termination statements
(Form UCC-3 or the appropriate equivalent) for filing under the UCC of each
jurisdiction where a financing statement (Form UCC-1 or the appropriate
equivalent) was filed with respect to TPI or any of its Subsidiaries in
connection with the security interest created with respect to the
Indebtedness to be Refinanced and the documentation related thereto, (y)
terminations of all mortgages, leasehold mortgages and deeds of trust created
with respect to property of TPI or any of its Subsidiaries, in each case, to
secure the obligations under the Indebtedness to be Refinanced, all of which
shall be in form and substance satisfactory to the Agents and (z)
instructions to transfer, contemporaneously with the consummation of the
Contribution, funds on deposit in the Sub Debt Restricted Account and the
Restricted Account to the holders of Indebtedness to be Refinanced which
shall have not been repaid in full.
(b) On the Initial Borrowing Date and after giving effect
to the Transaction, the Borrower and its Subsidiaries shall have no
Indebtedness or preferred stock outstanding other than (i) the Loans, (ii)
the Senior Subordinated Notes, (iii) the Borrower PIK Preferred Stock and
(iv) certain other indebtedness existing on the Initial Borrowing Date
acceptable to the Agents and the Required Lenders as listed on Schedule V.A
hereto in an aggregate outstanding principal amount not to exceed $250,000
(with the Indebtedness described in this sub-clause (iv) being herein called
the "EXISTING INDEBTEDNESS"). On and as of the Initial Borrowing Date, all
of the Existing Indebtedness shall remain outstanding after giving affect to
the Transaction and the other transactions contemplated hereby without any
default or event of default existing thereunder or arising as a result of the
Transaction and the other transactions contemplated hereby (except to the
extent amended or waived by the parties thereto on terms and conditions
reasonably satisfactory to the Agents and the Required Lenders).
(c) On the Initial Borrowing Date, the Administrative Agent
shall have received evidence in form and substance reasonably satisfactory to
the Agents that the matters set forth in this Section 5.07 have been
satisfied.
5.08 GUARANTIES. (a) On the Initial Borrowing Date, each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiaries Guaranty in the form of Exhibit G-1 (as modified, supplemented
or amended from time to time, the "SUBSIDIARIES GUARANTY"), and the
Subsidiaries Guaranty shall automatically become effective upon the
consummation of the Contribution.
(b) On Initial Borrowing Date, Tenneco shall have duly
authorized, executed and delivered a Guaranty in a form of Exhibit G-2 (as
modified, supplemented or amended from time to time, the "TENNECO GUARANTY"),
and the Tenneco Guaranty shall be in full force and effect
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(it being understood that the Tenneco Guaranty shall be fully released at the
Contribution Effective Time).
5.09 PLEDGE AGREEMENT. On the Initial Borrowing Date, PCA and
each Subsidiary Guarantor shall have duly authorized, executed and delivered
a Pledge Agreement in the form of Exhibit H (as modified, supplemented or
amended from time to time, the "PLEDGE AGREEMENT"), and the Pledge Agreement
shall automatically become effective upon the consummation of the
Contribution.
5.10 SECURITY AGREEMENT. (a) On the Initial Borrowing Date,
TPI shall have duly authorized, executed and delivered a Security Agreement
in the form of Exhibit I-1 (as modified, supplemented or amended from time to
time, the "TPI SECURITY AGREEMENT") covering all of the TPI Security
Agreement Collateral, and the TPI Security Agreement shall be in full force
and effect (it being understood that the TPI Security Agreement shall be
fully released at the Contribution Effective Time).
(b) On the Initial Borrowing Date, each of PCA and each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Security Agreement in the form of Exhibit I-2 (as modified, supplemented or
amended from time to time, the "PCA SECURITY AGREEMENT") covering all of the
PCA Security Agreement Collateral, in each case together with:
(i) proper Financing Statements (Form UCC-1) fully executed
for filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported
to be created by the PCA Security Agreement upon the consummation of the
Contribution;
(ii) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, each of a recent date listing all
effective financing statements that name any Credit Party (other than
Tenneco) as debtor and that are filed in the jurisdictions referred to in
clause (a) above, together with copies of such other financing statements
(none of which shall cover the Collateral except to the extent evidencing
Permitted Liens or in respect of which the Collateral Agent shall have
received termination statements (Form UCC-3) or such other termination
statements as shall be required by local law) fully executed for filing;
(iii) evidence of execution for post-closing filing and
recordation of all other recordings and filings of, or with respect to,
the PCA Security Agreement as may be necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by such PCA Security Agreement upon the
consummation of the Contribution; and
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the PCA
Security Agreement upon the consummation of the Contribution have been
taken;
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and the PCA Security Agreement shall automatically become effective upon the
consummation of the Contribution.
5.11 MORTGAGES; TITLE INSURANCE; SURVEYS; ETC. On the Initial
Borrowing Date, the Collateral Agent shall have received:
(a) fully executed counterparts of mortgages, deeds of trust
or deeds to secure debt, in each case in form and substance reasonably
satisfactory to the Collateral Agent (as amended, modified or
supplemented from time to time, each, a "MORTGAGE" and, collectively, the
"MORTGAGES"), which Mortgages shall cover such of the Real Property owned
or leased by PCA or any Subsidiary Guarantor (after giving effect to the
Transaction) as shall be designated as "Mortgaged Properties" on Schedule
III (each, a "MORTGAGED PROPERTY" and, collectively, the "MORTGAGED
PROPERTIES"), together with evidence that counterparts of the Mortgages
have been delivered to the title insurance company insuring the Lien of
the Mortgages (other than the Woodland Mortgages) for recording in all
places to the extent necessary or, in the reasonable opinion of the
Collateral Agent, desirable to effectively create (upon the consummation
of the Contribution) a valid and enforceable first priority mortgage
lien, subject only to Permitted Encumbrances, on each Mortgaged Property
in favor of the Collateral Agent (or such other trustee as may be
required or desired under local law) for the benefit of the Secured
Creditors;
(b) mortgagee title insurance policies (the "MORTGAGE
POLICIES") on each of the mill sites located in Valdosta, Georgia,
Counce, Tennessee, Filer City, Michigan and Tomahawk, Wisconsin
(collectively, the "MILLS") issued by Chicago Title Insurance Company in
amounts satisfactory to the Collateral Agent and the Required Lenders and
assuring the Collateral Agent that, upon the consummation of the
Contribution, the Mortgages on the Mills are valid and enforceable first
priority mortgage liens on the respective Mills, free and clear of all
defects and encumbrances except Permitted Encumbrances, and such Mortgage
Policies shall otherwise be in form and substance reasonably satisfactory
to the Collateral Agent and (i) include the following endorsements (if
available); comprehensive, survey, contiguity, usury, creditor's rights,
subsequent advance, tax, doing-business, street, variable rate, zoning,
environmental protection, subdivision, tax deed, first loss, last dollar
and tie-in, (ii) shall not include an exception for mechanics' liens, and
(iii) shall provide for affirmative insurance and such reinsurance as the
Collateral Agent in its discretion may reasonably request;
(c) binding commitments to issue title insurance policies
from Chicago Title Insurance Company on each Mortgaged Property other
than the Mills and the Woodland Properties;
(d) surveys in form and substance reasonably satisfactory to
the Collateral Agent of each of the Mills, dated a recent date reasonably
acceptable to the Collateral Agent and certified in a manner reasonably
satisfactory to the Collateral Agent by a licensed professional surveyor
satisfactory to the Collateral Agent; and
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(e) duly authorized, fully executed, acknowledged and
delivered landlord-lender agreements or owner-lender agreements and
landlord consents and waivers and such other documents relating to the
Leaseholds and all the foregoing shall be in form and substance
reasonably satisfactory to the Collateral Agent.
5.12 CONSENT LETTER. On the Initial Borrowing Date, the
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019, substantially
in the form of Exhibit J, indicating its consent to its appointment by each
of PCA and each Subsidiary Guarantor as its agent to receive service of
process as specified in Section 13.08 or the Subsidiaries Guaranty, as the
case may be.
5.13 MATERIAL ADVERSE CHANGE, ETC. (a) Since December 31,
1998, nothing shall have occurred which has had, or would reasonably be
expected to have, (i) a material adverse effect on the rights or remedies of
the Lenders or the Agents hereunder or under any other Credit Document or on
the ability of any Credit Party to perform its obligations to them hereunder
or under any other Credit Document, (ii) a material adverse effect on the
Transaction or (iii) a Material Adverse Effect.
(b) On or prior to the Initial Borrowing Date, all
necessary governmental (domestic and foreign), regulatory and third party
approvals and/or consents (including any necessary anti-trust approvals or
consents) in connection with the Transaction, the transactions contemplated
by the Documents and otherwise referred to herein or therein shall have been
obtained and remain in full force and effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Transaction, the making of Loans or the
transactions contemplated by the Documents. Additionally, there shall not
exist any judgment, order, injunction or other restraint or a hearing seeking
injunctive relief or other restraint pending or notified prohibiting or
imposing materially adverse conditions upon, or materially delaying, or
making economically unfeasible, the Transaction or the transactions
contemplated by the Documents.
5.14 LITIGATION. On the Initial Borrowing Date, no actions,
suits, proceedings or investigations by any entity (private or governmental)
shall be pending or threatened (a) with respect to this Agreement or any
other Document or the Transaction or (b) which would reasonably be expected
to have (i) a Material Adverse Effect or (ii) a material adverse effect on
the Transaction, the rights or remedies of the Lenders or the Agents
hereunder or under any other Credit Document or on the ability of any Credit
Party to perform its respective obligations to the Lenders or the Agents
hereunder or under any other Credit Document.
5.15 SOLVENCY CERTIFICATE; INSURANCE. On or before the
Initial Borrowing Date, the Borrower shall cause to be delivered to the
Administrative Agent (i) a solvency certificate from the chief financial
officer of PCA in the form of Exhibit K hereto, which shall be addressed to
the Agents and each of the Lenders and be dated the Initial Borrowing Date,
setting forth the conclusion that, after giving effect to the Transaction and
the incurrence of all the financings contemplated herein, the Borrower (on a
stand-alone basis) and the Borrower and its Subsidiaries
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(on a consolidated basis), in each case, are not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection therewith, and
will not be left with unreasonably small capital with which to engage in its
or their businesses and will not have incurred debts beyond its or their
ability to pay debts as they mature and become due and (ii) certificates of
insurance complying with the requirements of Section 8.03 for the business
and properties of PCA and its Subsidiaries (including the Containerboard
Business), in scope, form and substance reasonably satisfactory to the Agents
and naming the Collateral Agent as an additional insured, mortgagee and/or
loss payee, and stating that such insurance shall not be canceled or revised
without 30 days' prior written notice by the insurer to the Collateral Agent.
5.16 PRO FORMA BALANCE SHEET; FINANCIAL STATEMENTS;
PROJECTIONS. On or prior to the Initial Borrowing Date, the Agents and the
Lenders shall have received true and correct copies of the financial
statements (including the PRO FORMA financial statements) and Projections
referred to in Sections 7B.05(a), (b) and (e), as applicable, together with a
related funds flow memorandum, and all of the foregoing shall be in form and
substance reasonably satisfactory to the Agents and the Required Lenders.
5.17 MARKET DISRUPTION, ETC. On or prior to the Initial
Borrowing Date, there shall have been no material change in or material
disruption of financial, bank syndication or capital market conditions (from
those which existed on January 25, 1999) that in the good faith judgment of
the Co-Lead Arrangers would reasonably be expected to have a material adverse
effect on syndication of the Loans and/or the Commitments.
5.18 PCA ACKNOWLEDGEMENT AND AGREEMENT. On or prior to the
Initial Borrowing Date, PCA shall have duly authorized, executed and
delivered an Acknowledgement and Agreement in the form of Exhibit N (as
modified, supplemented or amended from time to time, the "PCA ACKNOWLEDGEMENT
AND AGREEMENT"), and the PCA Acknowledgement and Agreement shall
automatically become effective upon the consummation of the Contribution.
5.19 BANK CREDIT AGREEMENT ASSIGNMENT AND ASSUMPTION
AGREEMENT. On or prior to the Initial Borrowing Date, TPI and PCA shall have
duly authorized, executed and delivered an Assignment and Assumption
Agreement in the form of Exhibit O (as modified, supplemented or amended from
time to time, the "BANK CREDIT AGREEMENT ASSIGNMENT AND ASSUMPTION
AGREEMENT"), and the Bank Credit Agreement Assignment and Assumption
Agreement shall automatically become effective upon the consummation of the
Contribution.
SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The
obligation of each Lender to make Loans (including Loans made on the Initial
Borrowing Date but excluding Mandatory Borrowings made thereafter, which
shall be made as provided in Section 1.01(f)), and the obligation of an
Issuing Bank to issue any Letter of Credit, is subject, at the time of each
such Credit Event (except as hereinafter indicated), to the satisfaction of
the following conditions:
6.01 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time
of each such Credit Event and also after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in any other Credit Document shall be true and
correct in all material respects with the same effect as though such
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representations and warranties had been made on the date of such Credit Event
(it being understood and agreed that any representation or warranty which by
its terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date).
6.02 NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior
to the making of each Loan (excluding Swingline Loans and Mandatory
Borrowings), the Administrative Agent shall have received the notice required
by Section 1.03(a). Prior to the making of any Swingline Loan, the Swingline
Lender shall have received the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.02(a).
The occurrence of the Initial Borrowing Date and the acceptance of the
proceeds of each Credit Event shall constitute a representation and warranty
by the Borrower to the Administrative Agent and each of the Lenders that all
the conditions specified in Section 5 and in this Section 6 and applicable to
such Credit Event have been satisfied as of that time. All of the Notes,
certificates, legal opinions and other documents and papers referred to in
Section 5 and in this Section 6, unless otherwise specified, shall be
delivered to the Administrative Agent at the Notice Office for the account of
each of the Lenders and, except for the Notes, in sufficient counterparts for
each of the Lenders and shall be in form and substance reasonably
satisfactory to the Administrative Agent.
SECTION 7A. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order
to induce the Lenders to enter into this Agreement and to make the Loans, and
issue (or participate in) the Letters of Credit as provided herein, TPI
hereby makes the following representations, warranties and agreements, in
each case after giving effect to each element of the Transaction being
consummated prior to the Contribution Effective Time, all of which shall
survive the execution and delivery of this Agreement and the Notes and the
making of the Loans and issuance of the Letters of Credit, with the
occurrence of the Initial Borrowing Date and each Credit Event on the Initial
Borrowing Date and prior to the Contribution Effective Time being deemed to
constitute a representation and warranty that the matters specified in this
Section 7A are true and correct in all material respects on and as of the
Initial Borrowing Date (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date):
7A.01 CORPORATE STATUS. Each of Tenneco and each of TPI and
its Subsidiaries (i) is a duly organized and validly existing corporation or
limited liability company, as the case may be, in good standing under the
laws of the jurisdiction of its incorporation and (ii) has the corporate or
other applicable power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to engage.
7A.02 CORPORATE POWER AND AUTHORITY. Each Tenneco Party has the
corporate or other applicable power and authority to execute, deliver and
perform the terms and provisions of each of the Credit Documents to which it is
party and has taken all necessary corporate or other
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applicable action to authorize the execution, delivery and performance by it
of each of such Credit Documents. Each Tenneco Party has duly executed and
delivered each of the Credit Documents to which it is party, and each of such
Credit Documents constitutes the legal, valid and binding obligation of such
Tenneco Party enforceable in accordance with its terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law)
and principles of good faith and fair dealing.
7A.03 NO VIOLATION. Neither the execution, delivery or
performance by any Tenneco Party of the Credit Documents to which it is a
party, nor compliance by it with the terms and provisions thereof, (i) will
contravene any provision of any applicable law, statute, rule or regulation
or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict with or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien (except pursuant to the TPI Security Documents
and the Lien on the Sub Debt Restricted Account securing the Subordinated
Promissory Notes) upon any of the properties or assets of any Tenneco Party
or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, credit agreement or loan agreement, or any other material
agreement, contract or instrument, to which any Tenneco Party or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject (including, without limitation, the
Subordinated Notes Purchase Agreement) or (iii) will violate any provision of
the Certificate of Incorporation or By-Laws (or equivalent organizational
documents) of any Tenneco Party or any of its Subsidiaries.
7A.04 GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Initial
Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date) or, in the case of any filings or recordings in respect of
the TPI Security Documents executed on the Initial Borrowing Date, will be
made within 10 days thereof if the Contribution Effective Time has not
theretofore occurred), or exemption by, any foreign or domestic governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the execution, delivery and
performance of any Credit Document to which any Tenneco Party is a party or
(ii) the legality, validity, binding effect or enforceability of any such
Credit Document.
7A.05 LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best knowledge of the Borrower, threatened
which allege any breach caused by entry into or performance of, or which may
enjoin or otherwise limit, any Document to which any Tenneco Party is a party
or the Transaction.
7A.06 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds
of the Term Loans shall (x) contemporaneously with the Contribution Effective
Time, be released from the Restricted Account and used by TPI to effect the
Refinancing and (y) at the time of the
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Contribution Effective Time, be released from the Restricted Account to TPI
and used for general corporate purposes.
(b) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds thereof nor the occurrence of any other Credit Event
prior to the Contribution Effective Time will violate or be inconsistent with
the provisions of Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
7A.07 TPI SECURITY AGREEMENT. The provisions of the TPI
Security Agreement are effective to create in favor the Collateral Agent for
the benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of TPI in the TPI Security
Agreement Collateral described therein and the TPI Security Agreement, upon
the filing of Form UCC-1 financing statements, mortgages or the appropriate
equivalent, create a fully perfected lien on, and security interest in, all
right, title and interest in all of the TPI Security Agreement Collateral
described therein, subject to no Liens other than TPI Permitted Liens to the
extent a security interest or Lien in such collateral can be perfected by the
filing of a financing statement or recording of a mortgage.
7A.08 INVESTMENT COMPANY ACT. Neither Tenneco nor TPI or any
of its Subsidiaries is an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
7A.09 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Tenneco nor
TPI or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
7A.10 SUBORDINATION. The subordination provisions contained
in the Subordinated Promissory Notes Documents are enforceable against TPI,
Tenneco and the holders of the Subordinated Promissory Notes, and all
Obligations hereunder and the Tenneco Guaranty are within the definition of
"Senior Debt" included in such subordination provisions.
7A.11 CONDITIONS TO THE CONTRIBUTION. All conditions
precedent to TPI's obligation to consummate the Contribution pursuant to the
Contribution Documents have been satisfied or waived other than the making of
the Term Loans and the Refinancing. The cash proceeds of the Subordinated
Promissory Notes and the Term Loans are sufficient to consummate the
Refinancing.
SECTION 7B. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order
to induce the Lenders to enter into this Agreement and to make the Loans, and
issue (or participate in) the Letters of Credit as provided herein, PCA hereby
makes the following representations, warranties and agreements, in each case
both (x) after giving effect to each element of the Transaction (other than the
Contribution) and (y) after giving effect to the Transaction (including the
Contribution), all of which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loans and issuance of the Letters
of Credit, with the occurrence of
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the Initial Borrowing Date and the Contribution and each Credit Event on or
after the Initial Borrowing Date being deemed to constitute a representation
and warranty that the matters specified in this Section 7B are true and
correct in all material respects on and as of the Initial Borrowing Date, at
the time of the Contribution (after giving effect thereto) and on the date of
each such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date):
7B.01 CORPORATE STATUS. Each of PCA and its Subsidiaries (i)
is a duly organized and validly existing corporation or limited liability
company, as the case may be, in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the corporate or other applicable
power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing in
each jurisdiction where the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
7B.02 CORPORATE POWER AND AUTHORITY. Each PCA Credit Party
has the corporate or other applicable power and authority to execute, deliver
and perform the terms and provisions of each of the Documents to which it is
party and has taken all necessary corporate or other applicable action to
authorize the execution, delivery and performance by it of each of such
Documents. Each PCA Credit Party has duly executed and delivered each of the
Documents to which it is party, and each of such Documents constitutes the
legal, valid and binding obligation of such PCA Credit Party enforceable in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws generally
affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law) and principles of good
faith and fair dealing.
7B.03 NO VIOLATION. Neither the execution, delivery or
performance by any PCA Credit Party of the Documents to which it is a party,
nor compliance by it with the terms and provisions thereof, (i) will
contravene any provision of any applicable law, statute, rule or regulation
or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict with or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien (except pursuant to the Security Documents)
upon any of the properties or assets of any PCA Credit Party or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other material agreement, contract
or instrument, to which any PCA Credit Party or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to which it
may be subject (including, without limitation, the Subordinated Notes
Purchase Agreement and the Senior Subordinated Notes Indenture) or (iii) will
violate any provision of the Certificate of Incorporation or By-Laws (or
equivalent organizational documents) of any PCA Credit Party or any of its
Subsidiaries.
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7B.04 GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Initial
Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date) or, in the case of any filings or recordings in respect of
the Security Documents executed on the Initial Borrowing Date (other than the
TPI Security Documents), will be made within 10 days thereof except to the
extent otherwise provided in the Security Documents), or exemption by, any
foreign or domestic governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Document or (ii) the
legality, validity, binding effect or enforceability of any Document.
7B.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; PROJECTIONS; ETC. (a) The consolidated balance sheets of the
Containerboard Group for the fiscal years ended on December 31, 1996,
December 31, 1997 and December 31, 1998, respectively, and the related
consolidated statements of income, cash flows and interdivision account of
the Containerboard Group for the fiscal year ended on such dates, copies of
which have been furnished to the Lenders prior to the Effective Date, present
fairly in all material respects the financial position of the Containerboard
Group at the dates of such balance sheets and the results of the operations
of the Containerboard Group for the periods covered thereby. All of the
foregoing historical financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied.
(b) The unaudited PRO FORMA consolidated balance sheet and
related statement of income of PCA and its Subsidiaries (including the
Containerboard Business) as of December 31, 1998 and for the fiscal year
ended on such date, after giving effect to the Transaction, copies of which
have been furnished to the Lenders prior to the Effective Date, present
fairly in all material respects the PRO FORMA consolidated financial position
of PCA and its Subsidiaries as at December 31, 1998, and the PRO FORMA
consolidated results of operations of PCA and its Subsidiaries for the period
covered thereby (assuming the Contribution had occurred on December 31, 1998
(in the case of such balance sheet) and on January 1, 1998 (in the case of
the related income statement)).
(c) On and as of the Initial Borrowing Date, on a PRO FORMA
basis after giving effect to the Transaction and all other transactions
contemplated by the Documents and to all Indebtedness (including the Loans and
the Senior Subordinated Notes) being incurred or assumed, and Liens created by
each PCA Credit Party in connection therewith, with respect to each of PCA,
individually, and PCA and its Subsidiaries taken as a whole, (x) the sum of the
assets, at a fair valuation, of PCA, individually, and PCA and its Subsidiaries
taken as a whole, will exceed its (or their) debts; (y) it has (or they have)
not incurred and does (or do) not intend to incur, nor believes (or believe)
that it (or they) will incur debts beyond its (or their) ability to pay such
debts as such debts mature; and (z) it (or they) will have sufficient capital
with which to conduct its (or their) business. For purposes of this Section
7B.05(c), "debt" means any liability on a claim and "claim" means (i) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured or (ii) right to an equitable remedy for
breach of
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performance if such breach gives rise to a payment, whether or not such right
to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
(d) Except as fully disclosed in the financial statements
(including the PRO FORMA financial statements) delivered pursuant to Section
7B.05(a) and 7B.05(b), there were as of the Initial Borrowing Date no
liabilities or obligations with respect to (x) at any time prior to the
Contribution Effective Time, the Containerboard Business or (y) thereafter,
PCA or any of its Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) which, either
individually or in the aggregate, would be adversely material to (x) at any
time prior to the Contribution Effective Time, the Containerboard Business or
(y) thereafter, PCA or any of its Subsidiaries. As of the Initial Borrowing
Date, none of the PCA Credit Parties knows of any basis for the assertion
against it or the Containerboard Business of any liability or obligation of
any nature that is not fully disclosed in the financial statements delivered
pursuant to Section 7B.05(a) and 7B.05(b) which, either individually or in
the aggregate, have or would reasonably be likely to have a Material Adverse
Effect.
(e) On and as of the Initial Borrowing Date, the
Projections which have been delivered to the Administrative Agent and the
Lenders on or prior to the Effective Date are based on good faith estimates
and assumptions believed by management of PCA to be reasonable as of the date
of such Projections. On the Initial Borrowing Date, PCA believes that the
Projections are reasonable and attainable (it being understood that nothing
contained in this Section 7B.05(e) shall constitute a representation that the
results forecasted in such Projections will in fact be achieved). There is
no fact known to PCA or any of its Subsidiaries which would have a Material
Adverse Effect which has not been disclosed herein or in such documents,
certificates and statements furnished to the Lenders for use in connection
with the transactions contemplated hereby.
(f) Since December 31, 1998 (but after giving effect to the
Transaction as if the same had occurred prior thereto), nothing has occurred
that has had or would reasonably be expected to have a Material Adverse
Effect.
(g) Substantially all of the assets and liabilities, and
the business, of the Containerboard Group are being acquired by PCA pursuant
to the Contribution and the assets being acquired comprise all of the assets
which are necessary to conduct the business of the Containerboard Group as
conducted during the period covered by the financial statements referred to
in Section 7B.05(a).
7B.06 LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of PCA, threatened (i) on the
Initial Borrowing Date with respect to any Document or the Transaction or
(ii) with respect to any Credit Party or any of its Subsidiaries (x) that
could reasonably be expected to have a Material Adverse Effect or (y) that
could reasonably be expected to have a material adverse effect on the rights
or remedies of the Agents or the Lenders or on the ability of any Credit
Party to perform its respective obligations
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in any material respect to the Agents or the Lenders hereunder and under the
other Credit Documents to which it is, or will be, a party.
7B.07 TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole) prepared by or on behalf of PCA or any of its Subsidiaries
and furnished in writing to any Agent or any Lender (including, without
limitation, all information contained in the Documents) for purposes of or in
connection with this Agreement, the other Credit Documents or any transaction
contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter prepared by or on behalf of any such Person and
furnished in writing to any Agent or any Lender will be, after giving effect
to any written corrections delivered to the Lenders and the Agents prior to
the date this representation is made or deemed made, true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided; PROVIDED that this representation shall not apply to non-Borrower
specific information furnished with an express disclaimer.
7B.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds
of all Revolving Loans and all Swingline Loans shall be used for PCA's and
its Subsidiaries' general corporate and working capital purposes (including,
without limitation, to make Capital Expenditures and finance Permitted
Acquisitions) and shall not be used to finance the Transaction (other than
fees and expenses to the extent related to the period following the Initial
Borrowing Date and purchase price adjustments required to be paid after the
Initial Borrowing Date under the Contribution Agreement); PROVIDED that
proceeds of Revolving Loans and Swingline Loans in an aggregate principal
amount not exceeding $25,000,000 may be used to make payments owing in
connection with the Transaction (other than fees and expenses to the extent
related to the period following the Initial Borrowing Date and purchase price
adjustments required to be paid after the Initial Borrowing Date under the
Contribution Agreement).
(b) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds thereof nor the occurrence of any other Credit Event
will violate or be inconsistent with the provisions of Regulation T, U or X
of the Board of Governors of the Federal Reserve System.
7B.09 TAX RETURNS AND PAYMENTS. PCA and each of its
Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid
all material taxes and assessments payable by it which have become due,
except for those contested in good faith and adequately disclosed and fully
provided for on the financial statements of PCA and its Subsidiaries in
accordance with generally accepted accounting principles. PCA and each of
its Subsidiaries have at all times paid, or have provided adequate reserves
(in the good faith judgment of the management of PCA) for the payment of, all
material federal, state and foreign taxes applicable for all prior fiscal
years and for the current fiscal year to date. There is no action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge
of PCA or any of its Subsidiaries, threatened by any authority
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regarding any material taxes relating to PCA or any of its Subsidiaries.
Neither PCA nor any of its Subsidiaries has entered into an agreement or
waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of material
taxes of PCA or any of its Subsidiaries, or is aware of any circumstances
that would cause the taxable years or other taxable periods of PCA or any of
its Subsidiaries not to be subject to the normally applicable statute of
limitations. Except as set forth in Schedule X, neither PCA nor any
Subsidiary has incurred, or will incur, any material tax liability in
connection with the Transaction.
7B.10 COMPLIANCE WITH ERISA. The following paragraphs only
apply to a Multiemployer Plan where specifically mentioned. In each other
instance, the following paragraphs apply to any Multiemployer Plan only to
the extent of the knowledge of PCA. In addition, the following paragraph
applies with respect to the Tenneco Retirement Plan and the TPI Hourly Plan
(the "TENNECO PENSION PLANS") only to the extent of the knowledge of PCA,
after the exercise of reasonable diligence and due inquiry. (i) Schedule VII
sets forth each Plan; each Plan (and each related trust, insurance contract
or fund) is in substantial compliance with its terms and with all applicable
laws, including, without limitation, ERISA and the Code; each Plan (and each
related trust, if any) which is intended to be qualified under Section 401(a)
of the Code has received or has timely applied for a determination letter
from the Internal Revenue Service to the effect that it meets the
requirements of Sections 401(a) and 501(a) of the Code; except as would not
result in a material liability no Reportable Event has occurred; to the
knowledge of Borrower, no Plan which is a Multiemployer Plan (as defined in
Section 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has
an Unfunded Current Liability which, when added with the Unfunded Current
Liability of each other Plan could result in a material liability; no Plan
which is subject to Section 412 of the Code or Section 302 of ERISA has an
accumulated funding deficiency, within the meaning of such sections of the
Code or ERISA, or has applied for or received a waiver of an accumulated
funding deficiency or an extension of any amortization period, within the
meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all
contributions required to be made with respect to a Plan or a Multiemployer
Plan have been timely made; neither (x) at any time prior to the Contribution
Effective Time, the Containerboard Business nor (y) thereafter, PCA, any of
its Subsidiaries or any ERISA Affiliate, has incurred any material liability
(including any indirect, contingent or secondary liability) to or on account
of a Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l),
515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or expects to incur any such liability
under any of the foregoing sections with respect to any Plan; to the best
knowledge of PCA or any of its Subsidiaries, no condition exists which
presents a material risk to (x) at any time prior to the Contribution
Effective Time, the Containerboard Business or (y) thereafter, PCA or any of
its Subsidiaries or any ERISA Affiliate, of incurring a material liability to
or on account of a Plan or a Multiemployer Plan pursuant to the foregoing
provisions of ERISA and the Code; no proceedings have been instituted to
terminate or appoint a trustee to administer any Plan which is subject to
Title IV of ERISA; no material action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment
of assets of any Plan (other than routine claims for benefits) is pending, or
expected or threatened; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of (x)
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at any time prior to the Contribution Effective Time, the Containerboard
Business or (y) thereafter, PCA and of its Subsidiaries and its ERISA
Affiliates, to all Plans which are Multiemployer Plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of
the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event, would not result in a material
liability; each group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered employees or
former employees of (x) at any time prior to the Contribution Effective Time,
the Containerboard Business or (y) thereafter, PCA, any Subsidiary of PCA, or
any ERISA Affiliate, has at all times been operated in material compliance
with the provisions of Part 6 of subtitle B of Title I of ERISA and Section
4980B of the Code; no lien imposed under the Code or ERISA on the assets of
(x) at any time prior to the Contribution Effective Time, the Containerboard
Business or (y) thereafter, PCA or any Subsidiary of PCA or any ERISA
Affiliate, exists or is likely to arise on account of any Plan; and, except
with respect to a Plan maintained pursuant to a collective bargaining
agreement, PCA and its Subsidiaries may cease contribuions to or terminate
any Employee Benefit Plan maintained by any of them without a Material
Adverse Effect.
(ii) Each Foreign Pension Plan has been maintained in
substantial compliance with its terms and with the requirements of any and
all applicable laws, statutes, rules, regulations and orders and has been
maintained, where required, in good standing with applicable regulatory
authorities. All contributions required to be made with respect to a Foreign
Pension Plan have been or will be timely made. Neither (x) at any time prior
to the Contribution Effective Time, the Containerboard Business nor (y)
thereafter, PCA or any of its Subsidiaries has incurred any material
obligation in connection with the termination of or withdrawal from any
Foreign Pension Plan. Except as would not result in a material liability, the
present value of the accrued benefit liabilities (whether or not vested)
under each Foreign Pension Plan, determined as of the end of PCA's most
recently ended fiscal year on the basis of actuarial assumptions, each of
which is reasonable, did not exceed the current value of the assets of such
Foreign Pension Plan allocable to such benefit liabilities.
7B.11 THE SECURITY DOCUMENTS. (a) On and after the Contribution
Effective Time, (i) the provisions of the PCA Security Agreement are effective
to create in favor of the Collateral Agent for the benefit of the Secured
Creditors a legal, valid and enforceable security interest in all right, title
and interest of the PCA Credit Parties in the PCA Security Agreement Collateral
described therein and (ii) the PCA Security Agreement, upon the filing of Form
UCC-1 financing statements or the appropriate equivalent (which filings, if this
representation is being made more than 10 days after the Contribution Effective
Time, have been made), creates a fully perfected first lien on, and security
interest in, all right, title and interest in all of the PCA Security Agreement
Collateral described therein as of the consummation of the Contribution, subject
to no other Liens other than Permitted Liens, to the extent a security interest
in such collateral can be perfected by the filing of a financing statement. The
recordation of the Grant of Security Interest in U.S. Patents and Trademarks in
the form attached to the PCA Security Agreement in the United States Patent and
Trademark Office, together with filings on Form UCC-1 made pursuant to the PCA
Security Agreement will be effective when recorded or filed (which recordings or
filings, if this representation is being made more than 10 days after the
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Contribution Effective Time, have been made), under applicable law, to
perfect the security interest granted to the Collateral Agent in the
trademarks and patents covered by the PCA Security Agreement and identified
in such Grant of Security Interest and the recordation of the Grant of
Security Interest in U.S. Copyrights in the form attached to the PCA Security
Agreement with the United States Copyright Office, together with filings on
Form UCC-1 made pursuant to the PCA Security Agreement, will be effective
when recorded or filed (which recordings or filings, if this representation
is being made more than 10 days after the Contribution Effective Time, have
been made) under federal law to perfect the security interest granted to the
Collateral Agent in the copyrights covered by the PCA Security Agreement and
identified in such Grant of Security Interest .
(b) On and after the Contribution Effective Time, assuming
the Collateral Agent continues to retain possession of the applicable Pledged
Securities, the security interests created in favor of the Collateral Agent,
as pledgee, for the benefit of the Secured Creditors under the Pledge
Agreement constitute first priority perfected security interests in the
Pledged Securities described in the Pledge Agreement, subject to no security
interests of any other Person. Assuming the Collateral Agent continues to
retain possession of the applicable Pledged Securities, no filings or
recordings are required in order to perfect (or maintain the perfection or
priority of) the security interests created in the Pledged Securities and the
proceeds thereof under the Pledge Agreement.
(c) On and after the Contribution Effective Time, the
Mortgages create, as security for the obligations purported to be secured
thereby, a valid and enforceable perfected security interest in and mortgage
lien on all of the Mortgaged Properties in favor of the Collateral Agent (or
such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto) and subject to no other Liens (other than Permitted Liens). On and
after the Contribution Effective Time, PCA and each of its Subsidiaries have
good and indefeasible title to all fee-owned Mortgaged Properties and valid
leasehold title to all Leaseholds, in each case free and clear of all Liens
except those described in the first sentence of this subsection (c).
7B.12 REPRESENTATIONS AND WARRANTIES IN OTHER DOCUMENTS. All
representations and warranties of PCA and its Subsidiaries set forth in the
other Documents were true and correct in all material respects at the time as
of which such representations and warranties were made (or deemed made) and
shall be true and correct in all material respects as of the Initial
Borrowing Date and the Contribution Effective Time as if such representations
or warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations or warranties shall
be true and correct in all material respects as of such earlier date, in each
case except to the extent that the failure of any such representation and
warranty to be true and correct in all material respects, either individually
or in the aggregate with other such representations and warranties, is not
reasonably likely to have a Material Adverse Effect.
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7B.13 PROPERTIES. The Borrower and each of its Subsidiaries have
good and valid title to all properties owned by them, including, after the
Contribution Effective Time, all property reflected in the most recent balance
sheet referred to in Section 7B.05(a) (except as sold or otherwise disposed of
since the date of such balance sheet in accordance with the Contribution
Agreement and for the properties not being transferred to PCA pursuant to the
Contribution Agreement) and in the PRO FORMA balance sheet referred to in
Section 7B.05(b) (except as sold or otherwise disposed of since the Contribution
Effective Time in accordance with the terms of this Agreement), free and clear
of all Liens, other than Permitted Liens permitted by Section 9.01. On the
Initial Borrowing Date, Schedule III sets forth a true and complete description
of all Real Property owned or leased by the Borrower and/or its Subsidiaries
comprising part of the Containerboard Business and sets forth the direct owner
or lessee thereof.
7B.14 CAPITALIZATION. On the Initial Borrowing Date and after
giving effect to the Transaction, the authorized capital stock of PCA shall
consist of (i) 1,000,000 shares of common stock, $.01 par value per share (such
authorized shares of common stock, together with any subsequently authorized
shares of common stock of PCA, the "BORROWER COMMON STOCK"), all of which shares
shall be issued and outstanding, (ii) 3,000,000 shares of Borrower PIK Preferred
Stock, of which 1,000,000 shares shall be issued and outstanding and (iii) 100
shares of junior preferred stock, all of which shall be issued and outstanding.
All such outstanding shares have been duly and validly issued, are fully paid
and non-assessable and have been issued free of preemptive rights. On the
Initial Borrowing Date, PCA does not have any outstanding securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock.
7B.15 SUBSIDIARIES. (a) Prior to the consummation of the
Transaction, PCA has no Subsidiaries.
(b) After giving effect to the Transaction, PCA will have no
Subsidiaries other than (i) those Subsidiaries listed on Schedule VIII and (ii)
new Subsidiaries created in compliance with Section 9.14. Schedule VIII
correctly sets forth, as of the Initial Borrowing Date and after giving effect
to the Transaction, the percentage ownership (direct and indirect) of PCA in
each class of capital stock or other equity interest of each of its Subsidiaries
and also identifies the direct owner thereof. On and after the Contribution
Effective Time, all outstanding shares of capital stock of each Subsidiary of
PCA have been duly and validly issued, are fully paid and non-assessable and
have been issued free of preemptive rights. No Subsidiary of PCA has any
outstanding securities convertible into or exchangeable for its capital stock or
outstanding any right to subscribe for or to purchase, or any options or
warrants for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of or any calls, commitments or claims of any
character relating to, its capital stock or any stock appreciation or similar
rights.
7B.16 COMPLIANCE WITH STATUTES, ETC. (x) At any time prior to
the Contribution Effective Time, the Containerboard Business and (y) thereafter,
each of PCA and each of its
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Subsidiaries, is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of the Containerboard
Business or its business, as applicable, and the ownership of the
Containerboard Business or its property, as applicable (excluding applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls, which are governed by Section 7B.19), except such
noncompliances as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
7B.17 INVESTMENT COMPANY ACT. Neither PCA nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7B.18 PUBLIC UTILITY HOLDING COMPANY ACT. Neither PCA nor any of
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
7B.19 ENVIRONMENTAL MATTERS. (a) (x) At any time prior to the
Contribution Effective Time, the Containerboard Business and (y) thereafter, PCA
and each of its Subsidiaries has complied with, and on the date of each Credit
Event will be in compliance with, all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws. There are no
past, pending or, to the best knowledge of PCA after due inquiry, past or
threatened Environmental Claims against (x) at any time prior to the
Contribution Effective Time, the Containerboard Business or (y) thereafter, PCA
or any of its Subsidiaries or any Real Property owned or operated by PCA or any
of its Subsidiaries. There are no facts, circumstances, conditions or
occurrences in respect of (x) at any time prior to the Contribution Effective
Time, the Containerboard Business or (y) thereafter, any Real Property owned or
operated or occupied by PCA or any of its Subsidiaries that would reasonably be
expected (i) to form the basis of an Environmental Claim against the
Containerboard Business or PCA or any of its Subsidiaries or any such Real
Property, as the case may be, or (ii) to cause (x) at any time prior to the
Contribution Effective Time, the Containerboard Business or (y) thereafter, any
such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of the Containerboard Business or such Real
Property, as the case may be, by PCA or any of its Subsidiaries under any
applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from (x) at any time prior to
the Contribution Effective Time, any Real Property comprising part of the
Containerboard Business and (y) thereafter, any Real Property owned or operated
by PCA or any of its Subsidiaries, where such generation, use, treatment or
storage has violated or would reasonably be expected to violate any
Environmental Law or give rise to an Environmental Claim. Hazardous Materials
have not been Released on or from (x) at any time prior to the Contribution
Effective Time, any Real Property comprising part of the Containerboard Business
and (y) thereafter, any Real Property owned or operated by PCA or any of its
Subsidiaries, where such Release has violated or would reasonably be expected to
violate any applicable Environmental Law or give rise to an Environmental Claim.
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(c) Notwithstanding anything to the contrary in this Section
7B.19, the representations made in this Section 7B.19 shall only be untrue if
the aggregate effect of all failures and noncompliances of the types described
above would reasonably be expected to have a Material Adverse Effect.
(d) This Section 7B.19 sets forth the sole and exclusive
representations by the Borrower with respect to environmental matters, including
without limitations all matters arising under Environmental Laws.
7B.20 LABOR RELATIONS. Neither (x) at any time prior to the
Contribution Effective Time, the Containerboard Business nor (y) thereafter, PCA
or any of its Subsidiaries is engaged in any unfair labor practice that would
reasonably be expected to have a material adverse effect on the Containerboard
Business or PCA and its Subsidiaries taken as a whole, as the case may be, and
there is (i) no unfair labor practice complaint pending against (x) at any time
prior to the Contribution Effective Time, the Containerboard Business or (y)
thereafter, PCA or any of its Subsidiaries or, to the best knowledge of PCA,
threatened against any of them, before the National Labor Relations Board, and
no material grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against (x) at any time prior to
the Contribution Effective Time, the Containerboard Business or (y) thereafter,
PCA or any of its Subsidiaries or, to the best knowledge of PCA, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending
against (x) at any time prior to the Contribution Effective Time, the
Containerboard Business or (y) thereafter, PCA or any of its Subsidiaries or, to
the best knowledge of PCA, threatened against the Containerboard Business or PCA
or any of its Subsidiaries, as the case may be, and (iii) to the best knowledge
of PCA, no union representation proceeding is pending with respect to the
employees of (x) at any time prior to the Contribution Effective Time, the
Containerboard Business or (y) thereafter, PCA or any of its Subsidiaries,
except (with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate) such as would not reasonably be
expected to have a Material Adverse Effect.
7B.21 PATENTS, LICENSES, FRANCHISES AND FORMULAS. (i) At any
time prior to the Contribution Effective Time, the Containerboard Business and
(ii) at any time on and after the Contribution Effective Time, each of PCA and
its Subsidiaries owns or has a valid license to use all material patents,
trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or rights with respect to the foregoing, and has
obtained assignments of all leases and other rights of whatever nature,
necessary for the present conduct of its business, without any known conflict
with the rights of others which, or the failure to own or obtain which, as the
case may be, would be reasonably likely to result in a Material Adverse Effect.
7B.22 INDEBTEDNESS. (a) Schedule V.A sets forth a true and
complete list of all Existing Indebtedness of PCA and its Subsidiaries as of the
Initial Borrowing Date and which is to remain outstanding after giving effect to
the Transaction, in each case showing the aggregate principal amount thereof and
the name of the respective borrower and any other entity which directly or
indirectly guaranteed such debt.
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(b) Schedule V.B sets forth a true and complete list of all
Indebtedness of TPI and its Subsidiaries to be Refinanced (the "INDEBTEDNESS TO
BE REFINANCED"), in each case showing the aggregate principal amount thereof,
the name of the respective borrower and any other entity which directly or
indirectly guaranteed such Indebtedness and the amount required to pay such
Indebtedness in full on the Initial Borrowing Date which amount does not exceed
in the aggregate $1,110,000,000.
7B.23 TRANSACTION. At the time of consummation thereof, each
element of the Transaction shall have been consummated in all material respects
in accordance with the terms of the respective Documents and all applicable
laws. At the time of consummation of each element of the Transaction, all
material consents and approvals of, and filings and registrations with (or, in
the case of any filing in respect of the Security Documents executed on the
Initial Borrowing Date (other than the TPI Security Agreement), will be made
within 10 days thereof), and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to make or
consummate the Transaction will have been obtained, given, filed or taken and
are or will be in full force and effect (or effective judicial relief with
respect thereto has been obtained). All applicable waiting periods with respect
thereto have or, prior to the time when required, will have, expired without, in
all such cases, any action being taken by any competent authority which
restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon any element
of the Transaction, or the occurrence of any Credit Event or the performance by
any Credit Party of its obligations under the respective Credit Documents. All
actions taken by each Credit Party pursuant to or in furtherance of the
Transaction have been taken in all material respects in compliance with the
respective Documents and all applicable laws.
7B.24 INSURANCE. Schedule VI sets forth a true and complete
listing of all insurance maintained by PCA and its Subsidiaries as of the
Initial Borrowing Date (after giving effect to the Contribution), and with the
amounts insured (and any deductibles) set forth therein.
7B.25 YEAR 2000 COMPLIANCE. PCA has reviewed its operations and
those of its Subsidiaries with a view to assessing whether its businesses, or
the businesses of any of its Subsidiaries, will be vulnerable to a Y2K Problem
or will be vulnerable in any material respect to the effects of a Y2K Problem
suffered by any of PCA or any of its Subsidiaries' major customers and
suppliers. PCA represents and warrants that it has a reasonable basis to
believe, and that it does believe, that no Y2K Problem will cause a Material
Adverse Effect.
7B.26 SPECIAL PURPOSE CORPORATION. PCA was formed to effect the
Transaction. Prior to the consummation of the Transaction, PCA had no
significant assets or liabilities (other than those liabilities under the
Contribution Documents).
7B.27 SUBORDINATION. (a) The subordination provisions contained
in the Senior Subordinated Notes Documents are enforceable against PCA, the
Subsidiary Guarantors and the holders of the Senior Subordinated Notes, and all
Obligations hereunder and under the other Credit Documents (including, without
limitation, pursuant to the Subsidiaries Guaranty) are
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within the definitions of "Senior Debt" and "Designated Senior Debt" included
in such subordination provisions.
(b) The subordination provisions contained in the
Subordinated Promissory Notes Documents are enforceable against the Borrower,
Tenneco and the holders of the Subordinated Promissory Notes, and all
Obligations hereunder and under the other Credit Documents (including, without
limitation, pursuant to the Guaranties) are within the definition of "Senior
Debt" included in such subordination provisions.
(c) There exists no Designated Senior Debt for purposes of,
and as defined in, the Senior Subordinated Notes Indenture (other than the
Obligations).
SECTION 8. AFFIRMATIVE COVENANTS. PCA hereby covenants and
agrees that in the case of the covenants described below on and after the
Contribution Effective Time and until the Total Commitments and all Letters of
Credit have terminated and the Loans, Notes and Unpaid Drawings, together with
interest, Fees and all other obligations incurred hereunder and thereunder are
paid in full (other than any indemnity, not then due and payable, which by its
terms shall survive such termination and payment):
8.01 INFORMATION COVENANTS. The Borrower will furnish to each
Lender:
(a) QUARTERLY FINANCIAL STATEMENTS. Within 45 days after the
close of the first three quarterly accounting periods in each fiscal year
of the Borrower, (i) the consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as at the end of such quarterly accounting
period and the related consolidated statements of income and cash flows,
in each case for such quarterly accounting period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
accounting period, and in each case, setting forth comparative figures
for the related periods in the prior fiscal year (other than in the case
of the first fiscal year of PCA) and, after the delivery of the first
budget pursuant to Section 8.01(d), the budgeted figures for such
quarterly periods as set forth in the respective budget delivered
pursuant to Section 8.01(d), all of which shall be certified by the Chief
Financial Officer of the Borrower, subject to normal year-end audit
adjustments and (ii) management's discussion and analysis of the
important operational and financial developments during the fiscal
quarter and year-to-date periods.
(b) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the
close of each fiscal year of the Borrower, (i) the consolidated and
consolidating balance sheets of the Borrower and its Consolidated
Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and retained earnings
and of cash flows for such fiscal year setting forth comparative figures
for the preceding fiscal year and (x) in the case of such consolidated
financial statements certified by Ernst & Young LLP, or such other
independent certified public accountants of recognized national standing
reasonably acceptable to the Administrative Agent, together with a report
of such accounting firm stating that in the course of its regular audit
of the financial statements of the Borrower and its Subsidiaries, which
audit was conducted in accordance with generally accepted auditing
standards, such accounting firm obtained no
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knowledge of any Default or Event of Default which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default
or Event of Default has occurred and is continuing, a statement as to
the nature thereof, and (y) in the case of such consolidating financial
statements certified by the Chief Financial Officer of the Borrower,
and (ii) management's discussion and analysis of the important
operational and financial developments during such fiscal year.
(c) MANAGEMENT LETTERS. Promptly after the receipt thereof
by the Borrower or any of its Subsidiaries, a copy of any "management
letter" received by any such Person from its certified public accountants
and the management's responses thereto.
(d) BUDGETS. No later than 60 days following the
commencement of the first day of each fiscal year of the Borrower
(commencing with the fiscal year of the Borrower ended December 31,
2000), a budget of the Borrower and its Subsidiaries in form satisfactory
to the Administrative Agent prepared by the Borrower for each fiscal
quarter of such fiscal year prepared in detail, accompanied by the
statement of the Chief Financial Officer of the Borrower to the effect
that, to the best of his knowledge, the budget is a reasonable estimate
for the period covered thereby.
(e) OFFICER'S CERTIFICATES. At the time of the delivery of
the financial statements provided for in Section 8.01(a) and (b), a
certificate of the Chairman of the Board, the President or Chief
Financial Officer of the Borrower to the effect that, to the best of such
officer's knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate
shall, in the case of any such financial statements delivered in respect
of a period ending on the last day of a fiscal quarter or year of the
Borrower, (x) set forth the calculations required to establish whether
the Borrower was in compliance with the provisions of Sections 4.02(e),
(f), (g), (h), (i) and (j) (but with respect to Section 4.02(i) only to
the extent delivered with the financial statements required by
Sections 8.01(b)), 9.02 and 9.04 through 9.10, inclusive, at the end of
such fiscal quarter or year, as the case may be, (y) set forth the
calculation of the Available J.V. Basket Amount and the Available
Permitted Acquisition Basket Amount at the end of the period covered by
such financial statements, and all sources and uses of proceeds relating
to the calculation thereof and (z) if delivered with the financial
statements required by Section 8.01(b), set forth (in reasonable detail)
the amount of, and the calculations required to establish the amount of,
Excess Cash Flow for the respective Excess Cash Payment Period.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any
event within three Business Days after an officer of the Borrower obtains
knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or Event of Default and (ii) any litigation or
governmental investigation or proceeding pending or threatened (x)
against the Borrower or any of its Subsidiaries which would reasonably be
expected to have a Material Adverse Effect, (y) with respect to any
Indebtedness in excess of $10,000,000 of the Borrower or any of its
Subsidiaries or (z) with respect to any Document.
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(g) OTHER REPORTS AND FILINGS. Promptly, copies of all financial
information, proxy materials and other information and reports, if any, which
the Borrower or any of its Subsidiaries shall file with the Securities and
Exchange Commission or any successor thereto (the "SEC") or deliver to
holders of its material Indebtedness (including the Senior Subordinated
Notes) pursuant to the terms of the documentation governing such Indebtedness
(or any trustee, agent or other representative therefor) and holders of their
capital stock (including the Borrower PIK Preferred Stock) in their capacity
as such.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within
thirty days after, an officer of the Borrower or any of its Subsidiaries
obtains knowledge thereof, notice of one or more of the following
environmental matters which occurs after the Initial Borrowing Date, unless
such environmental matters would not, individually or when aggregated with
all other such environmental matters, be reasonably expected to have a
Material Adverse Effect:
(i) any Environmental Claim pending or threatened in writing
against the Borrower or any of its Subsidiaries or any Real Property
owned or operated or occupied by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated or occupied by the Borrower or any of its
Subsidiaries that (a) results in noncompliance by the Borrower or any of
its Subsidiaries with any applicable Environmental Law or (b) would
reasonably be expected to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any such Real
Property;
(iii) any condition or occurrence on any Real Property owned or
operated or occupied by the Borrower or any of its Subsidiaries that
would reasonably be expected to cause such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability by
the Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated or occupied by the Borrower or any of its
Subsidiaries as required by any Environmental Law or any governmental or
other administrative agency; PROVIDED that in any event the Borrower
shall deliver to the Administrative Agent all material notices received
by it or any of its Subsidiaries from any government or governmental
agency under, or pursuant to, CERCLA.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's or such Subsidiary's response thereto. In addition, the Borrower
will provide the Lenders with copies of all material communications with any
government or governmental agency and all material communications with any
Person relating to any Environmental Claim of which notice is required to be
given pursuant to this Section 8.01(h), and such detailed
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reports of any such Environmental Claim as to which notice is required, as
may reasonably be requested by the Agents or the Lenders.
(i) ANNUAL MEETINGS WITH LENDERS. At the request of
Administrative Agent, the Borrower shall within 120 days after the close
of each fiscal year of the Borrower hold a meeting at a reasonable time
and place selected by the Borrower and acceptable to the Administrative
Agent with all of the Lenders at which meeting shall be reviewed the
financial results of the previous fiscal year and the financial condition
of the Borrower and its Subsidiaries and the budgets presented for the
current fiscal year of the Borrower and its Subsidiaries.
(j) PERMITTED RECEIVABLES FACILITY TRANSACTION DATE. The
Borrower shall provide the Administrative Agent 15 Business Days' prior
written notice of the Permitted Receivables Facility Transaction Date.
(k) NOTICE OF COMMITMENT REDUCTIONS AND MANDATORY REPAYMENTS.
On or prior to the date of any reduction to the Total Commitment or any
mandatory repayment of outstanding Term Loans pursuant to any of Sections
4.02(e) through (j), inclusive, the Borrower shall provide written notice
of the amount of the respective reduction or repayment, as the case may
be, to the Total Revolving Loan Commitment or the outstanding Term Loans,
as applicable, the calculation thereof (in reasonable detail) and the
event to which the respective reduction or repayment relates.
(l) OTHER INFORMATION. From time to time, such other
information or documents (financial or otherwise) with respect to the
Borrower or its Subsidiaries as any Agent or any Lender may reasonably
request in writing.
8.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which are made full, true and correct entries in conformity with generally
accepted accounting principles and all requirements of law. The Borrower will,
and will cause each of its Subsidiaries to, permit officers and designated
representatives of any Agent or any Lender to visit and inspect, during regular
business hours and under guidance of officers of the Borrower, any of the
properties of the Borrower or such Subsidiary in whomsoever's possession, and to
examine the books of account of the Borrower or such Subsidiary and discuss the
affairs, finances and accounts of the Borrower or such Subsidiary with, and be
advised as to the same by, its and their officers and independent accountants,
all upon reasonable advance notice and at such reasonable times and intervals
and to such reasonable extent as such Agent or such Lender may request,
PROVIDED, that so long as no Default or Event of Default is then in existence,
the Borrower shall have the right to participate in any discussions of the
Agents or the Lenders with any independent accountants of the Borrower.
8.03 MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower will,
and will cause each of its Subsidiaries to, (i) keep all material properties and
equipment used in its business in good working order and condition (ordinary
wear and tear and loss or damage by casualty or condemnation excepted), (ii)
maintain in full force and effect insurance with reputable and
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solvent insurance carriers on all its property in at least such amounts,
against at least such risks and with such deductibles or self-insured
retentions as is consistent and in accordance with industry practice and
(iii) furnish to each Lender, upon written request, full information as to
the insurance carried. In addition to the requirements to the immediately
preceding sentence, the Borrower will at all time cause insurance of the
types described in Schedule VI to be maintained with no less scope of
coverage or greater deductibles as are described in Schedule VI with respect
to the Containerboard Business immediately before the Effective Date, taking
into account the age and fair market value of equipment. Such insurance
shall include physical damage insurance on all real and personal property
(whether now or hereafter acquired) on an all risk basis and business
interruption insurance. The provisions of this Section 8.03 shall be deemed
supplemental to, but not duplicative of, the provisions of any Security
Documents requiring the maintenance of insurance.
(b) The Borrower will, and will cause its Subsidiaries to, at
all times keep their respective property insured in favor of the Collateral
Agent, and all policies (including the Mortgage Policies) or certificates (or
certified copies thereof) with respect to such insurance (and any other
insurance maintained by the Borrower or any of its Subsidiaries) (i) shall be
endorsed to the Collateral Agent's satisfaction for the benefit of the
Collateral Agent (as certificate holder, mortgagee and loss payee with respect
to Real Property, certificate holder and loss payee with respect to personal
property, additional insured with respect to general liability and umbrella
liability coverage and certificate holder with respect to workers' compensation
insurance), (ii) shall state that such insurance policies shall not be canceled
or materially revised without 30 days' prior written notice thereof by the
respective insurer to the Collateral Agent, and (iii) shall be deposited with
the Collateral Agent.
(c) If the Borrower or any of its Subsidiaries shall fail to
maintain all insurance in accordance with this Section 8.03, or if the Borrower
or any of its Subsidiaries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Administrative Agent and/or the
Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and the Borrower agrees to reimburse the Administrative
Agent or the Collateral Agent as the case may be, for all costs and expenses of
procuring such insurance.
8.04 CORPORATE FRANCHISES. The Borrower will, and will cause
each of its Subsidiaries, to do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents used in its business; PROVIDED,
HOWEVER, that any transaction permitted by Section 9.02 will not constitute a
breach of this Section 8.04.
8.05 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such noncompliances as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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8.06 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) The Borrower will
comply, and will cause each of its Subsidiaries to comply, in all respects with
all Environmental Laws applicable to the operation of its business or to the
ownership or use of Real Property now or hereafter owned or operated by the
Borrower or any of its Subsidiaries, will within a reasonable time period pay or
cause to be paid all costs and expenses incurred in connection with such
compliance (except to the extent being contested in good faith), and will
undertake all reasonable efforts to keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such Environmental
Laws, except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries will generate, use, treat, store, release or dispose
of, or permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned or operated or
occupied by the Borrower or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property except
in compliance with all applicable Environmental Laws (except such noncompliances
as could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect) and reasonably required in connection with the
operation, use and maintenance of any such Real Property or otherwise in
connection with their businesses.
(b) At the written request of the Administrative Agent or the
Required Lenders upon a reasonable belief by the Administrative Agent or the
Required Lenders that the Borrower or any of its Subsidiaries has breached any
representation or covenant contained herein relating to environmental matters,
which request shall specify in reasonable detail the basis therefor, the
Borrower will provide, at the Borrower's sole cost and expense, an environmental
site assessment report, reasonable in scope, concerning the subject matter of
such representation or covenant and any Real Property now or hereafter owned,
operated or occupied by the Borrower or any of its Subsidiaries, prepared by an
environmental consulting firm reasonably acceptable to the Administrative Agent,
indicating (if relevant to such breach) the presence or absence of Hazardous
Materials and the potential cost of any removal or remedial action in connection
with any Hazardous Materials on such Real Property; PROVIDED, that such request
may be made only if (i) there has occurred and is continuing an Event of
Default, (ii) the Administrative Agent or the Required Lenders reasonably
believe that the Borrower or any such Real Property is not in compliance with
Environmental Law and such circumstances would reasonably be expected to have a
Material Adverse Effect, or (iii) circumstances exist that reasonably could be
expected to form the basis of a material Environmental Claim against the
Borrower or any of its Subsidiaries or any such Real Property. If the Borrower
fails to provide the same within a reasonable period, not to exceed 90 days,
after such request was made, the Administrative Agent may order the same, and
the Borrower shall grant and hereby grants to the Administrative Agent and the
Lenders and their agents access to such Real Property and specifically grants
the Administrative Agent and the Lenders an irrevocable non-exclusive license,
subject to the rights of tenants, to undertake such an assessment, all at the
Borrower's expense.
8.07 ERISA. Except to the extent that the events described
herein are specifically made applicable to Multiemployer Plans, they shall
relate only to Plans which are not Multiemployer Plans. In each other instance,
the events described herein apply to Multiemployer Plans only to the extent of
the knowledge of PCA. In addition, with respect to the Tenneco
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Pension Plans, the reporting covenants described herein apply only to the
extent of the knowledge of PCA, after the exercise of reasonable diligence
and due inquiry. As soon as reasonably possible and, in any event, within
twenty (20) Business Days after the Borrower or any of its Subsidiaries or
any ERISA Affiliate knows or has reason to know of the occurrence of any of
the following, the Borrower will deliver to the Administrative Agent a
certificate of the chief financial officer of the Borrower setting forth the
full details as to such occurrence and the action, if any, that the Borrower,
such Subsidiary or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed by the
Borrower, the Subsidiary, the Plan administrator or the ERISA Affiliate, to
or with the PBGC, or any other government agency, or a Plan participant and
any notices received by such Borrower, such Subsidiary or ERISA Affiliate
from the PBGC or any other government agency, or a Plan participant with
respect thereto: that a Reportable Event has occurred (except to the extent
that the Borrower has previously delivered to the Lenders a certificate and
notices (if any) concerning such event pursuant to the next clause hereof);
that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a
Plan subject to Title IV of ERISA is subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably
expected to occur with respect to such Plan within the following 30 days; that
an accumulated funding deficiency, within the meaning of Section 412 of the
Code or Section 302 of ERISA, has been incurred or an application may be or
has been made for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA with respect to a Plan; that any contribution required to be made with
respect to a Plan or Foreign Pension Plan has not been timely made; that a
Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has a material increase in an
Unfunded Current Liability; that proceedings may be or have been instituted
to terminate or appoint a trustee to administer a Plan which is subject to
Title IV of ERISA; that a proceeding has been instituted pursuant to Section
515 of ERISA to collect a delinquent contribution to a Plan; that the
Borrower, any of its Subsidiaries or any ERISA Affiliate will or is likely to
incur any material liability (including any indirect, contingent, or
secondary liability) to or on account of the termination of or withdrawal
from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA
or with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the
Code or Section 409 or 502(i) or 502(l) of ERISA or with respect to a group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of
the Code) under Section 4980B of the Code; or that the Borrower, or any of
its Subsidiaries may incur any material liability pursuant to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) that provides
benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan or any Foreign Pension. Upon
request, the Borrower will deliver to the Administrative Agent a complete
copy of the annual report (on Internal Revenue Service Form 5500-series) of
each Plan (including, to the extent required, the related financial and
actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices
delivered to the Administrative Agent pursuant to the third sentence hereof,
copies of annual reports and any records, documents or other information
required to be furnished to the PBGC, or any other government agency and any
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material notices received by the Borrower, any of its Subsidiaries or any
ERISA Affiliate with respect to any Plan or Foreign Pension Plan shall be
delivered to the Administrative Agent no later than twenty (20) Business Days
after the date such annual report required to be filed with the Internal
Revenue Service was requested by the Administrative Agent, or such records,
documents and/or information has been furnished to the PBGC (other than in
connection with premium payments, which shall be furnished within twenty (20)
Business Days of request by the Administrative Agent) or such notice has been
received by the Borrower, the Subsidiary or the ERISA Affiliate, as
applicable. PCA and each of its Subsidiaries shall ensure that all Foreign
Pension Plans administered by it or into which it makes payments obtains or
retains (as applicable) registered status under and as required by applicable
law and is administered in a timely manner in all respects in compliance with
all applicable laws except where the failure to do any of the foregoing would
not be reasonably likely to result in a Material Adverse Effect.
8.08 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower shall
cause (i) each of its, and each of its Subsidiaries', fiscal years to end on
December 31 and (ii) its fiscal quarters to end on March 31, June 30, September
30 and December 31.
8.09 PAYMENT OF TAXES. The Borrower will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for sums that have become
due and payable which, if unpaid, might become a Lien not otherwise permitted
under Section 9.01(i), PROVIDED, that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with GAAP.
8.10 OWNERSHIP OF SUBSIDIARIES. Except to the extent expressly
permitted herein or as otherwise expressly consented in writing by the Required
Lenders, the Borrower shall directly or indirectly own 100% of the capital stock
or other equity interests of each of its Subsidiaries.
8.11 ADDITIONAL SECURITY; FURTHER ASSURANCES; SURVEYS. (a)
The Borrower will, and will cause each of its Domestic Wholly-Owned
Subsidiaries to, grant to the Collateral Agent security interests and
mortgages (an "ADDITIONAL MORTGAGE") in such Real Property (excluding Real
Property where the fair market value thereof is less than $1,000,000) of the
Borrower or any of its Domestic Wholly-Owned Subsidiaries as are not covered
by the original Mortgages, to the extent acquired after the Initial Borrowing
Date, and as may be requested from time to time by the Administrative Agent
or the Required Lenders (each such Real Property, an "ADDITIONAL MORTGAGED
PROPERTY"). All such Additional Mortgages shall be granted pursuant to
documentation substantially in the form of the Mortgages or in such other
form as is reasonably satisfactory to the Administrative Agent and shall
constitute valid and enforceable perfected Liens superior to and prior to the
rights of all third Persons and subject to no other Liens except as are
permitted by Section 9.01 at the time of perfection thereof. The Additional
Mortgages or instruments related thereto shall be duly recorded or filed in
such manner and in such places as
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are required by law to establish, perfect, preserve and protect the Liens in
favor of the Collateral Agent required to be granted pursuant to the
Additional Mortgages and all taxes, fees and other charges payable in
connection therewith shall be paid in full.
(b) The Borrower will, and will cause each of its Domestic
Wholly-Owned Subsidiaries (other than the Receivables Entity) to, at the expense
of the Borrower, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
Collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require pursuant to this Section 8.11. Additionally, upon the
request of the Collateral Agent or the Required Lenders, the Borrower shall
take, or cause to be taken such action as may be requested in order to perfect
(or maintain the perfection of) the security interests (or take any analogous
actions under the applicable provisions of local law in order to protect such
security interests) in any Collateral located outside the U.S. owned by the
Borrower or a Domestic Wholly-Owned Subsidiary, in each case to the extent such
actions are permitted to be taken under the laws of the applicable
jurisdictions. Furthermore, the Borrower shall cause to be delivered to the
Collateral Agent such opinions of counsel, title insurance and other related
documents as may be reasonably requested by the Collateral Agent to assure
itself that this Section 8.11 has been complied with.
(c) The Borrower agrees to cause each Domestic Wholly-Owned
Subsidiary (other than the Receivables Entity) established or created in
accordance with Section 9.14 to execute and deliver a guaranty of all
Obligations and all obligations under Interest Rate Protection or Other Hedging
Agreements to a Lender or any of its Affiliates in substantially the form of the
Subsidiaries Guaranty.
(d) The Borrower agrees to pledge and deliver, or cause to be
pledged and delivered, all of the capital stock of each new Subsidiary
(excluding that portion of the voting stock of any Foreign Subsidiary which
would be in excess of 66% of the total outstanding voting stock of such Foreign
Subsidiary) established or created after the Initial Borrowing Date, to the
extent owned by the Borrower or any Domestic Wholly-Owned Subsidiary, to the
Collateral Agent for the benefit of the Secured Creditors pursuant to the Pledge
Agreement.
(e) The Borrower will cause each Domestic Wholly-Owned
Subsidiary (other than the Receivables Entity) established or created in
accordance with Section 9.14 to grant to the Collateral Agent a first priority
(subject to Permitted Liens) Lien on property (tangible and intangible) of such
Subsidiary upon terms and with exceptions similar to those set forth in the
Security Documents as appropriate, and satisfactory in form and substance to the
Borrower, the Administrative Agent and Required Lenders. The Borrower shall
cause each such Domestic Wholly-Owned Subsidiary, at its own expense, to
execute, acknowledge and deliver, or cause the execution, acknowledgment and
delivery of, and thereafter register, file or record in any appropriate
governmental office, any document or instrument reasonably deemed by the
Collateral Agent to be necessary or desirable for the creation and perfection of
the foregoing Liens. The Borrower will cause each of such Domestic Wholly-Owned
Subsidiaries to take all
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actions reasonably requested by the Administrative Agent (including, without
limitation, the filing of UCC-1's) in connection with the granting of such
security interests.
(f) The security interests required to be granted pursuant to
this Section 8.11 shall be granted pursuant to security documentation (which
shall be substantially similar to the Security Documents already executed and
delivered by the Borrower or its Subsidiaries, as applicable) or otherwise
satisfactory in form and substance to the Collateral Agent and the Borrower and
shall constitute valid and enforceable perfected security interests prior to the
rights of all third Persons and subject to no other Liens except such Liens as
are permitted by Section 9.01. The Additional Security Documents and other
instruments related thereto shall be duly recorded or filed in such manner and
in such places and at such times as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Collateral Agent for the benefit
of the respective Secured Creditors, required to be granted pursuant to the
Additional Security Documents and all taxes, fees and other charges payable in
connection therewith shall be paid in full by the Borrower. At the time of the
execution and delivery of the Additional Security Documents, the Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel, Mortgage
Policies, title surveys, real estate appraisals and other related documents as
may be reasonably requested by the Administrative Agent or the Required Lenders
to assure themselves that this Section 8.11 has been complied with.
(g) In the event that the Administrative Agent or the
Required Lenders at any time after the Effective Date determines in its or their
reasonable discretion (whether as a result of a position taken by an applicable
bank regulatory agency or official, or otherwise) that real estate appraisals
satisfying the requirements set forth in 12 C.F.R., Part 34-Subpart C, or any
successor or similar statute, rule, regulation, guideline or order (any such
appraisal, a "REQUIRED APPRAISAL") are or were required to be obtained, or
should be obtained, in connection with any Mortgaged Property then, within 60
days after receiving written notice thereof from the Administrative Agent or the
Required Lenders, as the case may be, the Borrower shall cause such Required
Appraisal to be delivered, at the expense of the Borrower, to the Administrative
Agent, which Required Appraisal, and the respective appraiser, shall be
reasonably satisfactory to the Administrative Agent.
(h) The Borrower agrees that each action required above by
Section 8.11(a) or (b) shall be completed as soon as possible, but in no event
later than 60 days after such action is requested to be taken by the
Administrative Agent, the Collateral Agent or the Required Lenders. The
Borrower further agrees that each action required by Section 8.11(c), (d), (e)
and (f) with respect to the creation or acquisition of a new Subsidiary shall be
completed contemporaneously with (or, in the case of any documents or
instruments to be registered, filed or recorded, within 10 days of) the creation
of such new Subsidiary.
8.12 INTEREST RATE PROTECTION. No later than the 45th day after
the Initial Borrowing Date, the Borrower shall enter into, and for a minimum
period of two years thereafter maintain, Interest Rate Protection Agreements
with one or more Lenders or their affiliates reasonably acceptable to the
Administrative Agent establishing a fixed or maximum interest rate
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acceptable to the Administrative Agent for an aggregate amount with respect
to no less than 50% of the Term Loans outstanding from time to time.
8.13 PERMITTED ACQUISITIONS. (a) Subject to the provisions of
this Section 8.13 and the requirements contained in the definition of Permitted
Acquisition, the Borrower and any of its Wholly-Owned Domestic Subsidiaries may
from time to time effect Permitted Acquisitions, so long as (in each case except
to the extent the Required Lenders otherwise specifically agree in writing in
the case of a specific Permitted Acquisition):
(i) no Default or Event of Default shall be in existence at
the time of the consummation of the proposed Permitted Acquisition or
immediately after giving effect thereto;
(ii) the Borrower shall have given the Administrative Agent
and the Lenders at least five Business Days' prior written notice of any
Permitted Acquisition;
(iii) calculations are made by the Borrower of compliance with
the covenants contained in Sections 9.08, 9.09 and 9.10 (in each case,
giving effect to the last sentence appearing therein) for the Calculation
Period most recently ended prior to the date of such Permitted
Acquisition, on a PRO FORMA Basis as if the respective Permitted
Acquisition (as well as all other Permitted Acquisitions theretofore
consummated after the first day of such Calculation Period) had occurred
on the first day of such Calculation Period, and such recalculations
shall show that such financial covenants would have been complied with if
the Permitted Acquisition had occurred on the first day of such
Calculation Period;
(iv) either (x) the Maximum Permitted Consideration payable in
connection with the proposed Permitted Acquisition, when combined with
the aggregate Maximum Permitted Consideration paid in connection with all
other Permitted Acquisitions consummated after the Effective Date and on
or prior to the date of the consummation of the proposed Permitted
Acquisition which the Borrower has not elected to be permitted pursuant
to clause (y) below does not exceed $125,000,000 or (y) the amount of the
Maximum Permitted Consideration payable in connection with Permitted
Acquisitions consummated in any fiscal year which the Borrower has not
elected to be permitted pursuant to clause (x) above, shall not exceed
the Available Permitted Acquisition Basket Amount for such fiscal year;
PROVIDED that the Borrower may allocate the Maximum Permitted
Consideration paid in respect of a Permitted Acquisition between the
baskets under clauses (x) and (y);
(v) all representations and warranties contained herein and
in the other Credit Documents shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the date of such Permitted
Acquisition (both before and after giving effect thereto), unless stated
to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of
such earlier date;
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(vi) the Borrower provides to the Administrative Agent and the
Lenders as soon as available but not later than five Business Days after
the execution thereof, a copy of any executed purchase agreement or
similar agreement with respect to such Permitted Acquisition;
(vii) after giving effect to such Permitted Acquisition and the
payment of all post-closing purchase price adjustments required (in the
good faith determination of the Borrower) in connection with such
Permitted Acquisition (and all other Permitted Acquisitions for which
such purchase price adjustments may be required to be made) and all
Capital Expenditures (and the financing thereof) reasonably anticipated
by the Borrower to be made in the business acquired pursuant to such
Permitted Acquisition within the 90-day period (such period for any
Permitted Acquisition, a "POST-CLOSING PERIOD") following such Permitted
Acquisition (and in the businesses acquired pursuant to all other
Permitted Acquisitions with Post-Closing Periods ended during the
Post-Closing Period of such Permitted Acquisition), the Total Available
Unutilized Revolving Loan Commitment shall equal or exceed $50,000,000;
(viii) the Borrower shall believe in good faith that the
proposed Permitted Acquisition could not result in a material increase in
tax, ERISA, environmental or other contingent liabilities with respect to
the Borrower or any of its Subsidiaries which would reasonably be
expected to have a Material Adverse Effect; and
(ix) the Borrower shall have delivered to the Administrative
Agent an officer's certificate executed by an Authorized Officer of the
Borrower, certifying to the best of his knowledge, compliance with the
requirements of preceding clauses (i) through (viii), inclusive,
containing the calculations required by the preceding clauses (iii), (iv)
and (vii) and stating whether the Maximum Permitted Consideration for
such Permitted Acquisition is to be applied to the basket under clause
(iv)(x) above or clause (iv)(y) above.
(b) At the time of each Permitted Acquisition involving the
creation or acquisition of a Subsidiary, or the acquisition of capital stock or
other equity interest of any Person, the capital stock or other equity interests
thereof created or acquired in connection with such Permitted Acquisition shall
be pledged for the benefit of the Secured Creditors pursuant to the Pledge
Agreement in accordance with the requirements of Sections 8.11 and 9.15.
(c) The Borrower shall cause each Subsidiary which is formed
to effect, or is acquired pursuant to, a Permitted Acquisition to comply with,
and to execute and deliver, all of the documentation required by, Sections 8.11
and 9.15, to the satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Acquisition shall be
deemed to be a representation and warranty by the Borrower that the
certifications by the Borrower (or by one or more of its Authorized Officers)
pursuant to Section 8.13(a) are true and correct and that all conditions thereto
have been satisfied and that same is permitted in accordance with the terms of
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this Agreement, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, Sections 6 and 10.
8.14 FOREIGN SUBSIDIARIES SECURITY. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower acceptable to the Administrative Agent and the Required Lenders does
not within 30 days after a request from the Administrative Agent or the Required
Lenders deliver to the Administrative Agent evidence, in form and substance
reasonably satisfactory to the Administrative Agent and the Required Lenders,
with respect to any Foreign Wholly-Owned Subsidiary which has not already had
all of its stock pledged pursuant to the Pledge Agreement that (i) a pledge of
66% or more of the total combined voting power of all classes of capital stock
of such Foreign Subsidiary entitled to vote or, in the case of a Foreign
Subsidiary whose capital stock is held by another Foreign Subsidiary, a pledge
of any of the capital stock of such Foreign Subsidiary, (ii) the entering into
by such Foreign Subsidiary of a security agreement in substantially the form of
the PCA Security Agreement, (iii) the entering into by such Foreign Subsidiary
of a pledge agreement in substantially the form of the Pledge Agreement and
(iv) the entering into by such Foreign Subsidiary of a guaranty in
substantially the form of the Subsidiaries Guaranty, in any such case would
cause (I) the undistributed earnings of such Foreign Subsidiary (or such
Foreign Subsidiary's parent or indirect parent to the extent that such parent
is also a foreign subsidiary) as determined for Federal income tax purposes to
be treated as a deemed dividend to such Foreign Subsidiary's United States
parent for Federal income tax purposes or (II) other material adverse Federal
income tax consequences to the Credit Parties, then in the case of a failure
to deliver the evidence described in clause (i) above, that portion of such
Foreign Subsidiary's outstanding capital stock not theretofore pledged pursuant
to the Pledge Agreement shall be pledged to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Pledge Agreement (or another
pledge agreement in substantially similar form, if needed), and in the case of
a failure to deliver the evidence described in clause (ii) or (iii) above, such
Foreign Subsidiary shall execute and deliver the PCA Security Agreement (or
another security agreement in substantially similar form, if needed) or the
Pledge Agreement (or another pledge agreement in substantially similar form, if
needed), as the case may be, granting to the Collateral Agent for the benefit of
the Secured Creditors a security interest in all of such Foreign Subsidiary's
assets or the capital stock and promissory notes owned by such Foreign
Subsidiary, as the case may be, and securing the Obligations of the Borrower
under the Credit Documents and under any Interest Rate Protection Agreement or
Other Hedging Agreement and, in the event the Subsidiaries Guaranty shall have
been executed by such Foreign Subsidiary, the obligations of such Foreign
Subsidiary thereunder, and in the case of a failure to deliver the evidence
described in clause (iv) above, such Foreign Subsidiary shall execute and
deliver the Subsidiaries Guaranty (or another guaranty in substantially similar
form, if needed), guaranteeing the Obligations of the Borrower under the Credit
Documents and under any Interest Rate Protection Agreement or Other Hedging
Agreement, in each case to the extent that the entering into of such PCA
Security Agreement, Pledge Agreement or Subsidiaries Guaranty (or substantially
similar document) is permitted by the laws of the respective foreign
jurisdiction and with all documents delivered pursuant to this Section 8.14 to
be in form and substance reasonably satisfactory to the Administrative Agent and
the Required Lenders.
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8.15 YEAR 2000 COMPLIANCE. The Borrower shall take all actions
necessary and commit adequate resources to assure that its computer-based and
other systems (and those of all Subsidiaries) are able to effectively process
dates, including dates before, on and after January 1, 2000, without
experiencing any Y2K Problem that could cause a Material Adverse Effect. At the
request of the Administrative Agent, the Borrower will provide the
Administrative Agent with assurances and substantiations (including, but not
limited to, the results of internal or external audit reports prepared in the
ordinary course of business) reasonably acceptable to the Administrative Agent
as to the capability of the Borrower and its Subsidiaries to conduct its and
their businesses and operations before, on and after January 1, 2000 without
experiencing a Y2K Problem causing a Material Adverse Effect.
8.16 PERMITTED RECEIVABLES FACILITY TRANSACTION. At any time
after the Contribution Effective Time, the Borrower and/or one or more other
Receivables Sellers may enter into a Permitted Receivables Facility (which
complies with the definition of Permitted Receivables Facility contained herein)
to provide off-balance sheet financing to the Borrower for the sale of Permitted
Receivables Facility Assets to a Receivables Entity (which shall be established
in accordance with, and meet the requirements of, the definition of Receivables
Entity contained herein), so long as on the Permitted Receivables Facility
Transaction Date all requirements of this Section 8.16 have been satisfied and
the Permitted Receivables Facility and related transactions comply with the
respective defined terms as used in this Section 8.16. On the Permitted
Receivables Facility Transaction Date, (i) there shall have been delivered to
the Administrative Agent and the Lenders true and correct copies of all
Permitted Receivables Facility Documents, certified as such by an officer of the
Borrower, and all of the terms and conditions of the Permitted Receivables
Facility Documents shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Lenders, (ii) the Permitted Receivables
Facility Transaction, including all of the terms and conditions thereof, shall
have been duly approved by the board of directors of the Borrower, and all
Permitted Receivables Facility Documents shall be in full force and effect,
(iii) each of the conditions precedent to the consummation of the Permitted
Receivables Facility Transaction shall have been satisfied and not waived except
with the consent of the Administrative Agent and the Required Lenders to the
reasonable satisfaction of the Administrative Agent and the Required Lenders,
(iv) each of the representations and warranties of the Receivables Sellers and
the Receivables Entity contained in the Permitted Receivables Facility Documents
shall be true and correct in all material respects, (v) the Permitted
Receivables Facility Transaction shall have been consummated in all material
respects in accordance with all applicable law and the Permitted Receivables
Facility Documents, (vi) no Default or Event of Default shall be in effect upon
the Permitted Receivables Facility Transaction Dte (either before or after
giving effect to the transactions contemplated by the Permitted Receivables
Facility Documents) and (vii) the Borrower and/or the other Receivables Sellers
shall have received the Permitted Receivables Facility Proceeds and used the
same to make any prepayment of Loans and/or satisfy any cash collateral
requirement required under Section 4.02(a) or (j), as the case may be.
SECTION 9. NEGATIVE COVENANTS. PCA covenants and agrees that on
and after the Contribution Effective Time and until the Total Commitments and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other
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Obligations incurred hereunder and thereunder, are paid in full (other than
any indemnity, not then due and payable, which by its terms shall survive
such termination and payment):
9.01 LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to the Borrower
or any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute; PROVIDED that the provisions
of this Section 9.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
"PERMITTED LIENS"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes, assessments
or governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with generally accepted accounting principles in the United
States (or the equivalent thereof in any country in which a Foreign
Subsidiary is doing business, as applicable);
(ii) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law, which arise or were incurred in
the ordinary course of business and do not secure Indebtedness for
borrowed money, such as carriers', workmen's, repairmen's,
warehousemen's, materialmen's and mechanics' liens, collecting bank's
liens, charge back rights of depository banks for uncollected items and
other similar Liens arising or incurred in the ordinary course of
business, and (x) which do not in the aggregate materially detract from
the value of the property or assets of the Borrower or such Subsidiary
and do not materially impair the use thereof in the operation of the
business of the Borrower or such Subsidiary or (y) which are being
contested in good faith by appropriate proceedings, which proceedings (or
orders entered in connection with such proceedings) have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on the Effective Date which are
listed, and the property subject thereto described, in Schedule IV, but
only to the respective date, if any, set forth in such Schedule IV for
the removal and termination of any such Liens, plus renewals and
extensions of such Liens to the extent set forth on Schedule IV, PROVIDED
that (x) the aggregate principal amount of the Indebtedness, if any,
secured by such Liens does not increase from that amount outstanding at
the time of any such renewal or extension and (y) any such renewal or
extension does not encumber any additional assets or properties of the
Borrower or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to this Agreement and the Security
Documents;
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(vi) licenses, leases or subleases granted to other Persons in
the ordinary course of business not materially interfering with the
conduct of the business of the Borrower and its Subsidiaries taken as a
whole;
(vii) Liens placed upon assets used in the ordinary course of
business of the Borrower or any of its Subsidiaries (other than the
Receivables Entity) at the time of acquisition thereof by the Borrower or
any such Subsidiary or within 90 days thereafter to secure Indebtedness
incurred to pay all or a portion of the purchase price thereof, PROVIDED
that (i) any such Liens attach only to the equipment so purchased and
upgrades thereon, (ii) the Indebtedness secured by any such Lien does not
exceed 100% of the lesser of the fair market value or the purchase price
of the equipment being purchased at the time of the incurrence of such
Indebtedness and (iii) the Indebtedness secured thereby is permitted to
be incurred pursuant to Section 9.04(vi);
(viii) easements, rights-of-way, restrictions (including zoning
restrictions), covenants, encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies, in each case
whether now or hereafter in existence, not securing Indebtedness and not
materially interfering with the conduct of the business of the Borrower
and its Subsidiaries taken as a whole;
(ix) Liens arising from precautionary UCC financing statement
filings regarding operating leases entered into by the Borrower or any of
its Subsidiaries (other than the Receivables Entity) in the ordinary
course of business;
(x) Liens arising out of judgments or awards in circumstances
not constituting an Event of Default under Section 10.09 in respect of
which the Borrower or any of its Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review in respect of which there
shall have been secured a subsisting stay of execution pending such
appeal or proceedings, PROVIDED that the aggregate amount of all such
judgments or awards does not exceed $10,000,000 at any time outstanding;
(xi) statutory, contractual and common law landlords' liens
under leases or subleases permitted by this Agreement;
(xii) Liens (other than any Lien imposed by ERISA) (x) incurred
or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, (y) to secure the performance of tenders, statutory obligations
(other than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money) or (z)
arising by virtue of deposits made in the ordinary course of business to
secure liability for premiums to insurance carriers, PROVIDED that the
aggregate amount of deposits at any time pursuant to sub-clauses (y) and
(z) shall not exceed $15,000,000 in the aggregate;
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(xiii) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this
Agreement;
(xiv) Liens (x) granted by the Receivables Sellers in favor of
the Receivables Entity consisting of UCC-1 financing statements filed to
effect the sale of Permitted Receivables Facility Assets pursuant to the
Permitted Receivables Facility Documents, (y) granted by the Receivables
Entity on those Permitted Receivables Facility Assets acquired by it
pursuant to the Permitted Receivables Facility Documents to the extent
that such Liens are created by the Permitted Receivables Facility
Documents and (z) consisting of the right of setoff granted by the
Receivables Entity to any financial institution acting as a lockbox bank
in connection with the Permitted Receivables Facility;
(xv) Liens created pursuant to Capital Leases permitted
pursuant to Section 9.04(vi), PROVIDED that (x) such Liens only serve to
secure the payment of Indebtedness arising under such Capitalized Lease
Obligation and (y) the Lien encumbering the asset giving rise to such
Capitalized Lease Obligation does not encumber any other asset of the
Borrower or any of its Subsidiaries;
(xvi) Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of the
Borrower in existence at the time such Subsidiary is acquired pursuant to
a Permitted Acquisition, PROVIDED that (i) any Indebtedness that is
secured by such Liens is permitted to exist under Section 9.04(xiii) and
(ii) such Liens are not incurred in connection with, or in contemplation
or anticipation of, such Permitted Acquisition and do not attach to any
other asset of the Borrower or any of its Subsidiaries;
(xvii) Liens securing Foreign Subsidiary Working Capital
Indebtedness permitted pursuant to Section 9.04(xii), so long as any such
Lien attaches only to the assets of the respective Foreign Subsidiary
which is the obligor under such Indebtedness;
(xviii) Liens in favor of customs and revenue authorities arising
as a matter of law or regulation to secure the payment of customs duties
in connection with the importation of goods and deposits made to secure
statutory obligations in the form of excise taxes;
(xix) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
the Borrower or any of its Subsidiaries in the ordinary course of
business (excluding any general inventory financing);
(xx) Liens arising pursuant to Permitted Sale-Leaseback
Transactions to the extent permitted by Section 9.02(xiv), so long as
such Liens do not attach to any assets of the Borrower or any of its
Subsidiaries other than those which are the subject of such
Permitted-Sale Leaseback Transaction; and
(xxi) additional Liens incurred by the Borrower and its
Subsidiaries so long as the value of the property subject to such Liens,
and the Indebtedness and other obligations secured thereby, do not exceed
$10,000,000.
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In connection with the granting of Liens of the type described in clauses (vi),
(vii), (xiv), (xv), (xvi), (xx) and (xxi) of this Section 9.01 by the Borrower
of any of its Subsidiaries, the Administrative Agent and the Collateral Agent
shall be authorized to take any actions deemed appropriate by it in connection
therewith (including, without limitation, by executing appropriate lien releases
or lien subordination agreements in favor of the holder or holders of such
Liens, in either case solely with respect to the item or items of equipment or
other assets (including Real Property) subject to such Liens).
9.02 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any sale-leaseback transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory in the ordinary
course of business) of any Person (or agree to do any of the foregoing at any
future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries
(other than the Receivables Entity) shall be permitted to the extent not
in violation of Section 9.07;
(ii) each of the Borrower and its Subsidiaries (other than the
Receivables Entity) may in the ordinary course of business, sell, lease
or otherwise dispose of any assets which, in the reasonable judgment of
such Person, are obsolete, worn out or otherwise no longer useful in the
conduct of such Person's business;
(iii) Investments may be made to the extent permitted by
Section 9.05 and Cash Equivalents may be disposed of or liquidated in the
ordinary course of business;
(iv) each of the Borrower and its Subsidiaries (other than the
Receivables Entity) may lease (as lessee) real or personal property in
the ordinary course of business (so long as any such lease does not
create a Capitalized Lease Obligation except to the extent permitted by
Section 9.04(vi));
(v) each of the Borrower and its Subsidiaries (other than the
Receivables Entity) may make sales or transfers of inventory in the
ordinary course of business and consistent with past practices;
(vi) the Borrower and its Subsidiaries (other than the
Receivables Entity) may sell or discount, in each case without recourse
and in the ordinary course of business, overdue accounts receivable
arising in the ordinary course of business, but only in connection with
the compromise or collection thereof consistent with customary industry
practice (and not as part of any bulk sale);
(vii) the Borrower and its Subsidiaries (other than the
Receivables Entity) may license or sublicense software, trademarks and
other intellectual property in the ordinary course of business which do
not materially interfere with the business of the Borrower
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and its Subsidiaries taken as a whole or the Borrower, so long as each
such license is permitted to be assigned pursuant to the PCA Security
Agreement (to the extent that a security interest in such intellectual
property is granted thereunder) and does not otherwise prohibit the
granting of a Lien by the Borrower or any of its Subsidiaries pursuant
to the PCA Security Agreement in the intellectual property covered by
such license or such sublicense;
(viii) the Borrower and its Subsidiaries may make Timberlands
Dispositions, PROVIDED that (x) at least 75% of the aggregate
consideration received in respect thereof shall consist of cash and Cash
Equivalents, (y) the Net Asset Sale Proceeds in respect thereof shall be
applied as provided in Section 4.02(g) and (z) the gross purchase price
in respect thereof shall equal or exceed the fair market value of all
Timberland Properties sold pursuant thereto (as determined in good faith
by senior management of the Borrower);
(ix) the Borrower or any Domestic Wholly-Owned Subsidiary of
the Borrower (other than the Receivables Entity) may transfer assets or
lease to or acquire or lease assets from the Borrower or any other
Domestic Wholly-Owned Subsidiary (other than the Receivables Entity) and
any Domestic Wholly-Owned Subsidiary (other than the Receivables Entity)
may be merged into the Borrower or any other Domestic Wholly-Owned
Subsidiary of the Borrower (other than the Receivables Entity) (so long
as, in the case of any merger involving the Borrower, the Borrower is the
surviving corporation thereof);
(x) the Borrower and its Subsidiaries (other than the
Receivables Entity) may sell or otherwise dispose of additional assets
(other than a Timberlands Disposition, any Asset Sale pursuant to a
Permitted Sale-Leaseback Transaction and a sale or disposition of a
Converting Plant), PROVIDED that (v) each such sale or disposition shall
be for an amount at least equal to the fair market value thereof (as
determined in good faith by the senior management of the Borrower), (w)
each such sale results in consideration at least 75% of which shall be in
the form of cash (for such purpose, taking into account the amount of
cash, the principal amount of any promissory notes and the fair market
value, as determined in good faith by the senior management of the
Borrower, of any other consideration), (x) the Net Sale Proceeds
therefrom are either applied to repay Term Loans as provided in Section
4.02(g) or reinvested in replacement assets to the extent permitted by
Section 4.02(g), and (y) the aggregate Net Sale Proceeds of all assets
subject to sale or other disposition pursuant to this clause (x) shall
not exceed (a) $50,000,000 in any twelve month period or (b) for all such
sales and dispositions after the Effective Date, 5% of the Total Relevant
Assets (as determined on the last day of the most recently ended fiscal
quarter for which financial statements have been made available to the
Lenders);
(xi) on and after the Permitted Receivables Facility
Transaction Date, the Receivables Sellers may (x) contribute cash to the
Receivables Entity the proceeds of which are used to acquire Permitted
Receivables Facility Assets from the Receivables Sellers and (y)
transfer and reacquire Permitted Receivables Facility Assets to and from
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the Receivables Entity, in each case pursuant to, and in accordance with
the terms of, the Permitted Receivables Facility Documents;
(xii) on and after the Permitted Receivables Facility
Transaction Date, the Receivables Entity may transfer and reacquire
Permitted Receivables Facility Assets (to the extent acquired from the
Receivables Sellers as provided in clause (xi) above) pursuant to, and in
accordance with the terms of, the Permitted Receivables Facility
Documents;
(xiii) the Borrower and its Wholly-Owned Domestic Subsidiaries
may make Permitted Acquisitions, so long as such Permitted Acquisitions
are effected in accordance with the requirements of Section 8.13;
(xiv) the Borrower or any of its Subsidiaries may effect
Permitted Sale-Leaseback Transactions in accordance with the definition
thereof, PROVIDED that (x) the aggregate amount of all proceeds received
by the Borrower and its Subsidiaries from all Permitted Sale-Leaseback
Transactions consummated on and after the Effective Date shall not exceed
$100,000,000, (y) the Net Sale Proceeds therefrom are applied to repay
Term Loans as provided in Section 4.02(g) and (z) the Borrower
establishes compliance with Sections 9.08 and 9.09 after giving effect,
on a Pro Forma Basis, to the respective sale or disposition;
(xv) each of the Borrower and its Subsidiaries may sell or
otherwise dispose of Converting Plants (other than pursuant to a
Permitted Sale-Leaseback Transaction), PROVIDED that (v) each such sale
or disposition shall be for an amount at least equal to the fair market
value thereof (as determined in good faith by the senior management of
the Borrower), (w) each such sale results in consideration at least 75%
of which shall be in the form of cash (for such purpose, taking into
account the amount of cash, the principal amount of any promissory notes
and the fair market value, as determined in good faith by the senior
management of the Borrower, of any other consideration), (x) the Net Sale
Proceeds therefrom are either applied to repay Term Loans as provided in
Section 4.02(g) or reinvested in replacement assets to the extent
permitted by Section 4.02(g), and (y) the aggregate Net Sale Proceeds of
all Converting Plants subject to sale or other disposition pursuant to
this clause (xv) shall not exceed $60,000,000 in any twelve month period;
(xvi) the Borrower and its Subsidiaries may sell or exchange
specific items of equipment, so long as the purpose of each such sale or
exchange is to acquire (and results within 90 days of such sale or
exchange in the acquisition of) replacement items of equipment which are
the functional equivalent of the item of equipment so sold or exchanged;
and
(xvii) the Borrower and its Subsidiaries may sell or lease
equipment to their respective customers or suppliers in the ordinary
course of business, so long as the book value of the equipment sold or
leased after the Effective Date (as reflected on the most recent balance
sheet of the Borrower or such Subsidiary prior to the respective sale or
lease) pursuant to this clause (xvii) which is either subject at the time
of determination to
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a lease under which the Borrower or a Subsidiary is lessor or was
financed by an advance to the relevant customer or supplier made or
guaranteed by the Borrower or a Subsidiary which remain outstanding on
the date of determination, does not exceed $5,000,000 at any one time.
To the extent the Required Lenders waive the provisions of this Section 9.02
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 9.02, such Collateral (unless sold to the Borrower or
a Subsidiary of the Borrower) shall be sold free and clear of the Liens created
by the Security Documents, and the Administrative Agent and Collateral Agent
shall be authorized to take any actions deemed appropriate in order to effect
the foregoing.
9.03 DIVIDENDS. The Borrower shall not, and shall not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends with respect to
the Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends to
the Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment thereof), the
Borrower may repurchase outstanding shares of its common stock (or
options to purchase such common stock) owned by employees, officers or
directors of the Borrower or any Subsidiary following the death,
disability, retirement or termination of employment of such employee,
officer or director, PROVIDED that (x) the aggregate amount of all
Dividends paid pursuant to this clause (ii) in any fiscal year shall not
exceed $3,000,000 and (y) if $3,000,000 exceeds the amount of Dividends
paid by the Borrower pursuant to this clause (ii) in any fiscal year,
such excess may be carried forward and utilized to pay Dividends pursuant
to this clause (ii) in succeeding fiscal years so long as the aggregate
amount of Dividends paid pursuant to this clause (ii) in any fiscal year
shall not exceed $10,000,000;
(iii) the Borrower may make cash and stock distributions to TPI
at the time of the Contribution in the manner described in the
Contribution Agreement;
(iv) any Subsidiary of the Borrower that is a Joint Venture
may pay cash Dividends to its shareholders or partners generally, so long
as the Borrower or its respective Subsidiary which owns the equity
interest or interests in the Subsidiary paying such Dividends receives at
least its proportionate share thereof (based upon its relative holdings
of equity interest in the Subsidiary paying such Dividends and taking
into account the relative preferences, if any, of the various classes of
equity interests in such Subsidiary or the terms of any agreements
applicable thereto);
(v) the Borrower may pay regularly accruing Dividends with
respect to the Borrower PIK Preferred Stock through the issuance of
additional shares of Borrower PIK Preferred Stock (but not in cash) in
accordance with the terms thereof;
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(vi) so long as (x) no Default or Event of Default exists or
would result therefrom, (y) at the time of the respective Dividend, the
Borrower establishes compliance with Section 9.08 after giving effect, on
a PRO FORMA Basis, to such Dividend (and all other cash Dividends paid
with respect to Borrower PIK Preferred Stock during the respective
Calculation Period) and (z) the Borrower delivers an officer's
certificate to the Administrative Agent on or before the payment of such
Dividend certifying that the requirements of clauses (x) and (y) above
are satisfied, the Borrower may pay regularly accruing cash Dividends on
Borrower PIK Preferred Stock on and after the PIK Trigger Date, with such
Dividends to be paid in accordance with the terms of the certificate of
designation therefor;
(vii) the Borrower may pay cash Dividends to PCA Holdings, so
long as the proceeds thereof are promptly used by PCA Holdings to pay
operating and administrative expenses in the ordinary course of business
(including, without limitation, professional fees and expenses), other
similar corporate overhead costs and expenses and salaries or other
compensation of employees who perform services for PCA Holdings and the
Borrower, in each case to the extent such payments are made in accordance
with the requirements of the PCA Holdings Service Agreement, PROVIDED
that the aggregate amount of cash Dividends paid pursuant to this clause
(vii) in any fiscal year shall not exceed $1,000,000;
(viii) the Borrower may, at any time prior to the first
anniversary of the Initial Borrowing Date, repurchase outstanding shares
of Borrower Common Stock from PCA Holdings and Tenneco with the net cash
proceeds of purchase of Borrower Common Stock received by the Borrower in
connection with its sale of such stock to management of the Borrower, so
long as no Default or Event of Default is then in existence or would
result therefrom;
(ix) so long as the Timberlands Disposition
Recapture/Restricted Payments Requirements are satisfied at the time of
the consummation of the respective sale of Timberland Properties pursuant
to the Timberlands Dispositions, the Borrower may utilize proceeds from
the Timberlands Dispositions in an aggregate amount not to exceed the
Excluded Timberland Disposition Proceeds to redeem Borrower PIK Preferred
Stock and/or pay cash Dividends with respect to Borrower Common Stock, so
long as the sum of the aggregate liquidation preference of all Borrower
PIK Preferred Stock redeemed pursuant to this clause (ix) and all accrued
and unpaid dividends thereon and all redemption premiums in respect
thereof and the aggregate amount of all cash payments with respect to
Borrower Common Stock made in reliance on this clause (ix) does not
exceed the Excluded Timberland Disposition Proceeds LESS the aggregate
principal amount of Senior Subordinated Notes redeemed or repurchased
pursuant to the proviso to Section 9.11(iii); and
(x) to the extent the issuance of Exchange Borrower PIK
Preferred Stock in exchange for Borrower PIK Preferred Stock would be
deemed to constitute a Dividend, the same shall be permitted so long as
any such issuance is consummated in accordance
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(and consistent) with the requirements of the definitions of Borrower
PIK Preferred Stock and Exchange Borrower PIK Preferred Stock.
9.04 INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred or existing pursuant to this
Agreement and the other Credit Documents;
(ii) unsecured Indebtedness of the Borrower under the
Subordinated Promissory Notes and the Borrower and the Subsidiary
Guarantors under the Senior Subordinated Notes and the other Senior
Subordinated Notes Documents in an aggregate principal amount for all
Indebtedness at any time outstanding pursuant to this clause (ii) not to
exceed $550,000,000 LESS the aggregate amount of all repayments of Senior
Subordinated Notes after the Initial Borrowing Date, PROVIDED that the
Senior Subordinated Notes are issued by the Borrower as (and constitute)
repayment in full of all Indebtedness of the Borrower under the
Subordinated Promissory Notes Documents immediately after the
Contribution Effective Time;
(iii) Existing Indebtedness shall be permitted to the extent
actually outstanding on the Initial Borrowing Date and as the same is
listed on Schedule V, but no refinancings or renewals thereof except as
otherwise permitted by Section 9.04(xvii);
(iv) accrued expenses and trade accounts payable incurred in
the ordinary course of business;
(v) Indebtedness under Interest Rate Protection Agreements
entered into in compliance with Section 8.12, and such other Interest
Rate Protection Agreements which may be entered into from time to time by
the Borrower and which the Borrower in good faith believes will provide
protection against fluctuations in interest rates with respect to
outstanding floating rate Indebtedness then outstanding, and permitted to
remain outstanding, pursuant to the other provisions of this Section
9.04;
(vi) Capitalized Lease Obligations (including Capitalized
Lease Obligations arising from Permitted Sale-Leaseback Transactions) and
Indebtedness of the Borrower and its Subsidiaries representing purchase
money Indebtedness secured by Liens permitted pursuant to Section
9.01(vii), PROVIDED that the sum of (without duplication) (x) the
aggregate amount of Capitalized Lease Obligations (including Capitalized
Lease Obligations arising from Permitted Sale Leaseback Transactions)
incurred on and after the Initial Borrowing Date and outstanding at any
time PLUS (y) the aggregate principal amount of all such purchase money
Indebtedness incurred on and after the Initial Borrowing Date and
outstanding at any time and (z) Permitted Acquired Debt assumed on and
after the Initial Borrowing Date and outstanding at any time, shall not
exceed $150,000,000;
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(vii) intercompany Indebtedness of the Borrower and its
Subsidiaries (other than the Receivables Entity) outstanding to the
extent permitted by Section 9.05(vi);
(viii) Indebtedness evidenced by Other Hedging Agreements
entered into pursuant to Section 9.05(v);
(ix) Indebtedness under performance bonds, letter of credit
obligations to provide security for worker's compensation claims and bank
overdrafts, in each case incurred in the ordinary course of business,
PROVIDED that any obligations arising in connection with such bank
overdraft Indebtedness is extinguished within five Business Days;
(x) Indebtedness of the Borrower which may exist as a result
of its obligation to pay purchase price adjustments (not past due)
pursuant to Section 2.5 of the Contribution Agreement;
(xi) Indebtedness which may be deemed to exist pursuant to the
Permitted Receivables Facility, so long as the Attributed Receivables
Facility Indebtedness does not exceed the Permitted Receivables Facility
Threshold Amount;
(xii) Indebtedness of Foreign Subsidiaries of the Borrower
under lines of credit extended after the Contribution Effective Time to
any such Foreign Subsidiary by Persons other than the Borrower or any of
its Subsidiaries, the proceeds of which Indebtedness are used for such
Foreign Subsidiary's working capital purposes, PROVIDED that the
aggregate principal amount of all such Indebtedness outstanding at any
time for all such Foreign Subsidiaries (such Indebtedness being the
"Foreign Subsidiary Working Capital Indebtedness") shall not exceed the
Foreign Borrowing Base Amount in effect at such time;
(xiii) Indebtedness of a Subsidiary acquired pursuant to a
Permitted Acquisition (or Indebtedness assumed by the Borrower or any
Wholly-Owned Domestic Subsidiary pursuant to a Permitted Acquisition as a
result of a merger or consolidation or the acquisition of an asset
securing such Indebtedness) (the "PERMITTED ACQUIRED DEBT"), so long as
(w) such Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition, (x) such
Indebtedness does not constitute debt for borrowed money, it being
understood and agreed that Capitalized Lease Obligations and purchase
money Indebtedness shall not constitute debt for borrowed money for
purposes of this clause (x) and (y) the sum of (1) the aggregate amount
of all Capitalized Lease Obligations and purchase money Indebtedness
incurred on and after the Initial Borrowing Date pursuant to Section
9.04(vi) and outstanding at any time and (2) the Permitted Acquired Debt
assumed on and after the Initial Borrowing Date and outstanding at any
time, shall not exceed $150,000,000;
(xiv) Indebtedness of the Borrower and its Subsidiaries which
may be deemed to exist pursuant to their respective obligations to pay
Dividends permitted by Section 9.03 after same have been declared;
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(xv) Indebtedness consisting of loans to officers and
employees of the Borrower and its Subsidiaries made or guaranteed by the
Borrower, the proceeds of which are utilized to purchase Borrower Common
Stock in an aggregate principal amount not to exceed $5,500,000
outstanding at any time;
(xvi) Indebtedness of the Borrower or any of its Subsidiaries
which may be deemed to exist in connection with agreements providing for
indemnification, purchase price adjustments and similar obligations in
connection with acquisitions or sales of assets and/or businesses
effected in accordance with the requirements of this Agreement (so long
as any such obligations are those of the Person making the respective
acquisition or sale, and are not guaranteed by any other Person);
(xvii) Permitted Refinancing Indebtedness incurred in accordance
with the requirements of the definition thereof, so long as no Default or
Event of Default is then in existence or would result therefrom;
(xviii) in connection with Timberlands Dispositions, the Borrower
and its Subsidiaries may enter into agreements for the purchase of fiber
in order to insure continuing fiber source at market price or less as
determined in good faith by the Borrower;
(xix) the Borrower and its Subsidiaries may enter into take or
pay contracts for the provision of electricity, steam or other energy
source requiring payments not to exceed $30,000,000 in the aggregate in
any fiscal year provided that at the time of such contract the Borrower
reasonably believes that such contract will result in lower energy costs;
and
(xx) additional unsecured Indebtedness of the Borrower and its
Subsidiaries not otherwise permitted pursuant to this Section 9.04, so
long as the aggregate principal amount of all Indebtedness incurred
pursuant to this clause (xx) does not exceed $50,000,000 at any time
outstanding.
Notwithstanding the foregoing or any other provision of this
Agreement, unless the Required Lenders expressly consent thereto in writing, no
exchange of Borrower PIK Preferred Stock for Subordinated Exchange Debentures
shall be permitted.
9.05 ADVANCES, INVESTMENTS AND LOANS. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, (each of the foregoing an "INVESTMENT" and,
collectively, "INVESTMENTS") except that the following shall be permitted:
(i) the Borrower and its Subsidiaries (other than the
Receivables Entity) may acquire and hold accounts receivables owing to
any of them if created or acquired in the
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ordinary course of business and payable or dischargeable in accordance
with customary trade terms of the Borrower or such Subsidiary;
(ii) the Borrower and its Subsidiaries (other than the
Receivables Entity) may acquire and hold cash and Cash Equivalents;
(iii) the Borrower and its Subsidiaries (other than the
Receivables Entity) may make loans and advances in the ordinary course of
business to their respective employees so long as the aggregate principal
amount thereof at any time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances) shall not exceed
$5,500,000;
(iv) the Borrower may enter into Interest Rate Protection
Agreements to the extent permitted in Section 9.04(v);
(v) the Borrower may enter into and perform its obligations
under Other Hedging Agreements entered into in the ordinary course of
business and so long as any such Other Hedging Agreement is not
speculative in nature and is (x) related to income derived from foreign
operations of the Borrower or any Subsidiary or otherwise related to
purchases permitted hereunder from foreign suppliers or (y) entered into
to protect the Borrower and/or its Subsidiaries against fluctuations in
the prices of raw materials and energy costs used in their businesses;
(vi) any Wholly-Owned Subsidiary (other than the Receivables
Entity) may make intercompany loans to the Borrower or any Wholly-Owned
Subsidiary (other than the Receivables Entity) and the Borrower may make
intercompany loans and advances to any Wholly-Owned Subsidiary (other
than the Receivables Entity), PROVIDED that (x) any promissory notes
evidencing such intercompany loans made by the Borrower or any Domestic
Wholly-Owned Subsidiary shall be pledged (and delivered) by the Borrower
or the respective Domestic Wholly-Owned Subsidiary that is the lender of
such intercompany loan as Collateral pursuant to the Pledge Agreement,
(y) neither the Borrower nor any Domestic Subsidiaries of the Borrower
may make loans to any Foreign Subsidiaries of the Borrower pursuant to
this clause (vi) and (z) any loans made by any Foreign Subsidiaries to
the Borrower or any of its Domestic Subsidiaries pursuant to this clause
(vi) shall be subordinated to the obligations of the Credit Parties
pursuant to subordination provisions in substantially the form of Exhibit
M hereto;
(vii) the Borrower and it Subsidiaries may sell or transfer
assets to the extent permitted by Section 9.02;
(viii) the Borrower may establish Subsidiaries to the extent
permitted by Section 9.14;
(ix) the Receivables Sellers may make an initial cash capital
contribution to the Receivables Entity on the Permitted Receivables
Facility Transaction Date as provided in the Permitted Receivables
Facility Documents, so long as the Receivables Entity uses all
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of the proceeds of such contribution on such date to purchase
Permitted Receivables Facility Assets from the Receivables Sellers,
and the Borrower may hold the capital stock of the Receivables Entity
issued to it so long as such capital stock has been duly pledged and
delivered to the Collateral Agent pursuant to the Pledge Agreement;
(x) on or after the Permitted Receivables Facility
Transaction Date, the Receivables Entity may invest those Permitted
Receivables Facility Assets pursuant to, and in accordance with the terms
of, the Permitted Receivables Facility Documents;
(xi) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations and equity securities) received
in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(xii) so long as no Default or Event of Default exists or would
exist immediately after giving effect to the respective Investment, the
Borrower and its Wholly-Owned Domestic Subsidiaries shall be permitted to
make Investments in any Joint Venture on any date in an amount not to
exceed the Available J.V. Basket Amount on such date (after giving effect
to all prior and contemporaneous adjustments thereto, except as a result
of such Investment), it being understood and agreed that to the extent
the Borrower or one or more other Credit Parties (after the respective
Investment has been made) receives a cash return from the respective
Joint Venture of amounts previously invested pursuant to this clause
(xii) (which cash return may be made by way of repayment of principal in
the case of loans and cash equity returns (whether as a distribution,
dividend or redemption) in the case of equity investments) or a return in
the form of an asset distribution from the respective Joint Venture of
any asset previously contributed pursuant to this clause (xii), then the
amount of such cash return of investment or the fair market value of such
distributed asset (as determined in good faith by senior management of
the Borrower), as the case may be, shall, upon the Administrative Agent's
receipt of a certification of the amount of the return of investment from
an Authorized Officer, apply to increase the Available J.V. Basket
Amount, PROVIDED that the aggregate amount of increases to the Available
J.V. Basket Amount described above shall not exceed the amount of
returned Investment and, in no event, shall the amount of the increases
made to the Available J.V. Basket Amount in respect of any Investment
exceed the amount previously invested pursuant to this clause (xii);
(xiii) the Borrower and any of its Wholly-Owned Domestic
Subsidiaries may make Permitted Acquisitions in accordance with the
relevant requirements of Section 8.13 and the component definitions as
used therein; and
(xiv) the Borrower and its Subsidiaries may make advances and
loans in the ordinary course of business to their respective customers,
so long as (x) the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs
of such loans or advances) shall not exceed $5,000,000 and (y) such
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customers utilize the proceeds thereof to acquire equipment used in their
respective businesses.
9.06 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section
9.03 or, at any time and to the extent that any Dividend is permitted to
by paid by the Borrower to PCA Holdings pursuant to Section 9.03(vii),
the Borrower may in lieu of paying the amounts permitted to be paid in
the form of Dividends pursuant to said Section, pay such amounts to PCA
Holdings pursuant to the PCA Holdings Service Agreement, so long as all
proceeds of such payments are used by PCA Holdings to make the payments
which would be required to be made by it if such amounts had been paid as
Dividends pursuant to, and in accordance with the requirements of,
Section 9.03(vii); PROVIDED that such payments shall be alternative to
and not duplicative of any Dividends paid (and permitted to be paid)
pursuant to said Section;
(ii) loans may be made and other transactions may be entered
into between the Borrower and its Subsidiaries to the extent permitted by
Sections 9.04 and 9.05;
(iii) so long as no Default or Event of Default is then in
existence or would result therefrom, the payment, on a quarterly basis,
of management fees to MDP in an aggregate amount not to exceed $500,000
in any fiscal quarter of the Borrower pursuant to, and in accordance with
the terms of, the MDP Management Agreement; PROVIDED that if during any
fiscal quarter of the Borrower, a Default or Event of Default is in
existence and such management fees cannot be paid as provided above, such
fees shall continue to accrue and may be paid at such time as all
Defaults and Events of Default have been cured or waived and so long as
no Default or Event of Default will exist immediately after giving effect
to the payment thereof;
(iv) customary fees to non-officer directors of the Borrower
and its Subsidiaries;
(v) the payment on the Initial Borrowing Date of one time
consulting and advisory fees to MDP in an aggregate amount not to exceed
$15,000,000;
(vi) the reimbursement of MDP for its reasonable out-of-pocket
expenses incurred in connection with performing management services to
the Borrower and its Subsidiaries under the MDP Management Agreement;
(vii) transactions may be entered into between the Borrower and
the Subsidiary Guarantors to the extent permitted by this Agreement; and
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(viii) transactions between the Borrower or any of its
Subsidiaries and Tenneco and its Subsidiaries as contemplated by the
Contribution Agreement and the Purchase Supply Agreements (each as in
effect on the Effective Date).
In no event shall any management, consulting or similar fees be paid or payable
by the Borrower or any of its Subsidiaries to any Person except as specifically
provided in this Section 9.06.
9.07 CAPITAL EXPENDITURES. (a) The Borrower will not, and will
not permit any of its Subsidiaries to, make any Capital Expenditures, except
that during any fiscal year set forth below, the Borrower and its Subsidiaries
may make Capital Expenditures, so long as the aggregate amount of such Capital
Expenditures does not exceed in any fiscal year set forth below the amount set
forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
December 31, 1999 $135,000,000
December 31, 2000 $135,000,000
December 31, 2001 $140,000,000
December 31, 2002 $145,000,000
December 31, 2003 $150,000,000
December 31, 2004 $155,000,000
December 31, 2005 $160,000,000
December 31, 2006 $160,000,000
December 31, 2007 $160,000,000
December 31, 2008 $160,000,000
</TABLE>
(b) Notwithstanding the foregoing, in the event that the
amount of Capital Expenditures permitted to be made by the Borrower and its
Subsidiaries pursuant to clause (a) above in any fiscal year (before giving
effect to any increase in such permitted expenditure amount pursuant to this
clause (b)) is greater than the amount of such Capital Expenditures made by the
Borrower and its Subsidiaries during such fiscal year, such excess (the
"ROLLOVER AMOUNT") may be carried forward and utilized to make Capital
Expenditures in succeeding fiscal years of the Borrower; PROVIDED that in no
event shall the aggregate amount of Capital Expenditures made by the Borrower
and its Subsidiaries during any fiscal year pursuant to Section 9.07(a) and this
Section 9.07(b) exceed $250,000,000.
(c) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with Net Asset
Sale Proceeds to the extent such Net Asset Sale Proceeds are not required to be
applied to repay Term Loans pursuant to Section 4.02(g) and such proceeds are
reinvested as required by said Section.
(d) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) consisting of
the reinvestment of Net
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Insurance/Condemnation Proceeds not required to be applied to prepay Term
Loans pursuant to Section 4.02(h).
(e) Notwithstanding the foregoing, (x) the Borrower and its
Wholly-Owned Domestic Subsidiaries may make Capital Expenditures (which Capital
Expenditures will not be included in any determination under the foregoing
clause (a)) constituting Permitted Acquisitions effected in accordance with the
requirements of Section 9.02(xiii) and (y) on each date during a fiscal year in
which the Available Permitted Acquisition Basket Amount is utilized to make a
Permitted Acquisition pursuant to Section 8.13(iv)(y), the amount so utilized
shall be applied on a dollar for dollar basis to reduce the amount of Capital
Expenditures permitted under Section 9.07(a) for the fiscal year in which such
date occurs.
9.08 CONSOLIDATED INTEREST COVERAGE RATIO. The Borrower will not
permit the Consolidated Interest Coverage Ratio for any Test Period ended on the
last day of a fiscal quarter set forth below to be less than the amount set
forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
September 30, 1999 1.50:1.0
December 31, 1999 1.50:1.0
March 31, 2000 1.50:1.0
June 30, 2000 1.50:1.0
September 30, 2000 1.60:1.0
December 31, 2000 1.60:1.0
March 31, 2001 1.75:1.0
June 30, 2001 1.75:1.0
September 30, 2001 2.00:1.0
December 31, 2001 2.00:1.0
March 31, 2002 2.00:1.0
June 30, 2002 2.00:1.0
September 30, 2002 2.00:1.0
December 31, 2002 2.00:1.0
March 31, 2003 2.25:1.0
June 30, 2003 2.25:1.0
September 30, 2003 2.25:1.0
December 31, 2003 2.25:1.0
March 31, 2004 2.25:1.0
June 30, 2004 2.25:1.0
September 30, 2004 2.25:1.0
December 31, 2004 2.25:1.0
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<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
March 31, 2005 and 2.50:1.0
each Fiscal Quarter thereafter
</TABLE>
9.09 MAXIMUM LEVERAGE RATIO. The Borrower will not permit the
Leverage Ratio at any time during a fiscal quarter set forth below to be greater
than the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
September 30, 1999 6.75:1.0
December 31, 1999 6.75:1.0
March 31, 2000 6.75:1.0
June 30, 2000 6.50:1.0
September 30, 2000 6.50:1.0
December 31, 2000 6.25:1.0
March 31, 2001 6.25:1.0
June 30, 2001 6.00:1.0
September 30, 2001 5.75:1.0
December 31, 2001 5.75:1.0
March 31, 2002 5.50:1.0
June 30, 2002 5.25:1.0
September 30, 2002 5.25:1.0
December 31, 2002 5.00:1.0
March 31, 2003 5.00:1.0
June 30, 2003 5.00:1.0
September 30, 2003 5.00:1.0
December 31, 2003 4.75:1.0
March 31, 2004 4.75:1.0
June 30, 2004 4.75:1.0
September 30, 2004 4.50:1.0
December 31, 2004 4.50:1.0
March 31, 2005 4.25:1.0
June 30, 2005 4.25:1.0
September 30, 2005 4.25:1.0
December 31, 2005 4.25:1.0
March 31, 2006 and each 4.00:1.0
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<PAGE>
<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
Fiscal Quarter thereafter
</TABLE>
Notwithstanding anything to the contrary contained in this Agreement, all
calculations of compliance with this Section 9.09 shall be made on a PRO FORMA
Basis.
9.10 MINIMUM CONSOLIDATED NET WORTH. The Borrower will not
permit Consolidated Net Worth at any time during any fiscal quarter set forth
below to be less than the amount set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Minimum Consolidated Net Worth
-------------------- ------------------------------
<S> <C>
June 30, 1999 $315,000,000
September 30, 1999 $325,000,000
December 31, 1999 $325,000,000
March 31, 2000 $325,000,000
June 30, 2000 $325,000,000
September 30, 2000 $325,000,000
December 31, 2000 $350,000,000
March 31, 2001 $350,000,000
June 30, 2001 $350,000,000
September 30, 2001 $350,000,000
December 31, 2001 $400,000,000
March 31, 2002 $400,000,000
June 30, 2002 $400,000,000
September 30, 2002 $400,000,000
December 31, 2002 $450,000,000
March 31, 2003 $450,000,000
June 30, 2003 $450,000,000
September 30, 2003 $450,000,000
December 31, 2003 $490,000,000
March 31, 2004 $490,000,000
June 30, 2004 $490,000,000
September 30, 2004 $490,000,000
December 31, 2004 $540,000,000
March 31, 2005 $540,000,000
June 30, 2005 $540,000,000
September 30, 2005 $540,000,000
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<PAGE>
<S> <C>
December 31, 2005 $590,000,000
March 31, 2006 $590,000,000
June 30, 2006 $590,000,000
September 30, 2006 $590,000,000
December 31, 2006 $640,000,000
March 31, 2007 $640,000,000
June 30, 2007 $640,000,000
September 30, 2007 $640,000,000
December 31, 2007 $690,000,000
March 31, 2008 $690,000,000
</TABLE>
9.11 LIMITATION ON MODIFICATIONS OF INDEBTEDNESS;
MODIFICATIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER
AGREEMENTS; ETC. The Borrower will not, and will not permit any of its
Subsidiaries to, (i) amend or modify, or permit the amendment or modification
of, any provision of any Borrower PIK Preferred Stock Document, any
Subordinated Promissory Notes Document or any Senior Subordinated Notes
Document or of any agreement (including, without limitation, any purchase
agreement, indenture, loan agreement or security agreement) relating thereto,
(ii) amend or modify, or permit the amendment or modification of, any
provision of any Existing Indebtedness, any Permitted Debt or of any
agreement (including, without limitation, any purchase agreement, indenture,
loan agreement or security agreement) relating thereto other than any
amendments or modifications thereto which (A) do not make any material term
or condition thereof more restrictive than previously existing terms and
conditions with respect thereto, (B) do not in any way materially adversely
affect the interest of the Lenders and (C) do not increase the interest rates
applicable thereunder, reduce the maturity date thereunder or change any
subordination provision thereof from those in effect immediately prior to
such amendment or modification, (iii) make (or give any notice in respect
thereof) any voluntary or optional payment or prepayment on or redemption or
acquisition for value (including, without limitation, by way of depositing
with the trustee with respect thereto monies or securities before due for the
purpose of paying when due) or exchange of, or any prepayment or redemption
as a result of any asset sale, change of control or similar event of, any
Subordinated Promissory Note, any Senior Subordinated Note or any Existing
Indebtedness; PROVIDED that (x) the Borrower may exchange the Senior
Subordinated Notes for Exchange Senior Subordinated Notes issued as
contemplated in the definition of Senior Subordinated Notes and consistent
with the requirements of the definition of Exchange Senior Subordinated
Notes, (y) so long as no Default or Event of Default is then in existence or
would result therefrom, the Borrower may and its Subsidiaries may make such
payments and prepayments in connection with Existing Indebtedness and (z) so
long as the Timberlands Disposition Recapture/Restricted Payments
Requirements are satisfied at the time of the consummation of the respective
sale of Timberland Properties pursuant to the Timberlands Dispositions, the
Borrower may utilize proceeds from the Timberlands Dispositions in an
aggregate amount not to exceed the Excluded Timberlands Disposition Proceeds
to repurchase or otherwise redeem Senior Subordinated Notes in an aggregate
principal amount not to exceed the remainder of (x) the Excluded Timberlands
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<PAGE>
Disposition Proceeds LESS (y) the sum of (I) the aggregate liquidation
preference of all Borrower PIK Preferred Stock redeemed pursuant to Section
9.03(ix) and all accrued and unpaid dividends thereon and all redemption
premiums in respect thereof, if any, PLUS (II) the aggregate amount of cash
Dividends paid with respect to Borrower Common Stock pursuant to Section
9.03(ix), if any, (iv) amend or modify, or permit the amendment or
modification of any Contribution Document, any Common Equity Financing
Document, the PCA Holdings Service Agreement or any Management Agreement
(including, without limitation, the MDP Management Agreement), except for
amendments or modifications which are not in any way materially adverse to
the interests of the Lenders and do not involve the payment by the Borrower
or any of its Subsidiaries of any amounts which could give rise to a
violation of this Agreement or result in the Borrower or any of its
Subsidiaries incurring any additional liability or monetary obligations not
permitted under this Agreement, (v) amend, modify or change its Certificate
of Incorporation (except as contemplated by the Shareholders' Agreement as in
effect on the Initial Borrowing Date) (including, without limitation, by the
filing or modification of any certificate of designation) or By-Laws (or
equivalent organizational documents) or any agreement entered into by it,
with respect to its capital stock (or equivalent interests) (including any
Shareholders' Agreement), or enter into any new agreement with respect to its
capital stock, other than any amendments, modifications or changes pursuant
to this clause (v) or any such new agreements pursuant to this clause (v)
which do not in any way materially adversely affect the interests of the
Lenders or which may be required to issue new capital stock permitted to be
issued pursuant to Section 9.13 or (vi) at any time after the Permitted
Receivables Facility Transaction Date, amend or modify, or permit the
amendment or modification of, any provision of any Permitted Receivables
Facility Document, except as permitted by the definition thereof.
9.12 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any of the
Borrower's Subsidiaries or (c) transfer any of its properties or assets to the
Borrower or any of the Borrower's Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of the
Borrower or a Subsidiary of the Borrower, (iv) customary provisions restricting
assignment of any licensing agreement entered into by the Borrower or a
Subsidiary of the Borrower in the ordinary course of business, (v) the Senior
Subordinated Notes Documents, (vi) the Subordinated Promissory Notes Documents,
(vii) customary provisions restricting the transfer of assets subject to Liens
permitted under Sections 9.01(vii), (viii) any Permitted Receivables Facility
Document, (ix) restrictions applicable to any Joint Venture that is a Subsidiary
existing at the time of the acquisition thereof as a result of an Investment
pursuant to Section 9.05 or a Permitted Acquisition effected in accordance with
Section 8.14, PROVIDED that the restrictions applicable to the respective such
Joint Venture are not made worse, or more burdensome, from the perspective of
the Borrower and its Subsidiaries, than those as in effect immediately before
giving effect to the consummation of the respective
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<PAGE>
Investment or Permitted Acquisition, (x) any agreement or instrument
governing Permitted Acquired Debt, which encumbrance or restriction is not
applicable to any Person or the properties or assets of any Person, other
than the Person or the properties or assets of the Person acquired pursuant
to the respective Permitted Acquisition and so long as the respective
encumbrances or restrictions were not created (or made more restrictive) in
connection with or in anticipation of the respective Permitted Acquisition
and (xi) the Borrower PIK Preferred Stock Documents.
9.13 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) The Borrower
will not issue any Disqualified Stock (other than Borrower PIK Preferred Stock
issued in accordance with the requirements of Section 5.06, the issuance of
shares of Borrower PIK Preferred Stock in payment of regularly accruing
dividends on theretofore outstanding shares of Borrower PIK Preferred Stock and
the issuance of Exchange Borrower PIK Preferred Stock in exchange for Borrower
PIK Preferred Stock as contemplated in the definition of Borrower PIK Preferred
Stock and consistent with the requirements of the definition of Exchange
Borrower PIK Preferred Stock).
(b) The Borrower will not permit any of its Subsidiaries to
issue any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then outstanding shares of capital
stock, (ii) for stock splits, stock dividends and additional issuances which do
not decrease the percentage ownership of the Borrower or any of its Subsidiaries
in any class of the capital stock of such Subsidiary, (iii) in the case of
Foreign Subsidiaries of the Borrower, to qualify directors to the extent
required by applicable law, and (iv) Subsidiaries of the Borrower formed after
the Contribution Effective Time pursuant to Section 9.14 may issue capital stock
to the Borrower or the respective Subsidiary of the Borrower which is to own
such stock in accordance with the requirements of Section 8.11. All capital
stock issued in accordance with this Section 9.13(b) shall, to the extent
required by the Pledge Agreement, be delivered to the Collateral Agent for
pledge pursuant to the Pledge Agreement.
9.14 LIMITATION ON CREATION OF SUBSIDIARIES AND JOINT
VENTURES. (a) The Borrower shall not establish, create or acquire any
additional Subsidiaries (other than Joint Ventures permitted to be established
in accordance with the requirements of Section 9.05(xii)) without the prior
written consent of the Required Lenders; PROVIDED that the Borrower may
establish or create one or more Wholly-Owned Subsidiaries of the Borrower
without such consent so long as (i) 100% of the capital stock of any new
Domestic Subsidiary (or all capital stock of any new Foreign Subsidiary which is
owned by any Credit Party, except that, subject to the provisions of Section
8.14, not more than 66 2/3% of the voting stock of any such Foreign Subsidiary
shall be required to be so pledged) is upon the creation, establishment or
acquisition of any such new Subsidiary pledged and delivered to the Collateral
Agent for the benefit of the Secured Creditors under the Pledge Agreement and
(ii) upon the creation or establishment of any such new Domestic Subsidiary,
such Domestic Subsidiary (other than the Receivables Entity) executes the
Additional Security Documents and guaranty required to be executed by it in
accordance with Section 8.11.
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(b) The Borrower will not, nor will the Borrower permit any of
its Subsidiaries to, enter into any Joint Venture, except to the extent
permitted by Section 9.05(xii).
9.15 BUSINESS. (a) The Borrower will not, and will not permit
any of its Subsidiaries to, engage directly or indirectly in any lines of
business other than a Permitted Business.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Receivables Entity will not engage in any business other
than purchasing Permitted Receivables Facility Assets from the Receivables
Sellers and the related transactions pursuant to the terms of the Permitted
Receivables Facility Documents.
9.16 DESIGNATED SENIOR DEBT. The Borrower will not, and will
not permit any of its Subsidiaries to (i) designate any Indebtedness (other
than the Obligations) as "Designated Senior Debt" for purposes of, and as
defined in, the Senior Subordinated Notes Indenture or (ii) designate any
documents with respect to any Indebtedness (other than this Agreement) as the
"Credit Agreement" as defined in the Senior Subordinated Notes Indenture for
purposes of the receipt of notices by the Administrative Agent, and delivery
of blockage notices pursuant to the subordination provisions of the Senior
Subordinated Notes Documents.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each, an "EVENT OF DEFAULT"):
10.01 PAYMENTS. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more Business Days, in the
payment when due of any Unpaid Drawings or interest on any Loan or Note, or any
Fees or any other amounts owing hereunder or under any other Credit Document; or
10.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by any PCA Credit Party herein or in any other Credit Document or
in any statement or certificate delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
10.03 COVENANTS. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(f)(i), 8.08, 8.11 (within the time periods specified in Section
8.11(h)), or 8.13 or Section 9 or (ii) default in the due performance or
observance by it of any other term, covenant or agreement contained in this
Agreement and such default shall continue unremedied for a period of 30 days
after written notice to the Borrower by the Administrative Agent or any of the
Lenders; or
10.04 DEFAULT UNDER OTHER AGREEMENTS. (a) The Borrower or any of
its Subsidiaries shall (i) default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relating
to any Indebtedness (other than the Obligations) or contained in any
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instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause (determined without regard to whether any notice is required), any
such Indebtedness to become due prior to its stated maturity or (b) any
Indebtedness (other than the Obligations) of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, PROVIDED that it shall not be a Default or Event of
Default under this Section 10.04 unless the aggregate principal amount of all
Indebtedness as described in preceding clauses (a) and (b) is at least
$10,000,000; or
10.05 BANKRUPTCY, ETC. The Borrower or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "BANKRUPTCY CODE"); or an involuntary case is commenced
against the Borrower or any of their respective Subsidiaries and the petition is
not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Subsidiaries or the Borrower or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Subsidiaries or there is commenced
against the Borrower or any of its Subsidiaries any such proceeding which
remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
any of its Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Borrower or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by the Borrower or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof under Section 412 of
the Code or Section 302 of ERISA or a waiver of such standard or extension of
any amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan or a
Foreign Pension Plan has not been timely made, the Borrower or any Subsidiary of
the Borrower
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or any ERISA Affiliate has incurred or is likely to incur any liability to or
on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975
of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of
the Code, or the Borrower, or any of its Subsidiaries has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or Plans or Foreign Pension Plans a "default"," within the meaning of
Section 4219(c)(5) of ERISA, shall occur with respect to any Plan; any
applicable law, rule or regulation is adopted, changed or interpreted, or the
interpretation or administration thereof is changed, in each case after the
date hereof, by any governmental authority or agency or by any court (a
"Change in Law"), or, as a result of a Change in Law, an event occurs
following a Change in Law, with respect to or otherwise affecting any Plan;
(b) there shall result from any such event or events the imposition of a
lien, the granting of a security interest, or a liability or a material risk
of incurring a liability; and (c) such lien, security interest or liability,
individually, and/or in the aggregate, in the opinion of the Required
Lenders, has had, or would reasonably be expected to have, a Material Adverse
Effect; or
10.07 SECURITY DOCUMENTS. At any time after the execution and
delivery thereof any of the Security Documents (other than at any time after the
termination thereof in accordance with its terms, the TPI Security Agreement)
shall cease to be in full force and effect, or shall cease to give the
Collateral Agent for the benefit of the Secured Creditors the Liens, rights,
powers and privileges purported to be created thereby (including, without
limitation, a perfected security interest in, and Lien on, all of the
Collateral), in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons (except as permitted by Section 9.01), and subject
to no other Liens (except as permitted by Section 9.01), or any Credit Party
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any of the
Security Documents and such default shall continue beyond any grace period (if
any) specifically applicable thereto pursuant to the terms of such Security
Document; or
10.08 GUARANTIES. Any Guaranty or any provision thereof shall
cease to be in full force or effect as to the relevant Guarantor (except in the
case (x) such Guarantor is no longer a Subsidiary by virtue of a liquidation,
sale, merger or consolidation permitted by Section 9.02 or (y) of the Tenneco
Guaranty, upon the termination thereof in accordance with its terms), or any
Guarantor or Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under the relevant Guaranty, or any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to the
relevant Guaranty; or
10.09 JUDGMENTS. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by a reputable and solvent insurance company) and such judgments and
decrees shall not be vacated, discharged or stayed or bonded pending
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appeal for any period of 60 consecutive days, and the aggregate amount of all
such judgments to the extent not covered by insurance exceeds $10,000,000; or
10.10 CHANGE OF CONTROL. A Change of Control Event shall occur;
or
10.11 PERMITTED RECEIVABLES FACILITY. At any time after the
Permitted Receivables Facility Transaction Date, an early amortization event
under the Permitted Receivables Facility Documents or any event permitting any
Person party to the Permitted Receivables Facility Documents to effect an early
termination of the Permitted Receivables Facility (or portion thereof) shall
have occurred and be continuing;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to the Borrower, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent, any Lender or the holder of any Note to enforce its claims against any
Credit Party (PROVIDED that, if an Event of Default specified in Section 10.05
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitments terminated,
whereupon all Commitments of each Lender shall forthwith terminate immediately
and any Commitment Commission shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit
that may be terminated in accordance with its terms; (iv) direct the Borrower
(and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.05 with respect to the
Borrower, it will pay) to the Collateral Agent at the Payment Office such
additional amount of cash, to be held as security by the Collateral Agent, as is
equal to the aggregate Stated Amount of all Letters of Credit issued for the
account of the Borrower and then outstanding; and (v) enforce, as Collateral
Agent, all of the Liens and security interests created pursuant to the Security
Documents.
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS.
11.01 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ADDITIONAL COLLATERAL" shall mean all property (whether real or
personal) in which security interests are granted (or have been purported to be
granted) (and continue to be in effect at the time of determination) pursuant to
Section 8.11.
"ADDITIONAL MORTGAGE" shall have the meaning provided in Section
8.11(a).
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"ADDITIONAL MORTGAGED PROPERTY" shall have the meaning provided in
Section 8.11(a).
"ADDITIONAL SECURITY DOCUMENTS" shall mean all mortgages, pledge
agreements, security agreements and other security documents entered into
pursuant to Section 8.11 with respect to Additional Collateral.
"ADJUSTED CONSOLIDATED NET INCOME" for any period shall mean
Consolidated Net Income for such period and without giving effect to any
gains or losses from sales of assets other than inventory sold in the
ordinary course of business plus, without duplication, (i) the sum of the
amount of all net non-cash charges (including, without limitation,
depreciation, amortization, depletion, deferred tax expense and non-cash
interest expense) and net non-cash losses which were included in arriving at
Consolidated Net Income for such period LESS (ii) all net non-cash gains
included in arriving at Consolidated Net Income for such period. For purposes
of the foregoing, accrued accounts receivable and accrued payables and other
similar working capital items shall not be considered to be non-cash charges
or gains.
"ADJUSTED CONSOLIDATED WORKING CAPITAL" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"ADJUSTED PERCENTAGE" shall mean (x) at a time when no Lender
Default exists, for each Lender, such Lender's Percentage and (y) at a time when
a Lender Default exists (i) for each Lender that is a Defaulting Lender, zero
and (ii) for each Lender that is a Non-Defaulting Lender, the percentage
determined by dividing such Lender's Revolving Loan Commitment at such time by
the Adjusted Total Revolving Loan Commitment at such time, it being understood
that all references herein to Revolving Loan Commitments and the Adjusted Total
Revolving Loan Commitment at a time when the Total Revolving Loan Commitment or
Adjusted Total Revolving Loan Commitment, as the case may be, has been
terminated shall be references to the Revolving Loan Commitments or Adjusted
Total Revolving Loan Commitment, as the case may be, in effect immediately prior
to such termination, PROVIDED that (A) no Lender's Adjusted Percentage shall
change upon the occurrence of a Lender Default from that in effect immediately
prior to such Lender Default if after giving effect to such Lender Default, and
any repayment of Revolving Loans and Swingline Loans at such time pursuant to
Section 4.02(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of all Non-Defaulting Lenders plus (ii) the aggregate
outstanding principal amount of Swingline Loans plus (iii) the Letter of Credit
Outstandings, exceed the Adjusted Total Revolving Loan Commitment; (B) the
changes to the Adjusted Percentage that would have become effective upon the
occurrence of a Lender Default but that did not become effective as a result of
the preceding clause (A) shall become effective on the first date after the
occurrence of the relevant Lender Default on which the sum of (i) the aggregate
outstanding principal amount of the Revolving Loans of all Non-Defaulting
Lenders plus (ii) the aggregate outstanding principal amount of Swingline Loans
plus (iii) the Letter of Credit Outstandings is equal to or less than the
Adjusted Total Revolving Loan Commitment; and (C) if (i) a Non-Defaulting
Lender's Adjusted Percentage is changed pursuant to the preceding clause (B) and
(ii) any repayment of such Lender's Revolving Loans, or of
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Unpaid Drawings with respect to Letters of Credit or of Swingline Loans, that
were made during the period commencing after the date of the relevant Lender
Default and ending on the date of such change to its Adjusted Percentage must
be returned to the Borrower as a preferential or similar payment in any
bankruptcy or similar proceeding of the Borrower, then the change to such
Non-Defaulting Lender's Adjusted Percentage effected pursuant to said clause
(B) shall be reduced to that positive change, if any, as would have been made
to its Adjusted Percentage if (x) such repayments had not been made and (y)
the maximum change to its Adjusted Percentage would have resulted in the sum
of the outstanding principal of Revolving Loans made by such Lender plus such
Lender's new Adjusted Percentage of the outstanding principal amount of
Swingline Loans and of Letter of Credit Outstandings equaling such Lender's
Revolving Loan Commitment at such time.
"ADJUSTED TOTAL AVAILABLE REVOLVING LOAN COMMITMENT" shall mean at
any time the Adjusted Total Revolving Loan Commitment less the Blocked
Commitment.
"ADJUSTED TOTAL REVOLVING LOAN COMMITMENT" shall mean at any time
the Total Revolving Loan Commitment LESS the aggregate Revolving Loan
Commitments of all Defaulting Lenders.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the
first paragraph of this Agreement, and shall include any successor thereto.
"AFFILIATE" shall mean, with respect to any Person, any other
Person (including, for purposes of Section 9.06 only, all directors, officers
and partners of such Person) directly or indirectly controlling, controlled by,
or under direct or indirect common control with, such Person; PROVIDED, HOWEVER,
that for purposes of Section 9.06, an Affiliate of the Borrower shall include
any Person that directly or indirectly owns more than 10% of any class of the
capital stock of the Borrower and any officer or director of the Borrower or any
of its Subsidiaries. A Person shall be deemed to control another Person if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
"AGENTS" shall mean and include the Administrative Agent and the
Syndication Agent.
"AGREEMENT" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.
"APPLICABLE EXCESS CASH FLOW PERCENTAGE" shall mean, with respect
to any Excess Cash Flow Payment Date, 75%; PROVIDED that so long as no Default
or Event of Default is then in existence, if on the last day of the relevant
Excess Cash Flow Payment Period, the Leverage Ratio for (and as calculated on
the last day of ) the Test Period then ended is less than 4.0:1.0, then the
Applicable Excess Cash Flow Percentage shall instead be 50%.
"APPLICABLE MARGIN" shall mean a percentage per annum equal to (i)
in the case of Tranche A Term Loans and Revolving Loans maintained as (x) Base
Rate Loans, 1.75% and (y)
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Eurodollar Loans, 2.75%, (ii) in the case of Tranche B Term Loans maintained
as (x) Base Rate Loans, 2.25% and (y) Eurodollar Loans, 3.25%, (iii) in the
case of Tranche C Term Loans maintained as (x) Base Rate Loans, 2.50% and (y)
Eurodollar Loans, 3.50%, and (iv) in the case of the Commitment Commission,
0.50%. In the case of the Applicable Margins for Tranche A Term Loans,
Revolving Loans and the Commitment Commission (the "ADJUSTABLE APPLICABLE
MARGINS"), from and after each day of delivery of any certificate delivered
in accordance with the first sentence of the following paragraph indicating
an entitlement to a different margin than that described in the immediately
preceding sentence (each, a "START DATE") to and including the applicable End
Date described below, the Adjustable Applicable Margins shall be that set
forth below opposite the Leverage Ratio indicated to have been achieved in
any certificate delivered in accordance with the following sentence:
<TABLE>
<CAPTION>
APPLICABLE MARGIN APPLICABLE MARGIN
FOR EURODOLLAR FOR BASE RATE
TRANCHE A TERM TRANCHE A TERM APPLICABLE MARGIN
LEVERAGE LOANS AND LOANS AND FOR COMMITMENT
RATIO REVOLVING LOANS REVOLVING LOANS COMMISSION
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
greater than or
equal to
4.50:1.00 2.75% 1.75% 0.50%
- -------------------------------------------------------------------------------
less than
4.50:1:00 but
greater than or 2.50% 1.50% 0.50%
equal to
4.00:1.00
- -------------------------------------------------------------------------------
less than
4.00:1.00 but
greater than or 2.25% 1.25% 0.50%
equal to
3.50:1.00
- -------------------------------------------------------------------------------
less than
3.50:1.00 but
greater than or 2.00% 1.00% 0.375%
equal to
3.00:1.00
- -------------------------------------------------------------------------------
less than
3.00:1.00
1.75% 0.75% 0.375%
- -------------------------------------------------------------------------------
</TABLE>
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The Leverage Ratio shall be determined based on the delivery of a certificate of
the Borrower by an Authorized Officer of the Borrower to the Administrative
Agent (with a copy to be sent by the Administrative Agent to each Lender),
within 45 days of the last day of any fiscal quarter of Borrower, which
certificate shall set forth the calculation of the Leverage Ratio as at the last
day of the Test Period ended immediately prior to the relevant Start Date and
the Adjustable Applicable Margins which shall be thereafter applicable (until
same are changed or cease to apply in accordance with the following sentences);
PROVIDED that at the time of the consummation of any Permitted Acquisition, an
Authorized Officer of the Borrower shall deliver to the Administrative Agent a
certificate setting forth the calculation of the Leverage Ratio on a PRO FORMA
Basis as of the last day of the last Calculation Period ended prior to the date
on which such Permitted Acquisition is consummated for which financial
statements have been made available (or were required to be made available)
pursuant to Section 8.01(a) or (b), as the case may be, and the date of such
consummation shall be deemed to be a Start Date and the Adjustable Applicable
Margins which shall be thereafter applicable (until same are changed or cease to
apply in accordance with the following sentence) shall be based upon the
Leverage Ratio as so calculated. The Adjustable Applicable Margins so
determined shall apply, except as set forth in the succeeding sentence, from the
Start Date to the earliest of (x) the date on which the next certificate is
delivered to the Administrative Agent, (y) the date on which the next Permitted
Acquisition is consummated or (z) the date which is 45 days following the last
day of the Test Period in which the previous Start Date occurred (such earliest
date, the "END DATE"), at which time, if no certificate has been delivered to
the Administrative Agent indicating an entitlement to new Adjustable Applicable
Margins (and thus commencing a new Start Date), the Adjustable Applicable
Margins shall be those described in the first sentence of this definition above.
Notwithstanding anything to the contrary contained above in this definition, (x)
the Applicable Margins shall be those described in the first sentence of this
definition above at all times during which there shall exist any Default or
Event of Default and (y) prior to the date of delivery of the financial
statements pursuant to Section 8.01(b) for the fiscal year ended December 31,
1999, the Applicable Margins shall be those described in the first sentence of
this definition.
"ASSET SALE" shall mean the sale by the Borrower or any of its
Subsidiaries to any Person other than the Borrower or any of its Wholly-Owned
Subsidiaries of (i) any of the stock of any of the Borrower's Subsidiaries,
(ii) substantially all of the assets of any division or line of business of the
Borrower or any of its Subsidiaries, or (iii) any other assets (whether tangible
or intangible) of the Borrower or any of its Subsidiaries (other than any such
other assets to the extent that the aggregate fair market value of such assets
(at the time of sale thereof) sold in any single transaction or related series
of transactions is equal to $2,500,000 or less); PROVIDED, HOWEVER, that (x)
Asset Sales shall not include (1) any sale or discount, in each case without
recourse, of accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof, (2) any sale or
exchange of specific items of equipment, so long as the purpose of each such
sale or exchange is to acquire (and results within 90 days of such sale or
exchange in the acquisition of) replacement items of equipment which are the
functional equivalent of the item of equipment so sold or exchanged, (3) the
leasing (pursuant to operating leases in the ordinary course of business) or
licensing of real or personal property, including intellectual property, (4)
disposals of obsolete, uneconomical, negligible, worn out or surplus property in
the ordinary course of business or (5) the Contribution and (y) Asset Sales
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shall in any event include (1) sales of assets pursuant to a Permitted
Sale-Leaseback Transaction and (2) Timberlands Dispositions.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit L (appropriately
completed).
"ATTRIBUTED RECEIVABLES FACILITY INDEBTEDNESS" at any time shall
mean the principal amount of Indebtedness which would be outstanding at such
time under the Permitted Receivables Facility if same were structured as a
secured lending agreement rather than a purchase agreement.
"AUTHORIZED OFFICER" shall mean, with respect to (i) delivering
Notices of Borrowing, Notices of Conversion, Letter of Credit Requests and
similar notices, and delivering financial information and officer's certificates
pursuant to this Agreement, the chief operating officer, any treasurer or other
financial officer of the Borrower and (ii) any other matter in connection with
this Agreement or any other Credit Document, any officer (or a person or persons
so designated by any two officers) of the Borrower, in each case to the extent
reasonably acceptable to the Administrative Agent.
"AVAILABLE J.V. BASKET AMOUNT" shall mean, on any date of
determination, an amount equal to the sum (without duplication) of (i)
$25,000,000 MINUS (ii) the aggregate amount of Investments made (including for
such purpose the fair market value of any assets contributed to any Joint
Venture (as determined in good faith by senior management of the Borrower), net
of Indebtedness assigned to, and assumed by, the respective Joint Venture in
connection therewith) pursuant to Section 9.05(xii) after the Effective Date,
MINUS (iii) the aggregate amount of Indebtedness or other obligations (whether
absolute, accrued, contingent or otherwise and whether or not due) of any Joint
Venture for which the Borrower or any of its Subsidiaries (other than the
respective Joint Venture) is liable on such date of determination, MINUS (iv)
all payments made by the Borrower or any of its Subsidiaries (other than the
respective Joint Venture) in respect of Indebtedness or other obligations of the
respective Joint Venture (including, without limitation, payments in respect of
obligations described in preceding clause (iii)) after the Effective Date minus
(v) that portion of the Maximum Permitted Consideration in respect of any
Permitted Acquisition that is attributable to the acquisition of a Joint Venture
pursuant to such Permitted Acquisition, PLUS (vi) the amount of any increase to
the Available J.V. Basket Amount made after the Effective Date in accordance
with the provisions of Section 9.05(xii).
"AVAILABLE PERMITTED ACQUISITION BASKET AMOUNT" shall mean on any
date of the determination thereof during any fiscal year the lesser of (i) the
unutilized permitted amounts of Capital Expenditures under Section 9.07(a)
during the fiscal year in which such date of determination occurs (after taking
into account all Capital Expenditures made pursuant to clause (a) and clause (b)
of Section 9.07 during such period and assuming that clause (b) is utilized to
the maximum extent permissible during the respective fiscal year prior to the
utilization of clause (a)), such unutilized amount to be determined on the date
of determination and (ii) 25% of the
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maximum amount of Capital Expenditures permitted to be made under Section
9.07(a) during such fiscal year.
"AVAILABLE REVOLVING LOAN COMMITMENT" of any Lender at any time
shall mean its Percentage of the Total Available Revolving Loan Commitment at
such time.
"BANK CREDIT AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT" shall
have the meaning provided in Section 5.19.
"BANKRUPTCY CODE" shall have the meaning provided in Section
10.05.
"BASE RATE" shall mean for any day, a rate of interest per annum
equal to the higher of (i) the Prime Lending Rate for such day and (ii) the sum
of the Federal Funds Rate for such day plus 1/2 of 1% per annum.
"BASE RATE LOAN" shall mean (i) each Swingline Loan and (ii) each
Loan designated or deemed designated as such by the Borrower at the time of the
incurrence thereof or conversion thereto.
"BENEFICIAL OWNER" shall have the meaning provided in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"BLOCKED COMMITMENT" shall mean, on any date of determination,
zero PLUS (i) the aggregate principal amount of Revolving Loans prepaid pursuant
to Section 4.02(p) on or prior to such date in lieu of the deposit of amounts in
the Cash Collateral Account pursuant to said Section LESS (ii) the aggregate
amount specified by the Borrower in an officers' certificate or certificates
delivered to the Administrative Agent on or prior to such date as having been
paid (or which will be paid with the proceeds of Revolving Loans being incurred
on the date of delivery of such officer's certificate) in connection with the
purchase of Eligible Assets, investments in Converting Plants or the replacement
or restoration of the respective properties or assets giving rise to the receipt
of Net Insurance/Condemnation Proceeds which resulted in such prepayment of
Revolving Loans, as the case may be, LESS (iii) the aggregate amount specified
by the Borrower in an officers' certificate or certificates delivered to the
Administrative Agent on or prior to such date as being the aggregate principal
amount of the Term Loans which have been paid (or which will be paid with the
proceeds of Revolving Loans being incurred on the date of delivery of such
officers' certificate) by reason of the application of the second proviso to
Section 4.02(g) or the second proviso to Section 4.02(h), as the case may be, in
each case to the extent the Total Revolving Loan Commitment was blocked pursuant
to Section 4.02(p) by reason of the receipt of the related Net Asset Sale
Proceeds or Net Insurance/Condemnation Proceeds, as the case may be.
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"BORROWER" shall mean (i) at any time prior to the Contribution
Effective Time, TPI and (ii) at any time after Contribution Effective Time, PCA.
"BORROWER COMMON STOCK" shall have the meaning provided in Section
7B.14.
"BORROWER PIK PREFERRED STOCK" shall mean the pay-in-kind
Preferred Stock of the Borrower, $.01 par value per share, issued by the
Borrower pursuant to the Borrower Preferred Stock Documents as contemplated by
Section 5.06. As used herein, the term "Borrower PIK Preferred Stock" shall
include any Exchange Borrower PIK Preferred Stock issued in exchange for
theretofore outstanding Borrower PIK Preferred Stock, as contemplated by the
Offering Memorandum, dated as of March 30, 1999, and the definition of Exchange
Borrower PIK Preferred Stock.
"BORROWER PREFERRED STOCK DOCUMENTS" shall mean the documents
executed and delivered with respect to the Borrower PIK Preferred Stock.
"BORROWING" shall mean the borrowing of one Type of Loan of a
single Tranche from all the Lenders (other than any Lender which has not funded
its share of a Borrowing in accordance with this Agreement) having Commitments
of the respective Tranche (or from the Swingline Lender in the case of Swingline
Loans) on a given date (or resulting from a conversion or conversions on such
date) having in the case of Eurodollar Loans the same Interest Period, PROVIDED
that Base Rate Loans incurred pursuant to Section 1.10(b) shall be considered
part of the related Borrowing of Eurodollar Loans. It is understood that there
may be more than one Borrowing outstanding pursuant to a given Tranche.
"BT ALEX. BROWN" shall mean BT Alex. Brown Incorporated, in its
individual capacity, and any successor thereto.
"BTCO" shall mean Bankers Trust Company in its individual capacity
and any successor thereto.
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York, New York a legal or a day on which banking institutions
are authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
Lenders in the New York interbank Eurodollar market.
"CALCULATION DATE" shall mean the date of the respective Permitted
Acquisition, incurrence, assumption or issuance of Indebtedness, repayment of
Indebtedness, payment of Dividends, or other event, as the case may be, which
gives rise to the requirement to calculate compliance with the financial
covenants under this Agreement on a PRO FORMA Basis.
"CALCULATION PERIOD" shall mean the Test Period (taken as one
accounting period) most recently ended prior to a given Calculation Date.
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"CAPITAL EXPENDITURES" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and the amount of Capitalized Lease
Obligations incurred by such Person.
"CAPITALIZED LEASE OBLIGATIONS" of any Person shall mean all
rental obligations which, under generally accepted accounting principles, are or
will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"CASH COLLATERAL ACCOUNT" shall have the meaning provided in
Section 4.02(p).
"CASH EQUIVALENTS" shall mean, as to any Person, (i) securities
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (PROVIDED that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) time deposits and certificates
of deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any State thereof or the District of Columbia having capital, surplus
and undivided profits aggregating in excess of $200,000,000, with maturities of
not more than one year from the date of acquisition by such Person, (iii)
repurchase obligations with a term of not more than 90 days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, (iv) commercial paper
issued by any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or at least P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
not more than one year after the date of acquisition by such Person, and (v)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 ET SEQ.
"CHANGE OF CONTROL EVENT" shall mean, (I) at any time prior to the
consummation of a Qualified IPO, (a) MDP Group shall cease to own on a fully
diluted basis in the aggregate at least 35% of the outstanding Voting Stock of
PCA or (b) any "person" or "group" (within the meaning of Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, as in effect on the Effective Date),
other than MDP Group, shall have obtained the power (whether or not exercised)
to appoint or elect 50% or more of PCA's directors or (c) unless and until TPI
and its Affiliates cease to own on a fully diluted basis in the aggregate at
least 17.5% of the Voting Stock of PCA and as a result thereof the Shareholders'
Agreement has terminated, MDP Group shall cease to have the right to appoint at
least 50% of the directors of PCA (excluding for purposes of any determination
pursuant to this clause (I)(c) up to two additional directors
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appointed by holders of Borrower PIK Preferred Stock pursuant to the terms of
the Borrower PIK Preferred Stock Documents), (II) at any time after a
Qualified IPO, any "person" or "group" (within the meaning of Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, as in effect on the
Effective Date), other than the Principals and their Related Parties, shall
have acquired Beneficial Ownership, directly or indirectly, of a percentage
of the outstanding Voting Stock of PCA that exceeds the percentage of such
Voting Stock then Beneficially Owned, directly or indirectly, by MDP Group or
(III) at any time (I.E., whether before or after a Qualified IPO), (a) the
Board of Directors of PCA shall cease to consist of a majority of Continuing
Directors or (b) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as that term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as in effect on the Effective Date), other than the Principals
and their Related Parties or a Permitted Group, becomes the Beneficial Owner,
directly or indirectly, of 50% or more of the Voting Stock of PCA, measured
by voting power rather than number of shares; or (c) a "change of control" or
similar event shall occur as provided in any Senior Subordinated Notes
Document, Subordinated Promissory Notes Document or Borrower PIK Preferred
Stock Document or in any Existing Indebtedness or Permitted Debt, to the
extent the outstanding principal amount of such Existing Indebtedness or
Permitted Debt exceeds $10,000,000.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement and any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"CO-DOCUMENTATION AGENT" shall mean and include Goldman Sachs
Credit Partners L.P. and The Chase Manhattan Bank.
"CO-LEAD ARRANGER" shall have the meaning provided in the first
paragraph of this Agreement, and shall include any successor thereto.
"COLLATERAL" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or purported to
be granted) pursuant to any Security Document, including, without limitation,
all Pledge Agreement Collateral, all PCA Security Agreement Collateral, all TPI
Security Agreement Collateral, all Mortgaged Properties, all cash and Cash
Equivalents delivered as collateral pursuant to Section 4.02 or 10 hereof and
all Additional Collateral, if any.
"COLLATERAL AGENT" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Security
Documents.
"COLLECTIVE BARGAINING AGREEMENTS" shall have the meaning provided
in Section 5.05.
"COMMITMENT" shall mean any of the commitments of any Lender,
I.E., whether the Tranche A Term Loan Commitment, Tranche B Term Loan
Commitment, Tranche C Term Loan Commitment or Revolving Loan Commitment.
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"COMMITMENT COMMISSION" shall have the meaning provided in Section
3.01(a).
"COMMON EQUITY FINANCING DOCUMENTS" shall mean and include the
Initial Common Equity Financing Documents and the Secondary Common Equity
Financing Documents.
"CONSOLIDATED CASH INTEREST EXPENSE" shall mean, for any period,
the total consolidated cash interest expense of the Borrower and its
Consolidated Subsidiaries for such period (calculated without regard to any
limitations on the payment thereof) plus, without duplication, (i) that portion
of Capitalized Lease Obligations of the Borrower and its Consolidated
Subsidiaries representing the interest factor for such period, (ii) all
Permitted Receivables Facility Financing Costs for such period and (iii) the
amount of all cash Dividends on preferred stock of the Borrower and its
Subsidiaries paid during such period, as reflected in the audited consolidated
financial statements of the Borrower for its most recently completed fiscal
year, which amounts described in preceding clause (iii) shall be treated as
interest expense of the Borrower and its Subsidiaries for purposes of this
definition regardless of the treatment of such amounts under GAAP, but excluding
the amortization of any deferred financing costs and fees incurred in connection
with this Agreement. For the avoidance of doubt, it is understood that
Consolidated Cash Interest Expense shall not take into account any amount
attributable to the treasury lock transaction entered into on behalf of PCA
prior to the Initial Borrowing Date.
"CONSOLIDATED CURRENT ASSETS" shall mean, at any time, the
consolidated current assets of the Borrower and its Consolidated Subsidiaries.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at any time, the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries at such time, but excluding (i) the current portion of any
Indebtedness under this Agreement, of any Attributed Receivables Facility
Indebtedness and of any other long-term Indebtedness which would otherwise be
included therein, (ii) accrued but unpaid interest with respect to the
Indebtedness and (iii) the current portion of Indebtedness constituting
Capitalized Lease Obligations.
"CONSOLIDATED EBIT" shall mean, for any period, the Consolidated
Net Income for such period, before Consolidated Cash Interest Expense, non-cash
interest expense and provision for taxes based on income (in each case to the
extent deducted in determining Consolidated Net Income) and without giving
effect to any extraordinary gains or losses or gains or losses from sales of
assets other than inventory sold in the ordinary course of business.
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated
EBIT, adjusted by adding thereto the amount of all amortization of intangibles,
depletion and depreciation, in each case that were deducted in arriving at
Consolidated EBIT for such period.
"CONSOLIDATED INDEBTEDNESS" shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness
(but including in any event the then outstanding principal amount of all Loans,
all Capitalized Lease Obligations and all Letter of Credit Outstandings) of the
Borrower and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP plus, without duplication, the amount of all Attributed
Receivables
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Facility Indebtedness at such time; PROVIDED that Indebtedness outstanding
pursuant to trade payables incurred in the ordinary course of business shall
be excluded in determining Consolidated Indebtedness.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, for any period,
the ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated Cash
Interest Expense for such period, provided that in the event such Test Period
does not include four fiscal quarters, for purposes of determining the
Consolidated Interest Coverage Ratio, Consolidated EBITDA and Consolidated Cash
Interest Expense shall each be multiplied by four (if such Test Period is
comprised of one fiscal quarter), two (if such Test period is comprised of two
fiscal quarters) and 4/3 (if such Test Period is comprised of three fiscal
quarters).
"CONSOLIDATED NET INCOME" shall mean, for any period, the
consolidated net after tax income of the Borrower and its Consolidated
Subsidiaries determined in accordance with GAAP; PROVIDED that in any event and
without duplication of any reduction to Consolidated Net Income in accordance
with the requirements of GAAP, Consolidated Net Income shall be reduced by the
amount of Dividends paid during the respective period pursuant to clause (vii)
of Section 9.03; PROVIDED FURTHER that the following items shall be excluded in
computing Consolidated Net Income (without duplication): (i) the net income of
any Person which is not a Wholly-Owned Subsidiary of the Borrower, except to the
extent of the amount of any dividends or other distributions actually paid to
the Borrower or any of its Wholly-Owned Subsidiaries during such period, (ii)
except for determinations expressly required to be made on a PRO FORMA Basis,
the net income (or loss) of any Person accrued prior to the date it becomes a
Wholly-Owned Subsidiary or all or substantially all of the property or assets of
such Person are acquired by a Wholly-Owned Subsidiary and (iii) the net income
of any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary of such net income is not at the time
permitted by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary.
"CONSOLIDATED NET WORTH" shall mean at any date (i) the sum of all
amounts which, in conformity with GAAP, would be included under the caption
"redeemable preferred stock" and "total stockholders' equity" (or like captions)
on a consolidated balance sheet of the Borrower on and as at such date, LESS
(ii) the amount (if positive) by which the amounts described in clause (i) above
determined on the Initial Borrowing Date (after giving effect to the
consummation of the Transaction) (such amounts, the "CLOSING DATE NET WORTH")
exceeds $397,780,000 PLUS (iii) the amount (if positive) by which $397,780,000
exceeds the Closing Date Net Worth PLUS (iv) the aggregate amount of cash
Dividends (if any) paid by the Borrower pursuant to Section 9.03(ix) (including,
without limitation, any amounts paid to redeem the Borrower PIK Preferred Stock)
LESS (iv) any cash Dividends on the capital stock of the Borrower (other than
Dividends included pursuant to clause (iii)) theretofore declared but not yet
paid, but only to the extent not already deducted when determining the amount
specified in clause (i).
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"CONSOLIDATED SUBSIDIARIES" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with GAAP.
"CONTAINERBOARD BUSINESS" shall mean and include (i) the business
of producing containerboard and corrugated packaging products (excluding folding
carton and honeycomb paperboard-type products and retained real property as
provided in the Contribution Agreement) as conducted by TPI on the Effective
Date at four paper mills located at Counce, Tennessee, Valdosta, Georgia,
Tomahawk, Wisconsin and Filer City, Michigan (the Mills), 67 box plants, three
recycling facilities, four wood products facilities and certain timberlands and
related facilities and (ii) all of the other assets and liabilities acquired by
PCA from TPI pursuant to the Contribution (including, without limitation, the
Contributed Assets and the Contributed Subsidiaries).
"CONTAINERBOARD GROUP" shall have the meaning set forth in the
footnotes to the audited financial statements described in Section 7B.05(a).
"CONTINGENT OBLIGATION" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business and any products warranties extended in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made (or, if the less, the
maximum amount of such primary obligation for which such Person may be liable
pursuant to the terms of the instrument evidencing such Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"CONTINUING DIRECTORS" shall mean, as of the date of
determination, any member of the Board of Directors of the Borrower who:
(1) was a member of such Board of Directors on the Effective
Date; or
(2) was nominated for election or elected to such Board of
Directors either (a) with the approval of a majority of the Continuing
Directors who were members of such
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Board at the time of such nomination or election or (b) pursuant to and
in accordance with the terms of the Stockholders Agreement as in effect
on the Effective Date.
"CONTRIBUTED ASSETS" shall have the meaning provided such term in
the Contribution Agreement.
"CONTRIBUTED SUBSIDIARIES" shall have the meaning provided such
term in the Contribution Agreement.
"CONTRIBUTION" shall mean the contribution of the Containerboard
Business by TPI to PCA pursuant to, and in accordance with the terms of, the
Contribution Agreement, free and clear of (i) all Indebtedness (including the
Indebtedness to be Refinanced) other than the Assumed Indebtedness (as such term
is defined in the Contribution Agreement) and (ii) all Liens or encumbrances of
any kind, other than Permitted Liens.
"CONTRIBUTION AGREEMENT" shall mean Contribution Agreement, dated
as of January 25, 1999 among TPI, PCA Holdings and PCA, as in effect on the
Effective Date and as the same may be amended, modified or supplemented in
accordance with the terms hereof and thereof.
"CONTRIBUTION DOCUMENTS" shall mean the Contribution Agreement
(including the exhibits and schedules thereto), the Bank Credit Agreement
Assignment and Assumption Agreement, the Purchase Supply Agreement and all other
documents and agreements entered into in connection with the Contribution.
"CONTRIBUTION EFFECTIVE TIME" shall mean the time at which the
Contribution becomes effective in accordance with the terms of the Contribution
Agreement and the Exchange has been consummated.
"CONVERTING PLANT" shall mean (i) plants that convert paper into
corrugated sheets, (ii) plants that convert corrugated sheets into corrugated
products, (iii) product design centers and (iv) plants that produce products
that are related or ancillary to the foregoing; PROVIDED that a mill that
produces paper shall not constitute a Converting Plant.
"CREDIT DOCUMENTS" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, each Security Document, the PCA Acknowledgement and Agreement, the Bank
Credit Agreement Assignment and Assumption Agreement and each Guaranty and,
after the execution and delivery thereof, each additional guaranty or security
document executed pursuant to Section 8.11.
"CREDIT EVENT" shall mean the making of any Loan or the issuance
of any Letter of Credit.
"CREDIT PARTY" shall mean (i) at any time prior to the
Contribution Effective Time, each of Tenneco and TPI, (ii) PCA, (iii) each
Subsidiary Guarantor and (iv) any other Subsidiary which at any time executes
and delivers any Credit Document as required by this Agreement.
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"DEBT AGREEMENTS" shall have the meaning provided in Section 5.05.
"DEFAULT" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with respect to which a
Lender Default is in effect.
"DISQUALIFIED STOCK" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (including a Change of
Control Event), (i) matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the first anniversary of the
Tranche C Term Loan Maturity Date, or (ii) is convertible into or exchangeable
(unless at the sole option of the issuer thereof) for (a) debt securities or (b)
any capital stock referred to in (i) above, in each case at any time prior to
the first anniversary of the Tranche C Term Loan Maturity Date.
"DIVIDEND" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or members or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to its
stockholders or members as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any class of
its capital stock or membership interests outstanding on or after the Effective
Date (or any options or warrants issued by such Person with respect to its
capital stock), or set aside any funds for any of the foregoing purposes, or
shall have permitted any of its Subsidiaries to purchase or otherwise acquire
for a consideration any shares of any class of the capital stock of such Person
outstanding on or after the Effective Date (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock).
Without limiting the foregoing, "DIVIDENDS" with respect to any Person shall
also include all payments made or required to be made by such Person with
respect to any stock appreciation rights, plans, equity incentive or achievement
plans or any similar plans or setting aside of any funds for the foregoing
purposes.
"DOCUMENTS" shall mean the Credit Documents, the Senior
Subordinated Notes Documents, the Borrower Preferred Stock Documents, the
Subordinated Promissory Notes Documents, the Common Equity Financing Documents,
the Contribution Documents and the Refinancing Documents and, on and after the
Permitted Receivables Facility Transaction Date, the Permitted Receivables
Facility Documents.
"DOLLARS" and the sign "$" shall each mean lawful money of the
United States.
"DOMESTIC SUBSIDIARY" shall mean each Subsidiary of the Borrower
that is incorporated or organized in the United States of America, any State
thereof, the United States Virgin Islands or Puerto Rico.
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"DOMESTIC WHOLLY-OWNED SUBSIDIARY" shall mean each Domestic
Subsidiary which is a Wholly-Owned Subsidiary of the Borrower.
"DRAWING" shall have the meaning provided in Section 2.04(b).
"EFFECTIVE DATE" shall have the meaning provided in Section 13.10.
"ELIGIBLE ASSETS" shall have the meaning provided in Section
4.02(g).
"ELIGIBLE TRANSFEREE" shall mean and include a commercial bank,
insurance company, financial institution, fund or other Person which regularly
purchases interests in loans or extensions of credit of the types made pursuant
to this Agreement, any other Person which would constitute a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act as
in effect on the Effective Date or other "accredited investor" (as defined in
Regulation D of the Securities Act).
"EMPLOYEE BENEFIT PLANS" shall have the meaning provided in
Section 5.05.
"EMPLOYMENT AGREEMENT" shall have the meaning provided in Section
5.05.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued or
any approval given under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment on
account of Hazardous Materials.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, legally
binding and enforceable guideline, legally binding and enforceable written
policy and rule of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation thereof, including
any legally binding and enforceable judicial or administrative order, consent
decree or judgment, to the extent binding on the Borrower or any of its
Subsidiaries, relating to the environment, health, safety or Hazardous
Materials, including, without limitation, CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ.; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C.
Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 300(f) ET
SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; the
Emergency Planning and the Community Right-To-Know Act of 1986, 42 U.S.C.
Section 11001 ET SEQ.; the Hazardous Material Transportation Act, 49 U.S.C.
Section 5101 ET SEQ.; and the Occupational Safety and Health Act, 29 U.S.C.
Section 651 ET SEQ.; and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean each person (as defined in Section
3(9) of ERISA) which together with PCA or a Subsidiary of PCA would be deemed to
be a "single employer" within the meaning of Section 414(b), (c), (m) or (o) of
the Code.
"EURODOLLAR LOAN" shall mean each Loan (excluding Swingline Loans)
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"EURODOLLAR RATE" shall mean (a) the arithmetic average (rounded
upward to the nearest 1/100th of 1%) of the offered quotation to first-class
banks in the New York interbank Eurodollar market determined by each Reference
Lender for Dollar deposits of amounts in immediately available funds comparable
to the outstanding principal amount of the Eurodollar Loan of such Reference
Lender with maturities comparable to the Interest Period applicable to such
Eurodollar Loan commencing two Business Days thereafter as of 11:00 A.M. (New
York time) on the date which is two Business Days prior to the commencement of
such Interest Period, divided (and rounded upward to the nearest 1/16 of 1%) by
(b) a percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in respect of Eurocurrency
funding or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D); provided that if one or more of the Reference
Lenders fail to provide the Administrative Agent with its aforesaid rate, then
the Eurodollar Rate shall be determined based on the rate or rates provided to
the Administrative Agent by the other Reference Lender or Reference Lenders.
"EVENT OF DEFAULT" shall have the meaning provided in Section 10.
"EXCESS CASH FLOW" shall mean, for any period, the remainder of
(a) the sum of (i) Adjusted Consolidated Net Income for such period, and (ii)
the decrease, if any, in Adjusted Consolidated Working Capital from the first
day to the last day of such period, MINUS (b) the sum of (i) the amount of (1)
Capital Expenditures made by the Borrower and its Subsidiaries on a consolidated
basis during such period pursuant to and in accordance with Section 9.07 (but
without giving effect to Capital Expenditures made pursuant to Section 9.07(c)
and (d)), except for each such Capital Expenditure to the extent financed with
the proceeds of Indebtedness or pursuant to Capitalized Lease Obligations PLUS
(or MINUS if negative) (2) the Rollover Amount for such period to be carried
forward to the next period LESS the Rollover Amount (if any) for the preceding
period carried forward to the current period, (ii) the aggregate amount of
permanent principal payments of Indebtedness for borrowed money of the Borrower
and its Subsidiaries and the permanent repayment of the principal component of
Capitalized Lease Obligations of the Borrower and its Subsidiaries (excluding
(1) payments with proceeds of asset sales and Net Insurance/Condemnation
Proceeds, (2) payments with the proceeds of other Indebtedness or
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equity or equity contributions and (3) payments of Loans or other
Obligations, PROVIDED that repayments of Loans shall be deducted in
determining Excess Cash Flow if such repayments were (x) required as a result
of a Scheduled Repayment under Section 4.02(b), (c) or (d) (but not as a
reduction to the amount of Scheduled Repayments pursuant to another provision
of this Agreement) or (y) made as a voluntary prepayment pursuant to Section
4.01 with internally generated funds (but in the case of a voluntary
prepayment of Revolving Loans or Swingline Loans, only to the extent
accompanied by a voluntary reduction to the Total Revolving Loan Commitment))
during such period, (iii) the increase, if any, in Adjusted Consolidated
Working Capital from the first day to the last day of such period, (iv) the
aggregate amount of cash dividends paid during such period in respect of the
Borrower PIK Preferred Stock and (v) if the Excess Cash Flow for the
immediately preceding Excess Cash Payment Period (after the application of
this clause (v) in respect of such Excess Cash Payment Period) was negative,
the amount of such negative Excess Cash Flow (expressed as a positive number).
"EXCESS CASH PAYMENT DATE" shall mean the date occurring 90 days
after the last day of each fiscal year of the Borrower (beginning with its
fiscal year ending on December 31, 1999).
"EXCESS CASH PAYMENT PERIOD" shall mean, with respect to the
repayment required on each Excess Cash Payment Date, the immediately preceding
fiscal year of the Borrower (or, in the case of the first Excess Cash Payment
Date, the period beginning on and including July 1, 1999 and to and including
December 31, 1999).
"EXCHANGE" shall mean the exchange of the Senior Subordinated
Notes as payment in full for all amounts owing under the Subordinated Promissory
Notes and the Subordinated Promissory Notes Documents immediately following the
consummation of the Contribution.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE BORROWER PIK PREFERRED STOCK" shall mean pay-in-kind
Preferred Stock of the Borrower which is substantially identical to the Borrower
PIK Preferred Stock issued on or prior to the Initial Borrowing Date, which
Exchange Borrower PIK Preferred Stock shall be issued pursuant to a registered
exchange offer for the Borrower PIK Preferred Stock. In no event will the
issuance of Exchange Borrower PIK Preferred Stock increase the aggregate
liquidation preference of Borrower PIK Preferred Stock then outstanding or
otherwise result in an increase in the dividend rate applicable to the Borrower
PIK Preferred Stock.
"EXCHANGE SENIOR SUBORDINATED NOTES" shall mean Senior
Subordinated Notes which are substantially identical securities to the Senior
Subordinated Notes issued on or prior to the Initial Borrowing Date, which
Exchange Senior Subordinated Notes shall be issued pursuant to a registered
exchange offer or private exchange offer for the Senior Subordinated Notes and
pursuant to the Senior Subordinated Notes Indenture. In no event will the
issuance of any Exchange Senior Subordinated Notes increase the aggregate
principal amount of Senior Subordinated Notes then outstanding or otherwise
result in an increase in an interest rate applicable to the Senior Subordinated
Notes.
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"EXCLUDED PROCEEDS" shall mean and include (i) the Excluded
Timberlands Disposition Proceeds, (ii) the Net Sale Proceeds from any Asset Sale
pursuant to a Permitted Sale-Leaseback Transaction and (iii) the Net Sale
Proceeds from the sale or disposition of a Converting Plant.
"EXCLUDED TIMBERLANDS DISPOSITION PROCEEDS" shall have the meaning
provided in Section 4.02(g).
"EXCLUDED TIMBERLANDS PROCEEDS MAXIMUM AMOUNT" shall mean the sum
of (i) $100,000,000 plus (ii) in the event that the Excluded Timberlands
Disposition Proceeds are to be applied to redeem all outstanding Borrower PIK
Preferred Stock during the three year period commencing on the Initial Borrowing
Date, (x) the liquidation preference of Borrower PIK Preferred Stock issued as a
regularly accruing dividend on outstanding shares of Borrower PIK Preferred
Stock, (y) accrued and unpaid dividends on the Borrower PIK Preferred Stock and
(z) the redemption premium payable upon the redemption of the Borrower PIK
Preferred Stock as provided in the Borrower Preferred Stock Documents.
"EXISTING INDEBTEDNESS" shall have the meaning provided in Section
5.07(b).
"FACING FEE" shall have the meaning provided in Section 3.01(c).
"FEDERAL FUNDS RATE" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 A.M. (New
York time) on such day on such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"FEES" shall mean all amounts payable pursuant to or referred to
in Section 3.01.
"FOREIGN BORROWING BASE AMOUNT" shall mean, at any time, the sum
of (i) 85% of the book value of all accounts receivable of all Foreign
Subsidiaries of the Borrower and (ii) 55% of the book value of all inventory of
all Foreign Subsidiaries of the Borrower, in each case as reflected in the
financial statements of such Foreign Subsidiaries for the fiscal quarter then
last ended.
"FOREIGN PENSION PLAN" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by the Borrower
or any one or more of its Subsidiaries primarily for the benefit of employees of
the Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.
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"FOREIGN SUBSIDIARY" shall mean each Subsidiary of the Borrower
that is incorporated or organized under the laws of any jurisdiction other than
the United States of America, any State thereof, the United States Virgin
Islands or Puerto Rico.
"FOREIGN SUBSIDIARY WORKING CAPITAL INDEBTEDNESS" shall have the
meaning provided in Section 9.04(xii).
"FOREIGN WHOLLY-OWNED SUBSIDIARY" as to any Person, shall mean
each Wholly-Owned Subsidiary of such Person which is not a Domestic Subsidiary.
"GAAP" shall have the meaning provided in Section 13.07(a).
"GUARANTY" shall mean and include the Subsidiaries Guaranty, the
Tenneco Guaranty and any other guaranty delivered pursuant to Section 8.11, 8.13
or 8.14.
"HAZARDOUS MATERIALS" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, ureaformaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted hazardous waste,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority under Environmental Laws.
"INDEBTEDNESS" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described
in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person (to the extent of the value of the respective
property), (iv) the aggregate amount required to be capitalized under leases
under which such Person is the lessee, (v) all obligations of such person to pay
a specified purchase price for goods or services, whether or not delivered or
accepted, I.E., take-or-pay and similar obligations, (vi) all Contingent
Obligations of such Person, (vii) all obligations under any Interest Rate
Protection Agreement or Other Hedging Agreement or under any similar type of
agreement and (viii) all Attributed Receivables Facility Indebtedness.
Notwithstanding the foregoing, Indebtedness shall not include obligations under
trade payables, accrued expenses and other current liabilities incurred by any
person in accordance with its customary practices and in the ordinary course of
business of such Person.
"INDEBTEDNESS TO BE REFINANCED" shall have the meaning provided in
Section 7B.22(b).
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"INITIAL BORROWING DATE" shall mean the date occurring on or after
the Effective Date on which the initial Borrowing of Term Loans hereunder
occurs.
"INITIAL COMMON EQUITY FINANCING DOCUMENTS" shall mean all of the
agreements and documents governing, or relating to, the Initial Common Equity
Issuance.
"INITIAL COMMON EQUITY ISSUANCE" shall have the meaning provided
in Section 5.06(a).
"INITIAL PERMITTED RECEIVABLES FACILITY PROCEEDS" shall mean the
amount of cash proceeds to be initially received by the Borrower and/or the
other Receivables Sellers from the sale of Permitted Receivables Facility Assets
to the Receivables Entity pursuant to the Permitted Receivables Facility;
PROVIDED that the amount of such cash proceeds shall be at least 75% of the fair
market value of the Permitted Receivables Facility Assets sold pursuant to the
Permitted Receivables Facility (as determined in good faith by senior management
of the Borrower).
"INTEREST DETERMINATION DATE" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"INTEREST PERIOD" shall have the meaning provided in Section 1.09.
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate
swap agreement, interest rate cap agreement, interest collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement.
"INVESTMENTS" shall have the meaning provided in Section 9.05.
"ISSUING BANK" shall mean The First National Bank of Chicago and
any Lender which at the request of the Borrower and with the consent of the
Administrative Agent (which shall not be unreasonably withheld) agrees, in such
Lender's sole discretion, to become an Issuing Bank for the purpose of issuing
Letters of Credit pursuant to Section 2.
"JOINT VENTURE" shall mean any Person, other than an individual or
a Wholly-Owned Subsidiary of the Borrower, (i) in which the Borrower or a
Subsidiary of the Borrower holds or acquires an ownership interest (whether by
way of capital stock, partnership or limited liability company interest, or
other evidence of ownership) and (ii) which is engaged in a Permitted Business.
"J.P. MORGAN" shall mean J.P. Morgan Securities Inc., in its
individual capacity, and any successor thereto.
"L/C SUPPORTABLE INDEBTEDNESS" shall mean (i) obligations of the
Borrower or its Subsidiaries incurred in the ordinary course of business with
respect to insurance obligations and workers' compensation, surety bonds and
other similar statutory obligations and (ii) such other obligations of the
Borrower or any of its Subsidiaries as are reasonably acceptable to the
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Administrative Agent and the respective Issuing Bank and otherwise permitted to
exist pursuant to the terms of this Agreement.
"LEASEHOLDS" of any Person shall mean all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"LENDER" shall mean each financial institution listed on Schedule
I, as well as any Person which becomes a "LENDER" hereunder pursuant to
13.04(b).
"LENDER DEFAULT" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.03(c) or (ii) a Lender having notified in writing the Borrower
and/or the Administrative Agent that it does not intend to comply with its
obligations under Section 1.01(d), 1.01(f) or Section 2, in the case of either
clause (i) or (ii) above as a result of the appointment of a receiver or
conservator with respect to such Lender at the direction or request of any
regulatory agency or authority.
"LETTER OF CREDIT" shall have the meaning provided in Section
2.01(a).
"LETTER OF CREDIT FEE" shall have the meaning provided in Section
3.01(b).
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum
of (i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"LETTER OF CREDIT REQUEST" shall have the meaning provided in
Section 2.02(a).
"LEVERAGE RATIO" shall mean, at any date of determination, the
ratio of Consolidated Indebtedness on such date to Consolidated EBITDA for the
Test Period then last ended, PROVIDED that in the event such Test Period does
not include four fiscal quarters, for purposes of determining the Leverage Ratio
Consolidated EBITDA shall be multiplied by four (if such Test Period is
comprised of one fiscal quarter), two (if such Test Period is comprised of two
fiscal quarters) and 4/3 (if such Test Period is comprised of three fiscal
quarters).
"LIEN" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"LOAN" shall mean each Tranche A Term Loan, each Tranche B Term
Loan, each Tranche C Term Loan, each Revolving Loan and each Swingline Loan.
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"MAJORITY LENDERS" of any Tranche shall mean those Non-Defaulting
Lenders which would constitute the Required Lenders under, and as defined in,
this Agreement if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"MANAGEMENT AGREEMENTS" shall have the meaning provided in Section
5.05.
"MANAGEMENT PARTICIPANTS" shall mean certain members of management
of the Borrower acceptable to the Agents.
"MANDATORY BORROWING" shall have the meaning provided in Section
1.01(f).
"MARGIN STOCK" shall have the meaning provided in Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean (i) for purposes of any
condition precedent contained in Section 5 or 6 to be satisfied on, or any
representation or warranty contained in Sections 7A or 7B to be made on, the
Initial Borrowing Date, a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of (x) at any time prior to the Contribution Effective Time, the Containerboard
Business or (y) thereafter, the Borrower and its Subsidiaries taken as a whole
and (ii) for all other purposes of this Agreement, a material adverse effect on
the business, operations, property, assets, liabilities or condition (financial
or otherwise) of the Borrower and its Subsidiaries taken as a whole.
"MATERIAL CONTRACTS" shall have the meaning provided in Section
5.05.
"MATURITY DATE" shall mean, with respect to any Tranche of Loans,
the Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date,
the Tranche C Term Loan Maturity Date, the Revolving Loan Maturity Date or the
Swingline Expiry Date, as the case may be.
"MAXIMUM PERMITTED CONSIDERATION" shall mean, with respect to any
Permitted Acquisition, the sum (without duplication) of (i) the fair market
value of the Borrower Common Stock (based on (x) the closing trading price of
the Borrower Common Stock on the date of such Permitted Acquisition on the stock
exchange on which the Borrower Common Stock is listed or (y) if the Borrower
Common Stock is not so listed, the good faith determination of senior management
of the Borrower) issued as consideration in connection with such Permitted
Acquisition, (ii) the aggregate principal amount of Permitted Acquired Debt
acquired or assumed by the Borrower or any of its Subsidiaries in connection
with such Permitted Acquisition, (iii) the aggregate principal amount of all
cash paid by the Borrower or any of its Subsidiaries in connection with such
Permitted Acquisition (including payments of fees and costs and expenses in
connection therewith), (iv) the aggregate principal amount of all other
Indebtedness assumed, incurred and/or issued in connection with such Permitted
Acquisition to the extent permitted by Section 9.04 and (v) the fair market
value (determined in good faith by senior management of the Borrower) of all
other consideration payable in connection with such Permitted Acquisition.
"MAXIMUM SWINGLINE AMOUNT" shall mean $20,000,000.
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"MDP" shall mean Madison Dearborn Partners, LLC.
"MDP GROUP" shall mean PCA Holdings LLC, Madison Dearborn Capital
Partners III, L.P., Madison Dearborn Special Equity III, L.P., Special Advisors
Fund I, LLC, J.P. Morgan Capital Corporation, Sixty Wall Street Fund, L.P., BT
Capital Investors, L.P., Randolph Street Partners II, Schwerin Company, L.L.C.,
Paul J. Magnell and Northwestern University and their Affiliates or any of their
respective direct or indirect officers, directors, managers, members, partners,
equity owners, employees, agents, representatives, successors or assigns.
"MDP MANAGEMENT AGREEMENT" shall mean a management agreement among
PCA and MDP in form and substance reasonably satisfactory to the Administrative
Agent, as the same may be amended, modified or supplemented from time to time
pursuant to the terms hereof and thereof.
"MILLS" shall have the meaning provided in Section 5.11.
"MINIMUM BORROWING AMOUNT" shall mean (i) for Term Loans of any
Tranche, $10,000,000 (and, if greater, in an integral multiple of $100,000) (ii)
for Revolving Loans, $3,000,000 (and, if greater, in an integral multiple of
$100,000) and (iii) for Swingline Loans, $250,000 (and if greater, in an
integral multiple of $50,000).
"MORGAN GUARANTY" shall mean Morgan Guaranty Trust Company of New
York, in its individual capacity, and any successor thereto.
"MORTGAGE" shall have the meaning provided in Section 5.11 and,
after the execution and delivery thereof, shall include each Additional
Mortgage.
"MORTGAGE POLICIES" shall have the meaning provided in Section
5.11.
"MORTGAGED PROPERTY" shall have the meaning provided in Section
5.11 and, after the execution and delivery of any Additional Mortgage, shall
include the respective Additional Mortgaged Property.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan as defined
in Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) the Borrower or a Subsidiary of
the Borrower or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Borrower, or a Subsidiary of
the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"NET ASSET SALE PROCEEDS" shall mean the Net Sale Proceeds
resulting from any Asset Sale .
"NET INSURANCE/CONDEMNATION PROCEEDS" shall mean any cash payments
or proceeds received by the Borrower or any of its Subsidiaries (i) under any
business interruption insurance policy or casualty insurance policy in respect
of a covered loss thereunder or (ii) as a
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result of the taking of any assets of the Borrower or any of its Subsidiaries
by any Person pursuant to the power of eminent domain, condemnation or
otherwise, or pursuant to a sale of any such assets to a purchaser with such
power under threat of such a taking, in each case net of any actual and
documented costs incurred by the Borrower or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of the Borrower or
such Subsidiary in respect thereof, including (i) income taxes reasonably
estimated to be actually payable within two years of the date of receipt of
such payments or proceeds as a result of any gain recognized in connection
with the receipt of such payment or proceeds and (ii) payment of the
outstanding amount of premium or penalty, if any, and interest of any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is repaid as a result of receipt of such payments
or proceeds.
"NET SALE PROCEEDS" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise, but only as and when received)
received from any sale of assets, net of (i) reasonable transaction costs
(including, without limitation, any underwriting, brokerage or other customary
selling commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith) and payments of
unassumed liabilities relating to the assets sold at the time of, or within 30
days after, the date of such sale, (ii) the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Lenders pursuant to this Agreement) which is secured by the respective assets
which were sold, and (iii) the estimated marginal increase in income taxes which
will be payable by the Borrower's consolidated group with respect to the fiscal
year in which the sale occurs as a result of such sale; PROVIDED, HOWEVER, that
such gross proceeds shall not include any portion of such gross cash proceeds
which the Borrower determines in good faith should be reserved for post-closing
adjustments (including indemnification payments) (to the extent the Borrower
delivers to the Lenders a certificate signed by its chief financial officer or
treasurer, controller or chief accounting officer as to such determination), it
being understood and agreed that on the day that all such post-closing
adjustments have been determined (which shall not be later than six months
following the date of the respective asset sale), the amount (if any) by which
the reserved amount in respect of such sale or disposition exceeds the actual
post-closing adjustments payable by the Borrower or any of its Subsidiaries
shall constitute Net Sale Proceeds on such date received by the Borrower and/or
any of its Subsidiaries from such sale, lease, transfer or other disposition.
The parties hereto acknowledge and agree that Net Sale Proceeds shall not
include any trade-in-credits or purchase price reductions received by the
Borrower or any of its Subsidiaries in connection with an exchange of equipment
for replacement equipment that is the functional equivalent of such exchanged
equipment.
"NON-DEFAULTING LENDER" shall mean and include each Lender other
than a Defaulting Lender.
"NOTE" shall mean each Tranche A Term Note, each Tranche B Term
Note, each Tranche C Term Note, each Revolving Note and the Swingline Note.
"NOTICE OF BORROWING" shall have the meaning provided in Section
1.03(a).
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"NOTICE OF CONVERSION" shall have the meaning provided in Section
1.06.
"NOTICE OFFICE" shall mean the office of the Administrative Agent
located at 60 Wall Street, New York, New York 10260 or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"OBLIGATIONS" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Lender pursuant to the terms of this
Agreement or any other Credit Document.
"OTHER HEDGING AGREEMENT" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements, energy agreements or
other similar agreements or arrangements designed to protect against the
fluctuations in currency or commodity values.
"PARTICIPANT" shall have the meaning provided in Section 2.03(a).
"PAYMENT OFFICE" shall mean the office of the Administrative Agent
located at 500 Station Christiana Road, Newark, DEL or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"PCA" shall have the meaning provided in the recitals to this
Agreement.
"PCA ACKNOWLEDGEMENT AND AGREEMENT" shall have the meaning
provided in Section 5.18.
"PCA CREDIT PARTY" shall mean each Credit Party other than a
Tenneco Party.
"PCA HOLDINGS" shall mean PCA Holdings, LLC, a Delaware limited
liability company.
"PCA HOLDINGS SERVICE AGREEMENT" shall mean the Holding Company
Support Agreement dated as of April 12, 1999 between PCA Holdings and PCA, as
the same may be amended, modified or supplemented from time to time.
"PCA SECURITY AGREEMENT" shall have the meaning provided in
Section 5.10(b).
"PCA SECURITY AGREEMENT COLLATERAL" shall mean all "Collateral" as
defined in the PCA Security Agreement.
"PERCENTAGE" of any Lender at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Lender at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, PROVIDED that if the Percentage of any
Lender is to be determined after the Total Revolving Loan
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Commitment has been terminated, then the Percentages of the Lenders shall be
determined immediately prior (and without giving effect) to such termination.
"PERMITTED ACQUIRED DEBT" shall have the meaning provided in
Section 9.04(xiii).
"PERMITTED ACQUISITION" shall mean the acquisition by the
Borrower or any of its Wholly-Owned Domestic Subsidiaries of assets
constituting a business, division or product line of any Person not already a
Subsidiary of the Borrower or any of its Wholly-Owned Subsidiaries or of 100%
of the capital stock or other equity interests of any such Person, PROVIDED
that (A) the consideration paid by the Borrower or such Wholly-Owned
Subsidiary consists solely of cash (including proceeds of Revolving Loans),
the issuance of the Borrower Common Stock, the issuance of Indebtedness
otherwise permitted in Section 9.04 and the assumption/acquisition of any
Permitted Acquired Debt (calculated in accordance with GAAP) relating to such
business, division, product line or Person which is permitted to remain
outstanding in accordance with the requirements of Section 9.04, (B) those
acquisitions that are structured as stock acquisitions shall be effected
through a purchase of 100% of the capital stock or other equity interests of
such Person by the Borrower or such Domestic Wholly-Owned Subsidiary or
through a merger between such Person and a Domestic Wholly-Owned Subsidiary
of the Borrower, so that after giving effect to such merger, 100% of the
capital stock or other equity interests of the surviving corporation of such
merger is owned by the Borrower or a Domestic Wholly-Owned Subsidiary, (C) in
the case of the acquisition of 100% of the capital stock or other equity
interests of any Person, such Person (the "ACQUIRED PERSON") shall own no
capital stock or other equity interests of any other Person unless either (x)
the Acquired Person owns 100% of the capital stock or other equity interests
of such other Person or (y) if the Acquired Person owns capital stock or
equity interests in any other Person which is not a Wholly-Owned Subsidiary
of the Acquired Person (a "NON-WHOLLY OWNED ENTITY"), (1) the Acquired Person
shall not have been created or established in contemplation of, or for
purposes of, the respective Permitted Acquisition, (2) any Non-Wholly Owned
Entity of the Acquired Person shall have been non-wholly-owned prior to the
date of the respective Permitted Acquisition and not created or established
in contemplation thereof, and (3) such Acquired Person and/or its
Wholly-Owned Subsidiaries own 80% of the consolidated assets of such Person
and its Subsidiaries and Joint Ventures, (D) substantially all of the
business, division or product line acquired pursuant to the respective
Permitted Acquisition, or the business of the Acquired Person and its
Subsidiaries taken as a whole, is in the United States (provided that so long
as the aggregate Maximum Permitted Consideration payable in respect of all
Permitted Acquisitions described in this parenthetical clause does not exceed
$50,000,000 and the assets acquired are Converting Plants, such business or
division may be in Canada), (E) the assets acquired, or the business of the
Acquired Person and its Subsidiaries, shall be in a business permitted to be
conducted pursuant to Section 9.15 and (F) all applicable requirements of
Sections 8.13 and 9.02 applicable to Permitted Acquisitions are satisfied.
Notwithstanding anything to the contrary contained in the immediately
preceding sentence, an acquisition which does not otherwise meet the
requirements set forth above in the definition of "Permitted Acquisition"
shall constitute a Permitted Acquisition if, and to the extent, the Required
Lenders agree in writing that such acquisition shall constitute a Permitted
Acquisition for purposes of this Agreement.
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"PERMITTED BUSINESS" shall mean the containerboard, paperboard and
packaging products business and any business in which PCA and its Subsidiaries
are engaged on the Initial Borrowing Date (after giving effect to the
Contribution) or any business reasonably related, incidental or ancillary to any
of the foregoing.
"PERMITTED DEBT" shall mean and include Permitted Acquired Debt
and Permitted Refinancing Indebtedness.
"PERMITTED ENCUMBRANCE" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, PROVIDED that in the
case of any Additional Mortgaged Property, all such exceptions shall also be
acceptable to the Administrative Agent in its reasonable discretion.
"PERMITTED GROUP" shall mean any group of investors that is deemed
to be a "person" (as that term is used in Section 13(d)(3) of the Exchange Act)
at any time prior to the Borrower's initial public offering of common stock, by
virtue of the Stockholders Agreement, as the same may be amended, modified or
supplemented from time to time, PROVIDED that no single Person (other than the
Principals and their Related Parties) Beneficially Owns (together with its
Affiliates) more of the Voting Stock of the Borrower that is Beneficially Owned
by such group of investors than is then collectively Beneficially Owned by the
Principals and their Related Parties in the aggregate.
"PERMITTED HOLDERS" shall mean and include MDP and the Management
Participants.
"PERMITTED LIENS" shall have the meaning provided in Section 9.01.
"PERMITTED RECEIVABLES FACILITy" shall mean the receivables
facility created under the Permitted Receivables Facility Documents, providing
for the sale by the Borrower and/or one or more other Receivables Sellers of
Permitted Receivables Facility Assets (thereby providing off-balance sheet
financing to the Borrower and the Receivables Sellers) to the Receivables
Entity, which in turn shall sell interests in the respective Permitted
Receivables Facility Assets to the third-party investors pursuant to the
Permitted Receivables Facility Documents (with the Receivables Entity to issue
investor certificates, purchased interest certificates or other similar
documentation evidencing interests in the Permitted Receivables Facility Assets)
in return for the cash used by the Receivables Entity to purchase the Permitted
Receivables Facility Assets from the Borrower and/or the respective Receivables
Sellers, in each case as more fully set forth in the Permitted Receivables
Facility Documents.
"PERMITTED RECEIVABLES FACILITY ASSETS" shall mean Receivables
(whether now existing or arising in the future) of the Borrower and its
Subsidiaries which are transferred to the Receivables Entity pursuant to the
Permitted Receivables Facility and any related Permitted Receivables Related
Assets which are also so transferred to the Receivables Entity and all proceeds
thereof.
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"PERMITTED RECEIVABLES FACILITY DOCUMENTS" shall mean each of the
documents and agreements entered into in connection with the Permitted
Receivables Facility, including all documents and agreements relating to the
issuance, funding and/or purchase of certificates and purchased interests, all
of which documents and agreements shall be in form and substance satisfactory to
the Agents and the Required Lenders, in each case as such documents and
agreements may be amended, modified, supplemented, refinanced or replaced from
time to time so long as (i) any such amendments, modifications, supplements,
refinancing or replacements do not impose any conditions or requirements on the
Borrower or any of its Subsidiaries that are more restrictive in any material
respect than those in existence on the Permitted Receivables Facility
Transaction Date, (ii) any such amendments, modifications, supplements,
refinancings or replacements are not adverse in any way to the interests of the
Lenders and (iii) any such amendments, modifications, supplements, refinancings
or replacements are otherwise in form and substance reasonably satisfactory to
the Administrative Agent.
"PERMITTED RECEIVABLES FACILITY FINANCING COSTS" shall mean, for
any period, the total consolidated interest and fee expense of the Borrower and
its Subsidiaries which would have existed for such period pursuant to the
Permitted Receivables Facility if same were structured as a secured lending
arrangement rather than as a facility for the sale of Permitted Receivables
Facility Assets.
"PERMITTED RECEIVABLES FACILITY THRESHOLD AMOUNT" shall, on the
Permitted Receivables Facility Transaction Date, equal the amount applied on
such date to repay outstanding Term Loans and/or reduce the Total Revolving Loan
Commitment pursuant to Section 4.02(j) or 3.03(f), as the case may be; PROVIDED
that, on each date upon which a mandatory repayment and/or commitment reduction
is required pursuant to Section 4.02(j) or 3.03(f), as the case may be, as a
result of the incurrence of Attributed Receivables Facility Indebtedness in
excess of the Permitted Receivables Facility Threshold Amount as theretofore in
effect, the Permitted Receivables Facility Threshold Amount shall be increased
(on the date of, after giving effect to, the respective mandatory repayment
and/or commitment reduction) by the amount of the mandatory principal repayment
or commitment reduction required on such date pursuant to Section 4.02(j) or
3.03(f), as the case may be, as a result of the respective incurrence of
Attributed Receivables Facility Indebtedness, PROVIDED that at no time shall the
Permitted Receivables Facility Threshold Amount exceed $250,000,000.
"PERMITTED RECEIVABLES FACILITY TRANSACTION" shall mean the
consummation of the transactions contemplated by the Permitted Receivables
Facility Documents on the initial funding date thereunder.
"PERMITTED RECEIVABLES FACILITY TRANSACTION DATE" shall mean the
date of the consummation of the Permitted Receivables Facility Transaction in
accordance with the requirements of Section 8.16.
"PERMITTED RECEIVABLES RELATED ASSETS" shall mean, with respect to
any Person, all of the following property and interests in property of such
Person, whether now existing or existing in the future or hereafter acquired or
arising and in each case to the extent relating to the
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respective Receivables of such Person: (i) all unpaid seller's or lessor's
rights (including, without limitation, recession, replevin, reclamation and
stoppage in transit, relating to any of the foregoing or arising therefrom),
(ii) all rights to any goods or merchandise represented by any of the
foregoing (including, without limitation, returned or repossessed goods),
(iii) all reserves and credit balances with respect to any such Receivable or
the respective account debtor, (iv) all letters of credit, security or
guarantees of any of the foregoing, (v) all insurance policies or reports
relating to any of the foregoing, (vi) all collection or deposit accounts
relating to any of the foregoing, (vii) all proceeds of any of the foregoing,
and (viii) all books and records relating to any of the foregoing.
"PERMITTED REFINANCING INDEBTEDNESS" shall mean any Indebtedness
of the Borrower and its Subsidiaries issued or given in exchange for, or the
proceeds of which are used to, extend, refinance, renew, replace, substitute or
refund Existing Indebtedness or any Indebtedness issued to so extend, refinance,
renew, replace, substitute or refund any such Indebtedness, so long as (a) such
Indebtedness has a weighted average life to maturity greater than or equal to
the weighted average life to maturity of the Indebtedness being refinanced, (b)
such refinancing or renewal does not (i) increase the amount of such
Indebtedness outstanding immediately prior to such refinancing or renewal or
(ii) add guarantors, obligors or security from that which applied to such
Indebtedness being refinanced or renewed, (c) such refinancing or renewal
Indebtedness has substantially the same (or, from the perspective of the
Lenders, more favorable) subordination provisions, if any, as applied to the
Indebtedness being renewed or refinanced, and (d) all other terms of such
refinancing or renewal (including, without limitation, with respect to the
amortization schedules, redemption provisions, maturities, covenants, defaults
and remedies), are not, taken as a whole, materially less favorable to the
respective borrower than those previously existing with respect to the
Indebtedness being refinancing or renewed.
"PERMITTED SALE-LEASEBACK TRANSACTION" shall mean any sale by the
Borrower or any of its Subsidiaries of any asset first acquired by the Borrower
or such Subsidiary which asset is then leased back to the Borrower or such
Subsidiary, PROVIDED that (i) the proceeds of the respective sale shall be
entirely cash and in an amount at least equal to 85% of the fair market value of
such asset (as determined in good faith by senior management of the Borrower)
and (ii) the respective transaction is otherwise effected in accordance with the
applicable requirements of Section 9.02(xiv).
"PERSON" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"PIK TRIGGER DATE" shall mean April 12, 2004.
"PLAN" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) PCA or a Subsidiary of PCA or an ERISA Affiliate,
and each such plan for the five-year period immediately following the latest
date on which PCA, or a Subsidiary of PCA or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
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"PLEDGE AGREEMENT" shall have the meaning provided in Section
5.09.
"PLEDGE AGREEMENT COLLATERAL" shall mean all "Collateral" as
defined in each of the Pledge Agreements.
"PLEDGED SECURITIES" shall mean "PLEDGED SECURITIES" as defined in
the Pledge Agreement.
"POST-CLOSING PERIOD" shall have the meaning provided in Section
8.13(a).
"PREFERRED EQUITY ISSUANCE" shall have the meaning provided in
Section 5.06(a).
"PRIME LENDING RATE" shall mean the rate which the Administrative
Agent announces from time to time as its prime lending rate, the Prime Lending
Rate to change when and as such prime lending rate changes. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"PRINCIPAL" shall mean
(1) MDP Group; and
(2) TPI and its Affiliates.
"PRO FORMA BASIS" shall mean, in connection with any
calculation of compliance with any financial covenant or financial term, the
calculation thereof after giving effect on a PRO FORMA basis to (i) the
assumption, incurrence or issuance of any Indebtedness (other than revolving
Indebtedness, except to the extent same is incurred to finance the
Transaction, to refinance other outstanding Indebtedness or to finance
Permitted Acquisitions) after the first day of the relevant Calculation
Period as if such Indebtedness had been assumed, incurred or issued (and the
proceeds thereof applied) on the first day of the relevant Calculation
Period, (ii) the permanent repayment of any Indebtedness (other than the
revolving Indebtedness) after the first day of the relevant Calculation
Period as if such Indebtedness had been retired or repaid on the first day of
the relevant Calculation Period, (iii) the Permitted Acquisition, if any,
then being consummated as if such Permitted Acquisition (and all other
Permitted Acquisitions consummated after the first day of the relevant
Calculation Period and on or prior to the Calculation Date) had been effected
on the first day of the respective Calculation Period, (iv) the Permitted
Sale-Leaseback Transaction, if any, then being consummated as if such
Permitted Sale-Leaseback Transaction (and all other Permitted Sale-Leaseback
Transactions consummated after the first day of the relevant Calculation
Period and on or prior to the Calculation Date) had been effected on the
first day of the respective Calculation Period, (v) any cash Dividend paid
pursuant to Section 9.03(vi), if any, then being consummated as if such
Dividend (and all other such Dividends paid during the twelve month period
ending on the Calculation Date) had been effected on the first day of the
respective Calculation Period and (vi) a Timberlands Disposition, as if such
Timberlands Disposition (and all other Timberlands Dispositions consummated
after
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the first day of the relevant Calculation Period and on or prior to the
Calculation Date) and the Capitalized Lease Obligations or operating lease
obligations, if any, incurred in connection with any leasing arrangements
with respect to Timberland Properties sold pursuant to such Timberlands
Disposition and any increase or decrease in fiber, stumpage or similar costs
as a result of such Timberlands Dispositions and the application of the
related Excluded Timberlands Disposition Proceeds had been effected on the
first day of the relevant Calculation Period, with the following rules to
apply in connection therewith:
(a) all Indebtedness (x) (other than revolving Indebtedness,
except to the extent same is incurred to finance the Transaction, to
refinance other outstanding Indebtedness, or to finance Permitted
Acquisitions) assumed, incurred or issued after the first day of the
relevant Calculation Period and on or prior to the Calculation Date
(whether incurred to finance a Permitted Acquisition, to refinance
Indebtedness or otherwise) shall be deemed to have been assumed, incurred
or issued (and the proceeds thereof applied) on the first day of the
respective Calculation Period and remain outstanding through the
Calculation Date and (y) (other than revolving Indebtedness) permanently
retired or redeemed after the first day of the relevant Calculation
Period shall be deemed to have been retired or redeemed on the first day
of the respective Calculation Period and remain retired through the
Calculation Date;
(b) all Indebtedness assumed to be outstanding pursuant to
preceding clause (i) shall be deemed to have borne interest (x) at the
rate applicable thereto, in the case of fixed rate Indebtedness or (y) at
the rates which would have been applicable thereto during the respective
period when same was deemed outstanding, in the case of floating rate
Indebtedness (although interest expense with respect to any Indebtedness
for periods while same was actually outstanding during the respective
period shall be calculated using the actual rates applicable thereto
while same was actually outstanding); and
(c) in making any determination of Consolidated EBITDA, PRO
FORMA effect shall be given to any Permitted Acquisition for the
respective period being tested, taking into account, cost savings and
expenses which would otherwise be accounted for as an adjustment pursuant
to Article 11 of Regulation S-X under the Securities Act, as if such
cost-savings or expenses were realized on the first day of the respective
period.
Notwithstanding anything to the contrary contained above, (x) for
the purposes of Sections 9.09 and, for purposes of all determinations of the
Applicable Margins, PRO FORMA effect (as otherwise provided above) shall only be
given for events or occurrences which occurred during the respective Test Period
but not thereafter and (y) for purposes of Section 8.13, PRO FORMA effect (as
otherwise provided above) shall be given for events or occurrences which
occurred during the respective Calculation Period and thereafter but on or prior
to the respective date of determination.
"PROJECTIONS" shall mean the financial projections set forth on
Schedule IX hereto.
"PURCHASE SUPPLY AGREEMENTS" shall mean those certain
Purchase/Supply Agreements between PCA and Tenneco Automotive Inc., PCA and
Tenneco Packaging Specialty
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and Consumer Products Inc., and PCA and Tenneco Packaging Inc., in each case
dated as of April 12, 1999, as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and
thereof.
"QUALIFIED IPO" shall mean a widely distributed public offering of
Borrower Common Stock.
"QUARTERLY PAYMENT DATE" shall mean the last Business Day of
March, June, September and December occurring after the Initial Borrowing Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ.
"REAL PROPERTY" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"RECEIVABLES" shall mean all accounts receivable (including,
without limitation, all rights to payment created by or arising from sales of
goods, leases of goods or the rendition of services rendered no matter how
evidenced whether or not earned by performance).
"RECEIVABLES ENTITY" shall mean a Wholly-Owned Subsidiary of the
Borrower which engages in no activities other than in connection with the
financing of accounts receivable of the Receivables Sellers and which is
designated (as provided below) as the "Receivables Entity" (a) no portion of the
Indebtedness or any other obligations (contingent or otherwise) of which (i) is
guaranteed by the Borrower or any other Subsidiary of the Borrower (excluding
guarantees of obligations (other than the principal of, and interest on,
Indebtedness)) pursuant to Standard Securitization Undertakings, (ii) is
recourse to or obligates the Borrower or any other Subsidiary of the Borrower in
any way (other than pursuant to Standard Securitization Undertakings) or (iii)
subjects any property or asset of the Borrower or any other Subsidiary of the
Borrower, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization Undertakings, (b) with
which neither the Borrower nor any of its Subsidiaries has any contract,
agreement, arrangement or understanding (other than pursuant to the Permitted
Receivables Facility Documents (including with respect to fees payable in the
ordinary course of business in connection with the servicing of accounts
receivable and related assets)) on terms less favorable to the Borrower or such
Subsidiary than those that might be obtained at the time from persons that are
not Affiliates of the Borrower, and (c) to which neither the Borrower nor any
other Subsidiary of the Borrower has any obligation to maintain or preserve such
entity's financial condition or cause such entity to achieve certain levels of
operating results. Any such designation shall be evidenced to the
Administrative Agent by filing with the Administrative Agent an officer's
certificate of the Borrower certifying that, to the best of such officer's
knowledge and belief after consultation with counsel, such designation complied
with the foregoing conditions.
"RECEIVABLES SELLERS" shall mean the Borrower and those Subsidiary
Guarantors that are from time to time party to the Permitted Receivables
Facility Documents.
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"REFERENCE LENDER" shall mean Morgan Guaranty, BTCo and The Chase
Manhattan Bank.
"REFINANCING" shall mean the consummation of the refinancing
transactions pursuant to, and in accordance with the requirements of, Section
5.07.
"REFINANCING DOCUMENTS" shall mean the certificates, agreements
and other documents entered into in connection with the Refinancing.
"REGISTER" shall have the meaning provided in Section 13.17.
"REGULATION D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"REGULATION T" shall mean Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"REGULATION U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"REGULATION X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"RELATED PARTY" shall mean:
(1) any controlling stockholder, 80% (or more) owned
Subsidiary, or immediate family member (in the case of an individual) of
any Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of any one
or more Principals and/or such other Persons referred to in the
immediately preceding clause (1).
"RELEASE" shall mean the active or passive disposing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, migration, placing and the like into the environment.
"REPLACED LENDER" shall have the meaning provided in Section 1.13.
"REPLACEMENT LENDER" shall have the meaning provided in
Section 1.13.
"REPORTABLE EVENT" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA
other than those events as to which the 30-day notice period is waived under
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
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"REQUIRED APPRAISAL" shall have the meaning provided in Section
8.11(g).
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders, the sum of
whose outstanding Term Loans (or, if prior to the Initial Borrowing Date, Term
Loan Commitments) and Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans and Adjusted Percentage of Swingline Loans
and Letter of Credit Outstandings) represent an amount greater than 50% of the
sum of all outstanding Term Loans (or, if prior to the Initial Borrowing Date,
Term Loan Commitments) of Non-Defaulting Lenders and the Adjusted Total
Revolving Loan Commitment (or after the termination thereof, the sum of the then
total outstanding Revolving Loans of Non-Defaulting Lenders and the aggregate
Adjusted Percentages of all Non-Defaulting Lenders of the total outstanding
Swingline Loans and Letter of Credit Outstandings at such time).
"RESTRICTED ACCOUNT" shall have the meaning provided in the TPI
Security Agreement.
"REVOLVING LOAN" shall have the meaning provided in Section
1.01(d).
"REVOLVING LOAN COMMITMENT" shall mean, for each Lender, the
amount set forth opposite such Lender's name in Schedule I hereto directly below
the column entitled "Revolving Loan Commitment," as same may be (x) reduced from
time to time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted
from time to time as a result of assignments to or from such Lender pursuant to
Section 1.13 or 13.04(b).
"REVOLVING LOAN MATURITY DATE" shall mean April 12, 2005.
"REVOLVING NOTE" shall have the meaning provided in Section
1.05(a).
"ROLLOVER AMOUNT" shall have the meaning provided in Section
9.07(b).
"SCHEDULED REPAYMENTS" shall mean Tranche A Scheduled Repayments,
Tranche B Scheduled Repayments and Tranche C Scheduled Repayments.
"SEC" shall have the meaning provided in Section 8.01(g).
"SECONDARY COMMON EQUITY FINANCING DOCUMENTS" shall mean all of
the agreements and documents governing, or relating to, the Secondary Common
Equity Issuance.
"SECONDARY COMMON EQUITY ISSUANCE" shall mean the issuance by PCA
of Borrower Common Stock to TPI (representing (as of the Initial Borrowing
Date) 45% of the voting interest of the Borrower's capital stock) as
contemplated by the Contribution Agreement.
"SECTION 4.04(B)(II) CERTIFICATE" shall have the meaning provided
in Section 4.04(b).
"SECURED CREDITORS" shall have the meaning provided in the
Security Documents.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SECURITY AGREEMENTS" shall mean and include the TPI Security
Agreement and the PCA Security Agreement.
"SECURITY DOCUMENT" shall mean the Pledge Agreement, each
Security Agreement, each Mortgage and, after the execution and delivery
thereof, each Additional Mortgage and each Additional Security Document.
"SENIOR SUBORDINATED NOTES" shall mean PCA's 9 5/8% Senior
Subordinated Notes due 2009 issued pursuant to the Senior Subordinated Notes
Indenture, as in effect on the Effective Date and as the same may be amended,
modified or supplemented from time to time in accordance with the terms
hereof and thereof. As used herein, the term "Senior Subordinated Notes"
shall include any Exchange Senior Subordinated Notes issued pursuant to the
Senior Subordinated Notes Indenture in exchange for theretofore outstanding
Senior Subordinated Notes, as contemplated by the Offering Memorandum, dated
as of March 30, 1999, and the definition of Exchange Senior Subordinated
Notes.
"SENIOR SUBORDINATED NOTES DOCUMENTS" shall mean the Senior
Subordinated Notes, the Senior Subordinated Notes Indenture and all other
documents executed and delivered in respect of the Senior Subordinated Notes
and the Senior Subordinated Notes Indenture, in each case as in effect on the
Effective Date and as the same may be amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof.
"SENIOR SUBORDINATED NOTES INDENTURE" shall mean the Indenture,
dated as of April 12, 1999, among PCA, the Subsidiary Guarantors and United
States Trust Company of New York, as trustee thereunder, as in effect on the
Effective Date and as the same may be amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof.
"SHAREHOLDERS' AGREEMENTS" shall have the meaning provided in
Section 5.05.
"STANDARD SECURITIZATION UNDERTAKINGS" shall mean
representations, warranties, covenants and indemnities entered into by the
Borrower or any Subsidiary thereof in connection with the Permitted
Receivables Facility which are reasonably customary in an off-balance-sheet
accounts receivable transaction.
"STANDBY LETTER OF CREDIT" shall have the meaning provided in
Section 2.01(a).
"STATED AMOUNT" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met).
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders
Agreement, dated as of April 12, 1999, as in effect on the Effective Date.
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"SUB DEBT RESTRICTED ACCOUNT" shall have the meaning provided
in the Subordinated Notes Purchase Agreement.
"SUBORDINATED NOTES PURCHASE AGREEMENT" shall mean the Note
Purchase Agreement, dated as of April 12, 1999, between TPI and J.P. Morgan,
as in effect on the Effective Date and as the same may be amended, modified
or supplemented from time to time in accordance with the terms hereof and
thereof.
"SUBORDINATED PROMISSORY NOTES" shall mean the Borrower's 9
5/8% Subordinated Promissory Notes issued pursuant to the Subordinated Notes
Purchase Agreement, as in effect on the Effective Date and as the same may be
amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof.
"SUBORDINATED PROMISSORY NOTES DOCUMENTS" shall mean the
Subordinated Notes Purchase Agreement, the Subordinated Promissory Notes, the
Subordinated Tenneco Guaranty and all other documents executed and delivered
in respect of the Subordinated Notes Purchase Agreement and the Subordinated
Promissory Notes, in each case as in effect on the Effective Date and as the
same may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"SUBORDINATED TENNECO GUARANTY" shall mean the Guarantee, dated
as of April 12, 1999, of Tenneco, of TPI's obligations under the Subordinated
Promissory Notes, as in effect on the Effective Date and as the same may be
amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof.
"SUBSIDIARIES GUARANTY" shall have the meaning provided in
Section 5.08(a).
"SUBSIDIARY" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has more than a 50% equity interest at the
time, PROVIDED that for purposes of Section 7A of this Agreement (and the
component definitions used therein), in the case of any representation,
warranty or agreement made by TPI prior to the Contribution Effective Time,
the term "Subsidiary" shall mean any Subsidiary (as defined above without
giving effect to this proviso) that is a Contributed Subsidiary.
"SUBSIDIARY GUARANTOR" shall mean each Subsidiary of the
Borrower designated as a "Subsidiary Guarantor" on Schedule VIII hereto or
which executes a guaranty after the Initial Borrowing Date pursuant to
Section 8.11 or 8.13.
"SWINGLINE EXPIRY DATE" shall mean the date which is two
Business Days prior to the Revolving Loan Maturity Date.
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"SWINGLINE LENDER" shall mean Morgan Guaranty.
"SWINGLINE LOAN" shall have the meaning provided in Section
1.01(e).
"SWINGLINE NOTE" shall have the meaning provided in Section
1.05(a).
"SYNDICATION AGENT" shall have the meaning provided in the
first paragraph of this Agreement, and shall include any successor thereto.
"SYNDICATION DATE" shall mean that date upon which the Co-Lead
Arrangers determine in their sole discretion acting in good faith (and notify
the Borrower) that the primary syndication (and resultant addition of
institutions as Lenders pursuant to Section 13.04) has been completed.
"TAX BENEFIT" shall have the meaning provided in Section
4.04(c).
"TAX SHARING AGREEMENT" shall have the meaning provided in
Section 5.05.
"TAXES" shall have the meaning provided in Section 4.04(a).
"TENNECO" shall mean Tenneco, Inc., a Delaware corporation.
"TENNECO GUARANTY" shall have the meaning provided in Section
5.08(b).
"TENNECO PARTY" shall mean each of Tenneco and TPI.
"TENNECO PENSION PLAN" shall have the meaning provided in
Section 7B.10.
"TERM LOAN" shall mean each Tranche A Term Loan, each Tranche B
Term Loan and each Tranche C Term Loan.
"TERM LOAN COMMITMENT" shall mean each Tranche A Term Loan
Commitment, each Tranche B Term Loan Commitment and each Tranche C Term Loan
Commitment, with the Term Loan Commitment of any Lender at any time to equal
the sum of its Tranche A Term Loan Commitment, Tranche B Term Loan Commitment
and Tranche C Term Loan Commitment as then in effect.
"TEST PERIOD" shall mean shall mean (x) for any determination
made on or prior to the last day of the fiscal quarter ended March 31, 2000,
the period from July 1, 1999 to the last day of the fiscal quarter of the
Borrower then last ended or then ending and (y) for any determination made
thereafter, the period of four consecutive fiscal quarters then last ended or
then ending in each case taken as one accounting period.
"TIMBERLAND PROPERTIES" shall mean the substantially unimproved
timber properties owned by the Borrower and its Subsidiaries.
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"TIMBERLANDS DISPOSITION" shall mean the sale or disposition by
the Borrower or any of its Subsidiaries (pursuant to one or more series of
sales) of the Timberland Properties.
"TIMBERLANDS DISPOSITION RECAPTURE/RESTRICTED PAYMENTS
REQUIREMENTS" shall have the meaning provided in Section 4.02(g).
"TOTAL ASSETS" shall mean the book value of consolidated gross
assets of the Borrower and its Subsidiaries, as reflected in the financial
statements of the Borrower most recently delivered pursuant to Section
8.01(a) or (b), as the case may be.
"TOTAL AVAILABLE REVOLVING LOAN COMMITMENT" shall mean at any
time an amount equal to the Total Revolving Loan Commitment at such time less
the Blocked Commitment at such time.
"TOTAL COMMITMENTS" shall mean, at any time, the sum of the
Commitments of each of the Lenders.
"TOTAL RELEVANT ASSETS" shall mean Total Assets less the book
value of the Timberlands Properties included therein, as reflected in the
financial statements of the Borrower most recently delivered pursuant to
Section 8.01(a) or (b), as the case may be.
"TOTAL REVOLVING LOAN COMMITMENT" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Lenders.
"TOTAL TERM LOAN COMMITMENT" shall mean, at any time, the sum
of the Total Tranche A Term Loan Commitment, Total Tranche B Term Loan
Commitment and the Total Tranche C Term Loan Commitment.
"TOTAL TRANCHE A TERM LOAN COMMITMENT" shall mean, at any time,
the sum of the Tranche A Term Loan Commitments of each of the Lenders.
"TOTAL TRANCHE B TERM LOAN COMMITMENT" shall mean, at any time,
the sum of the Tranche B Term Loan Commitments of each of the Lenders.
"TOTAL TRANCHE C TERM LOAN COMMITMENT" shall mean, at any time,
the sum of the Tranche C Term Loan Commitments of each of the Lenders.
"TOTAL UNUTILIZED REVOLVING LOAN COMMITMENT" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans and Swingline Loans then outstanding plus the then aggregate amount of
Letter of Credit Outstandings.
"TPI" shall have the meaning provided in the first paragraph of
this Agreement.
"TPI PERMITTED LIENS" shall have the meaning provided such term
in the TPI Security Agreement.
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"TPI SECURITY AGREEMENT" shall have the meaning provided in
Section 5.10(a).
"TPI SECURITY AGREEMENT COLLATERAL" shall mean all "Collateral"
as defined in the TPI Security Agreement.
"TPI SECURITY DOCUMENTS" shall mean the TPI Security Agreements
and all mortgages and other agreements, if any, executed pursuant to the
terms thereof.
"TPI TRANSACTIONS" shall mean the transactions described in
clauses (iii), (iv), (v) and (viii) of the definition of "Transaction".
"TRADE LETTER OF CREDIT" shall have the meaning provided in
Section 2.01(a).
"TRANCHE" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being five separate Tranches,
I.E., Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans,
Revolving Loans and Swingline Loans.
"TRANCHE A SCHEDULED REPAYMENT" shall have the meaning provided
in Section 4.02(b).
"TRANCHE A SCHEDULED REPAYMENT DATE" shall have the meaning
provided in Section 4.02(b).
"TRANCHE A TERM LOAN" shall have the meaning provided in
Section 1.01(a).
"TRANCHE A TERM LOAN COMMITMENT" shall mean, for each Lender,
the amount set forth opposite such Lender's name in Schedule I hereto
directly below the column entitled "Tranche A Term Loan Commitment", as same
may be (x) reduced from time to time pursuant to Sections 3.03, 4.02 and/or
10 or (y) adjusted from time to time as a result of assignments to or from
such Lender pursuant to Section 1.13 or 13.04.
"TRANCHE A TERM LOAN MATURITY DATE" shall mean April 12, 2005.
"TRANCHE A TERM NOTE" shall have the meaning provided in
Section 1.05(a).
"TRANCHE B SCHEDULED REPAYMENT" shall have the meaning provided
in Section 4.02(c).
"TRANCHE B SCHEDULED REPAYMENT DATE" shall have the meaning
provided in Section 4.02(c).
"TRANCHE B TERM LENDER" shall have the meaning provided in
Section 4.02(o).
"TRANCHE B TERM LOAN" shall have the meaning provided in
Section 1.01(b).
"TRANCHE B TERM LOAN COMMITMENT" shall mean, for each Lender,
the amount set forth opposite such Lender's name in Schedule I hereto
directly below the column entitled
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"Tranche B Term Loan Commitment", as same may be (x) reduced from time to
time pursuant to Sections 3.03, 4.02 and/or 10 or (y) adjusted from time to
time as a result of assignments to or from such Lender pursuant to Section
1.13 or 13.04(b).
"TRANCHE B TERM LOAN MATURITY DATE" shall mean April 12, 2007.
"TRANCHE B TERM NOTE" shall have the meaning provided in
Section 1.05(a).
"TRANCHE C SCHEDULED REPAYMENT" shall have the meaning provided
in Section 4.02(d).
"TRANCHE C SCHEDULED REPAYMENT DATE" shall have the meaning
provided in Section 4.02(d).
"TRANCHE C TERM LENDER" shall have the meaning provided in
Section 4.02(o).
"TRANCHE C TERM LOAN" shall have the meaning provided in
Section 1.01(c).
"TRANCHE C TERM LOAN COMMITMENT" shall mean, for each Lender,
the amount set forth opposite such Lender's name in Schedule I hereto
directly below the column entitled "Tranche A Term Loan Commitment," as same
may be (x) reduced from time to time pursuant to Sections 3.03, 4.02 and/or
10 or (y) adjusted from time to time as a result of assignments to or from
such lender pursuant to Section 1.13 or 13.04.
"TRANCHE C TERM LOAN MATURITY DATE" shall mean April 12, 2008.
"TRANCHE C TERM NOTE" shall have the meaning provided in
Section 1.05(a).
"TRANSACTION" shall mean, collectively, (i) the Initial Common
Equity Issuance, (ii) the Preferred Equity Issuance, (iii) the issuance by
TPI of the Subordinated Promissory Notes on the Initial Borrowing Date
generating gross cash proceeds of $550,000,000 and the deposit of the
proceeds thereof in the Sub Debt Restricted Account, (iv) the incurrence of
the Term Loans by TPI on the Initial Borrowing Date and the deposit of the
proceeds thereof in the Restricted Account, (v) the consummation of the
Refinancing, (vi) the Secondary Common Equity Issuance, (vii) the issuance by
PCA of the Senior Subordinated Notes on the Initial Borrowing Date in an
aggregate principal amount of $550,000,000, (viii) the consummation of the
Contribution, (ix) the assumption by PCA of all the rights, obligations and
interest of TPI under the Credit Documents (including, without limitation,
the Obligations) pursuant to the PCA Acknowledgement and Agreement and the
effectiveness of the Security Documents and (x) the payment of fees and
expenses owing in connection with the foregoing.
"TYPE" shall mean the type of Loan determined with regard to
the interest option applicable thereto, I.E., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
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"UNFUNDED CURRENT LIABILITY" of any Plan which is not a
Multiemployer Plan shall mean the amount, if any, by which the value of the
accumulated plan benefits under the Plan determined as of the latest
actuarial report for the most recent plan year exceeds the market value of
all plan assets allocable to such liabilities (excluding any accrued but
unpaid contributions).
"UNITED STATES" and "U.S." shall each mean the United States of
America.
"UNPAID DRAWING" shall have the meaning provided for in Section
2.04(a).
"UNUTILIZED REVOLVING LOAN COMMITMENT" with respect to any
Lender, at any time, shall mean such Lender's Revolving Loan Commitment at
such time LESS the sum of (i) the aggregate outstanding principal amount of
Revolving Loans made by such Lender and (ii) such Lender's Adjusted
Percentage of the Letter of Credit Outstandings in respect of Letters of
Credit issued under this Agreement.
"VOTING STOCK" shall mean, as to any Person, any class or
classes of capital stock of such Person pursuant to which the holders thereof
are entitled to vote in the election of the Board of Directors of such Person.
"WAIVABLE MANDATORY REPAYMENT" shall have the meaning provided
in Section 4.02(o).
"WAIVABLE REPAYMENT" shall mean a Waivable Mandatory Repayment
and a Waivable Voluntary Repayment.
"WAIVABLE VOLUNTARY REPAYMENT" shall have the meaning provided
in Section 4.02(o).
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more
Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at
such time.
"WOODLAND MORTGAGES" shall mean and include each Mortgage in
respect of a Woodland Property.
"WOODLAND PROPERTIES" shall mean and include each Mortgaged
Property designated as a "Woodland Property" on Schedule III hereto.
"Y2K PROBLEM" shall mean any significant risk that computer
hardware, software or equipment containing embedded microchips essential to
the business or operations of the Borrower or any of its Subsidiaries will
not, in the case of dates or time periods occurring after December 31, 1999,
function at least as efficiently and reliably in all material respects as in
the case of times or time periods occurring before January 1, 2000, including
the making of accurate leap year calculations.
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SECTION 12. THE AGENTS.
12.01 APPOINTMENT. Each Lender hereby irrevocably designates
and appoints Morgan Guaranty as Administrative Agent (for purposes of this
Section 12, the term "ADMINISTRATIVE AGENT" shall mean and include Morgan
Guaranty (and/or any of its affiliates) in its capacity as Administrative
Agent hereunder and Collateral Agent pursuant to the Security Documents) and
BTCo as Syndication Agent to act as specified herein and in the other Credit
Documents. Each Lender hereby irrevocably authorizes, and each holder of any
Note by the acceptance of such Note shall be deemed irrevocably to authorize,
the Administrative Agent and the Syndication Agent to take such action on its
behalf under the provisions of this Agreement, the other Credit Documents and
any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as
are specifically delegated to or required of the Administrative Agent and the
Syndication Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. Each of the Administrative Agent and the
Syndication Agent may perform any of its duties hereunder by or through its
respective officers, directors, agents, employees or affiliates.
12.02 NATURE OF DUTIES. Each of the Administrative Agent and
the Syndication Agent agrees to act in its capacity as such upon the express
conditions contained in this Section 12. Notwithstanding any provision to
the contrary elsewhere in this Agreement or in any other Credit Document, the
Administrative Agent and the Syndication Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or
otherwise exist against the Administrative Agent or the Syndication Agent.
The duties of the Administrative Agent and the Syndication Agent shall be
mechanical and administrative in nature; the Administrative Agent and the
Syndication Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Lender or the
holder of any Note; and nothing in this Agreement or any other Credit
Document, express or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein
or therein. The provisions of this Section 12 are solely for the benefit of
the Administrative Agent, the Syndication Agent, the Co-Lead Arrangers and
the Lenders, and neither the Borrower nor any of its Subsidiaries shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, each of the
Administrative Agent and the Syndication Agent shall act solely as agent of
the Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for the Borrower or any
of its Subsidiaries.
12.03 LACK OF RELIANCE ON THE ADMINISTRATIVE AGENT AND THE
SYNDICATION AGENT. Each Lender expressly acknowledges that none of the
Administrative Agent, the Syndication Agent or any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent or the Syndication Agent hereinafter taken, including
any review of the affairs of the Borrower or any of its Subsidiaries, shall
be deemed to constitute any representation or warranty by the Administrative
Agent or the Syndication Agent to any Lender. Independently and without
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reliance upon the Administrative Agent, the Syndication Agent or any other
Lender, each Lender and the holder of each Note, to the extent it deems
appropriate and based on such documents and information as it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the business, assets, operations, property, prospects,
financial and other conditions and affairs of the Borrower and its
Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii)
its own credit analysis and appraisal of the creditworthiness of the Borrower
and its Subsidiaries and, except as expressly provided in this Agreement,
neither the Administrative Agent nor the Syndication Agent shall have any
duty or responsibility, either initially or on a continuing basis, to provide
any Lender or the holder of any Note with any credit or other information
with respect thereto, whether coming into the possession of the
Administrative Agent, the Syndication Agent or any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates
before the making of the Loans or at any time or times thereafter. The
Administrative Agent and the Syndication Agent shall not be responsible to
any Lender or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectability, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or
be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any other Credit Document, or the financial condition of the Borrower and its
Subsidiaries or the existence or possible existence of any Default or Event
of Default.
12.04 CERTAIN RIGHTS OF THE ADMINISTRATIVE AGENT AND THE
SYNDICATION AGENT. If the Administrative Agent or the Syndication Agent
shall request instructions from the Required Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Credit Document, the Administrative Agent or the Syndication Agent, as
the case may be, shall be entitled to refrain from such act or taking such
action unless and until the Administrative Agent or the Syndication Agent, as
the case may be, shall have received instructions from the Required Lenders
as it deems appropriate or it shall have been indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action; and
the Administrative Agent or the Syndication Agent, as the case may be, shall
not incur liability to any Person by reason of so refraining. Without
limiting the foregoing, no Lender or the holder of any Note shall have any
right of action whatsoever against the Administrative Agent or the
Syndication Agent as a result of the Administrative Agent or the Syndication
Agent, as the case may be, acting or refraining from acting hereunder or
under any other Credit Document in accordance with the instructions of the
Required Lenders and such instructions or any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
12.05 RELIANCE. The Administrative Agent and the Syndication
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, statement, certificate, telex, teletype
or telecopier message, cablegram, radiogram, order or other document,
conversation or telephone message signed, sent or made by any Person that the
Administrative Agent or the Syndication Agent, as the case may be, believed to
be the proper
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Person or persons, and upon advice or statement of legal counsel (including,
without limitations counsel to the Borrower or any of its Subsidiaries),
independent accountants and other experts selected by the Administrative
Agent or the Syndication Agent, as the case may be.
12.06 INDEMNIFICATION. The Lenders agree to indemnify each of
the Administrative Agent and the Syndication Agent in their respective
capacities as such ratably according to their respective "percentages" as
used in determining the Required Lenders at such time or, if the Commitments
have terminated and all Loans have been repaid in full, as determined
immediately prior to such termination and repayment (with such "percentages"
to be determined as if there are no Defaulting Lenders), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time following
the payment of the Obligations) be imposed on, incurred by or asserted
against the Administrative Agent or the Syndication Agent in their respective
capacities as such in any way relating to or arising out of this Agreement or
any other Credit Document, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or omitted
to be taken by the Administrative Agent or the Syndication Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the Borrower or any of its Subsidiaries; PROVIDED,
that no Bank shall be liable to the Administrative Agent or the Syndication
Agent for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting primarily from the gross negligence or willful
misconduct of the Administrative Agent or the Syndication Agent, as the case
may be. If any indemnity furnished to the Administrative Agent or the
Syndication Agent for any purpose shall, in the opinion of the Administrative
Agent or the Syndication Agent be insufficient or become impaired, the
Administrative Agent or the Syndication Agent, as the case may be, may call
for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The
agreements in this Section 12.06 shall survive the payment of all Obligations.
12.07 AGENTS IN THEIR INDIVIDUAL CAPACITY. With respect to
its obligation to make Loans, the Loans made by it and all Obligations owed
to it under this Agreement, each of the Administrative Agent and the
Syndication Agent shall have the rights and powers specified herein for a
"Lender" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Lenders," "Required
Lenders," "Majority Lenders," "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Administrative
Agent and the Syndication Agent in their individual capacities. Each of the
Administrative Agent and the Syndication Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other
business with any Credit Party or any Affiliate of any Credit Party as if it
were not performing the duties specified herein, and may accept fees and
other consideration from the Borrower or any other Credit Party for services
in connection with this Agreement and otherwise without having to account for
the same to the Lenders.
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12.08 HOLDERS. The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall
be conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
12.09 RESIGNATION BY THE AGENTS. (a) The Administrative
Agent may resign from the performance of all its functions and duties
hereunder and/or under the other Credit Documents at any time by giving 15
Business Days' prior written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation by the
Administrative Agent, the Lenders shall appoint a successor Administrative
Agent hereunder or thereunder who shall be a commercial bank or trust company
reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been
so appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Borrower (which shall not be unreasonably withheld or
delayed), shall then appoint a commercial bank or trust company with capital
and surplus of not less than $500,000,000 as successor Administrative Agent
who shall serve as Administrative Agent hereunder or thereunder until such
time, if any, as the Lenders appoint a successor Administrative Agent as
provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 25th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Credit Document until such time, if any, as
the Required Lenders appoint a successor Administrative Agent as provided
above.
(e) The Syndication Agent may resign from the performance
of all its functions and duties hereunder and/or under the other Credit
Documents at any time by giving five Business Days' prior written notice to
the Lenders. Such resignation shall take effect at the end of such five
Business Day period. Upon the effectiveness of the resignation of the
Syndication Agent, the Administrative Agent shall assume all of the functions
and duties of the Syndication Agent hereunder and/or under the other Credit
Documents.
12.10 DELEGATION OF DUTIES. Each of the Administrative Agent
and the Syndication Agent may execute any of its duties under this Agreement
or any other Credit Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. None of the Administrative Agent or the Syndication Agent shall
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
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12.11 EXCULPATORY PROVISIONS. None of the Administrative
Agent, the Syndication Agent or any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for
any action taken or omitted to be taken by it or such Person in its capacity
as Administrative Agent or Syndication Agent, as the case may be, under or in
connection with this Agreement or the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower, any of its Subsidiaries
or any of its officers contained in this Agreement or the other Credit
Documents, any other Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the
Administrative Agent or the Syndication Agent under or in connection with,
this Agreement or any other Document or for any failure of the Borrower or
any of its Subsidiaries or any of their respective officers to perform its
obligations hereunder or thereunder. None of the Administrative Agent or the
Syndication Agent shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or the other Documents, or to
inspect the properties, books or records of the Borrower or any of its
Subsidiaries. None of the Administrative Agent or the Syndication Agent
shall be responsible to any Lender for the effectiveness, genuineness,
validity, enforceability, collectability or sufficiency of this Agreement or
any other Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports, certificates or
any other documents in connection herewith or therewith furnished or made by
the Administrative Agent or the Syndication Agent, as the case may be, to the
Lenders or by or on behalf of the Borrower or any of its Subsidiaries to the
Administrative Agent or the Syndication Agent, as the case may be, or any
Lender or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Deault or Event of
Default.
12.12 NOTICE OF DEFAULT. None of the Administrative Agent or
the Syndication Agent shall be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Administrative Agent
or the Syndication Agent, as the case may be, has actually received notice
from a Lender or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Administrative Agent or the Syndication
Agent receives such a notice, the Administrative Agent or the Syndication
Agent, as the case may be, shall give prompt notice thereof to the Lenders.
The Administrative Agent or the Syndication Agent, as the case may be, shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; PROVIDED, that, unless and until
the Administrative Agent or the Syndication Agent, as the case may be, shall
have received such directions, the Administrative Agent or the Syndication
Agent, as the case may be, may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
12.13 SPECIAL PROVISIONS REGARDING THE CO-LEAD ARRANGERS AND
CO-DOCUMENTATION AGENTS. No Co-Lead Arranger or Co-Documentation Agent shall
have any
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obligations, responsibilities or duties under this Agreement or any other
Credit Document in its capacity as such.
SECTION 13. MISCELLANEOUS.
13.01 PAYMENT OF EXPENSES, ETC. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agents and the Co-Lead
Arrangers (including, without limitation, the reasonable fees and
disbursements of White & Case LLP and local counsel) in connection with the
preparation, execution and delivery of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein
and any amendment, waiver or consent relating hereto or thereto, of each
Co-Lead Arranger in connection with its syndication efforts with respect to
this Agreement and of each Agent, each Issuing Bank and each of the Lenders
in connection with the enforcement of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein
(including, without limitation, the reasonable fees and disbursements of
counsel (including in-house counsel) for each Agent and for each of the
Lenders); (ii) pay and hold each of the Lenders harmless from and against any
and all present and future stamp, excise and other similar taxes with respect
to the foregoing matters and save each of the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Lender) to pay
such taxes; and (iii) indemnify each Agent, each Co-Lead Arranger, the
Collateral Agent, each Issuing Bank and each Lender, and each of their
respective officers, directors, trustees, employees, representatives and
agents from and hold each of them harmless against any and all liabilities,
obligations (including removal or remedial actions), losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and
disbursements (including reasonable attorneys' and consultants' fees and
disbursements) incurred by, imposed on or assessed against any of them as a
result of, or arising out of, or in any way related to, or by reason of, (a)
any investigation, litigation or other proceeding (whether or not any Agent,
any Co-Lead Arranger, any Issuing Bank, the Collateral Agent or any Lender is
a party thereto and whether or not any such investigation, litigation or
other proceeding is between or among any Agent, any Co-Lead Arranger, the
Collateral Agent, any Issuing Bank, any Lender, any Credit Party or any third
Person or otherwise) related to the entering into and/or performance of this
Agreement or any other Credit Document or the use of any Letter of Credit or
the proceeds of any Loans hereunder or the consummation of any transactions
contemplated herein (including, without limitation, the Transaction), or in
any other Credit Document or the exercise of any of their rights or remedies
provided herein or in the other Credit Documents, or (b) the actual or
alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property at any time
owned or operated by the Borrower or any of its Subsidiaries, the generation,
storage, transportation, handling or disposal of Hazardous Materials at any
location, whether or not owned or operated by the Borrower or any of its
Subsidiaries, the non-compliance of any Real Property at any time owned or
operated by the Borrower or any of its Subsidiaries with foreign, federal,
state and local laws, regulations, and ordinances (including applicable
permits thereunder) applicable to any such Real Property, or any
Environmental Claim asserted against the Borrower, any of its Subsidiaries or
such Real Property, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants
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incurred in connection with any such investigation, litigation or other
proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the
undertaking to indemnify, pay or hold harmless each Agent or any Lender set
forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Borrower shall make the maximum contribution
to the payment and satisfaction of each of the indemnified liabilities which
is permissible under applicable law.
13.02 RIGHT OF SETOFF. (a) In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
each Agent, each Issuing Bank and each Lender is hereby authorized at any
time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and apply
any and all deposits (general or special) and any other Indebtedness at any
time held or owing by such Agent, such Issuing Bank or such Lender
(including, without limitation, by branches and agencies of such Lender
wherever located) to or for the credit or the account of any Credit Party but
in any event excluding assets held in trust for any such Person against and
on account of the Obligations and liabilities of such Credit Party to such
Agent, such Issuing Bank or such Lender under this Agreement or under any of
the other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Lender pursuant to Section 13.06(b), and all
other claims of any nature or description arising out of or connected with
this Agreement or any other Credit Document, irrespective of whether or not
such Agent, such Issuing Bank or such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
(b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY
TIME THAT THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY
LOCATED IN CALIFORNIA, NEITHER ANY LENDER NOR THE ADMINISTRATIVE AGENT SHALL
EXERCISE A RIGHT OF SETOFF, LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR
ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF
THIS AGREEMENT OR ANY NOTE UNLESS IT IS TAKEN WITH THE CONSENT OF THE
REQUIRED LENDERS OR, TO THE EXTENT REQUIRED BY SECTION 13.12 OF THIS
AGREEMENT, ALL OF THE LENDERS, OR APPROVED IN WRITING BY THE ADMINISTRATIVE
AGENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580d AND 726 OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL
CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY,
OR ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL AGENT PURSUANT TO
THE SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND OTHER
OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR THE
ADMINISTRATIVE AGENT OF ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE
REQUISITE LENDERS OR THE ADMINISTRATIVE AGENT SHALL BE NULL AND VOID. THIS
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SUBSECTION (b) SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS AND THE
ADMINISTRATIVE AGENT HEREUNDER.
13.03 NOTICES. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in
writing (including telexed, telegraphic, telex, telecopier or cable
communication) and mailed, telexed, telecopied, cabled or delivered: if to
the Borrower, at the address specified opposite its signature below; if to
any Lender, at its address specified opposite its name on Schedule II below;
if to the Syndication Agent, at the address specified opposite its signature
below; if to the Administrative Agent, at its Notice Office; and if to any
Co-Lead Arranger, at the address specified opposite its signature below; or,
as to the Borrower, at such other address as shall be designated by the
Borrower in a written notice to the other parties hereto and, as to each
Lender, at such other address as shall be designated by such Lender in a
written notice to the Borrower and the Administrative Agent. All such
notices and communications shall, when mailed, telexed, telecopied or sent by
overnight courier, be effective when deposited in the mails or delivered to
the overnight courier, prepaid and properly addressed for delivery on such or
the next Business Day, or sent by telex or telecopier, except that notices
and communications to the Administrative Agent shall not be effective until
received by the Administrative Agent.
13.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; PROVIDED, HOWEVER, that (i) no
Credit Party may assign or transfer any of its rights, obligations or
interest hereunder or under any other Credit Document without the prior
written consent of the Lenders, PROVIDED that TPI may transfer all of its
rights, obligations and interest hereunder and under the other Credit
Documents (including all of the Obligations) to PCA in connection with the
Contribution pursuant to, and in accordance with the terms of, the Bank
Credit Agreement Assignment and Assumption Agreement, (ii) although any
Lender may transfer, assign or grant participations in its rights hereunder,
such Lender shall remain a "Lender" for all purposes hereunder (and may not
transfer or assign all or any portion of its Commitments hereunder except as
provided in Section 13.04(b)) and the transferee, assignee or participant, as
the case may be, shall not constitute a "Lender" hereunder and (iii) no
Lender shall transfer or grant any participation under which the participant
shall have rights to approve any amendment to or waiver of this Agreement or
any other Credit Document except to the extent such amendment or waiver would
(x) extend the final scheduled maturity of any Loan, Note or Letter of Credit
(unless such Letter of Credit is not extended beyond the Revolving Loan
Maturity Date) in which such participant is participating, or reduce the rate
or extend the time of payment of interest or Fees thereon (except (I) in
connection with a waiver of applicability of any post-default increase in
interest rates and (II) that any amendment or modification to the financial
definitions in this Agreement shall not constitute a reduction in the rate of
interest for purposes of this clause (x)) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total
Commitments shall not constitute a change in the terms of such participation,
and that an increase in any Commitment or Loan shall be permitted without the
consent of any participant if the participant's participation is not
increased as a result thereof), (y) consent to the assignment or
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transfer by the Borrower of any of its rights and obligations under this
Agreement or (z) release all or substantially all of the Collateral under all
of the Security Documents (except as expressly provided in the Credit
Documents) securing the Loans hereunder in which such participant is
participating. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the other Credit Documents
(the participant's rights against such Lender in respect of such participation
to be those set forth in the agreement executed by such Lender in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Lender had not sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any
Lender together with one or more other Lenders) may (x) assign all or a
portion of its Revolving Loan Commitment (and related outstanding Obligations
hereunder) and/or its outstanding Term Loans (or, if prior to the Initial
Borrowing Date, Term Loan Commitment) to its (i) parent company and/or any
affiliate of such Lender which is at least 50% owned by such Lender or its
parent company or (ii) in the case of any Lender that is a fund that invests
in bank loans, any other fund that invests in bank loans and is managed or
advised by the same investment advisor of such Lender or by an Affiliate of
such investment advisor or (iii) to one or more Lenders or (y) assign all, or
if less than all, a portion equal to at least $2,000,000 in the aggregate for
the assigning Lender or assigning Lenders, of such Revolving Loan Commitments
and outstanding principal amount of Term Loans (or, if prior to the Initial
Borrowing Date, Term Loan Commitment) hereunder to one or more Eligible
Transferees (treating any fund that invests in bank loans and any other fund
that invests in bank loans and is managed or advised by the same investment
advisor of such fund or by an Affiliate of such investment advisor as a
single Eligible Transferee), each of which assignees shall become a party to
this Agreement as a Lender by execution of an Assignment and Assumption
Agreement, PROVIDED that, (i) at such time Schedule I shall be deemed
modified to reflect the Commitments (and/or outstanding Term Loans, as the
case may be) of such new Lender and of the existing Lenders, (ii) new Notes
will be issued, at the Borrower's expense, to such new Lender and to the
assigning Lender upon the request of such new Lender or assigning Lender,
such new Notes to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans, as the case may be), (iii) the
consent of the Administrative Agent and each Issuing Bank shall be required
in connection with any assignment of all or any portion of Revolving Loan
Commitments (which consents shall not be unreasonably withheld or delayed),
(iv) in the case of assignments pursuant to clause (y) above, the consent of
the Administrative Agent (and, unless any Default or Event of Default is then
in existence, the consent of the Borrower) shall be required (which consents
shall not be unreasonably withheld or delayed) and (v) the Administrative
Agent shall receive at the time of each such assignment, from the assigning
or assignee Lender, the payment of a non-refundable assignment fee of $3,500.
To the extent of any assignment pursuant to this Section 13.04(b), the
assigning Lender shall be relieved of its obligations hereunder with respect
to its assigned Commitments (it being understood that the indemnification
provisions under this Agreement (including, without limitation, Sections
1.10, 1.11, 2.05, 4.04, 13.01 and 13.06) shall survive as to such assigning
Lender). At the time of each assignment pursuant to this Section 13.04(b) to
a Person which is not already a Lender hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code)
for Federal income tax purposes, the respective assignee Lender shall
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provide to the Borrower and the Administrative Agent the appropriate Internal
Revenue Service Forms (and, if applicable, a Section 4.04(b)(ii) Certificate)
described in Section 4.04(b). To the extent that an assignment of all or any
portion of a Lender's Commitments and related outstanding Obligations
pursuant to Section 1.13 or this Section 13.04(b) would, at the time of such
assignment, result in increased costs under Section 1.10, 1.11, 2.05 or 4.04
from those being charged by the respective assigning Lender prior to such
assignment, then the Borrower shall not be obligated to pay such increased
costs (although the Borrower shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of
the respective assignment, subject to Section 4.04(b)).
(c) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank
in support of borrowings made by such Lender from such Federal Reserve Bank
and, with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed), any Lender which is a fund may pledge all
or any portion of its Notes or Loans to any trustee, other representative of
holders of notes issued by such fund, or holder of obligations owed by such
fund, in support of its obligation to such trustee, representative or holder.
No pledge pursuant to this clause (c) shall release the transferor Lender
from any of its obligations hereunder.
13.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on
the part of any Agent or any Lender or any holder of any Note in exercising
any right, power or privilege hereunder or under any other Credit Document
and no course of dealing between any other Credit Party and any Agent or any
Lender or the holder of any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights, powers and remedies herein or in any other Credit
Document expressly provided are cumulative and not exclusive of any rights,
powers or remedies which any Agent or any Lender or the holder of any Note
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Agent or any Lender or the holder of any Note to any other or further action
in any circumstances without notice or demand.
13.06 PAYMENTS PRO RATA. (a) Except as otherwise provided in
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Lenders (other
than any Lender that has consented in writing to waive its PRO RATA share of
any such payment) PRO RATA based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive
any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, Unpaid Drawings, Commitment
Commission or Letter of Credit Fees, of a
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sum which with respect to the related sum or sums received by other Lenders
is in a greater proportion than the total of such Obligation then owed and
due to such Lender bears to the total of such Obligation then owed and due to
all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the
respective Credit Party to such Lenders in such amount as shall result in a
proportional participation by all the Lenders in such amount; PROVIDED that
if all or any portion of such excess amount is thereafter recovered from such
Lender, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 13.06(a) and (b) shall be
subject to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Lenders as opposed to
Defaulting Lenders.
13.07 CALCULATIONS; COMPUTATIONS. (a) The financial
statements to be furnished to the Lenders pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Lenders); PROVIDED that (i) except as otherwise specifically
provided herein, all computations of the Available J.V. Basket Amount, Excess
Cash Flow, the Leverage Ratio and the Applicable Margins and all computations
determining compliance with Sections 9.08 through 9.11, inclusive, shall
utilize accounting principles and policies in conformity with those used to
prepare the historical financial statements of the Containerboard Group for
the fiscal year ended December 31, 1998 delivered to the Lenders pursuant to
Section 5.16 (with the foregoing generally accepted accounting principles,
subject to the preceding proviso, herein called "GAAP"), (ii) to the extent
expressly required pursuant to the provisions of this Agreement, certain
calculations shall be made on a PRO FORMA Basis and (iii) for all purposes of
this Agreement, all Attributed Receivables Facility Indebtedness shall be
treated as Indebtedness of the Borrower and its Subsidiaries hereunder,
regardless of any differing treatment pursuant to generally accepted
accounting principles.
(b) All computations of interest on Eurodollar Loans,
Commitment Commission and Fees hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest,
Commitment Commission or Fees are payable. All computations of interest on
Base Rate Loans shall be made on the basis of a year of 365 or 366 days, as
the case may be, for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT
AS OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE
WITH
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AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT
AS SUCH, THE BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT
IN THE STATE OF NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE BORROWER HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR ANY OTHER CREDIT DOCUMENT THAT SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY LENDER OR THE
HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY
IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrower and the Administrative Agent.
13.10 EFFECTIVENESS. This Agreement shall become effective on
the date (the "EFFECTIVE DATE") on which the Borrower and each of the Lenders
who are initially parties hereto shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the
same to the Administrative Agent or, in the case of the Lenders, shall have
given to the Administrative Agent telephonic (confirmed in writing), written
or telex notice (actually received) at such office that the same has been
signed and mailed to it. The Administrative Agent will give the Borrower and
each Lender prompt written notice of the occurrence of the Effective Date.
13.11 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision
of this Agreement.
13.12 AMENDMENT OR WAIVER; ETC. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party
thereto and the Required Lenders, PROVIDED that no such change, waiver,
discharge or termination shall, without the consent of each Lender (other
than a Defaulting Lender) (with Obligations being directly affected in the
case of following clause (i)), (i) extend the final scheduled maturity of any
Loan or Note or extend the stated maturity of any Letter of Credit beyond the
Revolving Loan Maturity Date, or reduce the rate or extend the time of
payment of interest or Fees thereon (except (x) in connection with the waiver
of applicability of any post-default increase in interest rates and (y) that
any amendment or modification to the financial definitions in this Agreement
shall not constitute a reduction in the rate of interest for purposes of this
clause (i)), or reduce the principal amount thereof (except to the extent
repaid in cash), (ii) release all or substantially all of the Collateral
(except as expressly provided in the Credit Documents) under all the Security
Documents, (iii) amend, modify or waive any provision of this Section 13.12,
(iv) reduce the percentage specified in the definition of Required Lenders
(it being understood that, with the consent of the Required Lenders,
additional extensions of credit pursuant to this Agreement may be included in
the determination of the Required Lenders on substantially the same basis as
the extensions of Term Loans and Revolving Loan Commitments are included on
the Effective Date) or (v) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement or any
other Credit
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Document (it being understood and agreed, however, that TPI may transfer all
of its rights and obligations under the Credit Documents to PCA pursuant to
the Contribution); PROVIDED FURTHER, that no such change, waiver, discharge
or termination shall (t) increase the Commitments of any Lender over the
amount thereof then in effect without the consent of such Lender (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in the Total
Commitments shall not constitute an increase of the Commitment of any Lender,
and that an increase in the available portion of any Commitment of any Lender
shall not constitute an increase in the Commitment of such Lender), (u)
without the consent of the Swingline Lender, alter its rights or obligations
with respect to Swingline Loans, (v) without the consent of the respective
Issuing Bank, amend, modify or waive any provision of Section 2 or alter its
rights or obligations with respect to Letters of Credit, (w) without the
consent of the Administrative Agent or the Syndication Agent, amend, modify
or waive any provision of Section 12 as same applies to the Administrative
Agent or the Syndication Agent, as the case may be, or any other provision as
same relates to the rights or obligations of the Administrative Agent or the
Syndication Agent, as the case may be, (x) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights
or obligations of the Collateral Agent, (y) without the consent of the
Majority Lenders of each Tranche which is being allocated a lesser
prepayment, repayment or commitment reduction as a result of the actions
described below (or without the consent of the Majority Lenders of each
Tranche in the case of an amendment to the definition of Majority Lenders),
amend the definition of Majority Lenders (it being understood that, with the
consent of the Required Lenders, additional extensions of credit pursuant to
this Agreement may be included in the determination of the Majority Lenders
on substantially the same basis as the extensions of Term Loans and Revolving
Loan Commitments are included on the Effective Date) or alte the required
application of any prepayments or repayments (or commitment reductions), as
between the various Tranches, pursuant to Section 4.01 or 4.02 (excluding
Sections 4.02(b), (c) and (d)) (although (x) the Required Lenders may waive,
in whole or in part, any such prepayment, repayment or commitment reduction,
so long as the application, as amongst the various Tranches, of any such
prepayment, repayment or commitment reduction which is still required to be
made is not altered and (y) if additional Tranches of Term Loans are extended
after the Initial Borrowing Date with the consent of the Required Lenders as
required above, such Tranches may be included on a pro rata basis (as is
originally done with the Tranche A Term Loans, Tranche B Term Loans and
Tranche C Term Loans) in the various prepayments or repayments required
pursuant to Sections 4.01 and 4.02 (excluding Sections 4.02(b), (c), (d) and
any section providing Scheduled Repayments for any new Tranche of Term Loans)
or (z) without the consent of the Majority Lenders of the respective Tranche,
reduce the amount of, or extend the date of, any Scheduled Repayment
applicable to such Tranche or, without the consent of the Majority Lenders of
each Tranche, amend the definition of Majority Lenders (it being understood
that, with the consent of the Required Lenders, additional extensions of
credit pursuant to this Agreement may be included in the determination of the
Majority Lenders on substantially the same basis as the extensions of Term
Loans and Revolving Loan Commitments are included on the Effective Date).
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through
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(v), inclusive, of the first proviso to Section 13.12(a), the consent of the
Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then the Borrower shall
have the right, so long as all non-consenting Lenders whose individual
consent is required are treated as described in either clauses (A) or (B)
below, to either (A) replace each such non-consenting Lender or Lenders (or,
at the option of the Borrower if the respective Lender's consent is required
with respect to less than all Tranches of Loans (or related Commitments), to
replace only the respective Tranche or Tranches of Commitments and/or Loans
of the respective non-consenting Lender which gave rise to the need to obtain
such Lender's individual consent) with one or more Replacement Lenders
pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Lender consents to the proposed change, waiver, discharge
or termination or (B) terminate such non-consenting Lender's Revolving Loan
Commitment (if such Lender's consent is required as a result of its Revolving
Loan Commitment) and/or repay each Tranche of outstanding Term Loans of such
Lender which gave rise to the need to obtain such Lender's consent, in
accordance with Sections 3.02(b) and/or 4.01(iv), PROVIDED that, unless the
Commitments are terminated, and Loans repaid, pursuant to preceding clause
(B) are immediately replaced in full at such time through the addition of new
Lenders or the increase of the Commitments and/or outstanding Loans of
existing Lenders (who in each case must specifically consent thereto), then
in the case of any action pursuant to preceding clause (B) the Required
Lenders (determined both before and after giving effect to the proposed
action) shall specifically consent thereto, PROVIDED FURTHER, that in any
event the Borrower shall not have the right to replace a Lender, terminate
its Revolving Loan Commitment or repay its Loans solely as a result of the
exercise of such Lender's rights (and the withholding of any required consent
by such Lender) pursuant to the second proviso to Section 13.12(a).
13.13 SURVIVAL. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.05, 4.04, 12.06, 13.01 and
13.06 shall, subject to Section 13.15 (to the extent applicable), survive the
execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Loans.
13.14 DOMICILE OF LOANS. Each Lender may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Lender. Notwithstanding anything to the contrary contained herein, to
the extent that a transfer of Loans pursuant to this Section 13.14 would, at
the time of such transfer, result in increased costs under Section 1.10, 1.11,
2.05 or 4.04 from those being charged by the respective Lender prior to such
transfer, then the Borrower shall not be obligated to pay such increased
costs (although the Borrower shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of
the respective transfer).
13.15 LIMITATION ON ADDITIONAL AMOUNTS, ETC. Notwithstanding
anything to the contrary contained in Sections 1.10, 1.11, 2.05 or 4.04 of
this Agreement, unless a Lender gives notice to the Borrower that it is
obligated to pay an amount under any such Section within one year after the
later of (x) the date the Lender incurs the respective increased costs,
Taxes, loss, expense or liability, reduction in amounts received or
receivable or reduction in return on capital or (y) the date such Lender has
actual knowledge of its incurrence of the respective increased costs, Taxes,
loss, expense or liability, reductions in amounts received or receivable or
reduction
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in return on capital, then such Lender shall only be entitled to be
compensated for such amount by the Borrower pursuant to said Section 1.10,
1.11, 2.05 or 4.04, as the case may be, to the extent the costs, Taxes, loss,
expense or liability, reduction in amounts received or receivable or
reduction in return on capital are incurred or suffered on or after the date
which occurs one year prior to such Lender giving notice to the Borrower that
it is obligated to pay the respective amounts pursuant to said Section 1.10,
1.11, 2.05 or 4.04, as the case may be. This Section 13.15 shall have no
applicability to any Section of this Agreement other than said Sections 1.10,
1.11, 2.05 and 4.04.
13.16 CONFIDENTIALITY. (a) Subject to the provisions of
clause (b) of this Section 13.16, each Lender agrees that it will use its
best efforts not to disclose without the prior consent of the Borrower (other
than to its employees, auditors, advisors or counsel or to another Lender if
the Lender or such Lender's holding or parent company or board of trustees in
its sole discretion determines that any such party should have access to such
information), any information with respect to the Borrower or any of its
Subsidiaries which is now or in the future furnished pursuant to this
Agreement or any other Credit Document, PROVIDED that any Lender may disclose
any such information (a) as has become generally available to the public
other than by virtue of a breach of this Section 13.16(a) by the respective
Lender, (b) as may be required or appropriate (x) in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having
or claiming to have jurisdiction over such Lender or to the Federal Reserve
Board or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors or (y) in
connection with any request or requirement of any such regulatory body
(including any securities exchange or self-regulatory body), (c) as may be
required or appropriate in respect to any summons or subpoena or in
connection with any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Lender, (e) to any Agent or the
Collateral Agent, (f) to any prospective or actual transferee or participant
in connection with any contemplated transfer or participation of any of the
Notes or Commitments or any interest therein by such Lender, PROVIDED that
such prospective transferee agrees to be bound by the confidentiality
provisions contained in this Section 13.16 and (g) to any Person (or such
Person's investment advisor) with whom such Lender has entered into or
proposes to enter into (in each case either directly or indirectly) any
credit swap agreement with respect to such Lender's Loans and/or Commitments,
PROVIDED such Person (and such investment advisor, if any) agrees to be bound
by the confidentiality provisions contained in this Section 13.16.
(b) The Borrower hereby acknowledges and agrees that each
Lender may share with any of their affiliates or investment advisors any
information related to the Borrower or any of their respective Subsidiaries
(including, without limitation, any nonpublic customer information regarding
the creditworthiness of the Borrower or its Subsidiaries, provided such
Persons shall be subject to the provisions of this Section 13.16 to the same
extent as such Lender).
13.17 REGISTER. The Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this
Section 13.17, to maintain a register (the "REGISTER") on which it will
record the Commitments from time to time of each of the Lenders, the Loans
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<PAGE>
made by each of the Lenders and each repayment in respect of the principal
amount of the Loans of each Lender. Failure to make any such recordation, or
any error in such recordation shall not affect the Borrower's obligations in
respect of such Loans. With respect to any Lender, the transfer of any
Commitment of such Lender and the rights to the principal of, and interest
on, any Loan made pursuant to such Commitment shall not be effective until
such transfer is recorded on the Register maintained by the Administrative
Agent with respect to ownership of such Commitment and Loans and prior to
such recordation all amounts owing to the transferor with respect to such
Commitment and Loans shall remain owing to the transferor. The registration
of assignment or transfer of all or part of any Commitment and Loans shall be
recorded by the Administrative Agent on the Register only upon the acceptance
by the Administrative Agent of a properly executed and delivered Assignment
and Assumption Agreement pursuant to Section 13.04(b). Coincident with the
delivery of such an Assignment and Assumption Agreement to the Administrative
Agent for acceptance and registration of assignment or transfer of all or
part of a Commitment and/or Loan, or as soon thereafter as practicable, the
assigning or transferor Lender shall surrender the Note evidencing such
Commitment and/or Loan, if any, and thereupon one or more new Notes in the
same aggregate principal amount shall be issued to the assigning or
transferor Lender and/or the new Lender, if requested by such assigning or
transferor Lender and/or such new Lender. The Borrower shall indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this
Section 13.17.
13.18 POST-CLOSING ACTIONS. Notwithstanding anything to the
contrary contained in this Agreement or the other Credit Documents, the
parties hereto acknowledge and agree that:
(a) SECURITY DOCUMENT FILINGS. Form UCC-1 financing
statements and the grants of security interests in certain intellectual
property delivered by PCA to the Collateral Agent on the Initial Borrowing
Date pursuant to the Security Documents shall be filed in the appropriate
governmental office within 10 days following the Initial Borrowing Date.
(b) REAL ESTATE ITEMS. The conditions set forth on Schedule
XI hereto shall be satisfied within the time periods specified on such
Schedule, subject in each case to the last sentence appearing on said
Schedule.
(c) TIMBER STAND FILINGS. Within 90 days following the
Initial Borrowing Date, PCA shall, and shall have caused each of its
Subsidiaries to, have taken all actions to ensure that the security interests
in the Standing Timber (as defined in the PCA Security Agreement) of the
Borrower and its Subsidiaries purported to be created pursuant to the PCA
Security Agreement have been duly perfected (including, without limitation,
the execution, delivery and recording of financing statements, instruments
and other documents, in each case in form and substance satisfactory to the
Administrative Agent).
All provisions of this Credit Agreement and the other Credit
Documents (including, without limitation, all conditions precedent,
representations, warranties, covenants, events of default and other
agreements herein and therein) shall be deemed modified to the extent
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<PAGE>
necessary to effect the foregoing (and to permit the taking of the actions
and the satisfaction of the conditions described above and on Schedule XI
within the time periods required hereby and thereby (and, rather than as
otherwise provided in the Credit Documents)); PROVIDED, that (x) to the
extent any representation and warranty would not be true because the
foregoing actions were not taken, or conditions were not satisfied, on the
Initial Borrowing Date, the respective representation and warranty shall be
required to be true and correct in all material respects at the time the
respective action is taken or condition is satisfied (or was required to be
taken or satisfied) in accordance with the foregoing provisions of this
Section 13.18 and (y) all representations and warranties relating to the
Collateral Documents shall be required to be true immediately after the
actions required to be taken, or the conditions required to be satisfied, by
this Section 13.18 have been taken or satisfied (or were required to be taken
or satisfied), it being understood that any condition set forth in items 1
through 5 on Schedule XI not satisfied within the time period specified
therefor on said Schedule shall nevertheless be deemed to have been satisfied
within such time period to the extent "best efforts" or "commercially
reasonable efforts" (as may be specified on Schedule XI for such item) were
used by PCA or its relevant Subsidiary to satisfy such condition. The
acceptance of the benefits of the Loans shall constitute a representation,
warranty and covenant by PCA to each of the Lenders that the actions and
conditions required pursuant to this Section 13.18 will be, or have been,
taken or satisfied within the relevant time periods referred to in this
Section 13.18 and Schedule XI and that, at such time, all representations and
warranties contained in this Credit Agreement and the other Credit Documents
shall then be true and correct without any modification pursuant to this
Section 13.18. The parties hereto acknowledge and agree that the failure to
take any of the actions or satisfy any of the conditions required above or on
Schedule XI within the relevant time periods required above or by said
Schedule XI (but excluding in any event items 1 through 5, inclusive, on
Schedule XI to the extent provided by the last sentence of said Schedule),
shall give rise to an immediate Event of Default pursuant to this Agreement.
[Remainder of page intentionally left blank]
-161-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
ADDRESS:
1900 Westfield Court TENNECO PACKAGING, INC.
Lake Forest, IL 60045
By /s/ James V. Faulkner
------------------------------------------
Title: Vice President and Assistant
Secretary
Attention: James V. Faulkner
Telephone: 847-482-2000
Facsimile: 847-482-4589
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Individually and as Administrative Agent
By: /s/ Colleen B. Galle
-----------------------------------------
Title: Vice President
J.P. MORGAN SECURITIES, INC.,
as Co-Lead Arranger
By: /s/ Kenneth A. Lang
-----------------------------------------
Title: Managing Director
BT ALEX BROWN INCORPORATED,
as a Co-Lead Arranger
By: /s/ Loretta Summers
-----------------------------------------
Title: Managing Director
BANKERS TRUST COMPANY, Individually and as
Syndication Agent
By: /s/ Robert R. Telesca
-----------------------------------------
Title: Assistant Vice President
<PAGE>
ABN AMRO BANK N.V.
By: /s/ Christian H. Sievers
-----------------------------------------
Title: Senior Vice President
By: /s/ Paul S. Faust
-----------------------------------------
Title: Vice President
AIM STRATEGIC INCOME FUND
By: INVESCO (NY) INC.,
as Investment Advisor
By: /s/ Cheng-Hock Lau
------------------------------------
Title: Chief Investment Officer
ALLSTATE INSURANCE COMPANY
By: /s/ Jerry D. Zinkula
-----------------------------------------
Title: Authorized Signatory
By: /s/ Patricia W. Wilson
-----------------------------------------
Title: Authorized Signatory
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Jerry D. Zinkula
-----------------------------------------
Title: Authorized Signatory
By: /s/ Charles D. Mires
-----------------------------------------
Title: Authorized Signatory
<PAGE>
ARCHIMEDES FUNDING II, LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By: /s/ Jane M. Nelson
------------------------------------
Title: Senior Vice President
ARCHIMEDES FUNDING , L.L.C.
By: ING Capital Advisors LLC,
as Collateral Manager
By: /s/ Jane M. Nelson
------------------------------------
Title: Senior Vice President
BANK OF MONTREAL
By: /s/ L.A. Durning
-----------------------------------------
Title: Portfolio Manager
BANK UNITED
By: /s/ Phil Green
-----------------------------------------
Title: Director-Commercial Syndications
BAYERISCHE HYPO-UND VEREINSBANK AG, New York
Branch
By: /s/ Sylvia Cheng
-----------------------------------------
Title: Director
By: /s/ Erich Ebner v. Eschenbach
-----------------------------------------
Title: Managing Director
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ William M. Swenson
-----------------------------------------
Title: Authorized Signatory
CHASE MANHATTAN BANK
By: /s/ Jonathan E. Twichell
-----------------------------------------
Title: Vice President
CO BANK, ACB
By: /s/ Brian J. Klatt
-----------------------------------------
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By: /s/ Sean Mounier
-----------------------------------------
Title: First Vice President
By: /s/ Brian O' Leary
-----------------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Attila Koc
-----------------------------------------
Title: Senior Vice President
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company,
its Investment Manager
By: /s/ Justin L. Driscoll
------------------------------------
Title: Senior Vice President
<PAGE>
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment Management
Company, Inc., its Managing Member
By: /s/ Peter K. Merrill
------------------------------------
Title: Managing Director
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager
By: /s/ Peter K. Merrill
------------------------------------
Title: Managing Director
DEBT STRATEGIES FUND III, INC.
By: /s/ Andrew C. Liggio
-----------------------------------------
Title: Authorized Signatory
DRESDNER BANK AG NEW YORK AND GRAND CAYMAN
BRANCHES
By: /s/ Christopher E. Sarisky
-----------------------------------------
Title: Assistant Vice President
By: /s/ Beverly G. Cason
-----------------------------------------
Title: Vice President
<PAGE>
ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN
AG
By: /s/ John S. Runnion
-----------------------------------------
Title: First Vice President
By: /s/ Anca Trifan
-----------------------------------------
Title: Vice President
FEDERAL STREET PARTNERS
By: /s/ Gregory R. D. Clark
-----------------------------------------
Title: Managing Director
FIRSTRUST BANK
By: /s/ E.A. D'Ancona
-----------------------------------------
Title: Executive Vice President
FIRST UNION NATIONAL BANK
By: /s/ Andrew G. Paine
-----------------------------------------
Title: Vice President
FLEET NATIONAL BANK
By: /s/ Mark S. Pelletier
-----------------------------------------
Title: Vice President
FLOATING RATE PORTFOLIO
By: INVESCO Senior Secured Management, Inc.,
as attorney in fact
By: /s/ Joseph Rotondo
------------------------------------
Title: Authorized Signatory
<PAGE>
FRANKLIN FLOATING RATE TRUST
By: /s/ Chauncey Lufkin
-----------------------------------------
Title: Vice President
FREMONT INVESTMENT & LOAN
By: /s/ Maria Chachere
-----------------------------------------
Title: Vice President
GALAXY CLO 1999-1, LTD.
By: /s/ Steve Staver
-----------------------------------------
Title: Authorized Agent
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ William E. Magee
-----------------------------------------
Title: Authorized Signatory
GOLDMAN SACHS CREDIT PARTNERS L.P.,
INDIVIDUALLY AND AS DOCUMENTATION AGENT
By: /s/ Stephen B. King
-----------------------------------------
Title: Authorized Signatory
HELLER FINANCIAL, INC.
By: /s/ Sheila C. Weimer
-----------------------------------------
Title: Vice President
<PAGE>
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
By: /s/ Ray Vadalma
-----------------------------------------
Title: Senior Vice President
JACKSON NATIONAL LIFE INSURANCE COMPANY
By: PPM America, Inc., as attorney in fact,
on behalf of Jackson National Life
Insurance Company
By: /s/ Gaetano Petrelli
------------------------------------
Title: Vice President
KZH APPALOOSA LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH CNC LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH CRESCENT-2 LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH CYPRESS TREE-1 LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
<PAGE>
KZH ING-1 LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH ING-3 LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH IV LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH PONDVIEW LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH SHOSHONE LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH SOLEIL-2 LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
KZH STERLING LLC
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
<PAGE>
MEDICAL LIABILITY MUTUAL
INSURANCE COMPANY
By: /s/ K.Wayne Kahle
-----------------------------------------
Title: Vice President
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: /s/ Andrew C. Liggio
-----------------------------------------
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING RATE FUND II,
INC.
By: /s/ Andrew C. Liggio
-----------------------------------------
Title: Authorized Signatory
MICHIGAN NATIONAL BANK
By: /s/ Lisa Davidson McKinnon
-----------------------------------------
Title: Commercial Relationship Manager
MONUMENTAL LIFE INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------------------
Title: Vice President & Assistant
Secretary
MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST
By: /s/ Peter Gewirtz
-----------------------------------------
Title: Authorized Signatory
<PAGE>
NATEXIS BANQUE BFCE
By: /s/ Jordan Sadler
-----------------------------------------
Title: Associate
By: /s/ G. Kevin Dooley
-----------------------------------------
Title: Vice President
NATIONSBANK, N.A.
By: /s/ Edward A. Hamilton
-----------------------------------------
Title: Managing Director
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager
By: /s/ Peter K. Merrill
------------------------------------
Title: Managing Director
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Scott Krase
-------------------------------
Title: Vice President
<PAGE>
OCTAGON LOAN TRUST
By: Octagon Credit Investors, as Manager,
as a Lender
By: /s/ Joyce C. DeLucca
------------------------------------
Title: Managing Director
ORIX USA CORPORATION
By: /s/ Hirovoki Miyauchi
-----------------------------------------
Title: Executive Vice President
OSPREY INVESTMENTS PORTFOLIO
By: Citibank, N.A., as Manager
By: /s/ Hans L. Christensen
------------------------------------
Title: Vice President
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Raymond J. Lee
-----------------------------------------
Title: Senior Vice President
By: /s/ Elaine M. Havens
-----------------------------------------
Title: Vice President
PARIBAS CAPITAL FUNDING LLC
By: /s/ Jeffrey J. Youle
-----------------------------------------
Title: Director
<PAGE>
PARIBAS CORPORATION,
AS AGENT FOR PARIBAS
By: /s/ David C. Kreidler
-----------------------------------------
Title: Vice President
Loan Syndication & Trading
By: /s/ Daniel W. Whalen
-----------------------------------------
Title: Managing Director
Co-Head-Loan Syndication & Trading
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.,
as its Investment Manager
By: /s/ Michael Prince
------------------------------------
Title: Vice President
SEQUILS I, LTD
By: TCW Advisors, Inc. as its Collateral
Manager
By: /s/ Justin L. Driscoll
------------------------------------
Title: Senior Vice President
By: /s/ Jonathan R. Insull
------------------------------------
Title: Vice President
SOUTHERN PACIFIC BANK
By: /s/ Cheryl A. Wasilewski
-----------------------------------------
Title: Senior Vice President
<PAGE>
SRF TRADING, INC.
By: /s/ Kelly C. Walker
-----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------------------
Title: Senior Manager Loan Operations
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ Eric M. Moore
-----------------------------------------
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Philip Yarrow
-----------------------------------------
Title: Corporate Finance Officer
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
-----------------------------------------
Title: Joint General Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Walter R. Wolff
-----------------------------------------
Title: Joint General Manager
<PAGE>
THE ING CAPITAL SENIOR SECURED HIGH INCOME
FUND, L.P.
By: ING Capital Advisors LLC,
as Investment Advisor
By: /s/ Jane M. Nelson
------------------------------------
Title: Senior Vice President
THE MITSUBISHI TRUST & BANKING CORPORATION
By: /s/ Beatrice E. Kossodo
-----------------------------------------
Title: Senior Vice President
THE SUMITOMO BANK, LTD
By: /s/ Suresh S. Tata
-----------------------------------------
Title: Senior Vice President
SUTTER CBO 1998-1 LTD.
By: Wells Fargo Bank, N.A.,
its Attorney-in-Fact
By: /s/ Christine C. Rotter
------------------------------------
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By: /s/ Robert M. Mills
-----------------------------------------
Title: Investment Officer
TORONTO DOMINION (NEW YORK), INC.
By: /s/ Jorge A. Garcia
-----------------------------------------
Title: Vice President
<PAGE>
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Perry Vavoules
-----------------------------------------
Title: Senior Vice President
TRAVELERS CORPORATE LOAN FUND, INC.
By: TRAVELERS ASSET MANAGEMENT INTERNATIONAL
CORPORATION
By: /s/ Robert M. Mills
------------------------------------
Title: Investment Officer
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Henry G. Montgomery
-----------------------------------------
Title: Vice President
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
-----------------------------------------
Title: Senior Vice President & Director
WACHOVIA BANK, N.A.
By: /s/ Debra L. Coheley
-----------------------------------------
Title: Senior Vice President
<PAGE>
EXHIBIT 10.3
SUBSIDIARIES GUARANTY
GUARANTY, dated as of April 12, 1999 (as amended, restated,
modified and/or supplemented from time to time, this "GUARANTY"), made by
each of the undersigned (each, a "GUARANTOR" and, together with any other
entity which becomes a party hereto pursuant to Section 24, collectively, the
"GUARANTORS"). Except as otherwise defined herein, terms used herein and
defined in the Credit Agreement (as defined below) shall be used herein as
therein defined.
W I T N E S S E T H :
WHEREAS, Tenneco Packaging, Inc. ("TPI"), various financial
institutions from time to time party thereto (the "LENDERS"), J.P. Morgan
Securities Inc. and BT Alex. Brown Incorporated, as Co-Lead Arrangers (the
"CO-LEAD ARRANGERS"), Bankers Trust Company, as Syndication Agent (the
"SYNDICATION AGENT"), and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "ADMINISTRATIVE AGENT"), have entered into a Credit
Agreement, dated as of April 12, 1999 (as amended, restated, modified and/or
supplemented from time to time, the "CREDIT AGREEMENT"), providing for the
making of Loans to TPI, all as contemplated therein (with the Lenders, each
Issuing Bank, the Co-Lead Arrangers, the Syndication Agent, the
Administrative Agent and the Collateral Agent being herein called the "LENDER
CREDITORS");
WHEREAS, TPI and Packaging Corporation of America ("PCA" or the
"BORROWER") have entered into (i) the Contribution Agreement pursuant to
which (x) TPI will contribute the Containerboard Business to PCA and (y) PCA
will acquire the Containerboard Business and (ii) the Bank Credit Agreement
Assignment and Assumption Agreement pursuant to which (x) TPI will assign
(without recourse, representation or warranty) all of its rights, interests
and obligations under the Credit Agreement and the Notes to PCA and (y) PCA
will assume all of the rights, interests and obligations of TPI under the
Credit Agreement and the Notes, all as contemplated therein;
WHEREAS, upon the Contribution Effective Time, PCA will become the
"Borrower" for all purposes of the Credit Agreement, this Guaranty and the
other Credit Documents;
WHEREAS, PCA may from time to time enter into one or more (i)
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements), (ii) foreign
exchange contracts, currency swap agreements, commodity agreements or other
similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (each such agreement or arrangement with an
Other Creditor (as hereinafter defined), an "INTEREST RATE PROTECTION
AGREEMENT OR OTHER HEDGING AGREEMENT"), with Morgan Guaranty Trust Company of
New York in its individual capacity ("MORGAN GUARANTY"), any Lender or a
syndicate of financial institutions organized by Morgan Guaranty or any such
Lender, or an
<PAGE>
affiliate of Morgan Guaranty or any such Lender (Morgan Guaranty, any such
Lender or Lenders or affiliate or affiliates of Morgan Guaranty or such
Lender or Lenders (even if Morgan Guaranty or any such Lender ceases to be a
Lender under the Credit Agreement for any reason) and any such institution
that participates in such Interest Rate Protection Agreements or Other
Hedging Agreements and their subsequent successors and assigns, collectively,
the "OTHER CREDITORS", and together with the Lender Creditors, the
"CREDITORS");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of PCA;
WHEREAS, it is a condition to the making of Loans to TPI and PCA
and the issuance of, and participation in, Letters of Credit for the account
of PCA under the Credit Agreement and to the Other Creditors entering into
the Interest Rate Protection Agreements or Other Hedging Agreements that each
Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the assumption
and/or incurrence of Loans by PCA and the issuance of, and participation in,
Letters of Credit for the account of PCA under the Credit Agreement and the
entering into of Interest Rate Protection Agreements or Other Hedging
Agreements and, accordingly, desires to execute this Guaranty in order to
satisfy the conditions described in the preceding paragraph and to induce the
Lenders to maintain and make Loans to TPI and PCA and issue Letters of
Credit for the account of PCA and the Other Creditors to maintain and/or
enter into Interest Rate Protection Agreements or Other Hedging Agreements
with PCA;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following
representations and warranties to the Creditors and hereby covenants and
agrees with each Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: (i) to the Lender Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or
otherwise) of (x) the principal of and interest on the Notes issued by, and
the Loans made to, the Borrower under the Credit Agreement and all
reimbursement obligations and Unpaid Drawings with respect to Letters of
Credit and (y) all other obligations (including obligations which, but for
any automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities owing by the Borrower to the Lender Creditors
(including, without limitation, indemnities, Fees and interest thereon) now
existing or hereafter incurred under, arising out of or in connection with
the Credit Agreement or any other Credit Document and the due performance and
compliance with the terms, conditions and agreements contained in the Credit
Documents by the Borrower (all such principal, interest, liabilities and
obligations being herein collectively called the "CREDIT DOCUMENT
OBLIGATIONS"); and (ii) to each Other Creditor the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of
all obligations (including obligations which, but for any automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and
liabilities owing by the Borrower to the Other Creditors (including, without
limitation,
2
<PAGE>
indemnities, fees and interest thereon) under any Interest Rate Protection
Agreements or Other Hedging Agreements, whether now in existence or hereafter
arising, and the due performance and compliance by the Borrower with all
terms, conditions and agreements contained therein (all such obligations and
liabilities under this clause (ii) being herein collectively called the
"OTHER OBLIGATIONS", and together with the Credit Document Obligations are
herein collectively called the "GUARANTEED OBLIGATIONS"). Each Guarantor
understands, agrees and confirms that the Creditors may enforce this Guaranty
up to the full amount of the Guaranteed Obligations against each Guarantor
without proceeding against any other Guarantor, the Borrower, against any
security for the Guaranteed Obligations, or against any other guarantor under
any other guaranty covering all or a portion of the Guaranteed Obligations.
This Guaranty shall constitute a guaranty of payment and not of collection.
All payments by each Guarantor under this Guaranty shall be made on the same
basis as payments by the Borrower under Sections 4.03 and 4.04 of the Credit
Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations to the Creditors whether or not due or payable by the
Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 10.05 of the Credit Agreement, and unconditionally and
irrevocably, jointly and severally, promises to pay such Guaranteed
Obligations to the Creditors, or order, on demand, in lawful money of the
United States of America.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
whether executed by such Guarantor, any other Guarantor, any other guarantor or
by any other person, and the liability of each Guarantor hereunder shall not be
affected or impaired by (i) any direction as to application of payment by the
Borrower or by any other person, (ii) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other person as to the
Guaranteed Obligations, (iii) any payment on or in reduction of any such other
guaranty or undertaking, (iv) any dissolution, termination or increase, decrease
or change in personnel by the Borrower, (v) any payment made to any Creditor on
the Guaranteed Obligations which any Creditor repays the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, (vi)
any action or inaction by the Creditors as contemplated in Section 6 hereof or
(vii) any invalidity, irregularity or unenforceability of all or part of the
Guaranteed Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor of the Borrower
or the Borrower, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against
any other Guarantor, any other guarantor of the Borrower or the Borrower and
whether or not any other Guarantor, any other guarantor of the Borrower or
the Borrower be joined in any such action or actions. Each Guarantor waives,
to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof.
Any payment by the Borrower or other circumstance which operates to toll
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any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by the
Administrative Agent or any other Creditor against, and any other notice to, any
party liable thereon (including such Guarantor or any other guarantor of the
Borrower).
6. Any Creditor may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(i) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(ii) take and hold security for the payment of the Guaranteed
Obligations and/or sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(iii) exercise or refrain from exercising any rights against the
Borrower, any Guarantor, any other guarantor of the Borrower or others or
otherwise act or refrain from acting;
(iv) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to creditors of the
Borrower;
(v) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of
what liabilities of the Borrower remain unpaid;
(vi) release or substitute any one or more endorsers, guarantors,
Guarantors, the Borrower or other obligors;
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(vii) consent to or waive any breach of, or any act, omission or
default under, the Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of the instruments or agreements
referred to therein, or otherwise amend, modify or supplement any of the
Interest Rate Protection Agreements or Other Hedging Agreements, the Credit
Documents or any of such other instruments or agreements; and/or
(viii) act or fail to act in any manner referred to in this
Guaranty which may deprive such Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or any part
of the Guaranteed Obligations or of any security therefor shall affect, impair
or be a defense to this Guaranty, and this Guaranty shall be primary, absolute
and unconditional notwithstanding the occurrence of any event or the existence
of any other circumstances which might constitute a legal or equitable discharge
of a surety or guarantor except payment in full of the Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Creditor to inquire into the
capacity or powers of the Borrower or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for the
Creditors and be paid over to the Creditors on account of the indebtedness of
the Borrower to the Creditors, but without affecting or impairing in any manner
the liability of such Guarantor under the other provisions of this Guaranty.
Prior to the transfer by any Guarantor of any note or negotiable instrument
evidencing any indebtedness of the Borrower to such Guarantor, such Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination. Without limiting the generality of the
foregoing, each Guarantor hereby agrees with the Creditors that it will not
exercise any right of subrogation which it may at any time otherwise have as a
result of this Guaranty (whether contractual, under Section 509 of the
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Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors
to: (i) proceed against the Borrower, any other Guarantor, any other
guarantor of the Borrower or any other person; (ii) proceed against or
exhaust any security held from the Borrower, any other Guarantor, any other
guarantor of the Borrower or any other person; or (iii) pursue any other
remedy in the Creditors' power whatsoever. Each Guarantor waives any defense
based on or arising out of any defense of the Borrower, any other Guarantor,
any other guarantor of the Borrower or any other person other than payment in
full in cash of the Guaranteed Obligations, including, without limitation,
any defense based on or arising out of the disability of the Borrower, any
other Guarantor, any other guarantor of the Borrower or any other person, or
the unenforceability of the Guaranteed Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations in cash. The
Creditors may, at their election, foreclose on any security held by the
Administrative Agent, the Collateral Agent or the other Creditors by one or
more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Creditors may have
against the Borrower or any other person, or any security, without affecting
or impairing in any way the liability of any Guarantor hereunder except to
the extent the Guaranteed Obligations have been paid in full in cash. Each
Guarantor waives any defense arising out of any such election by the
Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other person or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
(c) Until such time as the Guaranteed Obligations have been paid in
full in cash, each Guarantor hereby waives all contractual, statutory or common
law rights of reimbursement, contribution or indemnity from the Borrower or any
other Guarantor which it may at any time otherwise have as a result of this
Guaranty.
11. In order to induce the Lenders to make Loans and issue Letters
of Credit pursuant to the Credit Agreement, and in order to induce the Other
Creditors to execute, deliver and perform the Interest Rate Protection
Agreements or Other Hedging Agreements, each Guarantor represents, warrants
and covenants that:
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(a) Such Guarantor (i) is a duly organized and validly existing
corporation and is in good standing under the laws of the jurisdiction of
its organization, and has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (ii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is
required to be so qualified except where the failure to be so qualified
would reasonably be expected to have a Material Adverse Effect.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and each
other Document (for purposes of this Guaranty, such term to mean and
include each Document (as defined in the Credit Agreement) and each
Interest Rate Protection Agreement or Other Hedging Agreement) to which it
is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each such Document. Such
Guarantor has duly executed and delivered this Guaranty and each other
Document to which it is a party, and each such Document constitutes the
legal, valid and binding obligation of such Guarantor enforceable in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is
sought in equity or law) and principles of good faith and fair dealing.
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Document to which it is a party, nor
compliance by it with the terms and provisions hereof and thereof: (i)
will contravene any applicable material provision of any law, statute, rule
or regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to
the Security Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets
of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement or other instrument to which such Guarantor or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of such Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any foreign
or domestic governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with, (i)
the execution, delivery and performance of this Guaranty or any other
Document to which such Guarantor is a party, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other
Document to which such Guarantor is a party.
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12. Each Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Commitments and all Interest
Rate Protection Agreements or Other Hedging Agreements and when no Note or
Letter of Credit remains outstanding and all other Guaranteed Obligations
have been paid in full (other than those arising from indemnities for which
no request has been made), such Guarantor shall take, or will refrain from
taking, as the case may be, all actions that are necessary to be taken or not
taken so that no violation of any provision, covenant or agreement contained
in Section 8 or 9 of the Credit Agreement, and so that no Event of Default,
is caused by the actions of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay all
out-of-pocket costs and expenses of each Creditor in connection with the
enforcement of this Guaranty and the protection of such Creditor's rights
hereunder, and in connection with any amendment, waiver or consent relating
hereto (including, without limitation, the fees and disbursements of counsel
employed by the Administrative Agent or any of the other Creditors).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and
their successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated in any manner whatsoever unless in writing duly
signed by the Administrative Agent (with the consent of (x) the Required Lenders
or, to the extent required by Section 13.12 of the Credit Agreement, all of the
Lenders, at all times prior to the time at which all Credit Document Obligations
have been paid in full, or (y) the holders of at least a majority of the
outstanding Other Obligations at all times after the time at which all Credit
Document Obligations have been paid in full) and each Guarantor directly
affected thereby (it being understood that the addition or release of any
Guarantor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Guarantor other than the Guarantor so added or
released); PROVIDED, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Creditors (and
not all Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors (as defined below) of such Class. For the purpose of
this Guaranty, the term "Class" shall mean each class of Creditors, I.E.,
whether (i) the Lender Creditors as holders of the Credit Document Obligations
or (ii) the Other Creditors as holders of the Other Obligations. For the
purpose of this Guaranty, the term "Requisite Creditors" of any Class shall mean
each of (i) with respect to the Credit Document Obligations, the Required
Lenders and (ii) with respect to the Other Obligations, the holders of at least
a majority of all obligations outstanding from time to time under the Interest
Rate Protection Agreements or Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents and the Interest Rate Protection Agreements or
Other Hedging Agreements has been made available to its principal executive
officers and such officers are familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not
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by way of limitation of any such rights, upon the occurrence and during the
continuance of an Event of Default (such term to mean and include any "Event
of Default" as defined in the Credit Agreement or any payment default under
any Interest Rate Protection Agreement or Other Hedging Agreement and shall
in any event, include, without limitation, any payment default on any of the
Guaranteed Obligations continuing after any applicable grace period), each
Creditor is hereby authorized at any time or from time to time, without
notice to any Guarantor or to any other Person, any such notice being
expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held or
owing by such Creditor to or for the credit or the account of such Guarantor,
against and on account of the obligations and liabilities of such Guarantor
to such Creditor under this Guaranty, irrespective of whether or not such
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Each Creditor acknowledges and agrees that the provisions of this
Section 17 are subject to the sharing provisions set forth in Section
13.06(b) of the Credit Agreement.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Lender Creditor, as provided in the Credit Agreement,
(ii) in the case of any Guarantor, at:
c/o Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Attention: Paul T. Stecko
Tel: (847) 482-2000
Fax: (847) 482-4738
and (iii) in the case of any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Guarantor; or in any case at
such other address as any of the foregoing Persons may hereafter notify the
others in writing.
19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of said Creditors repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Creditor or any of its
property or (ii) any settlement or compromise of any such claim effected by
such Creditor with any such claimant (including the Borrower), then and in
such event each Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon such Guarantor,
notwithstanding any revocation hereof or the cancellation of any Note or any
Interest Rate Protection Agreement or Other Hedging Agreement or other
instrument evidencing any liability of the Borrower, and such Guarantor shall
be and remain liable to such Creditor hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such Creditor.
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20. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
OR ANY OTHER CREDIT DOCUMENT TO WHICH ANY GUARANTOR IS A PARTY MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
GUARANTY, EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT
AS SUCH, EACH GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND
AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE ADMINISTRATIVE AGENT. EACH GUARANTOR HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER SUCH
GUARANTOR, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER CREDIT DOCUMENT TO
WHICH IT IS A PARTY BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH
COURT LACKS JURISDICTION OVER SUCH GUARANTOR. EACH GUARANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH
GUARANTOR AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT TO WHICH
SUCH GUARANTOR IS A PARTY THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY OF THE CREDITORS TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR
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OTHERWISE PROCEED AGAINST EACH GUARANTOR IN ANY OTHER JURISDICTION.
(C) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR
ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (B)
ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM
IN ANY SUCH COURT THAT SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(D) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
21. In the event that all of the capital stock or other equity
interests of one or more Guarantors is sold or otherwise disposed of (to a
Person other than the Borrower or a Subsidiary thereof) or liquidated in
compliance with the requirements of Section 9.02 of the Credit Agreement (or
such sale, disposition or liquidation has been approved in writing by the
Required Lenders (or all Lenders if required by Section 13.12 of the Credit
Agreement)) and the proceeds of such sale, disposition or liquidation are
applied in accordance with the provisions of the Credit Agreement, to the
extent applicable, such Guarantor shall be released from this Guaranty and
this Guaranty shall, as to each such Guarantor or Guarantors, terminate, and
have no further force or effect (it being understood and agreed that the sale
of one or more Persons that own, directly or indirectly, all of the capital
stock of any Guarantor shall be deemed to be a sale of such Guarantor for the
purposes of this Section 21).
22. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
23. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Administrative
Agent.
24. It is understood and agreed that any Subsidiary of the Borrower
that is required to execute a counterpart of this Guaranty pursuant to the
Credit Agreement shall automatically become a Guarantor hereunder by executing a
counterpart hereof and delivering the same to the Administrative Agent.
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25. Notwithstanding anything else to the contrary in this
Guaranty, the Creditors agree that this Guaranty may be enforced only by the
action of the Administrative Agent or the Collateral Agent, in each case
acting upon the instructions of the Required Lenders (or, after the date on
which all Credit Document Obligations have been paid in full, the holders of
at least a majority of the outstanding Other Obligations), and that no other
Creditor shall have any right individually to seek to enforce or to enforce
this Guaranty or to realize upon the security to be granted by the Security
Documents, it being understood and agreed that such rights and remedies may
be exercised by the Administrative Agent or the Collateral Agent or the
holders of at least a majority of the outstanding Other Obligations, as the
case may be, for the benefit of the Creditors upon the terms of this Guaranty
and the Security Documents. The Creditors further agree that this Guaranty
may not be enforced against any director, officer, employee, or stockholder
of any Guarantor (except to the extent such stockholder is also a Guarantor
hereunder). It is understood that the agreement in this Section 25 is among
and solely for the benefit of the Lenders and that if the Required Lenders so
agree (without requiring the consent of any Guarantor), this Guaranty may be
directly enforced by any Creditor.
26. At any time a payment in respect of the Guaranteed
Obligations is made under this Guaranty, the right of contribution of each
Guarantor hereunder against each other such Guarantor shall be determined as
provided in the immediately following sentence, with the right of
contribution of each Guarantor to be revised and restated as of each date on
which a payment (a "RELEVANT PAYMENT") is made on the Guaranteed Obligations
under this Guaranty. At any time that a Relevant Payment is made by a
Guarantor that results in the aggregate payments made by such Guarantor
hereunder in respect of the Guaranteed Obligations to and including the date
of the Relevant Payment exceeding such Guarantor's Contribution Percentage
(as defined below) of the aggregate payments made by all Guarantors hereunder
in respect of the Guaranteed Obligations to and including the date of the
Relevant Payment (such excess, the "AGGREGATE EXCESS AMOUNT"), each such
Guarantor shall have a right of contribution against each other Guarantor who
has made payments hereunder in respect of the Guaranteed Obligations to and
including the date of the Relevant Payment in an aggregate amount less than
such other Guarantor's Contribution Percentage of the aggregate payments made
to and including the date of the Relevant Payment by all Guarantors hereunder
in respect of the Guaranteed Obligations (the aggregate amount of such
deficit, the "AGGREGATE DEFICIT AMOUNT") in an amount equal to (x) a fraction
the numerator of which is the Aggregate Excess Amount of such Guarantor and
the denominator of which is the Aggregate Excess Amount of all Guarantors
multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A
Guarantor's right of contribution pursuant to the preceding sentences shall
arise at the time of each computation, subject to adjustment to the time of
any subsequent computation; PROVIDED, that no Guarantor may take any action
to enforce such right until the Guaranteed Obligations have been paid in full
and the Total Commitments have been terminated, it being expressly recognized
and agreed by all parties hereto that any Guarantor's right of contribution
arising pursuant to this Guaranty against any other Guarantor shall be
expressly junior and subordinate to such other Guarantor's obligations and
liabilities in respect of the Guaranteed Obligations and any other
obligations owing under this Guaranty. As used in this Section 26: (i) each
Guarantor's "CONTRIBUTION PERCENTAGE" shall mean the percentage obtained by
dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by
(y) the aggregate Adjusted Net Worth of all Guarantors; (ii) the "ADJUSTED
NET
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WORTH" of each Guarantor shall mean the greater of (x) the Net Worth (as
defined below) of such Guarantor and (y) zero; and (iii) the "NET WORTH" of
each Guarantor shall mean the amount by which the fair salable value of such
Guarantor's assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guaranty) on
such date. All parties hereto recognize and agree that, except for any right
of contribution arising pursuant to this Section 26, each Guarantor who makes
any payment in respect of the Guaranteed Obligations shall have no right of
contribution or subrogation against any other Guarantor in respect of such
payment. Each of the Guarantors recognizes and acknowledges that the rights
to contribution arising hereunder shall constitute an asset in favor of the
party entitled to such contribution. In this connection, each Guarantor has
the right to waive its contribution right against any Guarantor to the extent
that after giving effect to such waiver such Guarantor would remain solvent,
in the determination of the Required Lenders.
27. Each Guarantor hereby confirms that it is its intention that
this Guaranty not constitute a fraudulent transfer or conveyance for purposes
of any bankruptcy, insolvency or similar law, the Uniform Fraudulent
Conveyance Act or any similar Federal, state of foreign law. To effectuate
the foregoing intention, each Guarantor hereby irrevocably agrees that the
Guaranteed Obligations shall be limited to the maximum amount as will, after
giving effect to such maximum amount and all other (contingent or otherwise)
liabilities of such Guarantor that are relevant under such laws, result in
the Guaranteed Obligations of such Guarantor in respect of such maximum
amount not constituting a fraudulent transfer or conveyance.
28. EACH GUARANTOR UNDERSTANDS THAT UPON DEFAULT ON THE
OBLIGATIONS, AMONG OTHER REMEDIES SET OUT IN THE CREDIT AGREEMENT AND THE
OTHER CREDIT DOCUMENTS, THE COLLATERAL AGENT MAY FORECLOSE UPON ANY MORTGAGED
PROPERTY SECURING THE OBLIGATION AND REDRESS A DEFICIENCY JUDGMENT PURSUANT
TO SOUTH CAROLINA LAW. EACH GUARANTOR HEREBY EXPRESSLY WAIVES AND
RELINQUISHES ANY APPRAISAL RIGHTS WHICH SUCH GUARANTOR MAY HAVE UNDER SECTION
29-3-680 THROUGH SECTION 29-3-770, SOUTH CAROLINA CODE OF LAWS (1976) AS SUCH
MAY BE AMENDED, AND UNDERSTANDS AND AGREES THAT A DEFICIENCY JUDGMENT, IF
PROPOSED BY THE COLLATERAL AGENT, SHALL BE DETERMINED BY THE HIGHEST PRICE
BID AT THE JUDICIAL SALE OF THE RELEVANT MORTGAGED PROPERTY.
29. (A) EACH GUARANTOR HEREBY ACKNOWLEDGES AND AFFIRMS THAT IT
UNDERSTANDS THAT TO THE EXTENT THE OBLIGATIONS ARE SECURED BY REAL PROPERTY
LOCATED IN THE STATE OF CALIFORNIA, SUCH GUARANTOR SHALL BE LIABLE FOR THE
FULL AMOUNT OF THE LIABILITY HEREUNDER NOTWITHSTANDING FORECLOSURE ON SUCH
REAL PROPERTY BY TRUSTEE SALE OR ANY OTHER REASON IMPAIRING SUCH GUARANTOR'S,
THE COLLATERAL AGENT'S OR ANY SECURED CREDITORS'
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RIGHT TO PROCEED AGAINST THE BORROWER OR ANY OTHER GUARANTOR OF THE
OBLIGATIONS.
(B) EACH GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ALL RIGHTS AND BENEFITS UNDER SECTIONS 580A, 580B, 580D AND
726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. EACH GUARANTOR HEREBY FURTHER
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING OR ANY OTHER PROVISION HEREOF, ALL RIGHTS AND
BENEFITS WHICH MIGHT OTHERWISE BE AVAILABLE TO SUCH GUARANTOR UNDER SECTIONS
2809, 2810, 2815, 2819, 2821, 2839, 2845, 2848, 2849, 2850, 2899 AND 3433 OF THE
CALIFORNIA CIVIL CODE.
(C) EACH GUARANTOR WAIVES ITS RIGHTS OF SUBROGATION AND
REIMBURSEMENT AND ANY OTHER RIGHTS AND DEFENSES AVAILABLE TO SUCH GUARANTOR
BY REASON OF SECTIONS 2787 TO 2855, INCLUSIVE, OF THE CALIFORNIA CIVIL CODE,
INCLUDING, WITHOUT LIMITATION, (1) ANY DEFENSES SUCH GUARANTOR MAY HAVE TO
THIS GUARANTY BY REASON OF AN ELECTION OF REMEDIES BY THE COLLATERAL AGENT OR
THE SECURED CREDITORS AND (2) ANY RIGHTS OR DEFENSES SUCH GUARANTOR MAY HAVE
BY REASON OF PROTECTION AFFORDED TO THE BORROWER PURSUANT TO THE
ANTIDEFICIENCY OR OTHER LAWS OF CALIFORNIA LIMITING OR DISCHARGING THE
BORROWER'S INDEBTEDNESS, INCLUDING, WITHOUT LIMITATION, SECTION 580A, 580B,
580D OR 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. IN FURTHERANCE OF
SUCH PROVISIONS, EACH GUARANTOR HEREBY WAIVES ALL RIGHTS AND DEFENSES ARISING
OUT OF AN ELECTION OF REMEDIES BY THE COLLATERAL AGENT OR THE SECURED
CREDITORS, EVEN THOUGH THAT ELECTION OR REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE DESTROYS SUCH GUARANTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT
AGAINST THE BORROWER BY THE OPERATION OF SECTION 580D OF THE CALIFORNIA CODE
OF CIVIL PROCEDURE OR OTHERWISE.
(D) EACH GUARANTOR WARRANTS AND AGREES THAT EACH OF THE WAIVERS
SET FORTH ABOVE IS MADE WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND
CONSEQUENCES AND THAT IF ANY OF SUCH WAIVERS ARE DETERMINED TO BE CONTRARY TO
ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVERS SHALL BE EFFECTIVE ONLY TO
THE MAXIMUM EXTENT PERMITTED BY LAW.
30. This guaranty, including, without limitation, the
representations, warranties and covenants contained herein, shall become
effective when (i) the Contribution Effective Time shall have occurred and
(ii) the collateral agent, PCA and each subsidiary of PCA whose name appears
on the signature pages hereto shall have signed a counterpart hereof (whether
the same or different counterparts) and shall have delivered (including by
way of facsimile transmission) the same to the administrative agent at its
notice office or the offices of its counsel.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
DAHLONEGA PACKAGING CORPORATION, as a
Guarantor
By /s/ Paul T. Stecko
----------------------------------
Title: Chief Executive Officer
DIXIE CONTAINER CORPORATION,
as a Guarantor
By /s/ Paul T. Stecko
----------------------------------
Title: Chief Executive Officer
PCA HYDRO, INC., as a Guarantor
By /s/ Paul T. Stecko
----------------------------------
Title: Chief Executive Officer
PCA TOMAHAWK CORPORATION,
as a Guarantor
By /s/ Paul T. Stecko
----------------------------------
Title: Chief Executive Officer
PCA VALDOSTA CORPORATION, as a
Guarantor
By /s/ Paul T. Stecko
----------------------------------
Title: Chief Executive Officer
<PAGE>
Accepted and Agreed to:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent for the Lenders
By /s/ Unn Boucher
------------------------------
Title: Vice President
<PAGE>
EXHIBIT 10.4
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April 12, 1999 (as amended, restated,
modified and/or supplemented from time to time, this "AGREEMENT"), among each of
the undersigned (each, a "PLEDGOR" and, together with each other entity which
becomes a party hereto pursuant to Section 25, collectively, the "PLEDGORS") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, not in its individual capacity but
solely as Collateral Agent (the "PLEDGEE"), for the benefit of the Secured
Creditors (as defined below). Except as otherwise defined herein, terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Tenneco Packaging, Inc. ("TPI"), various financial
institutions from time to time party thereto (the "LENDERS"), J.P. Morgan
Securities Inc. and BT Alex. Brown Incorporated, as Co-Lead Arrangers (the
"CO-LEAD ARRANGERS"), Bankers Trust Company, as Syndication Agent (the
"SYNDICATION AGENT"), and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "ADMINISTRATIVE AGENT", and together with the
Lenders, the Co-Lead Arrangers, the Syndication Agent, each Issuing Bank, the
Pledgee and the Collateral Agent, the "LENDER CREDITORS") have entered into
the Credit Agreement, providing for the making of Term Loans to TPI as
contemplated therein;
WHEREAS, TPI and Packaging Corporation of America ("PCA") have entered
into (i) the Contribution Agreement pursuant to which (x) TPI will contribute
the Containerboard Business to PCA and (y) PCA will acquire the Containerboard
Business and (ii) the Bank Credit Agreement Assignment and Assumption Agreement
pursuant to which (x) TPI will assign (without recourse, representation or
warranty) all of its rights, interests and obligations under the Credit
Agreement and the Notes to PCA and (y) PCA will assume all of the rights,
interests and obligations of TPI under the Credit Agreement and the Notes, all
as contemplated therein;
WHEREAS, upon the Contribution Effective Time, PCA will become the
"Borrower" for all purposes of the Credit Agreement, this Agreement and the
other Credit Documents;
WHEREAS, PCA may from time to time enter into one or more (i) interest
rate protection agreements (including, without limitation, interest rate swaps,
caps, floors, collars and similar agreements), (ii) foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values
and/or (iii) other types of hedging agreements from time to time (each such
agreement or arrangement with an Other Creditor (as hereinafter defined), an
"INTEREST RATE PROTECTION AGREEMENT OR OTHER HEDGING AGREEMENT"), with Morgan
Guaranty Trust Company of New York in its individual capacity ("MORGAN
GUARANTY"), any Lender or a
<PAGE>
syndicate of financial institutions organized by Morgan Guaranty or any such
Lender, or an affiliate of
Morgan Guaranty or any such Lender (Morgan Guaranty, any such
Lender or Lenders or affiliate or affiliates of Morgan Guaranty or such
Lender or Lenders (even if Morgan Guaranty or any such Lender ceases to be a
Lender under the Credit Agreement for any reason) and any such institution
that participates in such Interest Rate Protection Agreements or Other
Hedging Agreements, and in each case their subsequent successors and assigns,
collectively, the "OTHER CREDITORS", and together with the Lender Creditors,
the "SECURED CREDITORS");
WHEREAS, pursuant to a Subsidiaries Guaranty, dated as of April 12,
1999 (as amended, restated, modified and/or supplemented from time to time,
the "SUBSIDIARIES GUARANTY"), each Pledgor (other than PCA) has, on and after
the Contribution Effective Time, jointly and severally guaranteed to the
Secured Creditors the payment when due of all obligations and liabilities of
PCA under or with respect to the Credit Documents and each Interest Rate
Protection Agreement and Other Hedging Agreement;
WHEREAS, it is a condition precedent to the making of Loans to TPI
and PCA and the issuance of, and participation in, Letters of Credit for the
account of PCA under the Credit Agreement and to the Other Creditors entering
into Interest Rate Protection Agreements and Other Hedging Agreements that
each Pledgor shall have executed and delivered to the Pledgee this Agreement;
and
WHEREAS, each Pledgor will obtain benefits from the incurrence
and/or assumption of Loans by PCA and the issuance of Letters of Credit for
the account of PCA under the Credit Agreement and PCA's entering into
Interest Rate Protection Agreements or Other Hedging Agreements and,
accordingly, desires to execute this Agreement in order to satisfy the
conditions precedent described in the preceding paragraph and to induce the
Lenders to make Loans to TPI and PCA and to issue, and participate in,
Letters of Credit for the account of PCA, and to induce the Other Creditors
to enter into Interest Rate Protection Agreements and Other Hedging
Agreements with PCA;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the
Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, indemnities, Fees and interest
thereon) of such Pledgor owing to the Lender Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with
the Credit Agreement and the other Credit Documents to which such Pledgor
is a party (including, in the case of a Pledgor other than the Borrower,
all such
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<PAGE>
obligations, liabilities and indebtedness under the Subsidiaries
Guaranty) and the due performance and compliance by such Pledgor with all
of the terms, conditions and agreements contained in the Credit Agreement
and such other Credit Documents (all such obligations, liabilities and
indebtedness under this clause (i), except to the extent guaranteeing
obligations of the Borrower under Interest Rate Protection Agreements or
Other Hedging Agreements, being herein collectively called the "CREDIT
DOCUMENT OBLIGATIONS");
(ii) the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, indemnities, fees and interest
thereon) of such Pledgor owing to the Other Creditors, now existing or
hereafter incurred under, arising out of or in connection with any Interest
Rate Protection Agreement or Other Hedging Agreement, whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereinafter arising, and the due performance and compliance
with the terms, conditions and agreements of each such Interest Rate
Protection Agreement and Other Hedging Agreement by such Pledgor,
including, in the case of Pledgors other than the Borrower, all
obligations, liabilities and indebtedness under the Subsidiaries Guaranty,
in each case, in respect of the Interest Rate Protection Agreements and
Other Hedging Agreements, and the due performance and compliance by such
Pledgor with all of the terms, conditions and agreements contained in each
such Interest Rate Protection Agreement and Other Hedging Agreement (all
such obligations, liabilities and indebtedness under this clause (ii) being
herein collectively called the "OTHER OBLIGATIONS");
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) and/or preserve its security
interest therein;
(iv) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement, after
an Event of Default (such term, as used in this Agreement, shall mean and
include any Event of Default under, and as defined in, the Credit Agreement
and any payment default under any Interest Rate Protection Agreement or
Other Hedging Agreement and shall in any event include, without limitation,
any payment default (after the expiration of any applicable grace period)
on any of the Obligations (as defined below)) shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee to which such Indemnitee
has the right to reimbursement under Section 11 of this Agreement.
all such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (v) of this Section 1 being collectively called the
"OBLIGATIONS", it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above,
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<PAGE>
whether outstanding on the date of this Agreement or extended from time to
time after the date of this Agreement.
2. DEFINITIONS; ANNEXES. (a) Unless otherwise defined herein,
all capitalized terms used herein and defined in the Credit Agreement shall be
used herein as therein defined. Reference to singular terms shall include the
plural and vice versa.
(b) The following capitalized terms used herein shall have the
definitions specified below:
"ADMINISTRATIVE AGENT" shall have the meaning given such term in the
recitals hereto.
"ADVERSE CLAIM" shall have the meaning given such term in
Section 8-102(a)(1) of the UCC.
"AGREEMENT" shall have the meaning set forth in the first paragraph
hereof.
"BANK CREDIT AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT" shall have
the meaning provided in the Credit Agreement.
"BORROWER" shall mean (i) at any time prior to the Contribution
Effective Time, TPI and (ii) thereafter, PCA.
"CERTIFICATED SECURITY" shall have the meaning given such term in
Section 8-102(a)(4) of the UCC.
"CLEARING CORPORATION" shall have the meaning given such term in
Section 8-102(a)(5) of the UCC.
"COLLATERAL" shall have the meaning set forth in Section 3.1 hereof.
"COLLATERAL ACCOUNTS" shall mean any and all accounts established and
maintained by the Pledgee in the name of any Pledgor to which Collateral may be
credited.
"CONTAINERBOARD BUSINESS" shall have the meaning provided in the
Credit Agreement.
"CONTRIBUTION AGREEMENT" shall have the meaning provided in the Credit
Agreement.
"CONTRIBUTION EFFECTIVE TIME" shall have the meaning provided in the
Credit Agreement.
"CREDIT AGREEMENT" shall mean the Credit Agreement , dated as of April
12, 1999, among the Borrower, the Lenders, the Co-Lead Arrangers, the
Syndication Agent and the Administrative Agent, providing for the making of
Loans to the Borrower and, after the
4
<PAGE>
Contribution Effective Time, the issuance of, and participation in, Letters
of Credit for the account of the Borrower as contemplated therein, as the
same may be amended, restated, modified, extended, renewed, replaced,
supplemented, restructured and/or refinanced from time to time, and including
any agreement extending the maturity of, refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers
thereunder that are Subsidiaries of the Borrower and whose obligations are
guaranteed by the Borrower and/or the Subsidiary Guarantors thereunder or any
increase in the amount borrowed) all, or any portion of, the Indebtedness
under such agreement or any successor agreements; PROVIDED, that with respect
to any agreement providing for the refinancing of Indebtedness under the
Credit Agreement, such agreement shall only be treated as, or as part of, the
Credit Agreement hereunder if (i) either (A) all obligations under the Credit
Agreement being refinanced shall be paid in full at the time of such
refinancing, and all commitments under the refinanced Credit Agreement shall
have terminated in accordance with their terms or (B) the Required Lenders
shall have consented in writing to the refinancing Indebtedness being
treated, along with their Indebtedness, as Indebtedness pursuant to the
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to be
incurred under the Credit Agreement being refinanced (if such Credit
Agreement is to remain outstanding) and (iii) a notice to the effect that the
refinancing Indebtedness shall be treated as issued under the Credit
Agreement shall be delivered by the Borrower to the Pledgee).
"CREDIT DOCUMENT OBLIGATIONS" shall have the meaning set forth in
Section 1 hereof.
"DOMESTIC CORPORATION" shall have the meaning set forth in the
definition of "Stock."
"EVENT OF DEFAULT" shall have the meaning set forth in Section 1
hereof.
"FINANCIAL ASSET" shall have the meaning given such term in
Section 8-102(a)(9) of the UCC.
"FOREIGN CORPORATION" shall have the meaning set forth in the
definition of "Stock."
"INDEMNITEES" shall have the meaning set forth in Section 11 hereof.
"INSTRUMENT" shall have the meaning given such term in
Section 9-105(1)(i) of the UCC.
"INTEREST RATE PROTECTION AGREEMENT" shall have the meaning given such
term in the recitals hereto.
"INVESTMENT PROPERTY" shall have the meaning given such term in
Section 9-115(f) of the UCC.
"LENDER CREDITORS" shall have the meaning given such term in the
recitals hereto.
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<PAGE>
"LENDERS" shall have the meaning given such term in the recitals
hereto.
"LIMITED LIABILITY COMPANY ASSETS" shall mean all assets, whether
tangible or intangible and whether real, personal or mixed (including, without
limitation, all limited liability company capital and interest in other limited
liability companies), at any time owned or represented by any Limited Liability
Company Interest.
"LIMITED LIABILITY COMPANY INTERESTS" shall mean the entire limited
liability company membership interest at any time owned by any Pledgor in any
limited liability company.
"NON-VOTING STOCK" shall mean all capital stock which is not Voting
Stock.
"NOTES" shall mean (x) all intercompany notes at any time issued to
each Pledgor and (y) all other promissory notes from time to time issued to, or
held by, each Pledgor.
"OBLIGATIONS" shall have the meaning set forth in Section 1 hereof.
"OTHER HEDGING AGREEMENT" shall have the meaning set forth in the
recitals hereto.
"OTHER CREDITORS" shall have the meaning set forth in the recitals
hereto.
"OTHER OBLIGATIONS" shall have the meaning set forth in Section 1
hereof.
"PARTNERSHIP ASSETS" shall mean all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all partnership capital and interest in other partnerships), at any time owned
or represented by any Partnership Interest.
"PARTNERSHIP INTEREST" shall mean the entire general partnership
interest or limited partnership interest at any time owned by any Pledgor in any
general partnership or limited partnership.
"PCA" shall have the meaning provided in the recitals hereto.
"PLEDGED NOTES" shall have the meaning set forth in Section 3.5
hereof.
"PLEDGEE" shall have the meaning set forth in the first paragraph
hereof.
"PLEDGOR" shall have the meaning set forth in the first paragraph
hereof.
"PROCEEDS" shall have the meaning given such term in Section 9-306(l)
of the UCC.
"REQUIRED LENDERS" shall have the meaning given such term in the
Credit Agreement.
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<PAGE>
"SECURED CREDITORS" shall have the meaning set forth in the recitals
hereto.
"SECURED DEBT AGREEMENTS" shall have the meaning set forth in
Section 5 hereof.
"SECURITIES ACCOUNT" shall have the meaning given such term in Section
8-501(a) of the UCC.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, as
in effect from time to time.
"SECURITY" and "SECURITIES" shall have the meaning given such term in
Section 8-102(a)(15) of the UCC and shall in any event include all Stock and
Notes (to the extent same constitute "Securities" under Section 8-102(a)(15)).
"SECURITY ENTITLEMENT" shall have the meaning given such term in
Section 8-102(a)(17) of the UCC.
"SPECIFIED DEFAULT" shall have the meaning provided such term in
Section 5.
"STOCK" shall mean (x) with respect to corporations incorporated
under the laws of the United States or any State or territory thereof (each,
a "DOMESTIC CORPORATION"), all of the issued and outstanding shares of
capital stock of any corporation at any time owned by any Pledgor of any
Domestic Corporation (other than American Cellulose Corporation so long as
same is not a direct or indirect Subsidiary of any Pledgor) and (y) with
respect to corporations not Domestic Corporations (each a "FOREIGN
CORPORATION"), all of the issued and outstanding shares of capital stock at
any time owned by any Pledgor of any Foreign Corporation.
"SYNDICATION AGENT" shall have the meaning given such term in the
recitals hereto.
"TERMINATION DATE" shall have the meaning set forth in Section 19
hereof.
"TPI" shall have the meaning provided in the recitals hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York from time to time; PROVIDED that all references herein to specific
sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
"UNCERTIFICATED SECURITY" shall have the meaning given such term in
Section 8-102(a)(18) of the UCC.
"VOTING STOCK" shall mean all classes of capital stock of any Foreign
Corporation entitled to vote.
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3. PLEDGE OF SECURITY INTEREST, ETC.
3.1 PLEDGE. To secure the Obligations now or hereafter owed or to
be performed by such Pledgor, each Pledgor does hereby grant, pledge and
assign to the Pledgee for the benefit of the Secured Creditors, and does
hereby create a continuing security interest (subject to those Liens
permitted to exist with respect to the Collateral pursuant to the terms of
all Secured Debt Agreements then in effect) in favor of the Pledgee for the
benefit of the Secured Creditors in, all of the right, title and interest in
and to the following, whether now existing or hereafter from time to time
acquired (collectively, the "COLLATERAL"):
(a) each of the Collateral Accounts (to the extent a security
interest therein is not created pursuant to PCA Security Agreement),
including any and all assets of whatever type or kind deposited by such
Pledgor in such Collateral Account, whether now owned or hereafter
acquired, existing or arising, including, without limitation, all Financial
Assets, Investment Property, moneys, checks, drafts, Instruments,
Securities or interests therein of any type or nature deposited or required
by the Credit Agreement or any other Secured Debt Agreement to be deposited
in such Collateral Account, and all investments and all certificates and
other Instruments (including depository receipts, if any) from time to time
representing or evidencing the same, and all dividends, interest,
distributions, cash and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the foregoing;
(b) all Securities of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor from
time to time, excluding those in a limited liability company that is not a
Wholly-Owned Subsidiary of the Borrower to the extent (and only to the
extent) such Limited Liability Company Interests may not be pledged
hereunder without violating the terms of the operating agreement or other
organizational documents of such limited liability company, and all of its
right, title and interest in each limited liability company to which each
such interest relates, whether now existing or hereafter acquired,
including, without limitation:
(A) all its capital therein and its interest in all
profits, losses, Limited Liability Company Assets and other
distributions to which such Pledgor shall at any time be entitled in
respect of such Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor
in respect of Limited Liability Company Interests, whether under any
limited liability company agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if any,
under any limited liability company agreement or operating agreement,
or at law or otherwise in respect of such Limited Liability Company
Interests;
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(D) all present and future claims, if any, of such Pledgor
against any such limited liability company for moneys loaned or
advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited
liability company agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to such Limited Liability Company
Interests, including any power to terminate, cancel or modify any
limited liability company agreement or operating agreement, to execute
any instruments and to take any and all other action on behalf of and
in the name of any of such Pledgor in respect of such Limited
Liability Company Interests and any such limited liability company, to
make determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive any
notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt
for any of the foregoing or for any Limited Liability Company Asset,
to enforce or execute any checks, or other instruments or orders, to
file any claims and to take any action in connection with any of the
foregoing (with all of the foregoing rights only to be exercisable
upon the occurrence and during the continuation of an Event of
Default); and
(F) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to time,
excluding those in a partnership that is not a Wholly-Owned Subsidiary of
the Borrower to the extent (and only to the extent) such Partnership
Interests may not be pledged hereunder without violating the terms of the
partnership agreement or other organizational documents of such
partnership, and all of its right, title and interest in each partnership
to which each such interest relates, whether now existing or hereafter
acquired, including, without limitation:
(A) all its capital therein and its interest in all
profits, losses, Partnership Assets and other distributions to which
such Pledgor shall at any time be entitled in respect of such
Partnership Interests;
(B) all other payments due or to become due to such Pledgor
in respect of Partnership Interests, whether under any partnership
agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if any,
under any partnership agreement or
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operating agreement, or at law or otherwise in respect of such
Partnership Interests;
(D) all present and future claims, if any, of such Pledgor
against any such partnership for moneys loaned or advanced, for
services rendered or otherwise;
(E) all of such Pledgor's rights under any partnership
agreement or operating agreement or at law to exercise and enforce
every right, power, remedy, authority, option and privilege of such
Pledgor relating to such Partnership Interests, including any power to
terminate, cancel or modify any partnership agreement or operating
agreement, to execute any instruments and to take any and all other
action on behalf of and in the name of any of such Pledgor in respect
of such Partnership Interests and any such partnership, to make
determinations, to exercise any election (including, but not limited
to, election of remedies) or option or to give or receive any notice,
consent, amendment, waiver or approval, together with full power and
authority to demand, receive, enforce, collect or receipt for any of
the foregoing or for any Partnership Asset, to enforce or execute any
checks, or other instruments or orders, to file any claims and to take
any action in connection with any of the foregoing (with all of the
foregoing rights only to be exercisable upon the occurrence and during
the continuation of an Event of Default); and
(F) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
(e) all Security Entitlements of such Pledgor from time to time in
any and all of the foregoing;
(f) all Financial Assets and Investment Property of such Pledgor
from time to time; and
(g) all Proceeds of any and all of the foregoing;
PROVIDED that (x) except to the extent provided by Section 8.14 of the Credit
Agreement, no Pledgor shall be required at any time to pledge hereunder more
than 65% of the Voting Stock of any Foreign Corporation and (y) each Pledgor
shall be required to pledge hereunder 100% of any Non-Voting Stock at any time
and from time to time acquired by such Pledgor of any Foreign Corporation.
3.2 PROCEDURES. (a) To the extent that any Pledgor at any time or
from time to time owns, acquires or obtains any right, title or interest in any
Collateral, such Collateral shall automatically (and without the taking of any
action by the respective Pledgor) be pledged
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pursuant to Section 3.1 of this Agreement and, in addition thereto, such
Pledgor shall (to the extent provided below) take the following actions as
set forth below (as promptly as practicable and, in any event, within 10 days
after it obtains such Collateral) for the benefit of the Pledgee and the
Secured Creditors:
(i) with respect to a Certificated Security (other than a
Certificated Security credited on the books of a Clearing Corporation), the
respective Pledgor shall physically deliver such Certificated Security to
the Pledgee, endorsed to the Pledgee or endorsed in blank;
(ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing Corporation),
the respective Pledgor shall cause the issuer of such Uncertificated
Security to duly authorize and execute, and deliver to the Pledgee, an
agreement for the benefit of the Pledgee and the other Secured Creditors
substantially in the form of Annex G hereto (appropriately completed to the
satisfaction of the Pledgee and with such modifications, if any, as shall
be satisfactory to the Pledgee) pursuant to which such issuer agrees to
comply with any and all instructions originated by the Pledgee without
further consent by the registered owner and not to comply with instructions
regarding such Uncertificated Security (and any Partnership Interests and
Limited Liability Company Interests issued by such issuer) originated by
any other Person other than a court of competent jurisdiction; it being
understood that the Pledgee will not so originate any instructions to any
such issuer unless an Event of Default has occurred and is continuing;
(iii) with respect to a Certificated Security, Uncertificated
Security, Partnership Interest or Limited Liability Company Interest
credited on the books of a Clearing Corporation (including a Federal
Reserve Bank, Participants Trust Company or The Depository Trust Company),
the respective Pledgor shall promptly notify the Pledgee thereof and shall
promptly take all actions (x) required (i) to comply with the applicable
rules of such Clearing Corporation and (ii) to perfect the security
interest of the Pledgee under applicable law (including, in any event,
under Sections 9-115 (4)(a) and (b), 9-115 (1)(e) and 8-106(d) of the UCC)
and (y) as the Pledgee deems necessary or desirable to effect the
foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability
Company Interest (other than a Partnership Interest or Limited Liability
Interest credited on the books of a Clearing Corporation), (1) if such
Partnership Interest or Limited Liability Company Interest is represented
by a certificate, the procedure set forth in Section 3.2(a)(i), and (2) if
such Partnership Interest or Limited Liability Company Interest is not
represented by a certificate, the procedure set forth in Section
3.2(a)(ii);
(v) with respect to any Note, physical delivery of such Note to
the Pledgee, endorsed to the Pledgee or endorsed in blank; and
(vi) after an Event of Default has occurred and is continuing, with
respect to cash, to the extent not otherwise provided in the Security
Agreement, (i) establishment by
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the Pledgee of a cash account in the name of such Pledgor over which the
Pledgee shall have exclusive and absolute control and dominion (and no
withdrawals or transfers may be made therefrom by any Person except with
the prior written consent of the Pledgee) and (ii) deposit of such cash
in such cash account.
(b) In addition to the actions required to be taken pursuant to
proceeding Section 3.2(a), each Pledgor shall take the following additional
actions with respect to the Securities and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or with
respect to which the Pledgee may obtain "control" thereof within the
meaning of Section 8-106 of the UCC (or under any provision of the UCC as
same may be amended or supplemented from time to time, or under the laws of
any relevant State other than the State of New York), the respective
Pledgor shall take all actions as may be requested from time to time by the
Pledgee so that "control" of such Collateral is obtained and at all times
held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate financing
statements (on Form UCC-1 or other appropriate form) under the Uniform
Commercial Code as in effect in the various relevant States, on form
covering all Collateral hereunder (with the form of such financing
statements to be satisfactory to the Pledgee), to be filed in the relevant
filing offices so that at all times the Pledgee has a security interest in
all Investment Property and other Collateral which is perfected by the
filing of such financing statements (in each case to the maximum extent
perfection by filing may be obtained under the laws of the relevant States,
including, without limitation, Section 9-115(4)(b) of the UCC).
3.3 SUBSEQUENTLY ACQUIRED COLLATERAL. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Collateral at any time
or from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant to Section 3.1 and, furthermore,
such Pledgor will within 10 days thereafter take (or cause to be taken) all
action with respect to such Collateral (except to the extent such Collateral
consists of Cash Equivalents) in accordance with the procedures set forth in
Section 3.2, and will promptly thereafter deliver to the Pledgee (i) a
certificate executed by a principal executive officer of such Pledgor describing
such Collateral and certifying that the same has been duly pledged in favor of
the Pledgee (for the benefit of the Secured Creditors) hereunder and (ii)
supplements to Annexes A through F hereto as are necessary to cause such annexes
to be complete and accurate at such time. Without limiting the foregoing, each
Pledgor shall be required to pledge hereunder any shares of stock at any time
and from time to time after the date hereof acquired by such Pledgor of any
Foreign Corporation, PROVIDED that (x) except to the extent provided by Section
8.14 of the Credit Agreement, no Pledgor shall be required at any time to pledge
hereunder more than 65% of the Voting Stock of any Foreign Corporation and (y)
each Pledgor shall be required to pledge hereunder 100% of any Non-Voting Stock
at any time and from time to time acquired by such Pledgor of any Foreign
Corporation.
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3.4 TRANSFER TAXES. Each pledge of Collateral under Section 3.1 or
Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5 DEFINITION OF PLEDGED NOTES. All Notes at any time pledged or
required to be pledged hereunder are hereinafter called the "PLEDGED NOTES".
3.6 CERTAIN REPRESENTATIONS AND WARRANTIES REGARDING THE COLLATERAL.
Each Pledgor represents and warrants that on the date hereof (i) each Subsidiary
of such Pledgor, and the direct ownership thereof, is listed in Annex A hereto;
(ii) the Stock held by such Pledgor consists of the number and type of shares of
the stock of the corporations as described in Annex B hereto; (iii) such Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Annex B hereto; (iv) the Notes held by
such Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) the Limited Liability Company
Interests held by such Pledgor consist of the number and type of interests of
the Persons described in Annex D hereto; (vi) each such Limited Liability
Company Interest constitutes that percentage of the issued and outstanding
equity interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest constitutes that percentage or portion of the entire
partnership interest of the Partnership as set forth in Annex E hereto; (ix) the
Pledgor has complied with the respective procedure set forth in Section 3.2(a)
with respect to each item of Collateral described in Annexes A through E hereto;
and (x) such Pledgor owns no other Securities, Limited Liability Company
Interests or Partnership Interests.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Collateral, which may be held (in the
discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default or a Default
under Section 10.01 or 10.05 of the Credit Agreement (each such Default, a
"SPECIFIED DEFAULT"), each Pledgor shall be entitled to exercise all voting
rights attaching to any and all Collateral owned by it, and to give consents,
waivers or ratifications in respect thereof, PROVIDED that no vote shall be
cast or any consent, waiver or ratification given or any action taken which
would violate, result in breach of any covenant contained in, or be
inconsistent with, any of the terms of this Agreement, the Credit Agreement,
any other Credit Document or any Interest Rate Protection Agreement or Other
Hedging Agreement (collectively, the "SECURED DEBT AGREEMENTS"), or which
would have the effect of materially impairing the value of the Collateral or
any material part thereof or the position or interests of the Pledgee or any
other Secured Creditor therein. All such rights of a Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of
Default or a Specified Default shall occur and be continuing and Section 7
hereof shall become applicable.
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6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until an Event
of Default or a Specified Default shall have occurred and be continuing, all
cash dividends, cash distributions, cash Proceeds and other cash amounts payable
in respect of the Collateral shall be paid to (and may be retained by) the
respective Pledgor. Subject to Section 3.2 hereof, the Pledgee shall be
entitled to receive directly, and to retain as part of the Collateral:
(i) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other securities
or property (including, but not limited to, cash dividends other than as
set forth above) paid or distributed by way of dividend or otherwise in
respect of the Collateral;
(ii) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other securities
or property (including, but not limited to, cash) paid or distributed in
respect of the Collateral by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other securities
or property (including, but not limited to, cash) which may be paid in
respect of the Collateral by reason of any consolidation, merger, exchange
of stock, conveyance of assets, liquidation or similar corporate
reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive the proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by the respective Pledgor contrary to the
provisions of this Section 6 or Section 7 shall be received in trust for the
benefit of the Pledgee, shall be segregated from other property or funds of such
Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the
same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT OR A SPECIFIED
DEFAULT. In the event an Event of Default or a Specified Default shall have
occurred and be continuing, the Pledgee shall be entitled to exercise all of the
rights, powers and remedies (whether vested in it by this Agreement or by any
other Secured Debt Agreement or by law) for the protection and enforcement of
its rights in respect of the Collateral, including, without limitation, all the
rights and remedies of a secured party upon default under the Uniform Commercial
Code of the State of New York, and the Pledgee shall be entitled, without
limitation, to exercise any or all of the following rights, which each Pledgor
hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to such Pledgor;
(ii) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
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(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(iv) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (subject to
any applicable operating agreement, partnership agreement or other
organizational document in the case of any Collateral constituting a
Partnership Interest or a Limited Liability Company Interest) (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so);
(v) at any time or from time to time to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; PROVIDED that at least 10 days' notice
of the time and place of any such sale shall be given to such Pledgor. The
Pledgee shall not be obligated to make such sale of Collateral regardless
of whether any such notice of sale has theretofore been given. Each
purchaser at any such sale shall hold the property so sold absolutely free
from any claim or right on the part of each Pledgor, and each Pledgor
hereby waives and releases to the fullest extent permitted by law any right
or equity of redemption with respect to the Collateral, whether before or
after sale hereunder, all rights, if any, of marshalling the Collateral and
any other security for the Obligations or otherwise, and all rights, if
any, of stay and/or appraisal which it now has or may at any time in the
future have under rule of law or statute now existing or hereafter enacted.
At any such sale, unless prohibited by applicable law, the Pledgee on
behalf of all Secured Creditors (or certain of them) may bid for and
purchase (by bidding in Obligations or otherwise) all or any part of the
Collateral so sold free from any such right or equity of redemption.
Neither the Pledgee nor any other Secured Creditor shall be liable for
failure to collect or realize upon any or all of the Collateral or for any
delay in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto; and
(vi) to set-off any and all Collateral against any and all
Obligations, and to withdraw any and all cash or other Collateral from any
and all Collateral Accounts and to apply such cash and other Collateral to
the payment of any and all Obligations.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Secured Debt Agreement,
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise
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by the Pledgee or any other Secured Creditor of any one or more of the
rights, powers or remedies provided for in this Agreement or any other
Secured Debt Agreement or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Pledgee or any other Secured Creditor of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any other
Secured Creditor to exercise any such right, power or remedy shall operate as
a waiver thereof. Unless otherwise required by the Credit Documents, no
notice to or demand on any Pledgor in any case shall entitle such Pledgor to
any other or further notice or demand in similar other circumstances or
constitute a waiver of any of the rights of the Pledgee or any other Secured
Creditor to any other or further action in any circumstances without demand
or notice. The Secured Creditors agree that this Agreement may be enforced
only by the action of the Pledgee, acting upon the instructions of the
Required Lenders (or, after the date on which all Credit Document Obligations
have been paid in full, the holders of at least a majority of the outstanding
Other Obligations) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that
such rights and remedies may be exercised by the Pledgee or the holders of at
least a majority of the outstanding Other Obligations, as the case may be,
for the benefit of the Secured Creditors upon the terms of this Agreement and
the other Credit Documents.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied to the payment of the Obligations in the manner
provided in Section 7.4 of the Security Agreement.
(b) It is understood and agreed that each Pledgor shall remain liable
to the extent of any deficiency between the amount of proceeds of the Collateral
pledged by it hereunder and the aggregate amount of its Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making such sale of the purchase money paid as consideration pursuant to
such sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee, each other Secured Creditor and their
respective successors, assigns, employees, agents and servants (individually an
"INDEMNITEE", and collectively, the "INDEMNITEES") from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee
for all reasonable costs and expenses, including reasonable attorneys' fees, in
each case arising out of or resulting from this Agreement or the exercise by any
Indemnitee of any right or remedy granted to it hereunder or under any other
Secured Debt Agreement (but
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excluding any claims, demands, losses, judgments and liabilities (including
liabilities for penalties) or expenses of whatsoever kind or nature to the
extent incurred or arising by reason of gross negligence or willful
misconduct of such Indemnitee). In no event shall any Indemnitee hereunder
be liable, in the absence of gross negligence or willful misconduct on its
part, for any matter or thing in connection with this Agreement other than to
account for monies or other property actually received by it in accordance
with the terms hereof. If and to the extent that the obligations of any
Pledgor under this Section 11 are unenforceable for any reason, each Pledgor
hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
The indemnity obligations of each Pledgor contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection and Other Hedging Agreements and Letters of Credit, and the
payment of all other Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor
agrees that it will join with the Pledgee in executing and, at such Pledgor's
own expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as
the Pledgee (acting on its own or on the instructions of the Required
Lenders) may reasonably deem necessary or appropriate and wherever required
or permitted by law in order to perfect and preserve the Pledgee's security
interest in the Collateral hereunder and hereby authorizes the Pledgee to
file financing statements and amendments thereto relative to all or any part
of the Collateral without the signature of such Pledgor where permitted by
law, and agrees to do such further acts and things and to execute and deliver
to the Pledgee such additional conveyances, assignments, agreements and
instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm
unto the Pledgee its rights, powers and remedies hereunder or thereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, from time to time after the
occurrence and during the continuance of an Event of Default, in the
Pledgee's discretion to take any action and to execute any instrument which
the Pledgee may deem necessary or advisable to accomplish the purposes of
this Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the
obligations of the Pledgee as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement, are
only those expressly set forth in this Agreement. The Pledgee shall act
hereunder on the terms and conditions set forth herein and in Section 12 of the
Credit Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of
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the Collateral or any interest therein (except in accordance with the terms
of this Agreement and the other Secured Debt Agreements).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
(a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has good
and marketable title to, all Collateral consisting of one or more
Securities and that it has sufficient interest in all Collateral in which a
security interest is purported to be created hereunder for such security
interest to attach (subject, in each case, to no pledge, lien, mortgage,
hypothecation, security interest, charge, option, Adverse Claim or other
encumbrance whatsoever, except the liens and security interests created by
this Agreement or permitted under the Credit Agreement);
(ii) it has full power, authority and legal right to pledge all the
Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law) and principles of good faith and fair dealing;
(iv) except to the extent already obtained or made, no consent of
any other party (including, without limitation, any stockholder, member,
partner or creditor of such Pledgor or any of its Subsidiaries) and no
consent, license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required to be obtained by such Pledgor in
connection with (a) the execution, delivery or performance of this
Agreement, (b) the validity or enforceability of this Agreement (except as
set forth in clause (iii) above), (c) the perfection or enforceability of
the Pledgee's security interest in the Collateral, (d) except for
compliance with or as may be required by applicable securities laws, the
exercise by the Pledgee of any of its rights or remedies provided herein or
(e) except for compliance with or as may required by any applicable
partnership agreement, limited liability company agreement or other
organizational document relating to any partnership or limited liability
company that is not a Wholly-Owned Subsidiary of the Borrower, the exercise
by the Pledgee of any of is rights or remedies provided herein with respect
to the Partnership Interest or Limited Liability Company Interest relating
to such partnership or limited liability company;
(v) the execution, delivery and performance of this Agreement will
not violate any provision of any applicable law or regulation or of any
order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, applicable to such Pledgor, or
of the certificate of incorporation, operating agreement,
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limited liability company agreement or by-laws of such Pledgor or of any
securities issued by such Pledgor or any of its Subsidiaries, or of any
mortgage, deed of trust, indenture, lease, loan agreement, credit
agreement or other contract, agreement or instrument or undertaking to
which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or
upon any of their respective assets and will not result in the creation
or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement (other than the
Liens created by the Collateral Documents);
(vi) all of the Collateral (consisting of Securities, Limited
Liability Company Interests or Partnership Interests, has been duly and
validly issued, is fully paid and non-assessable and is subject to no
options to purchase or similar rights, PROVIDED that Collateral consisting
of Limited Liability Company Interests or Partnership Interest, may require
further payments and/or assessments in respect thereof in accordance with
the partnership agreements, limited liability company agreements or other
organizational documents relating thereto or applicable laws;
(vii) each of the Pledged Notes constitutes, or when executed by the
obligor thereof will constitute, the legal, valid and binding obligation of
such obligor, enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law) and
principles of good faith and fair dealing;
(viii) the pledge, collateral assignment and delivery to the Pledgee
of the Collateral consisting of certificated securities (together with
instruments of transfer therefor), pursuant to this Agreement creates a
valid and perfected first priority security interest in such Securities,
and the proceeds thereof, subject to no prior Lien or encumbrance or to any
agreement purporting to grant to any third party a Lien or encumbrance on
the property or assets of such Pledgor which would include the Securities
(other than Permitted Liens) and the Pledgee is entitled to all the rights,
priorities and benefits afforded by the UCC or other relevant law as
enacted in any relevant jurisdiction to perfect security interests in
respect of such Collateral; and
(ix) "control" (as defined in Section 8-106 of the UCC) has been
obtained by the Pledgee over all Collateral consisting of Securities
(including Notes which are Securities) with respect to which such "control"
may be obtained pursuant to Section 8-106 of the UCC, PROVIDED that in the
case of the Pledgee obtaining "control" over Collateral consisting of a
security entitlement, such Pledgor shall have taken all steps in its
control so that the Pledgee obtains "control" over such security
entitlement.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and
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demands of all persons whomsoever; and each Pledgor covenants and agrees that
it will have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the Pledgee and the
other Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action
which would violate any of the terms of any Secured Debt Agreement.
16. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office
of each Pledgor is located at the address specified in Annex F hereto. Each
Pledgor will not move its chief executive office except to such new location as
such Pledgor may establish in accordance with the last sentence of this Section
16. The originals of all documents in the possession of such Pledgor evidencing
all Collateral, including but not limited to all Limited Liability Company
Interests and Partnership Interests, and the only original books of account and
records of such Pledgor relating thereto are, and will continue to be, kept at
such chief executive office at the location specified in Annex F hereto, or at
such new locations as such Pledgor may establish in accordance with the last
sentence of this Section 16. All Limited Liability Company Interests and
Partnership Interests are, and will continue to be, maintained at, and
controlled and directed (including, without limitation, for general accounting
purposes) from, such chief executive office location specified in Annex F
hereto, or such new locations as the respective Pledgor may establish in
accordance with the last sentence of this Section 16. No Pledgor shall
establish a new location for such offices until (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may reasonably request and (ii)
with respect to such new location, it shall have taken all action, satisfactory
to the Collateral Agent, to maintain the security interest of the Collateral
Agent in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect. Promptly after establishing a new
location for such offices in accordance with the immediately preceding sentence,
the respective Pledgor shall deliver to the Pledgee a supplement to Annex F
hereto so as to cause such Annex F hereto to be complete and accurate.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (other than termination of this Agreement pursuant to
Section 19 hereof), including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any Secured Debt Agreement
(other than this Agreement in accordance with its terms), or any other
instrument or agreement referred to therein, or any assignment or transfer
of any thereof;
(ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any such agreement or instrument or this
Agreement (other than a waiver, consent or extension with respect to this
Agreement in accordance with its terms);
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(iii) any furnishing of any additional security to the Pledgee or
its assignee or any acceptance thereof or any release of any security by
the Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof;
or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
any Pledgor or any Subsidiary of any Pledgor, or any action taken with
respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not such Pledgor shall have notice or
knowledge of any of the foregoing.
18. SALE OF COLLATERAL WITHOUT REGISTRATION. If at any time when
the Pledgee shall determine to exercise its right to sell all or any part of the
Collateral consisting of Securities, Limited Liability Company Interests or
Partnership Interests pursuant to Section 7, and such Collateral or the part
thereof to be sold shall not, for any reason whatsoever, be effectively
registered under the Securities Act of 1933, as then in effect, the Pledgee may,
in its sole and absolute discretion, sell such Collateral or part thereof by
private sale in such manner and under such circumstances as the Pledgee may deem
necessary or advisable in order that such sale may legally be effected without
such registration. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion: (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Collateral or part thereof shall have been filed under such
Securities Act; (ii) may approach and negotiate with a single possible purchaser
to effect such sale; and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Collateral
or part thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Collateral at a
price which the Pledgee, in its sole and absolute discretion, may in good faith
deem reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until the
registration as aforesaid.
19. TERMINATION; RELEASE. (a) On the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will execute and deliver to such Pledgor a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement
(including, without limitation, UCC termination statements and instruments of
satisfaction, discharge and/or reconveyance), and will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Pledgee and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement, together with any moneys at the time held by the Pledgee or any
of its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing
21
<PAGE>
Corporation), a Partnership Interest or a Limited Liability Company Interest,
a termination of the agreement relating thereto executed and delivered by the
issuer of such Uncertificated Security pursuant to Section 3.2(a)(ii) or by
the respective partnership or limited liability company pursuant to Section
3.2(a)(iv). As used in this Agreement, "TERMINATION DATE" shall mean the
date upon which the Total Commitments and all Interest Rate Protection
Agreements and Other Hedging Agreements have been terminated, no Letter of
Credit or Note is outstanding (and all Loans have been paid in full), all
Letters of Credit have been terminated, and all other Obligations then due
and payable have been paid in full (other than any indemnity, not then due
and payable, which by its terms shall survive such termination and payment).
(b) In the event that any part of the Collateral is sold or otherwise
disposed of (to a Person other than a Credit Party) (x) at any time prior to the
time at which all Credit Document Obligations have been paid in full and all
Commitments and Letters of Credit under the Credit Agreement have been
terminated, in connection with a sale or disposition permitted by Section 9.02
of the Credit Agreement or is otherwise released at the direction of the
Required Lenders (or all the Lenders if required by Section 13.12 of the Credit
Agreement) or (y) at any time thereafter, to the extent permitted by the other
Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of
such sale or disposition (or from such release) are applied in accordance with
the terms of the Credit Agreement or such other Secured Debt Agreement, as the
case may be, to the extent required to be so applied, the Pledgee, at the
request and expense of such Pledgor, will duly assign, transfer and deliver to
such Pledgor (without recourse and without any representation or warranty) such
of the Collateral as is then being (or has been) so sold or released and as may
be in possession of the Pledgee and has not theretofore been released pursuant
to this Agreement.
(c) At any time that any Pledgor desires that Collateral be released
as provided in the foregoing Section 19(a) or (b), it shall deliver to the
Pledgee a certificate signed by a principal executive officer of such Pledgor
stating that the release of the respective Collateral is permitted pursuant to
Section 19(a) or (b). If reasonably requested by the Pledgee (although the
Pledgee shall have no obligation to make any such request), the relevant Pledgor
shall furnish appropriate legal opinions (from counsel reasonably acceptable to
the Pledgee) to the effect set forth in the immediately preceding sentence. The
Pledgee shall have no liability whatsoever to any Secured Creditor as the result
of any release of Collateral by it as permitted by this Section 19.
20. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(i) if to any Pledgor, at:
Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Attention: Paul T. Stecko
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Tel: (847) 482-2000
Fax: (847) 482-4738
(ii) if to the Pledgee, at:
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware
Attention: Nicole Pedicone
Tel: (302) 634-1912
Fax: (302) 634-4300
(iii) if to any Lender (other than the Pledgee), at such address as
such Lender shall have specified in the Credit Agreement;
(iv) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Borrower and the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. THE PLEDGEE. (a)The Pledgee will hold, directly or indirectly
in accordance with this Agreement, all items of the Collateral at any time
received by it under this Agreement. It is expressly understood and agreed that
the obligations of the Pledgee with respect to the Collateral, interests therein
and the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in the UCC and this Agreement.
22. WAIVER; AMENDMENT. Except as contemplated in Section 25
hereof, none of the terms and conditions of this Agreement may be changed,
waived, discharged or terminated in any manner whatsoever unless such change,
waiver, discharge or termination is in writing duly signed by each Pledgor
directly and adversely affected thereby and the Collateral Agent (with the
consent of (x) the Required Lenders (or, to the extent required by Section 13.12
of the Credit Agreement, all of the Lenders) at all time prior to the time in
which all Credit Document Obligations (other than those arising from indemnities
for which no request has been made) have been paid in full and all Commitments
and Letters of Credit under the Credit Agreement had been terminated or (y) the
holders of at least a majority of the outstanding Other Obligations at all times
after the time on which all Credit Document Obligations (other than those
arising from indemnities for which no request has been made) have been paid in
full and all Commitments and Letters of Credit under the Credit Agreement had
been terminated, PROVIDED, HOWEVER, that no such change, waiver, modification or
variance shall be made to Section 11 hereof or this Section 22 without the
consent of each Secured Creditor adversely affected thereby, PROVIDED FURTHER
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Secured Creditors (and not all
Secured Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors (as defined below) of such Class of Secured
Creditors. For the purpose of this Agreement, the
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term "CLASS" shall mean each class of Secured Creditors, I.E., whether (x)
the Lender Creditors as holders of the Credit Document Obligations or (y)
the Other Creditors as holders of the Other Obligations. For the purpose of
this Agreement, the term "REQUISITE CREDITORS" of any Class shall mean each
of (x) with respect to each of the Credit Document Obligations, the Required
Lenders and (y) with respect to the Other Obligations, the holders of more
than 50% of all obligations outstanding from time to time under the Interest
Rate Protection Agreements and Other Hedging Agreements.
23. MISCELLANEOUS. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 19, (ii)
be binding upon each Pledgor, its successors and assigns; PROVIDED, HOWEVER,
that no Pledgor shall assign any of its rights or obligations hereunder without
the prior written consent of the Pledgee (with the prior written consent of the
Required Lenders or to the extent required by Section 13.12 of the Credit
Agreement, all of the Lenders), and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, the other
Secured Parties and their respective successors, transferees and assigns. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK. The headings of the several sections
and subsections in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision shall
be deemed to be severable from the other provisions of this Agreement which
shall remain binding on all parties hereto.
24. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement or the transactions contemplated hereby.
25. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee.
26. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgors contained herein and in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
27. LIMITED OBLIGATIONS. It is the desire and intent of each
Pledgor and the Secured Parties that this Agreement shall be enforced against
each Pledgor to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Notwithstanding anything to the contrary contained herein, in furtherance
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of the foregoing, it is noted that the obligations of each Pledgor
constituting a Subsidiary Guarantor have been limited as provided in the
Subsidiaries Guaranty.
28. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER.
(a) Nothing herein shall be construed to make the Pledgee or any other Secured
Creditor liable as a member of any limited liability company or partnership and
neither the Pledgee nor any other Secured Creditor by virtue of this Agreement
or otherwise (except as referred to in the following sentence) shall have any of
the duties, obligations or liabilities of a member of any limited liability
company or partnership. The parties hereto expressly agree that, unless the
Pledgee shall become the absolute owner of Collateral consisting of a Limited
Liability Company Interest or Partnership Interest pursuant hereto, this
Agreement shall not be construed as creating a partnership or joint venture
among the Pledgee, any other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of
this Section 28, the Pledgee, by accepting this Agreement, did not intend to
become a member of any limited liability company or partnership or otherwise be
deemed to be a co-venturer with respect to any Pledgor or any limited liability
company or partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and the
Secured Creditors shall assume none of the duties, obligations or liabilities of
a member of any limited liability company or partnership or any Pledgor except
as provided in the last sentence of paragraph (a) of this Section 28.
(c) The Pledgee and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of any Pledgor as a result of
the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee or any other Secured Creditor to appear in or
defend any action or proceeding relating to the Collateral to which it is not a
party, or to take any action hereunder or thereunder, or to expend any money or
incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral.
29. EFFECTIVENESS. This Agreement shall become effective when (i)
the Contribution Effective Time shall have occurred and (ii) the Pledgee, PCA
and each Subsidiary of PCA whose name appears on the signature pages hereto
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Administrative Agent at its Notice Office or the
offices of its counsel.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
PACKAGING CORPORATION OF AMERICA,
as a Pledgor
By /s/ Paul T. Stecko
---------------------------------
Title: Chairman of the Board and
Chief Executive Officer
DAHLONEGA PACKAGING CORPORATION,
as a Pledgor
By /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
DIXIE CONTAINER CORPORATION,
as a Pledgor
By /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
PCA HYDRO, INC., as a Pledgor
By /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
PCA TOMAHAWK CORPORATION,
as a Pledgor
By /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
<PAGE>
PCA VALDOSTA CORPORATION,
as a Pledgor
By /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Pledgee
By /s/ Unn Boucher
---------------------------------
Title: Vice President
<PAGE>
EXHIBIT 10.5
TPI SECURITY AGREEMENT
SECURITY AGREEMENT dated as of April 12, 1999 (as amended, modified or
supplemented from time to time, this "Agreement"), between TENNECO PACKING,
INC., a Delaware corporation (the "ASSIGNOR") and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent (the "COLLATERAL AGENT"), for the benefit of
the Lender Creditors (as defined below). Except as otherwise defined, terms
used herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Assignor, various financial institutions from time party
thereto (the "LENDERS"), J.P. Morgan Securities Inc. and BT Alex. Brown
Incorporated, as Co-Lead Arrangers (the "CO-LEAD ARRANGERS"), Bankers Trust
Company, as Syndication Agent (the "SYNDICATION AGENT"), and Morgan Guaranty
Trust Company of New York, as Administrative Agent (the "ADMINISTRATIVE AGENT",
and together with the Lenders, the Co-Lead Arrangers, the Syndication Agent,
each Issuing Bank, the Pledgee and the Collateral Agent, the "LENDER CREDITORS")
have entered into the Credit Agreement (the "Credit Agreement"), providing for
the making of Term Loans to TPI as contemplated therein;
WHEREAS, it is a condition precedent to the making of Term Loans to
the Assignor that the Assignor shall have executed and delivered to the
Collateral Agent this Agreement; and
WHEREAS, the Assignor will obtain benefits from the incurrence of Term
Loans and, accordingly, desires to execute this Agreement in order to satisfy
the conditions precedent described in the preceding paragraph and to induce the
Lenders to make Loans to TPI;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged, the
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
SECTION 1. SECURITY INTERESTS.
1.01 GRANT OF SECURITY INTERESTS. As security for the prompt and
complete payment and performance when due of all of the Obligations (as defined
below), the Assignor does hereby assign and transfer unto the Collateral Agent,
and does hereby pledge and grant to the Collateral Agent for the benefit of the
Lender Creditors, a continuing security interest of first
<PAGE>
priority in, all of the right, title and interest of such Assignor in, to and
under all of the following, whether now existing or hereafter from time to
time acquired:
(i) each and every Specified Mortgaged Property (as defined
below);
(ii) a continuing possessory lien and security interest in all of
the Assignor's right, title and interest in and to the Restricted Account
(as hereinafter defined) together with all deposits made from time to time
therein and all investments from time to time therein and/or made with the
funds therein and all cash and non-cash proceeds of any of the foregoing,
from the date this Agreement until the termination thereof pursuant to the
terms hereof (the "CASH COLLATERAL"); and
(iii) all Proceeds and products of any and all of the foregoing (all
of the above, collectively, the "COLLATERAL").
SECTION 2. ESTABLISHMENT OF RESTRICTED ACCOUNT; ETC.
2.01 ESTABLISHMENT. The Assignor has established with the
Collateral Agent a non-interest bearing account (Ref. TPI Restricted Account)
(the "RESTRICTED ACCOUNT"). Only Cash Collateral will be deposited and shall
remain in the Restricted Account until such Cash Collateral is released from
the Restricted Account in accordance with this Agreement. The Restricted
Account shall be under the sole dominion and control of the Collateral Agent,
with the Collateral Agent having the right to make withdrawals from the
balance of the Restricted Account from time to time therein in accordance
with the terms of this Agreement. All Cash Collateral delivered to or held
by or on behalf of the Collateral Agent pursuant hereto shall be held in the
Restricted Account in accordance with the provisions hereof.
2.02 DEPOSITS TO RESTRICTED ACCOUNT; ETC. (a) As provided in
Section 1.04 of the Credit Agreement, the Administrative Agent shall deposit the
proceeds of the Term Loans in the Restricted Account. The Collateral Agent
shall hold such cash deposited in the Restricted Account and apply any such
amounts as provided in clauses (b) or (c) below, as applicable.
(b) Upon the receipt by the Collateral Agent of an officer's
certificate of the Assignor stating that the Contribution Effective Time has
occurred or will occur contemporaneously with the application of the Cash
Collateral as provided in this clause (b) the amount on deposit in the
Restricted Account will be released and disbursed as indicated below in the
order indicated:
(i) to the persons listed on Annex A hereto in the amounts listed
for each such Person; and
(ii) after the application pursuant to clause (i) above, the
balance of the Cash Collateral shall be released and paid to the Assignor
free and clear of the Lien created by this Agreement.
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Notwithstanding the foregoing, in no event will Cash Collateral be released
pursuant to this clause (b) until all amounts in the Sub Debt Restricted
Account have been released and applied to the repayment of the Indebtedness
to be Refinanced and any balance remaining thereafter shall have been
released and paid to the Assignor.
(c) In the event that (x) the certificate referred to in clause
(b) is not received by 5:00 p.m. (New York time) on the Initial Borrowing Date
or (y) an Event of Default occurs prior to the Contribution Effective Time, all
Cash Collateral will be withdrawn from the Restricted Account and applied to the
repayment of the Obligations.
2.03 INVESTMENT OF FUNDS DEPOSITED IN THE RESTRICTED ACCOUNT.
Amounts on deposit in the Restricted Account will not be invested or otherwise
bear interest.
SECTION 3. FURTHER ASSURANCES.
(a) The Assignor will, at any time and from time to time, at its own
expense, if the Obligations are not paid in full on the Initial Borrowing Date
promptly execute and deliver all further agreements, instruments and other
documents and take all further action that may be necessary or that the
Collateral Agent may reasonably request in order to perfect and protect the
security interest purported to be created hereby or otherwise to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder.
(b) In furtherance and not in limitation of the foregoing, in the
event that (x) the Contribution Effective Time does not occur by 5:00 P.M. (New
York time) on the Initial Borrowing Date and (y) the Obligations are not paid in
full at such time, the Assignor shall execute and deliver mortgages or deeds of
trust (collectively, the "SPECIFIED MORTGAGES"), covering the Specified
Mortgaged Property such Specified Mortgages to be substantially in the form of
the Mortgages prepared in connection with the Credit Agreement. The Specified
Mortgages or instruments related thereto shall be duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Collateral Agent required to be granted
pursuant to the Specified Mortgages and all taxes, fees and other charges
payable in connection therewith shall be paid in full by the Assignor. All such
action shall be completed within 10 days of the Initial Borrowing Date.
SECTION 4. TRANSFERS AND OTHER LIENS.
The Assignor will not, without the written consent of the Collateral
Agent, (i) sell, assign (by operation of law or otherwise) or otherwise dispose
of any interest in the Collateral (except as pursuant to the Contribution
Agreement) or (ii) create or suffer to exist any Lien, security interest or
other charge or encumbrance upon or with respect to any Collateral except for
the security interest purported to be created hereby.
SECTION 5. ATTORNEY-IN-FACT.
The Assignor hereby appoints the Collateral Agent attorney-in-fact,
with full authority in the place and stead of the Assignor and in the name of
the Assignor or otherwise,
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from time to time if the Obligations are not paid in full on the Initial
Borrowing Date in the Collateral Agent's discretion to execute any instrument
and to take any other action which the Collateral Agent may in good faith
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement or to facilitate the assignment or other transfer by the Collateral
Agent of any or all of its rights hereunder. Such appointment of the
Collateral Agent as attorney-in-fact is irrevocable and coupled with an
interest and shall terminate on the Termination Date.
SECTION 6. PERFORMANCE BY THE COLLATERAL AGENT.
If the Assignor fails to perform any agreement or obligation contained
herein, the Collateral Agent itself may perform or cause performance of such
agreement or obligation, and the reasonable expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Assignor.
SECTION 7. RESPONSIBILITY OF THE SECURED CREDITOR.
Other than the exercise of reasonable care to assure the safe custody
of the Collateral while held hereunder, the Collateral Agent shall have no duty
or liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering surrender of
it to the Assignor. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords its own property. Without limiting the
generality of the foregoing, neither the Collateral Agent nor any of its
directors, officers, agents or employees shall be liable (i) for any failure to
invest or reinvest any cash in the Restricted Account or (ii) for any action
taken or omitted to be taken by the Collateral Agent (x) in good faith in
accordance with the advice of counsel with respect to any question as to the
construction of any provision hereof or any action to be taken by the Collateral
Agent hereunder or (y) in accordance with any instructions or other notice which
the Collateral Agent believes in good faith to be properly given by the Assignor
hereunder.
SECTION 8. REMEDIES UPON DEFAULT.
If any Event of Default shall occur and be continuing:
(a) The Collateral Agent may (i) exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party on
default under the Uniform Commercial Code then in effect in the State of New
York, (ii) withdraw any funds, if any, from the Restricted Account, and (iii)
without notice except as specified below, sell any or all of the Collateral in
one or more parcels at any public or private sale, at any exchange, broker's
board or at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as the Collateral Agent may deem commercially reasonable. The Assignor
agrees that, to the extent notice of sale shall be required by law, at least 10
Business Days' notice to the Assignor of the time and place of any public sale
or the time after which any private sale or other disposition is to be made
shall constitute reasonable notification. The
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Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time (by announcement, in the
case of any public sale, at the time and place fixed therefor), and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) Notwithstanding the foregoing provisions of this Section 8,
the Collateral Agent may elect, by notice to the Assignor, to retain any and all
of the Collateral, to collect or cause the collection of the proceeds thereof
and to hold any and all of such Collateral as continuing collateral for, and to
apply at such times and in such manner as the Collateral Agent may elect any and
all of such Collateral to pay the Obligations; provided that the Collateral is
valued at fair market value for purposes of determining the amount by which the
Obligations shall be reduced in consideration of the retention of such
Collateral. The Assignor hereby waives, to the fullest extent permitted by law,
any and all rights it may have to require the Collateral Agent to sell or
otherwise dispose of any or all of the Collateral.
SECTION 9. APPLICATION OF PROCEEDS.
(a) All moneys collected by the Collateral Agent upon any sale or
other disposition of any Collateral after the occurrence of an Event of Default,
together with all other moneys received by the Collateral Agent hereunder,
shall be applied as follows:
(i) first, to the payment of all amounts owing the Collateral
Agent of the type described in clauses (ii) and (iii) of the definition of
Obligations.
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Collateral Agent on account of such
Obligations on a pro rata basis; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and following the
termination of this Agreement pursuant to Section 12, any surplus then
remaining shall be paid to the Assignor, subject, however, to the rights of
the holder of any then existing Lien of which the Collateral Agent has
actual notice (without investigation).
(b) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to make a good faith
determination of the outstanding Obligations owed to the Collateral Agent,
PROVIDED that the Obligations paid on or prior to the Termination Time shall
include only principal and any interest on the Term Loans and not any costs,
premiums or penalties except as expressly provided herein and in the TPI
Guaranty.
5
<PAGE>
SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ASSIGNOR.
The Assignor represents and warrants that on the date of the
deposit by the Assignor of any Collateral in the Restricted Account, it will
be the legal, record and beneficial owner of, and will have good and
marketable title to, the Collateral, subject to no Lien, other than the Lien
created by this Agreement. The Assignor covenants and agrees that it will
defend the Collateral Agent's right, title and security interest in and to
the Collateral and the proceeds thereof against the claims and demands of all
other Persons whomsoever; and the Assignor covenants and agrees that it will
have like title to and right to pledge any other property at any time
hereafter pledged to the Collateral Agent as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the
Collateral Agent.
SECTION 11. INDEMNITY.
11.01 INDEMNITY. (a) The Assignor agrees to indemnify, reimburse
and hold the Secured Creditor and its successors, assigns, employees, agents
and servants (hereinafter in this Section 11.1 referred to individually as
"INDEMNITEE," and collectively as "INDEMNITEES") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs and expenses (including
reasonable attorneys' fees and expenses) (for the purposes of this Section
11.1 the foregoing are collectively called "EXPENSES") of whatsoever kind and
nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of the security interests credited in the
Specified Properties in any way relating to or arising out of this Agreement
or the enforcement, or the preservation of any rights with respect thereto;
PROVIDED that no Indemnitee shall be indemnified pursuant to this Section
11.1(a) for losses, damages or liabilities to the extent caused by the gross
negligence or willful misconduct of such Indemnitee. The Assignor agrees
that upon written notice by any Indemnitee of the assertion of such a
liability, obligation, damage, injury, penalty, claim, demand, action,
judgment or suit, the Assignor shall assume full responsibility for the
defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify the Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 11.1(a), if the
Obligations are not paid in full on the Initial Borrowing Date the Assignor
agrees to pay, or reimburse the Collateral Agent for any and all fees, costs
and expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon
or in respect of the Collateral, premiums for insurance with respect to the
Collateral and all other fees, costs and expenses in connection with
protecting, maintaining or preserving the Collateral and the Collateral
Agent's interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out
of or relating to the Collateral.
6
<PAGE>
(c) If and to the extent that the obligations of the Assignor
under this Section 11.1 are unenforceable for any reason, the Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
11.02 INDEMNITY OBLIGATIONS SECURED BY COLLATERAL. Any amounts paid
by any Indemnitee as to which such Indemnitee has the right to reimbursement
shall constitute Obligations secured by the Collateral.
SECTION 12. DEFINITIONS.
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the recitals
hereto.
"AGREEMENT" shall have the meaning provided in the preamble to this
Agreement.
"ASSIGNOR" shall have the meaning provided in the preamble to this
Agreement.
"CASH COLLATERAL" shall have the meaning provided in Section 1.01(ii).
"COLLATERAL" shall have the meaning provided in Section 1.01 of this
Agreement.
"COLLATERAL AGENT" shall have the meaning provided in the preamble to
this Agreement.
"CONTRIBUTION AGREEMENT" shall have the meaning provided in the Credit
Agreement.
"CONTRIBUTION EFFECTIVE TIME" shall have the meaning provided in the
Credit Agreement.
"CREDIT AGREEMENT" shall have the meaning provided in the recitals to
this Agreement.
"EVENT OF DEFAULT" shall mean any Event of Default under, and as
defined in, the Credit Agreement.
"INDEMNITEE" shall have the meaning provided in Section 11.01 of this
Agreement.
"LENDER CREDITORS" shall have the meaning provided in the recitals to
this Agreement.
"LENDERS" shall have the meaning provided in the recitals to this
Agreement.
7
<PAGE>
"LIENS" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on the Assignor's
property other than, in the case of the Specified Properties, "Permitted
Encumbrances "as defined in, or disclosed under, the Contribution Agreement.
"OBLIGATIONS" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Assignor owing to the Lender Creditors, now existing or hereafter incurred
under, arising out of or in connection with any Credit Document to which the
Assignor is a party and the due performance and compliance by the Assignor with
the terms, conditions and agreements of each such Credit Document; (ii) the full
and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations including any and all sums advanced by the
Collateral Agent in order to preserve the Collateral or preserve its security
interest in the Collateral; (iii) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
the Assignor referred to in clauses (i) and (ii) after an Event of Default shall
have occurred and be continuing, the reasonable expenses of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs; and (iv)
all amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 11.01 of this Agreement.
"PROCEEDS" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or the Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to the Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"RESTRICTED ACCOUNT" shall have the meaning provided in Section 2.01.
"SPECIFIED MORTGAGE" shall have the meaning provided in Section 3(b).
"SPECIFIED MORTGAGED PROPERTY" shall mean the real property interests
listed on Annex B hereto.
"SUB DEBT RESTRICTED ACCOUNT" shall have the meaning provided in the
Credit Agreement.
"TERMINATION DATE" shall have the meaning provided in Section 13 of
this Agreement.
8
<PAGE>
SECTION 13. TERMINATION; RELEASE; PARTIAL RELEASE.
(a) On the earlier to occur of (x) the Contribution Effective
Time and (y) that date upon which all Term Loans advanced to the Assignor
have been repaid in full together with all interest thereon but not including
any costs, premiums or penalties (such earlier time, the "TERMINATION TIME"),
this Agreement shall automatically terminate and be released without further
action by any party and there shall be no further liability of Assignor
hereunder, and the Collateral Agent, at the request and expense of the
Assignor, will execute and deliver to the Assignor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Assignor (without recourse
and without any representation or warranty) such of the Collateral as may
remain in the possession of the Collateral Agent held by the Collateral Agent
pursuant to this Agreement.
(b) Collateral shall be released from the Restricted Account from
time to time in accordance with the provisions of Section 2.02(b).
SECTION 14. NOTICES, ETC.
Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be delivered and become effective in
accordance with Section 13.03 of the Credit Agreement.
SECTION 15. MISCELLANEOUS.
This Agreement shall be binding upon the Assignor and its successors
and assigns (although the Assignor may not assign its rights or obligations
under this Agreement) and shall inure to the benefit of and be enforceable by
the Collateral Agent and its successors and assigns. The headings in this
Agreement are for reference only and shall not limit or define the meaning
hereof. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
This Agreement shall become effective on the date on which each of the parties
shall have executed and delivered a copy hereof. In the event that any
provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement which shall remain binding on all parties hereto.
SECTION 16. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignor and the Collateral Agent (with the consent of the
Required Lenders (or all the Lenders if required by Section 13.12 of the
Credit Agreement)).
* * * *
9
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Collateral Agent have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
TENNECO PACKAGING, INC.
By /s/ James V. Faulkner, Jr.
----------------------------------------------
Title: Vice President and Assistant Secretary
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By /s/ Unn Boucher
----------------------
Title: Vice President
<PAGE>
EXHIBIT 10.6
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PCA SECURITY AGREEMENT
among
PACKAGING CORPORATION OF AMERICA,
VARIOUS SUBSIDIARIES OF
PACKAGING CORPORATION OF AMERICA
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Collateral Agent
Dated as of April 12, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C> <C>
ARTICLE I SECURITY INTERESTS. . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Grant of Security Interests . . . . . . . . . . . . . . . 2
1.2. Power of Attorney . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . 5
2.1. Necessary Filings . . . . . . . . . . . . . . . . . . . . 5
2.2. No Liens. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3. Other Financing Statements. . . . . . . . . . . . . . . . 5
2.4. Chief Executive Office; Records . . . . . . . . . . . . . 6
2.5. Location of Inventory and Equipment . . . . . . . . . . . 6
2.6. Recourse. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7. Trade Names; Change of Name . . . . . . . . . . . . . . . 7
2.8. Location of Standing Timber . . . . . . . . . . . . . . . 7
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS . . . . . . . . . . . 8
3.1. Additional Representations and Warranties . . . . . . . . 8
3.2. Maintenance of Records. . . . . . . . . . . . . . . . . . 8
3.3. Direction to Account Debtors; Contracting Parties; etc. . 8
3.4. Modification of Terms; etc. . . . . . . . . . . . . . . . 9
3.5. Collection. . . . . . . . . . . . . . . . . . . . . . . . 9
3.6. Instruments . . . . . . . . . . . . . . . . . . . . . . . 9
3.7. Further Actions . . . . . . . . . . . . . . . . . . . . .10
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS. . . . . . . . . . . .10
4.1. Additional Representations and Warranties . . . . . . . .10
4.2. Licenses and Assignments. . . . . . . . . . . . . . . . .11
4.3. Infringements . . . . . . . . . . . . . . . . . . . . . .11
4.4. Preservation of Marks . . . . . . . . . . . . . . . . . .11
4.5. Maintenance of Registration . . . . . . . . . . . . . . .11
4.6. Future Registered Marks . . . . . . . . . . . . . . . . .11
4.7. Remedies. . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS . . . . . . . . . . . . .12
5.1. Additional Representations and Warranties . . . . . . . .12
5.2. Licenses and Assignments. . . . . . . . . . . . . . . . .13
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.3. Infringements . . . . . . . . . . . . . . . . . . . . . .13
5.4. Maintenance of Patents and Copyrights . . . . . . . . . .13
5.5. Prosecution of Patent or Copyright Applications . . . . .13
5.6. Other Patents and Copyrights. . . . . . . . . . . . . . .14
5.7. Remedies. . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL. . . . . . . . . . . . . .14
6.1. Protection of Collateral Agent's Security . . . . . . . .14
6.2. Warehouse Receipts Non-Negotiable . . . . . . . . . . . .15
6.3. Further Actions . . . . . . . . . . . . . . . . . . . . .15
6.4. Financing Statements. . . . . . . . . . . . . . . . . . .15
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT. . . . . . . . . .16
7.1. Remedies; Obtaining the Collateral Upon Default . . . . .16
7.2. Remedies; Disposition of the Collateral . . . . . . . . .17
7.3. Waiver of Claims. . . . . . . . . . . . . . . . . . . . .18
7.4. Application of Proceeds . . . . . . . . . . . . . . . . .18
7.5. Remedies Cumulative . . . . . . . . . . . . . . . . . . .20
7.6. Discontinuance of Proceedings . . . . . . . . . . . . . .21
ARTICLE VIII INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . .21
8.1. Indemnity . . . . . . . . . . . . . . . . . . . . . . . .21
8.2. Indemnity Obligations Secured by Collateral; Survival . .22
ARTICLE IX DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .29
10.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . .29
10.2. Waiver; Amendment. . . . . . . . . . . . . . . . . . . .29
10.3. Obligations Absolute . . . . . . . . . . . . . . . . . .30
10.4. Successors and Assigns . . . . . . . . . . . . . . . . .30
10.5. Headings Descriptive . . . . . . . . . . . . . . . . . .30
10.6. Governing Law. . . . . . . . . . . . . . . . . . . . . .31
10.7. Assignors' Duties. . . . . . . . . . . . . . . . . . . .31
10.8. Termination; Release . . . . . . . . . . . . . . . . . .31
10.9. Counterparts . . . . . . . . . . . . . . . . . . . . . .32
10.10. The Collateral Agent. . . . . . . . . . . . . . . . . .32
10.11. Severability. . . . . . . . . . . . . . . . . . . . . .32
10.12. Limited Obligations . . . . . . . . . . . . . . . . . .32
10.13. Additional Assignors. . . . . . . . . . . . . . . . . .32
10.14. Effectiveness . . . . . . . . . . . . . . . . . . . . .33
</TABLE>
(ii)
<PAGE>
PCA SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 12, 1999 (as amended, restated,
modified and/or supplemented from time to time in accordance with the terms
hereof, this "AGREEMENT"), among each of the undersigned (each, an "ASSIGNOR"
and, together with each other entity which becomes a party hereto pursuant to
Section 10.13, collectively, the "ASSIGNORS") and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent (the "COLLATERAL AGENT"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined in
Article IX hereof, terms used herein and defined in the Credit Agreement (as
defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Tenneco Packaging, Inc. ("TPI"), various financial
institutions from time to time party thereto (the "LENDERS"), J.P. Morgan
Securities Inc. and BT Alex. Brown Incorporated, as Co-Lead Arrangers (the
"CO-LEAD ARRANGERS"), Bankers Trust Company, as Syndication Agent (the
"SYNDICATION AGENT"), and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "ADMINISTRATIVE AGENT", and together with the
Lenders, the Co-Lead Arrangers, the Syndication Agent, each Issuing Bank, the
Pledgee and the Collateral Agent, the "LENDER CREDITORS") have entered into
the Credit Agreement, providing for the making of Term Loans to TPI as
contemplated therein;
WHEREAS, TPI and Packaging Corporation of America ("PCA") have entered
into (i) the Contribution Agreement pursuant to which (x) TPI will contribute
the Containerboard Business to PCA and (y) PCA will acquire the Containerboard
Business and (ii) the Bank Credit Agreement Assignment and Assumption Agreement
pursuant to which (x) TPI will assign (without recourse, representation or
warranty) all of its rights, interests and obligations under the Credit
Agreement and the Notes to PCA and (y) PCA will assume all of the rights,
interests and obligations of TPI under the Credit Agreement and the Notes, all
as contemplated therein;
WHEREAS, upon the Contribution Effective Time, PCA will become the
"Borrower" for all purposes of the Credit Agreement, this Agreement and the
other Credit Documents;
WHEREAS, PCA may from time to time enter into one or more (i)
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements), (ii) foreign
exchange contracts, currency swap agreements, commodity agreements or other
similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (each such agreement or arrangement with an
Other Creditor (as hereinafter defined), an "INTEREST RATE PROTECTION
AGREEMENT OR OTHER HEDGING AGREEMENT"), with Morgan Guaranty Trust Company of
New York in its individual capacity ("MORGAN GUARANTY"), any Lender or a
syndicate of financial institutions organized by Morgan Guaranty or any such
Lender, or an affiliate of Morgan Guaranty or any such Lender (Morgan
Guaranty, any such Lender or Lenders
1
<PAGE>
or affiliate or affiliates of Morgan Guaranty or such Lender or Lenders (even
if Morgan Guaranty or any such Lender ceases to be a Lender under the Credit
Agreement for any reason) and any such institution that participates in such
Interest Rate Protection Agreements or Other Hedging Agreements, and in each
case their subsequent successors and assigns, collectively, the "OTHER
CREDITORS", and together with the Lender Creditors, the "SECURED CREDITORS");
WHEREAS, pursuant to a Subsidiaries Guaranty, dated as of April 12,
1999 (as amended, restated, modified and/or supplemented from time to time, the
"SUBSIDIARIES GUARANTY"), each Assignor (other than PCA) has, on and after the
Contribution Effective Time, jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of PCA under
or with respect to the Credit Documents and each Interest Rate Protection
Agreement and Other Hedging Agreement;
WHEREAS, it is a condition precedent to the making of Loans to TPI and
PCA and the issuance of, and participation in, Letters of Credit for the account
of PCA under the Credit Agreement and to the Other Creditors entering into
Interest Rate Protection Agreements and Other Hedging Agreements that each
Assignor shall have executed and delivered to the Collateral Agent this
Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence and/or
assumption of Loans by PCA and the issuance of Letters of Credit for the account
of PCA under the Credit Agreement and PCA's entering into Interest Rate
Protection Agreements or Other Hedging Agreements and, accordingly, desires to
execute this Agreement in order to satisfy the conditions precedent described in
the preceding paragraph and to induce the Lenders to make Loans to TPI and PCA
and to issue, and participate in, Letters of Credit for the account of PCA, and
to induce the Other Creditors to enter into Interest Rate Protection Agreements
and Other Hedging Agreements with PCA;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. GRANT OF SECURITY INTERESTS. (a) As security for the prompt
and complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest of first priority (subject to
Permitted Liens) in, all of the right, title and interest of such Assignor in,
to and under all of the following, whether now existing or hereafter from time
to time acquired:
2
<PAGE>
(i) each and every Receivable;
(ii) all Contracts, together with all Contract Rights arising
thereunder (including, without limitation, the Contribution Agreement);
(iii) all Inventory;
(iv) the Cash Collateral Account and any other cash collateral account
established for such Assignor for the benefit of the Secured Creditors and
all moneys, securities and instruments deposited or required to be
deposited in such Cash Collateral Account;
(v) all Equipment;
(vi) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of such Assignor
symbolized by the Marks;
(vii) all Patents and Copyrights and all reissues, renewals and
extensions thereof;
(viii) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such
Assignor, including, but not limited to, Trade Secrets and Trade Secret
Rights;
(ix) all insurance policies;
(x) all other Goods (including, without limitation, Standing Timber),
General Intangibles, Chattel Paper, Documents and Instruments of such
Assignor (other than the Pledged Securities);
(xi) all Permits; and
(xii) all Proceeds and products of any and all of the foregoing (all of
the above, collectively, the "COLLATERAL").
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) above, the security interest created by this Agreement shall not extend
to, and the term "Collateral" shall not include any Equipment subject to a
purchase money Lien permitted under Section 9.01(iii), (vii) or (xvi) of the
Credit Agreement or a Lien securing Capital Lease Obligations permitted under
Section 9.01(xv) of the Credit Agreement, in each case to the extent, and only
to the extent, that the instrument evidencing the purchase money Indebtedness or
Capitalized Lease Obligations, as the case may be, secured by such Lien
expressly prohibits any other Lien on such Equipment and only for so long as
such purchase money Indebtedness or Capitalized Lease Obligations, as the case
may be, remains or remain outstanding and upon the earlier of the termination of
such prohibition or the satisfaction of such Indebtedness, such
3
<PAGE>
Equipment shall be included in the term "Collateral" without any further
action on the part of any Assignor, the Collateral Agent or any other Secured
Creditor.
(d) Notwithstanding anything to the contrary contained in clauses
(a) and (b) above, the security interest created by this Agreement shall not
extend to, and the term "Collateral" shall not include (i) any permit, lease
or license held by any Assignor that is subject to any agreement which
validly prohibits the creation by such Assignor of a security interest in
such permit, lease or license, and (ii) any permit, lease or license to the
extent that any valid enforceable law or regulation applicable to such
permit, lease or license prohibits the creation of a security interest
therein; PROVIDED, HOWEVER, that (A) to the extent permitted under applicable
law, the right to receive payments of money under such permits, leases or
licenses described in the preceding clauses (i) and (ii) above shall not be
excluded from the security interest created hereunder and (B) such rights and
property described in the preceding clauses (i) and (ii) above shall be
excluded from the Collateral only to the extent and for so long as such
agreement (in the case of clause (i)) or such law (in the case of clause
(ii)) continues validly to prohibit the creation of such security interest,
and upon the expiration of such prohibition, the permits, leases and licenses
as to which such prohibition previously applied shall automatically be
included in the Collateral, without further action on the part of each
Assignor.
(e) Notwithstanding anything to the contrary contained in clauses
(a) and (b) above, it is acknowledged and agreed that the security interest
created hereby shall not extend to any Marks, patents or copyrights owned by
a third Person in which any Assignor has rights of usage thereof to the
extent (and only to the extent) the granting of a security interest therein
is expressly prohibited by an agreement relating thereto to which such
Assignor is a party PROVIDED, HOWEVER, that such Marks, patents or
copyrights, as the case may be, shall be excluded from the Collateral only to
the extent and only for so long as the relevant agreement continues validly
to prohibit the creation of such security interest, and upon the expiration
of such prohibition, all Marks, patents or copyrights, as the case may be, as
to which such prohibition previously applied shall automatically be included
in the Collateral, without any further action on the part of any Assignor,
the Collateral Agent, or any other Secured Creditor.
1.2. POWER OF ATTORNEY. Each Assignor hereby appoints the
Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies
due or to become due to such Assignor under or arising out of the Collateral,
to endorse any checks or other instruments or orders in connection therewith
and to file any claims or take any action or institute any proceedings which
the Collateral Agent may deem to be necessary or advisable to accomplish the
purposes of this Agreement, which appointment as attorney is coupled with an
interest.
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ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. NECESSARY FILINGS. (i) All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect
the security interest granted by such Assignor to the Collateral Agent hereby
in respect of the Collateral have been accomplished (or, in the case of
Collateral for which it is necessary to file a UCC-1 financing statement or
the filing of the Grants of Security Interests set forth in Annexes G and H
in order to perfect a security interest in such Collateral, such filings will
be accomplished within 10 days following the Initial Borrowing Date (or to
the extent such Collateral is acquired after the Initial Borrowing Date,
within 10 days following the date of the acquisition of such Collateral)),
and (ii) the security interest granted to the Collateral Agent pursuant to
this Agreement in and to the Collateral constitutes (or, in the case of
Collateral referred to in the parenthetical in clause (i) above, upon
compliance with the requirements of such parenthetical, will constitute) a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction
to perfected security interests.
2.2. NO LIENS. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of, or
has rights in, all Collateral free from any Lien, security interest, encumbrance
or other right, title or interest of any Person (other than Permitted Liens and
Liens created under this Agreement), and such Assignor shall defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Collateral Agent.
2.3. OTHER FINANCING STATEMENTS. There is no financing statement
evidencing a valid security interest against the Borrower or any of its
Subsidiaries (or similar statement or instrument of registration under the
law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than (x) as may be filed in connection with
Liens permitted pursuant to Section 9.01 of the Credit Agreement and (y)
those with respect to which appropriate termination statements executed by
the secured lender thereunder have been delivered to the Administrative Agent
pursuant to the terms of the Credit Agreement), and so long as the Total
Commitments have not been terminated or any Note or Letter of Credit remains
outstanding or any of the Obligations (other than arising from indemnities
for which no request has been made) remain unpaid or any Interest Rate
Protection Agreement or Other Hedging Agreement remains in effect or any
Obligations are owed with respect thereto, such Assignor will not execute or
authorize to be filed in any public office any financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as permitted by the Credit
Agreement.
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2.4. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office
of such Assignor is located at the address or addresses indicated on Annex A
hereto. Such Assignor will not move its chief executive office except to
such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. The originals of all documents evidencing all
Receivables, Contract Rights and Trade Secret Rights of such Assignor and the
only original books of account and records of such Assignor relating thereto
are, and will continue to be, kept at such chief executive office or at such
new locations as such Assignor may establish in accordance with the last
sentence of this Section 2.4. All Receivables, Contract Rights and Trade
Secret Rights of such Assignor are, and will continue to be, maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from, the office locations described above or such new
location established in accordance with the last sentence of this Section
2.4. Such Assignor shall not establish new locations for such offices until
(i) it shall have given to the Collateral Agent not less than 30 days' prior
written notice of its intention to do so, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new
location, it shall have taken all action, satisfactory to the Collateral
Agent, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect, (iii) at the reasonable request of the Collateral
Agent, it shall have furnished an opinion of counsel reasonably acceptable to
the Collateral Agent to the effect that all financing or continuation
statements and amendments or supplements thereto have been filed in the
appropriate filing office or offices, and (iv) the Collateral Agent shall
have received reasonable evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and
maintain the perfection and priority of) the security interest granted hereby.
2.5. LOCATION OF INVENTORY AND EQUIPMENT. All Inventory and
Equipment held on the date hereof by such Assignor is located at one of the
locations shown on Annex B hereto. Such Assignor agrees that all Inventory
and Equipment now held or subsequently acquired by it shall be kept at (or
shall be in transport to) any one of the locations shown on Annex B hereto,
or such new location as such Assignor may establish in accordance with the
last sentence of this Section 2.5. Such Assignor may establish a new
location for Inventory and Equipment only if (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice of its intention
to do so, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, (ii) with respect to such new location, it shall take all action as
the Collateral Agent may reasonably request to maintain the security interest
of the Collateral Agent in the Collateral intended to be granted hereby at
all times fully perfected and in full force and effect, (iii) at the
reasonable request of the Collateral Agent, it shall have furnished an
opinion of counsel reasonably acceptable to the Collateral Agent to the
effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or
offices, and (iv) the Collateral Agent shall have received reasonable
evidence that all other actions (including, without limitation, the payment
of all filing fees and taxes, if any, payable in connection with such
filings) have been taken, in order to perfect (and maintain the perfection
and priority of) the security interest granted hereby.
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2.6. RECOURSE. This Agreement is made with full recourse to such
Assignor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in
the other Credit Documents, in the Interest Rate Protection Agreements or
Other Hedging Agreements and otherwise in writing in connection herewith or
therewith.
2.7. TRADE NAMES; CHANGE OF NAME. Such Assignor does not have or
operate in any jurisdiction under, or within the five year period preceding
the date of this Agreement previously has not had or has not operated in any
jurisdiction under, any trade names, fictitious names or other names
(including any names of divisions or operations) except its legal name and
such other trade or fictitious names as are listed on Annex C hereto. Such
Assignor shall not change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names
listed on Annex C hereto in the jurisdictions listed with respect to such
names and new names (including, without limitation, any names of divisions or
operations) and/or jurisdictions established in accordance with the last
sentence of this Section 2.7. Such Assignor shall not assume or operate in
any jurisdiction under any new trade, fictitious or other name or operate
under any existing name in any additional jurisdiction until (i) it shall
have given to the Collateral Agent not less than 30 days' prior written
notice of its intention so to do, clearly describing such new name and/or
jurisdiction and, in the case of a new name, the jurisdictions in which such
new name shall be used and providing such other information in connection
therewith as the Collateral Agent may reasonably request, (ii) with respect
to such new name and/or jurisdiction, it shall have taken all action to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect, (iii) at the reasonable request of the Collateral Agent, it shall
have furnished an opinion of counsel reasonably acceptable to the Collateral
Agent to the effect that all financing or continuation statements and
amendments or supplements thereto have been filed in the appropriate filing
office or offices, and (iv) the Collateral Agent shall have received
reasonable evidence that all other actions (including, without limitation,
the payment of all filing fees and taxes, if any, payable in connection with
such filings) have been taken, in order to perfect (and maintain the
perfection and priority of) the security interest granted hereby.
2.8. LOCATION OF STANDING TIMBER. All Standing Timber held on the
date hereof by such Assignor is located at one of the locations shown on
Annex I hereto, which Annex includes a description of the land concerned.
Within 30 days following the end of each fiscal quarter of the Borrower and
at any other time if requested by the Collateral Agent each Assignor shall
deliver to the Collateral Agent an updated Annex I (as of the end of such
fiscal quarter or such date as shall be specified by the Collateral Agent, as
the case may be) and at such Assignor's expense, it shall file UCC financing
statements and take all such other action as the Collateral Agent may
reasonably request to maintain the security interest of the Collateral Agent
in such Standing Timber intended to be granted hereby at all times fully
protected and in full force and effect.
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ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. As of the time
when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto (i) will represent the genuine legal, valid and binding (except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws generally
affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or law) obligation of the account
debtor evidencing indebtedness unpaid and owed by the respective account
debtor arising out of the performance of labor or services or the sale or
lease and delivery of the inventory, materials, equipment or merchandise
listed therein, or both, (ii) will be the only original writings evidencing
and embodying such obligation of the account debtor named therein (other than
copies created for general accounting purposes), (iii) will evidence true,
legal and valid obligations, enforceable in accordance with their respective
terms (except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting creditors' rights and by equitable principles (regardless
of whether enforcement is sought in equity or law)) and (iv) will be in
compliance and will conform in all material respects with all applicable
federal, state and local laws and applicable laws of any relevant foreign
jurisdiction.
3.2. MAINTENANCE OF RECORDS. Each Assignor will keep and maintain
at its own cost and expense satisfactory and complete records of its
Receivables and Contracts, including, but not limited to, originals of all
documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and
all other dealings therewith, and such Assignor will make the same available
on such Assignor's premises to the Collateral Agent for inspection, at such
Assignor's own cost and expense, at any and all reasonable times and
intervals as the Collateral Agent may request. Upon the occurrence and
during the continuance of an Event of Default and at the request of the
Collateral Agent, such Assignor shall, at its own cost and expense, deliver
all tangible evidence of its Receivables and Contract Rights (including,
without limitation, all documents evidencing the Receivables and all
Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be
retained by such Assignor). If the Collateral Agent so directs, such
Assignor shall legend, in form and manner reasonably satisfactory to the
Collateral Agent, the Receivables and the Contracts, as well as books,
records and documents of such Assignor evidencing or pertaining to such
Receivables and Contracts with an appropriate reference to the fact that such
Receivables and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3. DIRECTION TO ACCOUNT DEBTORS; CONTRACTING PARTIES; ETC. Upon
the occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any
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Assignor, such Assignor agrees (x) to cause all payments on account of the
Receivables and Contracts to be made directly to the Cash Collateral Account,
(y) that the Collateral Agent may, at its option, directly notify the
obligors with respect to any Receivables and/or under any Contracts to make
payments with respect thereto as provided in preceding clause (x), and (z)
that the Collateral Agent may enforce collection of any such Receivables or
Contracts and may adjust, settle or compromise the amount of payment thereof,
in the same manner and to the same extent as such Assignor. Upon the
occurrence and during the continuance of an Event of Default, without notice
to or assent by any Assignor, the Collateral Agent may apply any or all
amounts then in, or thereafter deposited in, the Cash Collateral Account in
the manner provided in Section 7.4 of this Agreement. The costs and expenses
(including attorneys' fees) of collection, whether incurred by any Assignor
or the Collateral Agent, shall be borne by such Assignor.
3.4. MODIFICATION OF TERMS; ETC. No Assignor shall rescind or
cancel any indebtedness evidenced by any Receivable, or modify any term
thereof or make any adjustment with respect thereto, or extend or renew the
same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or sell any Receivable, or interest therein,
without the prior written consent of the Collateral Agent, except as
permitted by Section 3.5. No Assignor shall rescind or cancel any
indebtedness evidenced by any Contract, or modify any term thereof or make
any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any material dispute, claim, suit or legal proceeding
relating thereto, or sell any Contract, or interest therein, without the
prior written consent of the Collateral Agent, except (i) as permitted by
Section 3.5 and (ii) so long as no Default or Event of Default is then in
existence, to the extent that the aggregate cost to such Assignor resulting
from any such recission, cancellation, modification, adjustment, extension,
compromise, settlement or sale is not material to such Assignor. Each
Assignor will duly fulfill all material obligations on its part to be
fulfilled under or in connection with the Receivables and Contracts and will
do nothing to impair the rights of the Collateral Agent in the Receivables or
the Contracts, except as permitted by this Section 3.4 and Section 3.5.
3.5. COLLECTION. Each Assignor shall use reasonable efforts to
endeavor to cause to be collected from the account debtor named in each of
its Receivables or obligor under any Contract, as and when due (including,
without limitation, amounts, services or products which are delinquent, such
amounts, services or products to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts, services or
products owing under or on account of such Receivable or Contract, and apply
forthwith upon receipt thereof all such amounts, services or products as are
so collected to the outstanding balance of such Receivable or under such
Contract, except that, prior to the occurrence of an Event of Default, any
Assignor may allow in the ordinary course of business as adjustments to
amounts, services or products owing under its Receivables and Contracts (i)
an extension or renewal of the time or times of payment or exchange, or
settlement for less than the total unpaid balance, which such Assignor finds
appropriate in accordance with reasonable business judgment and (ii) a refund
or credit due as a result of returned or damaged merchandise or improperly
performed services. The costs and expenses (including, without limitation,
attorneys' fees) of collection, whether incurred by an Assignor or the
Collateral Agent, shall be borne by the relevant Assignor.
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3.6. INSTRUMENTS. If any Assignor owns or acquires any Instrument
constituting Collateral, such Assignor will within 10 days notify the Collateral
Agent thereof and, upon request by the Collateral Agent, promptly deliver such
Instrument to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
3.7. FURTHER ACTIONS. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers
of attorney, certificates, reports and other assurances or instruments and
take such further steps relating to its Receivables, Contracts, Instruments
and other property or rights covered by the security interest hereby granted,
as the Collateral Agent may reasonably request to preserve and protect its
security interest in the Collateral.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Assignor
represents and warrants that it is the true, lawful, sole and exclusive owner
of or otherwise has the right to use the Marks listed in Annex D hereto and
that said listed Marks constitute all the Marks that such Assignor presently
owns or uses in connection with its business (other than immaterial
unregistered Marks) and include all Marks registered in the United States
Patent and Trademark Office or the equivalent thereof in any foreign country
and all unregistered Marks (other than immaterial unregistered Marks) that
such Assignor now owns, licenses or uses for products developed by such
Assignor in connection with its business. Each Assignor further warrants
that it has no knowledge of any material third party claim that any aspect of
such Assignor's present or contemplated business operations infringes or will
infringe any rights in any trademark, service mark or trade name. Each
Assignor represents and warrants that it is the beneficial and record owner
of all trademark registrations and applications listed in Annex D hereto and
designated as "owned" thereon and that said registrations are valid,
subsisting and have not been canceled and that such Assignor is not aware of
any material third-party claim that any of said registrations is invalid or
unenforceable, or that there is any reason that any of said applications will
not pass to registration. Each Assignor represents and warrants that upon
the recordation of a Grant of Security Interest in United States Trademarks
and Patents in the form of Annex G hereto in the United States Patent and
Trademark Office, together with filings on Form UCC-1 pursuant to this
Agreement, all filings, registrations and recordings necessary or appropriate
to perfect the security interest granted to the Collateral Agent in the
registered United States Marks covered by this Agreement under federal law
will have been accomplished. Each Assignor agrees to execute such a Grant of
Security Interest in United States Trademark and Patents covering all right,
title and interest in each registered United States Mark, and the associated
goodwill, of such Assignor, and to record the same. Each Assignor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon
the occurrence and during the continuance of an Event of Default, any
document which may be required by the United States Patent and Trademark
Office or secretary of state or equivalent governmental agency of any State
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of the United States or any foreign jurisdiction in order to effect an
absolute assignment of all right, title and interest in each Mark, and record
the same.
4.2. LICENSES AND ASSIGNMENTS. Each Assignor hereby agrees not to
divest itself of any right under any Mark that is material to the business of
such Assignor absent prior written approval of the Collateral Agent, except
as otherwise permitted by this Agreement or the Credit Agreement.
4.3. INFRINGEMENTS. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
(i) any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor's rights in and to any
material Mark, or (ii) with respect to any party claiming that such Assignor's
use of any material Mark violates in any material respect any property right of
that party. Each Assignor further agrees, unless otherwise agreed by the
Collateral Agent, to prosecute, in accordance with reasonable business
practices, any Person infringing any material Mark owned by such Assignor.
4.4. PRESERVATION OF MARKS. Each Assignor agrees to use its Marks in
interstate or foreign commerce, as the case may be, during the time in which
this Agreement is in effect, sufficiently to preserve such Marks as valid and
subsisting trademarks or service marks under the laws of the United States or
the relevant foreign jurisdiction; PROVIDED that no Assignor shall be obligated
to preserve any Mark to the extent the Assignor determines, in its reasonable
business judgment, that the preservation of such Mark is no longer desirable in
the conduct of its business.
4.5. MAINTENANCE OF REGISTRATION. Each Assignor shall, at its own
expense and in accordance with reasonable business practices, process all
documents required by the Trademark Act of 1946, as amended, 15 U. S. C.
Sections 1051 ET SEQ. and any foreign equivalent thereof to maintain
trademark registrations, including but not limited to affidavits of continued
use and applications for renewals of registration in the United States Patent
and Trademark Office or equivalent governmental agency in any foreign
jurisdiction for all of its registered Marks pursuant to 15 U. S. C. Sections
1058(a), 1059 and 1065 or any foreign equivalent thereof, as applicable, and
shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of
renewal prior to the exhaustion of all administrative and judicial remedies
without prior written consent of the Collateral Agent; PROVIDED that no
Assignor shall be obligated to maintain any Mark to the extent such Assignor
determines, in its reasonable business judgment, that the maintenance of such
Mark is no longer necessary or desirable in the conduct of its business.
4.6. FUTURE REGISTERED MARKS. Within 30 days following the end
of each fiscal quarter of the Borrower, Assignors shall deliver to the
Collateral Agent, an updated Annex D listing (as of the end of such fiscal
quarter) any and all newly issued Marks (other than immaterial unregistered
Marks) not previously listed on such Annex D or any such update. Upon the
Collateral Agent's request, the relevant Assignor shall, at such Assignor's
expense, deliver to the Collateral Agent an assignment for security in any
such newly issued Mark, the form of such
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assignment for security to be substantially the same as the form hereof or in
such other form as may be reasonably satisfactory to the Collateral Agent.
4.7. REMEDIES. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the relevant
Assignor, take any or all of the following actions: (i) declare the entire
right, title and interest of such Assignor in and to each of the Marks,
together with all trademark rights and rights of protection to the same and
the goodwill of such Assignor's business symbolized by said Marks and the
right to recover for past infringements thereof, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled
to exercise the power of attorney referred to in Section 4.1 to execute,
cause to be acknowledged and notarized and to record an absolute assignment
with the applicable agency; (ii) take and use or sell the Marks and the
goodwill of such Assignor's business symbolized by the Marks and the right to
carry on the business and use the assets of such Assignor in connection with
which the Marks have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral
Agent, change such Assignor's corporate name to eliminate therefrom any use
of any Mark and execute such other and further documents that the Collateral
Agent may request to further confirm this and to transfer ownership of the
Marks and registrations and any pending trademark applications therefor in
the United States Patent and Trademark Office or any equivalent government
agency or office in any foreign jurisdiction to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Assignor
represents and warrants that it is the true and lawful exclusive owner of or
otherwise has the right to use all (i) Trade Secret Rights of such Assignor,
(ii) rights in the Patents of such Assignor listed in Annex E hereto and that
said Patents constitute all the patents and applications for patents that such
Assignor now owns or that are otherwise used, pursuant to a license or
sublicense, in the conduct of the business of such Assignor and (iii) rights in
the Copyrights of such Assignor listed in Annex F hereto, and that such
Copyrights constitute all registrations of copyrights and applications for
copyright registrations that the Assignor now owns or that are otherwise used,
pursuant to a license or sublicense, in the conduct of the business of such
Assignor. Each Assignor further represents and warrants that it has the
exclusive right (or, in the case of any Patents or Copyrights subject to an
agreement which provides such right is non-exclusive, non-exclusive rights) to
use and practice under all Patents and Copyrights that it owns, uses, pursuant
to a license or sublicense, or under which it practices and has the exclusive
right (or, in the case of Patent subject to an agreement which provides such
right is non-exclusive, non-exclusive right) to exclude others from using or
practicing under any Patents it owns, uses, pursuant to a license or sublicense,
or under which it practices. Each Assignor further warrants that it has no
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knowledge of any material third party claim that any aspect of such
Assignor's present or contemplated business operations infringes or will
infringe any rights in any Patent or Copyright or that such Assignor has
misappropriated any Trade Secrets, Trade Secret Rights or other proprietary
information. Each Assignor represents and warrants that upon the recordation
of a Grant of Security Interest in United States Trademarks and Patents in
the form of Annex G hereto in the United States Patent and Trademark Office
and the recordation of a Grant of Security Interest in United States
Copyrights in the form of Annex H hereto in the United States Copyright
Office, together with filings on Form UCC-1 pursuant to this Agreement, all
filings, registrations and recordings necessary or appropriate to perfect the
security interest granted to the Collateral Agent in the registered United
States Patents and registered United States Copyrights covered by this
Agreement under federal law will have been accomplished. Each Assignor
agrees to execute a Grant of Security Interest in registered United States
Trademarks and Patents covering all right, title and interest in each
registered United States Patent of such Assignor and to record the same, and
to execute such a Grant of Security Interest in registered United States
Copyrights covering all right, title and interest in each registered United
States Copyright of such Assignor and to record the same. Each Assignor
hereby grants to the Collateral Agent an absolute power of attorney to sign,
upon the occurrence and during the continuance of any Event of Default, any
document which may be required by the United States Patent and Trademark
Office or equivalent governmental agency in any foreign jurisdiction or the
United States Copyright Office or equivalent governmental agency in any
foreign jurisdiction in order to effect an absolute assignment of all right,
title and interest in each registered Patent and registered Copyright of such
Assignor, as the case may be, and to record the same.
5.2. LICENSES AND ASSIGNMENTS. Each Assignor hereby agrees not to
divest itself of any right under any Patent or Copyright that is material to the
business of such Assignor absent prior written approval of the Collateral Agent,
except as otherwise permitted by this Agreement or the Credit Agreement.
5.3. INFRINGEMENTS. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement to infringe any of such
Assignor's rights in any material Patent or material Copyright or to any
claim that the practice of any material Patent or the use of any material
Copyright of such Assignor violates any property right of a third party, or
with respect to any misappropriation of any material Trade Secret Right of
such Assignor or any claim that practice of any material Trade Secret Right
of such Assignor violates any property right of a third party. Each Assignor
further agrees, absent direction of the Collateral Agent to the contrary,
diligently to prosecute, in accordance with reasonable business practices,
any Person infringing any material Patent or material Copyright of such
Assignor or any Person misappropriating any material Trade Secret Right of
such Assignor.
5.4. MAINTENANCE OF PATENTS AND COPYRIGHTS. At its own expense,
each Assignor shall make timely payment of all post-issuance fees required
pursuant to 35 U. S. C. Section 41 and any foreign equivalent thereof to
maintain in force rights under each of its Patents, and to apply as permitted
pursuant to applicable law for any renewal of each of its Copyrights, in any
case absent prior written consent of the Collateral Agent; PROVIDED, that, no
Assignor shall be obligated to
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pay any such fees or apply for any such renewal to the extent that such
Assignor determines, in its reasonable business judgment, that the
maintenance of such Patent or Copyright is no longer necessary or desirable
in the conduct of its business.
5.5. PROSECUTION OF PATENT OR COPYRIGHT APPLICATIONS. At its own
expense, each Assignor shall diligently prosecute, in accordance with reasonable
business practices, all of its applications for Patents listed in Annex E hereto
and for Copyrights listed in Annex F hereto and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies,
absent written consent of the Collateral Agent, PROVIDED that no Assignor shall
be obligated to prosecute such application for any such Patent or Copyright to
the extent that such Assignor determines, in its reasonable business judgment,
that the prosecution of such application for any such Patent or Copyright is no
longer necessary or desirable in the conduct of its business.
5.6. OTHER PATENTS AND COPYRIGHTS. Within 30 days following the end
of each fiscal quarter of the Borrower, Assignors shall deliver to the
Collateral Agent updated Annexes E and F listing, as of the end of such fiscal
quarter, any and all newly issued or acquired United States Patent or Copyright
registrations and any and all newly filed applications for United States Patent
or Copyright registrations. Upon the Collateral Agent's reasonable request, the
relevant Assignor shall, at such Assignor's expense, deliver to the Collateral
Agent an assignment for security as to any such newly issued or acquired Patent
or Copyright (or newly filed application therefor), the form of such assignment
for security to be substantially the same as the form hereof or in such other
form as may be reasonably satisfactory to the Collateral Agent.
5.7. REMEDIES. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 5.1 to execute, cause to
be acknowledged and notarized and to record an absolute assignment with the
applicable agency; (ii) take and use, practice or sell the Patents, Copyrights
and Trade Secret Rights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights and/or Trade Secret Rights directly or indirectly, and such Assignor
shall execute such other and further documents as the Collateral Agent may
request further to confirm this and to transfer ownership of the Patents,
Copyrights and Trade Secret Rights to the Collateral Agent for the benefit of
the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. PROTECTION OF COLLATERAL AGENT'S SECURITY. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep
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its Inventory and Equipment insured in favor of the Collateral Agent, at such
Assignor's own expense to the extent and in the manner provided in the Credit
Agreement and the other Credit Documents. All policies or certificates with
respect to such insurance (and any other insurance maintained by such
Assignor) (i) shall be endorsed to the Collateral Agent's reasonable
satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee and naming each of
the Lenders, the Administrative Agent and the Collateral Agent as additional
insureds); (ii) shall state that such insurance policies shall not be
canceled or revised without 30 days' (or at least 10 days' in the case of
nonpayment of any premium) prior written notice thereof by the insurer to the
Collateral Agent; and (iii) certified copies of such policies or certificates
shall be deposited with the Collateral Agent to the extent, at the times and
in the manner specified in the Credit Agreement. If any Assignor shall fail
to insure its Inventory and Equipment in accordance with the preceding
sentence, or if any Assignor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent shall
have the right (but shall be under no obligation) to procure such insurance
and such Assignor agrees to promptly reimburse the Collateral Agent for all
costs and expenses of procuring such insurance. Except as otherwise
permitted to be retained or expended by the relevant Assignor pursuant to the
Credit Agreement, the Collateral Agent shall, at the time such proceeds of
such insurance are distributed to the Secured Creditors, apply such proceeds
in accordance with the Credit Agreement, or after the Obligations have been
accelerated or otherwise become due and payable, in accordance with Section
7.4. Each Assignor assumes all liability and responsibility in connection
with the Collateral acquired by it and the liability of such Assignor to pay
the Obligations shall in no way be affected or diminished by reason of the
fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.
6.2. WAREHOUSE RECEIPTS NON-NEGOTIABLE. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).
6.3. FURTHER ACTIONS. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such lists, descriptions and designations of its
Collateral, warehouse receipts, receipts in the nature of warehouse receipts,
bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances
or instruments and take such further steps relating to the Collateral and
other property or rights covered by the security interest hereby granted,
which the Collateral Agent deems reasonably appropriate or advisable to
perfect, preserve or protect its security interest in the Collateral.
6.4. FINANCING STATEMENTS. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form acceptable
to the Collateral Agent, as the Collateral Agent may from time to time
reasonably request or as are reasonably necessary or desirable in the opinion
of the Collateral Agent to establish and maintain a valid, enforceable,
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first priority (subject to Permitted Liens) perfected security interest in
the Collateral as provided herein and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law.
Each Assignor will pay any applicable filing fees, recordation taxes and
related expenses relating to its Collateral. Each Assignor hereby authorizes
the Collateral Agent to file any such financing statements without the
signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and may
also:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4;
(iv) sell, assign or otherwise liquidate, or direct such Assignor to
sell, assign or otherwise liquidate, any or all of the Collateral or any
part thereof in accordance with Section 7.2, or direct the relevant
Assignor to sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof, and, in each case, take possession of the
proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral Agent,
in which event such Assignor shall at its own expense:
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(x) forthwith cause the same to be moved to the place or places
so reasonably designated by the Collateral Agent and there delivered
to the Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2; and
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for such
term and on such conditions and in such manner as the Collateral Agent
shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Collateral Agent
shall be entitled to a decree requiring specific performance by such Assignor
of said obligation. The Secured Creditors agree that this Agreement may be
enforced only by the action of the Administrative Agent or the Collateral
Agent, in each case acting upon the instructions of the Required Lenders (or,
after the date on which all Credit Document Obligations have been paid in
full, the holders of at least the majority of the outstanding Other
Obligations) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that
such rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent or the holders of at least a majority of the outstanding
Other Obligations, as the case may be, for the benefit of the Secured
Creditors upon the terms of this Agreement.
7.2. REMEDIES; DISPOSITION OF THE COLLATERAL. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 and any
other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at the
place of sale the property to be sold, and in general in such manner, at such
time or times, at such place or places and on such terms as the Collateral
Agent may, in compliance with any mandatory requirements of applicable law,
determine to be commercially reasonable. Any of the Collateral may be sold,
leased or otherwise disposed of, in the condition in which the same existed
when taken by the Collateral Agent or after any overhaul or repair at the
expense of the relevant Assignor which the Collateral Agent shall determine
to be commercially reasonable. Any such disposition which shall be a private
sale or other private proceedings permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time at which such disposition is to be made and the intended
sale price or other consideration therefor, and shall be subject, for the 10
days after the giving of such notice, to the right of the relevant Assignor
or any nominee of such Assignor to acquire the Collateral involved
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at a price or for such other consideration at least equal to the intended
sale price or other consideration so specified. Any such disposition which
shall be a public sale permitted by such requirements shall be made upon not
less than 10 days' written notice to the relevant Assignor specifying the
time and place of such sale and, in the absence of applicable requirements of
law, shall be by public auction (which may, at the Collateral Agent's option,
be subject to reserve), after publication of notice of such auction not less
than 10 days prior thereto in two newspapers in general circulation to be
selected by the Collateral Agent. To the extent permitted by any such
requirement of law, the Collateral Agent on behalf of the Secured Creditors
(or certain of them) may bid for and become the purchaser of the Collateral
or any item thereof, offered for sale in accordance with this Section without
accountability to the relevant Assignor. If, under mandatory requirements of
applicable law, the Collateral Agent shall be required to make a disposition
of the Collateral within a period of time which does not permit the giving of
notice to the relevant Assignor as hereinabove specified, the Collateral
Agent need give such Assignor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of applicable
law. Each Assignor agrees to do or cause to be done all such other acts and
things as may be reasonably necessary to make such sale or sales of all or
any portion of the Collateral of such Assignor valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrations or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Assignor's expense.
7.3. WAIVER OF CLAIMS. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH
ASSIGNOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE
UNITED STATES OR OF ANY STATE, and such Assignor hereby further waives, to
the extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
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Any sale of, or the grant of options to purchase, or any other realization
upon, any Collateral shall, to the fullest extent permitted under applicable
law, operate to divest all right, title, interest, claim and demand, either
at law or in equity, of the relevant Assignor therein and thereto and shall
be a perpetual bar both at law and in equity against such Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
such Assignor.
7.4. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral (or, to
the extent the Pledge Agreement, any Mortgage or any other Security Document
requires proceeds of collateral thereunder to be applied in accordance with
the provisions of this Agreement, the Pledgee under the Pledge Agreement, the
mortgagee under such Mortgage or the collateral agent under such other
Security Document), together with all other moneys received by the Collateral
Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Pledgee or
the Collateral Agent of the type described in clauses (iii) and (iv) of the
definition of "Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations shall be paid to the Secured Creditors as provided in
Section 7.4(e), with each Secured Creditor receiving an amount equal to its
outstanding Primary Obligations or, if the proceeds are insufficient to pay
in full all such Primary Obligations, its PRO RATA Share of the amount
remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(e), with each Secured Creditor receiving an amount
equal to its outstanding Secondary Obligations or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its PRO RATA
Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 10.8(a)
hereof, to the relevant Assignor or to whomever may be lawfully entitled to
receive such surplus.
(b) For purposes of this Agreement (x) "PRO RATA SHARE" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "PRIMARY OBLIGATIONS" shall mean (i) in the case of the
Credit Document Obligations, all principal of, and interest on, all Loans under
the Credit Agreement, all Unpaid Drawings theretofore made (together with all
interest accrued thereon), the aggregate Stated Amounts of all Letters of Credit
issued (or deemed issued) under the Credit
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Agreement, and all Fees and (ii) in the case of the Other Obligations, all
amounts due under the Interest Rate Protection Agreements or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (z) "SECONDARY
OBLIGATIONS" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective PRO RATA Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its
PRO RATA Share of any distribution would result in overpayment to such
Secured Creditor, such excess amount shall instead be distributed in respect
of the unpaid Primary Obligations or Secondary Obligations, as the case may
be, of the other Secured Creditors, with each Secured Creditor whose Primary
Obligations or Secondary Obligations, as the case may be, have not been paid
in full to receive an amount equal to such excess amount multiplied by a
fraction the numerator of which is the unpaid Primary Obligations or
Secondary Obligations, as the case may be, of such Secured Creditor and the
denominator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of all Secured Creditors entitled to such
distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if
the Lender Creditors are to receive a distribution on account of undrawn
amounts with respect to Letters of Credit issued (or deemed issued) under the
Credit Agreement (which shall only occur after all outstanding Loans and
Unpaid Drawings with respect to such Letters of Credit have been paid in
full), such amounts shall be paid to the Administrative Agent under the
Credit Agreement and held by it, for the equal and ratable benefit of the
Lender Creditors, as cash security for the repayment of Obligations owing to
the Lender Creditors as such. If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of
all outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Lender Creditors
after giving effect to the termination of all such Letters of Credit, if
there remains any excess cash, such excess cash shall be returned by the
Agent to the Collateral Agent for distribution in accordance with Section
7.4(a) hereof.
(e) Except as set forth in Section 7.4(d), all payments required to
be made hereunder shall be made (x) if to the Lender Creditors, to the
Administrative Agent under the Credit Agreement for the account of the Lender
Creditors, and (y) if to the Other Creditors, to the trustee, paying agent or
other similar representative (each, a "REPRESENTATIVE") for the Other Creditors
or, in the absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative
for the Other Creditors or, in the absence of such a Representative, upon the
Other Creditors for a determination (which the Administrative Agent, each
Representative for any Secured Creditors and the Secured Creditors agree (or
shall agree) to provide upon request of the Collateral Agent) of the
outstanding Primary Obligations and Secondary Obligations owed to the Lender
Creditors or the Other Creditors, as the case may be. Unless it has actual
knowledge (including by way of written notice from a Lender Creditor or an
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Other Creditor) to the contrary, the Administrative Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume
that no Secondary Obligations are outstanding. Unless it has actual
knowledge (including by way of written notice from an Other Creditor) to the
contrary, the Collateral Agent, in acting hereunder, shall be entitled to
assume that no Interest Rate Protection Agreements or Other Hedging
Agreements are in existence.
(g) It is understood and agreed that each Assignor shall remain
liable to the extent of any deficiency between the amount of the proceeds of
the Collateral in which it has granted a security interest hereunder and the
aggregate amount of its Obligations.
7.5. REMEDIES CUMULATIVE. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement,
the Interest Rate Protection Agreements or Other Hedging Agreements or the
other Credit Documents or now or hereafter existing at law, in equity or by
statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by
the Collateral Agent. All such rights, powers and remedies shall be
cumulative and the exercise or the beginning of the exercise of one shall not
be deemed a waiver of the right to exercise any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any
Default or Event of Default or an acquiescence therein. No notice to or
demand on any Assignor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances or constitute a waiver of
any of the rights of the Collateral Agent to any other or further action in
any circumstances without notice or demand. In the event that the Collateral
Agent shall bring any suit to enforce any of its rights hereunder and shall
be entitled to judgment, then in such suit the Collateral Agent may recover
expenses, including reasonable attorneys' fees, and the amounts thereof shall
be included in such judgment.
7.6. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every
such case the relevant Assignor, the Collateral Agent and each holder of any
of the Obligations shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the
Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. INDEMNITY. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective
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successors, assigns, employees, agents and servants (hereinafter in this
Section 8.1 referred to individually as an "INDEMNITEE," and, collectively,
as "INDEMNITEES") harmless from any and all liabilities, obligations, losses,
damages, injuries, penalties, claims, demands, actions, suits, judgments and
any and all costs, expenses or disbursements (including attorneys' fees and
expenses) (for the purposes of this Section 8.1, the foregoing are
collectively called "EXPENSES") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to
or arising out of this Agreement, any Interest Rate Protection Agreement or
Other Hedging Agreement, any other Credit Document or any other document
executed in connection herewith or therewith or in any other way connected
with the administration of the transactions contemplated hereby or thereby or
the enforcement of any of the terms of, or the preservation of any rights
under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent
or other defects, whether or not discoverable), the violation of the laws of
any country, state or other governmental body or unit, any tort (including,
without limitation, claims arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; PROVIDED
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence
or willful misconduct of such Indemnitee. Each Assignor agrees that upon
written notice by any Indemnitee of the assertion of such a liability,
obligation, loss, damage, injury, penalty, claim, demand, action, suit or
judgment, the relevant Assignor shall assume full responsibility for the
defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify the relevant Assignor of any such assertion of which such Indemnitee
has knowledge.
(b) Without limiting the application of Section 8.1(a), each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other fees,
costs and expenses in connection with protecting, maintaining or preserving
the Collateral and the Collateral Agent's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b),
each Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or
growing out of any misrepresentation by any Assignor in this Agreement, any
Interest Rate Protection Agreement or Other Hedging Agreement, any other
Credit Document or in any writing contemplated by or made or delivered
pursuant to or in connection with this Agreement, any Interest Rate
Protection Agreement or Other Hedging Agreement or any other Credit Document.
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(d) If and to the extent that the obligations of any Assignor
under this Section 8.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
8.2. INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and Letters of Credit, and
the payment of all other Obligations and notwithstanding the discharge
thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the recitals
hereto.
"AGREEMENT" shall have the meaning provided in the preamble to this
Agreement.
"ASSIGNOR" shall have the meaning provided in the preamble to this
Agreement.
"BANK CREDIT AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT" shall have
the meaning provided in the Credit Agreement.
"BORROWER" shall mean (i) at any time prior to the Contribution
Effective Time, TPI and (ii) at any time after the Contribution Effective Time,
PCA.
"CASH COLLATERAL ACCOUNT" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
"CHATTEL PAPER" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"CLASS" shall have the meaning provided in Section 10.2 of this
Agreement.
"CO-LEAD ARRANGERS" shall have the meaning provided in the recitals
hereto.
"COLLATERAL" shall have the meaning provided in Section 1.1(a) of this
Agreement.
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"COLLATERAL AGENT" shall have the meaning provided in the preamble to
this Agreement.
"CONTRACT RIGHTS" shall mean (i) all rights of an Assignor (including,
without limitation, all rights to payment) under each Contract and (ii) any
Receivable or any money(ies) due or to become due under any Excluded Contract.
"CONTRACTS" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreement or Other Hedging Agreement) to the extent the grant by an
Assignor of a security interest pursuant to this Agreement in its right, title
and interest in any such contract is not prohibited by such contract (or, if
prohibited, the consent of each other party to such grant of a security interest
is obtained) and would not give any other party to such contract the right to
terminate, or automatically result in the termination of, such other party's
obligations thereunder or the Assignor's rights thereunder (those contracts
where such grant is so prohibited (and consent not obtained) or resulting in
such a right of, or automatic, termination are referred to herein as "EXCLUDED
CONTRACTS").
"CONTAINERBOARD BUSINESS" shall have the meaning provided in the
Credit Agreement.
"CONTRIBUTION AGREEMENT" shall have the meaning provided in the Credit
Agreement.
"CONTRIBUTION EFFECTIVE TIME" shall have the meaning provided in the
Credit Agreement.
"COPYRIGHTS" shall mean any United States or foreign copyright owned
by any Assignor, including any registrations of any Copyright in the United
States Copyright Office or the equivalent thereof in any foreign country, other
than any country outside the United States where the grant of a security
interest would violate such Copyrights, as well as any application for a United
States or foreign copyright registration now or hereafter made with the United
States Copyright Office or the equivalent thereof in any foreign jurisdiction by
any Assignor.
"CREDIT AGREEMENT" shall mean the Credit Agreement , dated as of
April 12, 1999, among the Borrower, the Lenders, the Co-Lead Arrangers, the
Syndication Agent and the Administrative Agent, providing for the making of
Loans to the Borrower and, after the Contribution Effective Time, the
issuance of, and participation in, Letters of Credit for the account of the
Borrower as contemplated therein, as the same may be amended, restated,
modified, extended, renewed, replaced, supplemented, restructured and/or
refinanced from time to time, and including any agreement extending the
maturity of, refinancing or restructuring (including, but not limited to, the
inclusion of additional borrowers thereunder that are Subsidiaries of the
Borrower and whose obligations are guaranteed by the Borrower and/or the
Subsidiary Guarantors thereunder or any increase in the amount borrowed) all,
or any portion of, the Indebtedness under such agreement or any successor
agreements; PROVIDED, that with respect to any agreement providing for the
refinancing of Indebtedness under the Credit Agreement, such agreement shall
only be treated as, or as part of, the Credit Agreement hereunder if (i)
either (A)
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all obligations under the Credit Agreement being refinanced shall be paid in
full at the time of such refinancing, and all commitments under the
refinanced Credit Agreement shall have terminated in accordance with their
terms or (B) the Required Lenders shall have consented in writing to the
refinancing Indebtedness being treated, along with their Indebtedness, as
Indebtedness pursuant to the Credit Agreement, (ii) the refinancing
Indebtedness shall be permitted to be incurred under the Credit Agreement
being refinanced (if such Credit Agreement is to remain outstanding) and
(iii) a notice to the effect that the refinancing Indebtedness shall be
treated as issued under the Credit Agreement shall be delivered by the
Borrower to the Collateral Agent).
"CREDIT DOCUMENT OBLIGATIONS" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"DEFAULT" shall mean any event which, with notice or lapse of time, or
both, would constitute an Event of Default.
"DOCUMENTS" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"EQUIPMENT" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"EVENT OF DEFAULT" shall mean any Event of Default under, and as
defined in, the Credit Agreement or any payment default under any Interest Rate
Protection Agreement or Other Hedging Agreement and shall in any event, without
limitation, include any payment default on any of the Obligations after the
expiration of any applicable grace period.
"EXCLUDED CONTRACTS" shall have the meaning provided in the definition
of Contracts.
"GENERAL INTANGIBLES" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, but
excluding those General Intangibles constituting Excluded Contracts (other than
any Receivable or any money(ies) due or to become due under any such Excluded
Contract).
"GOODS" shall have the meaning provided in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
"INDEMNITEE" shall have the meaning provided in Section 8.1 of this
Agreement.
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<PAGE>
"INSTRUMENT" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"INTEREST RATE PROTECTION AGREEMENT OR OTHER HEDGING AGREEMENT" shall
have the meaning provided in the recitals to this Agreement.
"INVENTORY" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date
hereof in the State of New York, now or hereafter owned by any Assignor.
"LENDER CREDITORS" shall have the meaning provided in the recitals to
this Agreement.
"LENDERS" shall have the meaning provided in the recitals to this
Agreement.
"LIENS" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"MARKS" shall mean all right, title and interest in and to any United
States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration or application
for registration of any trademarks and service marks in the United States Patent
and Trademark Office, or the equivalent thereof in any State of the United
States or in any foreign country, other than any country outside the United
States where the grant of a security interest would violate such Marks and any
trade dress including logos, designs, trade names, company names, business
names, fictitious business names and other business identifiers used by any
Assignor in the United States or any foreign country.
"OBLIGATIONS" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of each
Assignor owing to the Lender Creditors, now existing or hereafter incurred
under, arising out of or in connection with any Credit Document to which such
Assignor is a party (including all such obligations and indebtedness under any
Subsidiaries Guaranty to which such Assignor is a party) and the due performance
and compliance by each Assignor with the terms, conditions and agreements of
each such Credit Document (all such obligations and liabilities under this
clause (i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection Agreements or Other Hedging Agreements,
being herein collectively called the "CREDIT DOCUMENT OBLIGATIONS"); (ii) the
full and prompt payment when due (whether at the
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stated maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of each Assignor owing to
the Other Creditors, now existing or hereafter incurred under, arising out of
or in connection with any Interest Rate Protection Agreement or Other Hedging
Agreement, whether such Interest Rate Protection Agreement or Other Hedging
Agreement is now in existence or hereafter arising, including, in the case of
each Subsidiary Guarantor, all obligations under the Subsidiaries Guaranty in
respect of Interest Rate Protection Agreements or Other Hedging Agreements,
and the due performance and compliance by each Assignor with all of the
terms, conditions and agreements contained in any such Interest Rate
Protection Agreement or Other Hedging Agreement (all such obligations and
indebtedness under this clause (ii) being herein collectively called the
"OTHER OBLIGATIONS"); (iii) any and all sums advanced by the Collateral Agent
or the Pledgee in order to preserve the Collateral or preserve its security
interest in the Collateral; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
each Assignor referred to in clauses (i), (ii) and (iii) after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent or the Pledgee of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement. It is acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types described
above, whether outstanding on the date of this Agreement or extended from
time to time after the date of this Agreement.
"OTHER CREDITORS" shall have the meaning provided in the recitals to
this Agreement.
"OTHER OBLIGATIONS" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"PATENTS" shall mean any United States or foreign patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a United States or foreign patent now or
hereafter made by any Assignor, except as to patents or patent applications in
any country where the granting of a security interest therein is not permissible
under the laws of such country.
"PERMITS" shall mean, to the extent permitted to be assigned by the
terms thereof or by applicable law, all licenses, permits, rights, orders,
variances, franchises or authorizations (including certificates of need) of or
from any governmental authority or agency.
"PLEDGE AGREEMENT" shall have the meaning provided in the Credit
Agreement.
"PLEDGED SECURITIES" shall mean all Securities under, and as defined
in, the Pledge Agreement, which have been pledged by the Assignors pursuant
thereto.
"PLEDGEE" shall have the meaning provided in the Pledge Agreement.
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<PAGE>
"PRIMARY OBLIGATIONS" shall have the meaning provided in Section
7.4(b) of this Agreement.
"PROCEEDS" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or any Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"PRO RATA SHARE" shall have the meaning provided in Section 7.4(b) of
this Agreement.
"RECEIVABLES" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for, or
exchange of, goods sold or leased or services performed or product exchanged by
such Assignor, whether now in existence or arising from time to time hereafter,
including, without limitation, rights evidenced by an account, note, contract,
barter arrangement, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by such Assignor to secure the foregoing, (b)
all of any Assignor's right, title and interest in and to any goods or services,
the sale or exchange of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"REPRESENTATIVE" shall have the meaning provided in Section 7.4(e) of
this Agreement.
"REQUISITE CREDITORS" shall have the meaning provided in Section 10.2
of this Agreement.
"SECONDARY OBLIGATIONS" shall have the meaning provided in Section
7.4(b) of this Agreement.
"SECURED CREDITORS" shall have the meaning provided in the recitals to
this Agreement.
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"STANDING TIMBER" shall mean standing timber which is to be cut and
removed under a conveyance or contract for sale.
"SUBSIDIARIES GUARANTY" shall have the meaning provided in the
recitals to this Agreement.
"SYNDICATION AGENT" shall have the meaning provided in the recitals to
this Agreement.
"TERMINATION DATE" shall have the meaning provided in Section 10.8 of
this Agreement.
"TRADE SECRET RIGHTS" shall mean the rights of an Assignor in any
Trade Secrets it holds or owns.
"TRADE SECRETS" means any secretly held existing engineering and
other data, information, production procedures and other know-how relating to
the design, manufacture, assembly, installation, use, operation, marketing,
sale and servicing of any products or business of an Assignor worldwide,
whether written or not written.
ARTICLE X
MISCELLANEOUS
10.1. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at:
c/o Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Attention: Paul T. Stecko
Tel: (847) 482-2000
Fax: (847) 482-4738
(b) if to the Collateral Agent:
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Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware
Attention: Nicole Pedicone
Telephone No.: (302) 634-1912
Facsimile No.: (302) 634-4300
(c) if to any Lender Creditor (other than the Collateral Agent), at
such address as such Lender Creditor shall have specified in the Credit
Agreement; and
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly and adversely
affected thereby and the Collateral Agent (with the consent of (x) the
Required Lenders (or all the Lenders if required by Section 13.12 of the
Credit Agreement) at all times prior to the time at which all Credit Document
Obligations (other than those arising from indemnities for which no request
has been made) have been paid in full and all Commitments and Letters of
Credit under the Credit Agreement have been terminated or (y) the holders of
at least a majority of the outstanding Other Obligations at all times after
the time on which all Credit Document Obligations have been paid in full and
all Commitments and Letters of Credit under the Credit Agreement have been
terminated); PROVIDED, HOWEVER, that no such change, waiver, modification or
variance shall be made to Section 8 hereof or this Section 10.2 without the
consent of each Secured Creditor adversely affected thereby, PROVIDED
FURTHER, that any change, waiver, modification or variance affecting the
rights and benefits of a single Class (as defined below) of Secured Creditors
(and not all Secured Creditors in a like or similar manner) shall require the
written consent of the Requisite Creditors (as defined below) of such Class
of Secured Creditors. For the purpose of this Agreement, the term "CLASS"
shall mean each class of Secured Creditors, I.E., whether (x) the Lender
Creditors as holders of the Credit Document Obligations or (y) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "REQUISITE CREDITORS" of any Class shall mean each of (x)
with respect to the Credit Document Obligations, the Required Lenders and (y)
with respect to the Other Obligations, the holders of at least a majority of
all obligations outstanding from time to time under the Interest Rate
Protection Agreements and Other Hedging Agreements.
10.3. OBLIGATIONS ABSOLUTE. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall
not be impaired by, (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of such
Assignor; (b) any exercise or non-exercise, or any waiver of, any right,
remedy, power or privilege under or in respect of this Agreement, any other
Credit Document or any
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Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
renewal, extension, amendment or modification of or addition or supplement to
or deletion from any Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement or any security for any of the
Obligations; (d) any waiver, consent, extension, indulgence or other action
or inaction under or in respect of any such agreement or instrument
including, without limitation, this Agreement; (e) any furnishing of any
additional security to the Collateral Agent or its assignee or any acceptance
thereof or any release of any security by the Collateral Agent or its
assignee; or (f) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof;
whether or not any Assignor shall have notice or knowledge of any of the
foregoing. The rights and remedies of the Collateral Agent herein provided
are cumulative and not exclusive of any rights or remedies which the
Collateral Agent would otherwise have.
10.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon each Assignor and its successors and assigns and shall inure to the
benefit of the Collateral Agent and its successors and assigns; PROVIDED,
that no Assignor may transfer or assign any or all of its rights or
obligations hereunder without the prior written consent of the Collateral
Agent. All agreements, statements, representations and warranties made by
each Assignor herein or in any certificate or other instrument delivered by
such Assignor or on its behalf under this Agreement shall be considered to
have been relied upon by the Secured Creditors and shall survive the
execution and delivery of this Agreement, the other Credit Documents and the
Interest Rate Protection Agreements or Other Hedging Agreements regardless of
any investigation made by the Secured Creditors or on their behalf.
10.5. HEADINGS DESCRIPTIVE. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
10.7. ASSIGNORS' DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.
10.8. TERMINATION; RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 8.1 hereof shall
survive such termination) and the Collateral Agent, at the request and expense
of the relevant Assignor, will execute and deliver to such Assignor a proper
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instrument or instruments (including, without limitation, Uniform Commercial
Code termination statements on form UCC-3) acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Collateral Agent
and as has not theretofore been sold or otherwise applied or released
pursuant to this Agreement. As used in this Agreement, "TERMINATION DATE"
shall mean the date upon which the Total Commitments and all Interest Rate
Protection Agreements or Other Hedging Agreements have been terminated, no
Note is outstanding (and all Loans have been paid in full), all Letters of
Credit have been terminated and all other Obligations (other than those
arising from indemnities for which no request has been made) then owing have
been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of (to a Person other than the Borrower or a Subsidiary
thereof) (x) at any time prior to the time at which all Credit Document
Obligations have been paid in full and all Commitments under the Credit
Agreement have been terminated, in connection with a sale or other
disposition (including the sale of the capital stock or other equity
interests of an Assignor) permitted by Section 9.02 of the Credit Agreement
or is otherwise released at the direction of the Required Lenders (or all the
Lenders if required by Section 13.12 of the Credit Agreement) or (y) at any
time thereafter, in accordance with the terms of the Interest Rate Protection
Agreements or Other Hedging Agreements, and the proceeds of any such sale or
disposition are applied in accordance with the terms of the Credit Agreement
or such Interest Rate Protection Agreements or Other Hedging Agreements, as
the case may be, to the extent required to be so applied, the Collateral
Agent, at the request and expense of such Assignor, will (i) duly assign,
transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold, disposed of or released and as may be in the possession of the
Collateral Agent and has not theretofore been released pursuant to this
Agreement and/or (ii) execute such releases and discharges in respect of such
Collateral as is then being (or has been) so sold, disposed of or released as
such Assignor may reasonably request.
(c) At any time that the respective Assignor desires that
Collateral be released as provided in the foregoing Section 10.8(a) or (b),
it shall deliver to the Collateral Agent a certificate signed by an
Authorized Officer stating that the release of the respective Collateral is
permitted pursuant to Section 10.8(a) or (b). If requested by the Collateral
Agent (although the Collateral Agent shall have no obligation to make any
such request), the relevant Assignor shall furnish appropriate legal opinions
(from counsel, which may be in-house counsel, reasonably acceptable to the
Collateral Agent) to the effect set forth in the immediately preceding
sentence. The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as
permitted (or which the Collateral Agent in the absence of gross negligence
or willful misconduct believes to be permitted) by this Section 10.8.
10.9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.
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10.10. THE COLLATERAL AGENT. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time
received under this Agreement. It is expressly understood and agreed that
the obligations of the Collateral Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement.
The Collateral Agent shall act hereunder on the terms and conditions set
forth in Section 12 of the Credit Agreement.
10.11. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
10.12. LIMITED OBLIGATIONS. It is the desire and intent of each
Assignor and the Secured Creditors that this Agreement shall be enforced
against each Assignor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Notwithstanding anything to the contrary contained herein, in furtherance of
the foregoing, it is noted that, on and after the execution and delivery of
the Subsidiaries Guaranty, the obligations of each Subsidiary Guarantor
constituting an Assignor have been limited as provided in the Subsidiaries
Guaranty.
10.13. ADDITIONAL ASSIGNORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Section 8.11, 8.13 or 9.14 of the
Credit Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Agent.
10.14. EFFECTIVENESS. This Agreement shall become effective when
(i) the Contribution Effective Time shall have occurred and (ii) the
Collateral Agent, PCA and each Subsidiary of PCA whose name appears on the
signature pages hereto shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered (including by way of
facsimile transmission) the same to the Administrative Agent at its Notice
Office or the offices of its counsel.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
PACKAGING CORPORATION OF AMERICA,
as an Assignor
By: /s/ Paul T. Stecko
---------------------------------
Title: Chairman of the Board and
Chief Executive Officer
DAHLANEGA PACKAGING CORPORATION,
as an Assignor
By: /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
DIXIE CONTAINER CORPORATION,
as an Assignor
By /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
PCA HYDRO, INC.,
as an Assignor
By: /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
PCA TOMAHAWK CORPORATION,
as an Assignor
By: /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
<PAGE>
PCA VALDOSTA CORPORATION,
as an Assignor
By: /s/ Paul T. Stecko
---------------------------------
Title: Chief Executive Officer
Accepted and Agreed to:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent, as Assignee
By /s/ Unn Boucher
---------------------------------
Title: Vice President
<PAGE>
EXHIBIT 10.7
- ------------------------------------------------------------------------------
STOCKHOLDERS AGREEMENT
by and among
TENNECO PACKAGING INC.,
PCA HOLDINGS LLC
and
PACKAGING CORPORATION OF AMERICA
April 12, 1999
- ------------------------------------------------------------------------------
<PAGE>
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made and entered
into as of the 12th day of April, 1999, by and among TENNECO PACKAGING INC., a
Delaware corporation ("TPI"), PCA HOLDINGS LLC, a Delaware limited liability
company ("PCA"), and PACKAGING CORPORATION OF AMERICA, a Delaware corporation
("Newco").
RECITALS
WHEREAS, TPI, PCA and Newco are parties to that certain Contribution
Agreement, dated as of January 25, 1999, as amended (the "Contribution
Agreement");
WHEREAS, pursuant to and subject to the terms and conditions of the
Contribution Agreement, each of TPI and PCA will contribute certain assets to
Newco or a Subsidiary of Newco in exchange for shares of the common stock, $.01
par value per share (the "Common Stock"), of Newco;
WHEREAS, PCA recognizes that TPI has substantial experience and
expertise in the ownership, management and operation of the Containerboard
Business (as such term and each other capitalized term used but not otherwise
defined herein is defined in the Contribution Agreement);
WHEREAS, TPI, PCA and Newco desire to enter into this Agreement to
set forth certain arrangements with respect to the ownership, operation and
management of Newco and its Subsidiaries; and
WHEREAS, the execution and delivery of this Agreement is a condition
to each of TPI's and PCA's respective obligation to effect the Closing.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1 Certain Definitions. As used herein, the following terms shall
have the meanings set forth or as referenced below:
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such first Person as of the date on which, or at any time during the period for
which, the determination of affiliation is being made. For the purpose of this
definition, "control" means (i) the ownership or control of 50% or more of the
equity interest in any Person, or (ii) the ability to direct or cause the
direction of the management
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or affairs of a Person, whether through the direct or indirect ownership of
voting interests, by contract or otherwise.
"Agreement" shall mean this Agreement, including the exhibits
hereto, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
"Board" shall mean the Board of Directors of Newco.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banks in Chicago, Illinois are authorized or obligated by Law or
executive order to close.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Common Stock" shall have the meaning set forth in the Recitals
hereto.
"Contribution Agreement" shall have the meaning set forth in the
Recitals hereto.
"CPA Firm" shall mean the independent public auditor selected
pursuant to Section 4.3, or any subsequent independent public auditor of the
books and records of Newco appointed by the Board in accordance with the terms
of this Agreement.
"Demand Registration" shall have the meaning set forth in the
Registration Rights Agreement.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Encumbrances" shall mean liens, charges, encumbrances, mortgages,
pledges, security interests, options or any other restrictions or third-party
rights.
"Exempt Sale" shall mean: (i) any Transfer of Shares to an Affiliate
of the selling party; (ii) any distribution of securities by a Person to its
direct or indirect equity owners; (iii) an assignment or pledge of Shares in
connection with the incurrence, maintenance or renewal of indebtedness of Newco
or its Subsidiaries; (iv) any Transfer of Shares pursuant to a Public Sale; and
(v) any Transfer of Shares to directors, officers, or employees of Newco or its
Subsidiaries.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, is not the owner of in excess of 5% of any class
or series of Newco's common equity on a fully-diluted basis (a "5% Owner") and
who is not an Affiliate of any such 5% Owner.
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"Junior Preferred Stock" shall mean the one hundred (100)
authorized, issued and outstanding shares of Junior Preferred Stock entitled to
elect the CEO Director, with TPI holding 45 shares and PCA holding 55 shares,
respectively, of such Junior Preferred Stock.
"Law" shall mean any federal, state, foreign or local law,
constitutional provision, code, statute, ordinance, rule, regulation, order,
judgment or decree of any governmental authority.
"Management Buy-In" shall mean the purchase of Management Stock as
contemplated by the Contribution Agreement.
"Newco" shall mean Packaging Corporation of America, a Delaware
Corporation.
"New Securities" shall mean any shares of capital stock or other
equity securities (or debt securities convertible into such equity securities)
of Newco, whether now authorized or not, and rights, options or warrants to
purchase said shares of capital stock and securities of any type whatsoever that
are, or may become, convertible into shares of Newco capital stock or other
Newco equity securities; provided, however, that the term "New Securities" shall
not include: (i) securities issued in connection with any stock split, stock
dividend, reclassification or recapitalization of Newco; (ii) shares of Common
Stock issued to employees, consultants, officers or directors of Newco or its
Subsidiaries pursuant to: (A) the exercise of any stock option, stock purchase
or stock bonus plan, agreement or arrangement for the primary purpose of
soliciting or retaining the services of such Persons and which is hereafter
approved by the Board; or (B) the exercise of any stock option issued pursuant
to the Share Performance Plan; (iii) securities issued in a Public Offering;
(iv) securities issued in connection with the acquisition of any business,
assets or securities of another Person in compliance with Section 3.6 hereof;
and (v) securities issued to any lender of Newco or one of its Subsidiaries in
compliance with Section 3.6 hereof.
"PCA" shall mean PCA Holdings LLC, a Delaware limited liability
company.
"PCA Holders" shall collectively refer to PCA together with any
other Stockholders who directly or indirectly acquire any Shares from: (i) PCA;
or (ii) TPI pursuant to an Initial Period Pro-Rata Tag-Along as provided in
subsection 6.3(b)(ii) below.
"Permitted Encumbrances" shall mean liens for taxes, assessments and
other governmental charges not yet due and payable or due but not delinquent or
being contested in good faith by appropriate proceedings.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization.
"Pro Rata Portion" shall mean, with respect to each Stockholder,
that number of shares of New Securities as is equal to the product of (i) the
total number of New Securities proposed to be issued or otherwise transferred
multiplied by (ii) a fraction, the numerator of which is the number of shares of
Common Stock (including any common equity issued or issuable in respect of such
Common Stock) held by such Stockholder immediately prior to such issuance or
transfer, and
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the denominator of which is the total number of shares of Common Stock
(including any such common equity issued or issuable in respect of such Common
Stock) which are held by all Stockholders.
"Public Offering" shall mean an underwritten public offering
pursuant to an effective registration statement under the Securities Act (or any
comparable form under any similar statute then in force), covering the offer and
sale of Common Stock.
"Public Sale" means: (i) any sale of Common Stock pursuant to a
Public Offering; or (ii) any Spin-Off.
"Registration Rights Agreement" shall have the meaning set forth in
the Contribution Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.
"Share Performance Plan" shall mean the equity incentive plan for
directors, officers and employees of Newco and its Subsidiaries.
"Share Performance Plan Amount" means the number of shares of Common
Stock equal to (i) 9.8% of the fully diluted Common Stock of Newco at Closing,
less (ii) the aggregate percentage of Common Stock sold pursuant to the
Management Buy-In.
"Shares" shall mean any Common Stock held by any Stockholder
(including any equity securities issued or issuable in respect of such Common
Stock pursuant to a stock split, stock dividend, reclassification, combination,
merger, consolidation, recapitalization or other reorganization) and any other
capital stock of any class or series of Newco held by any Stockholder. As to any
particular Shares, such shares shall cease to be Shares for all purposes of this
Agreement when they have been sold or transferred pursuant to a Public Sale, and
the transferee of any Shares pursuant to a Public Sale shall not be considered a
Stockholder for purposes of this Agreement by virtue of the ownership of Shares
transferred pursuant to such Public Sale.
"Spin-Off" shall mean any distribution by TPI or one of its
Affiliates of all of its Shares of any class or series to its public
stockholders, if any.
"Stockholders" means TPI, PCA and each Person other than Newco who
is or becomes bound by this Agreement; provided, however, that anything
contained in this Agreement to the contrary notwithstanding, directors, officers
and employees who directly or indirectly acquire Shares from TPI and PCA
pursuant to the Management Buy-In shall not be Stockholders for purposes of this
Agreement or bound by the terms hereof. Stockholders are sometimes individually
referred to herein as a "Stockholder".
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such Person, either
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directly or through or together with any other Subsidiary of such Person, owns
50% or more of the equity interests.
"Subsidiary Board" has the meaning set forth in Section 3.3.
"TPI" shall mean Tenneco Packaging Inc., a Delaware corporation.
"TPI Holders" shall collectively refer to: (i) TPI; and (ii) any
other Stockholders who directly or indirectly acquire any Shares from TPI except
for Stockholders who directly or indirectly acquire Shares from TPI pursuant to
an Initial Period Pro-Rata Tag-Along as provided in subsection 6.3(b)(ii) below.
"TPI Registrable Securities" shall have the meaning set forth in the
Registration Rights Agreement.
"Voting Stock" shall mean securities of Newco of any class or series
the holders of which are entitled to vote generally in the election of directors
of Newco.
1.2 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder", and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
(d) The term "including" shall be deemed to mean "including without
limitation."
(e) Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Contribution Agreement.
ARTICLE II
BUSINESS AND OPERATIONS OF NEWCO
2.1 Purposes and Business. Except as otherwise approved pursuant to
Section 3.6(i)(c), the sole and exclusive purpose of Newco and its Subsidiaries
shall be to engage in the business of producing and selling containerboard and
corrugated packaging products (other than folding carton, molded fiber and
honeycomb paperboard-type products), including without limitation, the
Containerboard Business (the "Business Scope"). Newco shall not and shall not
permit any of its Subsidiaries to (and PCA shall not cause or, to the extent
reasonably within PCA's control, permit Newco or any of its Subsidiaries to)
engage in any other activity or business except to the extent approved by the
Board in accordance with the terms and conditions hereof.
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2.2 Principal Executive Offices. The principal executive offices of
Newco shall be located at 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
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provided herein. With respect to the enumeration of the matters in Section 3.6
below, such matters shall be set forth in the By-laws (and not the Certificate
of Incorporation) except with respect to the establishment of committees of the
Board and each Subsidiary Board and the dissolution of Newco, which matters
shall be set forth in the Certificate of Incorporation.
3.2 Powers. Subject to the provisions of the DGCL, the Certificate
of Incorporation of Newco, the By-laws of Newco and this Agreement, the business
and affairs of Newco shall be managed by or under the direction of the Board.
3.3 Size and Composition. The Board shall consist of six individuals
as follows: (i) two directors shall be designated in writing by TPI; (ii) three
directors shall be designated in writing by PCA; and (iii) the remaining
director shall be the Chief Executive Officer of Newco (the "CEO Director"). The
directors in the preceding clause (i) (the "TPI Directors") and in the preceding
clause (ii) (the "the PCA Directors") are sometimes collectively referred to as
the "TPI/PCA Directors." TPI and PCA, as the holders of the Junior Preferred
Stock and thus entitled to elect the CEO Director, shall: (x) at each election
of directors (or filling of a vacancy with respect to the CEO Director), elect
the individual then serving as the Chief Executive Officer of Newco as the CEO
Director; and (y) remove the CEO Director if the CEO Director ceases to serve as
the Chief Executive Officer of the Company. The size and composition of the
board of directors or similar governing body of each Subsidiary of Newco (each,
a "Subsidiary Board") and the manner in which the initial members and any
subsequent members (including any subsequent member selected or appointed to
fill a vacancy) of any such Subsidiary Board will be the same as that of the
Board. Anything to the contrary contained herein notwithstanding, the rights of
each of TPI and PCA to designate directors as provided herein shall not be
assignable (by operation of law, the transfer of Shares or otherwise) without
the prior written consent of the other; provided, however, that each of TPI and
PCA shall be entitled to assign its rights to designate directors as provided
herein to one of its Affiliates that is (or becomes) a Stockholder without the
prior written consent of the other. If directed by PCA, a representative of 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,
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and five Business Days after deposit with the U.S. Postal Service, postage
prepaid, if mailed. The presence in person of three of the five TPI/PCA
Directors shall constitute a quorum for the transaction of business at any
special, annual or regular meeting of the Board or any Subsidiary Board. Each
Stockholder shall use its reasonable efforts to ensure that a quorum is present
at any duly convened meeting of the Board or any Subsidiary Board and each of
TPI and PCA may designate by written notice to the other an alternate
representative to act in the absence of any of its designates at any such
meeting. If at any meeting of the Board or any Subsidiary Board a quorum is not
present, a majority of the directors present may, without further notice,
adjourn the meeting from time to time until a quorum is obtained.
3.6 Voting. Each member of the Board and each Subsidiary Board shall
be entitled to cast one vote on each matter considered by such Board and
Subsidiary Board, respectively; provided, however, that in the event that a vote
would result in a 3-3 tie with respect to a matter, the CEO Director shall not
be entitled to vote with respect to such matter (the Board and each Subsidiary
Board shall poll its members prior to any vote to effectuate the purposes of
this sentence). Except as otherwise expressly provided by this Agreement, the
act of a majority of the members of the Board and each Subsidiary Board present
at any meeting at which a quorum is present shall constitute an act of the Board
or Subsidiary Board, as applicable. Notwithstanding anything to the contrary
contained herein: (i) the following matters shall require, in addition to any
other vote required by applicable law, the affirmative vote of at least four of
the five TPI/PCA Directors; (ii) Newco shall not directly or indirectly take,
and shall not permit any of its Subsidiaries to directly or indirectly take, any
of the following actions without first obtaining such approval; and (iii) PCA
shall not cause or, to the extent reasonably within PCA's control, permit Newco
or any of its Subsidiaries to take any of the following actions without first
obtaining such approval:
(i) (a) the approval of any Annual Business Plan, (b) any material
change to an approved Annual Business Plan, and (c) engaging in or the
ownership or operation of any activities or business by Newco and/or any
of its Subsidiaries which are not within the Business Scope;
(ii) subject to applicable Law, any dissolution or liquidation of
Newco;
(iii) (a) during the 12-month period beginning on the Closing Date,
any amendment of the certificate of incorporation, articles of
incorporation, by-laws or other governing documents of Newco or any of its
Subsidiaries (other than such amendment which may be necessary in
connection with other actions (or inactions) which would be permissible
under this Agreement but for this clause (a)); and (b) from and after such
12-month period, any amendment of the certificate of incorporation,
articles of incorporation, by-laws or other governing documents of Newco
or any of its Subsidiaries which would: (1) treat any TPI Holder
disproportionately vis-a-vis any PCA Holder; (2) place any restriction or
limitation on the ability of any TPI Holder to Transfer all or any portion
of its Shares or reduce the consideration received or to be received by
such TPI Holder in connection with such Transfer; or (3) cause such
governing documents, taken as a whole, to be less favorable to a
stockholder than the typical governing documents of a publicly traded
company engaged in a business within the Business Scope;
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(iv) any merger, consolidation, reorganization (except as provided
in ss.253 of the DGCL and except for a merger, consolidation or
reorganization in which the consideration to be received by TPI is cash,
publicly traded securities or a combination thereof, and TPI Holders are
not treated disproportionately or differently than PCA Holders) or the
issuance of capital stock or other securities of Newco or any of its
Subsidiaries (other than: (a) the formation of or issuance of securities
of a wholly-owned Subsidiary, (b) the issuance of up to the number of
shares of Common Stock equal to the Share Performance Plan Amount pursuant
to the Share Performance Plan, (c) issuances of a number of shares of
Common Stock which, on a cumulative basis from and after the Closing, does
not exceed 5% of the number of shares of Common Stock outstanding as of
the Closing, and (d) issuances pursuant to the Management Buy-In);
(v) the sale, transfer, exchange, license, assignment or other
disposition by Newco and/or any of its Subsidiaries of assets having a
fair market value exceeding $32.5 million in any transaction or series of
related transactions (excluding sales of inventory and other assets in the
ordinary course of business and timberlands sales pursuant to Section 5.2
hereof), except in each case for Permitted Encumbrances;
(vi) the acquisition of assets (tangible or intangible) by Newco
and/or any of its Subsidiaries (including any capital expenditure not
included in the approved Annual Business Plan) for an acquisition price
exceeding $32.5 million in value in any transaction or series of related
transactions (excluding acquisitions of inventory and other assets in the
ordinary course of business);
(vii) the acquisition of another Person or an existing business from
another Person in any transaction or series of related transactions or the
entry into any partnership or formal joint venture or similar arrangement
involving an acquisition price or investment exceeding $32.5 million in
value;
(viii) the refinancing of existing indebtedness, amendment of any
existing loan or financing arrangement or incurrence of any new
indebtedness by Newco and/or any of its Subsidiaries on terms which
either: (a) are, taken as a whole, less favorable to Newco and its
Subsidiaries than the terms then reasonably available in the financial
markets to similarly situated borrowers; (b) place any restriction or
limitation on the ability of any TPI Holder to Transfer all or any portion
of its Shares; or (c) include any event of default or other materially
adverse consequence to Newco and/or any of its Subsidiaries (including,
for example, an increase in the interest rate) as a result of a sale of
all or a portion of any Stockholder's Shares;
(ix) the making or guarantee by Newco or any of its Subsidiaries of
any loan or advance to any Person except: (a) in the ordinary course of
business; (b) to a wholly owned Subsidiary; (c) for advances to employees
in amounts not to exceed $500,000 to any one individual and $5 million in
the aggregate; (d) for loans or advances made in connection with any
acquisition of the business, capital stock or assets or any other Person
that is otherwise permitted or approved as provided by this Section 3.6;
and (e) guarantees, loans and
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advances in connection with the Management Buy-In and Share Performance
Plan, not to exceed $15 million in the aggregate;
(x) the entry into, or amendment of, contracts or other transactions
between Newco and/or any of its Subsidiaries, on the one hand, and a
Stockholder or any Affiliate thereof, on the other hand except for: (a)
the execution and delivery of the Contribution Agreement, Ancillary
Agreements and other documents and agreements to be delivered by Newco at
Closing pursuant to the Contribution Agreement; and (b) contracts,
amendments and transactions which are no less favorable to Newco and its
Subsidiaries than could be obtained from TPI or its Affiliates or
Independent Third Parties negotiated on an arms-length basis;
(xi) the direct or indirect redemption, retirement, purchase or
other acquisition of any equity securities of Newco or any of its
Subsidiaries (other than securities of its wholly owned Subsidiary) except
for pro rata redemptions with respect to the proceeds received from the
disposition of the timberlands or any of the assets or operations related
thereto or located thereon or pursuant to the provisions of agreements
with employees of the Corporation or its Subsidiaries under which such
equity securities were originally issued to such employees;
(xii) the appointment of the members of any committee of the Board
or any Subsidiary Board, unless at least one member of such committee is a
director who was designated by TPI;
(xiii) (a) the creation of any Subsidiary, unless: (1) all of the
equity interests of such Subsidiary are owned by Newco, or by another
Subsidiary in which all the equity interests of such other Subsidiary are
owned directly or indirectly by Newco; and (2) the by-laws or similar
governing documents of each such Subsidiary contain provisions regarding
the size, composition, quorum requirements and voting of the board of
directors equivalent to those provided for herein with respect to Newco;
and (b) the Transfer of any equity interest in a Subsidiary other than to
Newco or another Subsidiary in which all the equity interests of such
other Subsidiary are owned by Newco.
(xiv) removal of the independent public auditors of Newco or a
Subsidiary of Newco or appointment of any public auditors which are not
one of the Big Five accounting firms; and
(xv) delegation of any of the matters covered by any of clauses (i)
through (xiv) above to any committee of the Board or committee of any
Subsidiary Board.
Notwithstanding the foregoing: (i) the approvals required by this
Section 3.6 with respect to any of the matters in subsections (ii) through (xv)
above shall not apply to any matter included in an Annual Business Plan which
has been approved pursuant to this Section 3.6; (ii) nothing in this Section 3.6
shall restrict the sale of the timberlands or any of the assets or operations
related thereto or located thereon; and (iii) nothing in this Section 5 shall
restrict the
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issuances of management equity (representing in the aggregate up to 9.8% of
Newco's outstanding Common Stock) and the related distribution of proceeds from
such issuance and the repurchase of the corresponding number of outstanding
shares for such issuances as contemplated in the Contribution Agreement.
TPI hereby covenants and agrees, as more fully described in this
paragraph, that it shall use its reasonable good faith efforts to not cause or,
to the extent reasonably within its control, permit any member of the Board or
Subsidiary Board designated by TPI to withhold approval of a matter recommended
for approval by management of Newco and presented to the Board or Subsidiary
Board for consideration which requires the affirmative vote of four of the five
TPI/PCA Directors pursuant to this Section 3.6. TPI's covenant and agreement in
the preceding sentence: (i) shall relate only to matters, the approval of which
TPI determines in good faith are in the best interests of TPI and its
stockholders and Affiliates; and (ii) is exclusive to TPI and shall not be
binding upon any direct or indirect transferee of TPI's Shares.
3.7 Telephonic Meetings; Written Consents. Except as may otherwise
be provided by applicable Law, any action required or permitted to be taken at
any meeting of the Board or any committee thereof may be taken without a meeting
pursuant to a written consent, in compliance with the DGCL and Section 3.6
hereof and such written consent is filed with the minutes of the proceedings of
the Board or such committee. Any meeting of the Board or any committee thereof
may be held by conference telephone or similar communication equipment, so long
as all Board or committee members participating in the meeting can hear one
another clearly, and participation in a meeting by use of conference telephone
or similar communication equipment shall constitute presence in person at such
meeting.
3.8 Initial Directors. TPI and PCA shall make their designations
pursuant to Section 3.3 on or prior to the Closing Date.
3.9 Recapitalization of Newco Under Certain Circumstances. For any
Public Offering or Spin-Off prior to the time Newco becomes subject to the
Exchange Act with respect to Shares: (i) Newco shall use commercially reasonable
efforts to effect a stock split, stock dividend or stock combination which, in
the opinion of the managing underwriter for the Public Offering or TPI's
financial advisor in connection with a Spin-Off, is desirable for the sale,
marketing or distribution of the Shares to the public; and (ii) each Stockholder
agrees to vote all of its respective Shares and any other Voting Stock over
which it posses direct or indirect voting power in order to cause such stock
split, dividend or combination to be effected consistent with the provisions of
this Section 3.9.
ARTICLE IV
ACCOUNTING, BOOKS AND RECORDS
4.1 Fiscal Year. The fiscal year of Newco shall be the period
commencing January 1 in any year and ending December 31 of that year, except
that the first fiscal year of Newco shall commence on the Closing Date and end
on December 31 of the year in which the Closing Date occurs.
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4.2 Books and Records. Newco shall keep at its principal executive
offices books and records typically maintained by Persons engaged in similar
businesses and which set forth a true, accurate and complete account of the
business and affairs of Newco and its Subsidiaries, including a fair
presentation of all income, expenditures, assets and liabilities thereof. Such
books and records shall include all information reasonably necessary to permit
the preparation of financial statements required by applicable Law in accordance
with GAAP. Each Stockholder who, together with its Affiliates, owns 17-1/2% or
more of the outstanding common equity of Newco (a "17-1/2% Stockholder") and its
respective authorized representatives shall have the right, at all reasonable
times and upon reasonable advance written notice to Newco, to have access to,
inspect, audit and copy the original books, records, files, securities,
vouchers, canceled checks, employment records, bank statements, bank deposit
slips, bank reconciliations, cash receipts and disbursement records, and other
documents of Newco and its Subsidiaries.
4.3 Auditors. Newco shall engage one of the Big Five accounting
firms as the initial independent public auditors of Newco and its Subsidiaries.
4.4 Reporting. Newco shall use its reasonable best efforts to
deliver to each Stockholder unaudited consolidated interim financial statements
for Newco and its Subsidiaries for such fiscal quarter (including a balance
sheet as of the end of such period and statements of income, stockholders'
equity and cash flows for such period within 30 days after the close of each
fiscal quarter. Newco will use its reasonable best efforts to deliver to each
Stockholder within 60 days after the close of each fiscal year of Newco
consolidated annual financial statements for Newco and its Subsidiaries for such
fiscal year (including a balance sheet as of the end of such fiscal year and
statements of income, stockholders' equity and cash flows for such fiscal year),
in each case audited and certified by the CPA Firm. Such annual and interim
financial statements shall contain such statements and schedules, prepared in
accordance with the requirements of the Stockholders, as may be requested in
writing by any of the 17-1/2% Stockholders. Newco shall bear the cost of
providing financial and accounting information reasonably required by any of the
17-1/2% Stockholders in the preparation of such 17-1/2% Stockholder's own
financial statements. Such annual and interim financial statements shall be
prepared in accordance with GAAP, shall be true and accurate in all material
respects and shall present fairly the financial position and results of
operations of Newco.
4.5 Stockholder's Audit. Upon reasonable advance written notice to
Newco, any Stockholder may request an audit of the books and records of Newco
and its Subsidiaries (a "Stockholder's Audit") by an independent auditor of its
selection, other than the CPA Firm. Any Stockholder's Audit shall be at the
expense of the requesting 17-1/2% Stockholder unless material error or fraud is
found, in which case such audit shall be at the expense of Newco. All
information obtained by any 17-1/2% Stockholder in any such audit shall be
treated as confidential.
4.6 Consent of Newco Auditors. Upon request from time to time by
TPI, Newco shall use its commercially reasonable efforts to obtain the written
agreements of Newco's auditors to permit the use of Newco's Audited Financial
Statements in connection with TPI's and/or its Affiliates filings made with the
Securities and Exchange Commission and, subject to such auditor's normal
procedures, in private or public offerings of securities of TPI and/or its
Affiliates as may be
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reasonably requested by TPI. In addition, Newco will use commercially reasonable
efforts to cause Newco's auditors to provide a comfort letter in accordance with
SAS 72 for any such offering.
ARTICLE V
CERTAIN MATTERS REGARDING STOCKHOLDERS AND NEWCO
5.1 Transactions Between Stockholders and Newco. The Stockholders
hereby approve on behalf of Newco the Contribution Agreement and each of the
Ancillary Agreements and other documents and agreements to be delivered by Newco
at the Closing pursuant to the Contribution Agreement, and the transactions
contemplated thereby.
5.2 Sale of Timberlands. Newco, TPI and PCA hereby acknowledge that
it is their mutual intention to effect a sale for cash of the timberlands (and
the assets and operations related thereto and located thereon) included in the
Contributed Assets and to distribute the net proceeds from any such sale as soon
as practicable following the Closing Date. If and to the extent the net proceeds
from any such sale are distributed to the holders of the Common Stock, such
distribution shall be on a pro-rata basis among such holders.
ARTICLE VI
TRANSFER OF SHARES
6.1 General. No Stockholder will directly or indirectly sell,
assign, pledge, encumber, hypothecate, dispose of or otherwise transfer
("Transfer") any Shares or interest in any Shares, agree to any such Transfer or
permit any such interest to be subject to Transfer, directly or indirectly, by
merger or other operation of law, agreement or otherwise, except pursuant to and
in compliance with the provisions of this Article VI. Any purported Transfer in
any other manner, unless otherwise expressly permitted by this Article VI, shall
be null and void, and shall not be recognized or given effect by Newco or any
Stockholder. Any other provision of this Agreement, including, without
limitation, in this Article VI, to the contrary notwithstanding (except pursuant
to Section 8.1), neither TPI nor PCA shall Transfer any Shares of the Junior
Preferred Stock prior to the termination of this Agreement.
6.2 Transfers by TPI Holders.
(a) Permitted Transfers. A TPI Holder may at any time, without the
consent of any other Stockholder, Transfer any or all of its Shares or interests
in Shares to any Affiliate or third Person or Persons or pursuant to a Public
Sale, subject to the remaining provisions of this Section 6.2; provided,
however, that, except in the case of a Public Sale, TPI shall not Transfer any
Shares to any other Person then engaged, directly or indirectly, in a business
within the Business Scope with annual revenues from such business in excess of
$100 million without PCA's prior written consent. The foregoing consent right
shall not be assignable by PCA or inure to the benefit of any transferee,
successor or assign of PCA, except for an Affiliate of PCA who is (or becomes) a
Stockholder. Notwithstanding the foregoing and except in the case of a Public
Sale or sale to directors, officers or employees of Newco pursuant to the
Management Buy-In, any Transfer of Shares by a TPI Holder shall be null and void
and Newco shall refuse to recognize such Transfer
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unless the transferee executes and delivers to each party hereto an agreement (a
"TPI Joinder Agreement"): (i) acknowledging that all Shares or interests in any
Shares so transferred are and shall remain subject to this Agreement; and (ii)
agreeing to be bound hereby. Upon execution of a TPI Joinder Agreement, except
as otherwise expressly provided herein and except for any right hereunder to
consent to any action or proposed action (including, without limitation, any
proposed Transfer of Shares), the rights of the transferring TPI Holder
hereunder with respect to the Shares transferred shall be assigned to such
transferree. Any TPI Holder shall notify the other parties of any intended
Transfer of Shares or interests in Shares pursuant to this Section 6.2 (other
than pursuant to an Exempt Sale), giving the name and address of the intended
transferee; provided, however, that no otherwise valid Transfer shall be
rendered invalid solely as a result of a failure to give notice hereunder.
Transferees of a TPI Holder shall assume all obligations of the transferring TPI
Holder hereunder, but, except with respect to an Affiliate of TPI, shall not be
entitled to any rights of a TPI Holder.
6.3 Transfers by PCA Holders.
(a) Permitted Transfers. A PCA Holder may at any time, without the
consent of any other Stockholder, (i) Transfer any or all of its Shares to an
Affiliate of PCA, (ii) Transfer any or all its Shares pursuant to an Exempt
Sale, or (iii) sell any or all of its Shares to any other third Person or
Persons or pursuant to a Public Sale or otherwise Transfer Shares, subject to
the remaining provisions of this Section 6.3. The foregoing consent right shall
not be assignable by TPI or inure to the benefit of any transferee, successor or
assign of TPI, except for an Affiliate of TPI who is (or becomes) a Stockholder.
Notwithstanding the foregoing and except in the case of a Public Sale or sale to
directors, officers or employees of Newco pursuant to the Management Buy-In, any
Transfer of Shares by an PCA Holder shall be null and void and Newco shall
refuse to recognize such Transfer unless the transferee executes and delivers to
each party hereto an agreement (an "PCA Joinder Agreement"): (i) acknowledging
that all Shares or interests in any Shares so transferred are and shall remain
subject to this Agreement; and (ii) agreeing to be bound hereby. Upon execution
of an PCA Joinder Agreement, except as otherwise expressly provided herein and
except for any right hereunder to consent to any action or proposed action
(including, without limitation, any proposed Transfer of Shares), the rights of
the transferring PCA Holder hereunder with respect to the Shares transferred
shall be assigned to such transferee. Any PCA Holder shall notify the other
parties of any intended Transfer of Shares or interests in Shares pursuant to
this Section 6.3 (other than an Exempt Sale), giving the name and address of the
intended transferee; provided, however, that no otherwise valid Transfer shall
be rendered invalid solely as a result of a failure to give notice hereunder.
(b) Tag-Along Rights. TPI and its Affiliates shall have tag-along
rights as provided in this Section 6.3(b):
(i) In the event any PCA Holder desires to sell all or any part of
any class or series of its Shares to a third Person (other than pursuant to an
Exempt Sale), it shall provide prior written notice (the "Sale Notice") to TPI
setting forth in reasonable detail the terms and conditions on which the
proposed sale is to be made and identifying the proposed purchaser. TPI shall
have the option (the "Tag-Along Option") to sell any or all of its Shares of the
same class and series to
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the proposed purchaser on the terms and conditions set forth in such Sale Notice
subject to the provisions set forth in this Section 6.3(b). TPI shall exercise
its Tag-Along Option by giving written notice to PCA within ten Business Days
following its receipt of the Sale Notice, which notice shall specify the number
of Shares of the same class and series as to which TPI is exercising its
Tag-Along Right (the "Specified Shares"). In the event TPI exercises its
Tag-Along Option with respect to any Sale Notice: (A) if such exercise is within
14 months after the Closing Date, the PCA Holder shall not be entitled to sell
any of its Shares unless and until the prospective purchasers or PCA has
purchased all of the Specified Shares; and (B) if such exercise is more than 14
months after the Closing Date, TPI shall be entitled to sell its pro rata share
(based on the number of Shares proposed to be sold by the PCA Holder and TPI,
respectively) of the Shares proposed to be sold by the PCA Holder in the Sale
Notice, in each case on terms and conditions no less favorable than specified in
the Sale Notice or otherwise applicable to the sale to such prospective
purchasers by the PCA Holder. In the event TPI does not exercise its Tag-Along
Option with respect to any Sale Notice, the PCA Holder shall be entitled to sell
all or any part of its Shares as specified in the Sale Notice to the prospective
purchaser specified in the Sale Notice on the terms and conditions set forth in
the Sale Notice (subject to the provisions of the third sentence of Section
6.3(a) hereof).
(ii) Notwithstanding subsection 6.3(b)(i) above, with respect to
sales by a PCA Holder of any part of any class or series of its Shares to a
third Person (other than pursuant to an Exempt Sale) prior to the expiration of
the six-month period beginning on the Closing Date at a per share price which
does not exceed the per share price paid (excluding any interest for the
carrying cost of such Share) by such PCA Holder for such Shares pursuant to the
Contribution Agreement:
(A) TPI and its Affiliates shall not have a Tag-Along Option
during such six-month period for (i) sales of Shares (other
than PIK Preferred) in the aggregate amount of $40 million;
and (ii) the sale of 9.3% of the number of Shares of PIK
Preferred issued at Closing ("Excluded Tag-Along Sales); and
(B) TPI shall have a Tag-Along Option on a pro-rata basis (i.e.,
on the same basis applicable 14 months after the Closing Date
as provided in subsection 6.3(b)(i) above) with respect to
such sales of Shares by PCA Holders during such six-month
period in excess of the Excluded Tag Along Sales up to an
aggregate amount of consideration for such additional sales of
$100 million (the "Initial Period Pro-Rata Tag -Along").
The provisions of this subsection 6.3(b)(ii) shall terminate upon the expiration
of the six-month period beginning on the Closing Date.
(iii) Notwithstanding anything in this Agreement to the contrary,
the rights under this Section 6.3(b) shall be exclusive to TPI and its
Affiliates and shall not be assignable to or inure to the benefit of any
transferee of TPI or any successors or assigns of TPI, other than Affiliates of
TPI.
6.4 Drag-Along Rights.
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(a) Drag-Along Sale. If a sale of all or substantially all of
Newco's assets determined on a consolidated basis or a sale of all or
substantially all of Newco's outstanding capital stock (whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise) to
any Independent Third Party or group of Independent Third Parties is approved by
the Board or the holders of a majority of the Shares of Common Stock held by the
PCA Holders (a "Drag-Along Sale"), each Stockholder will consent to raise no
objections against such Drag-Along Sale on the terms and subject to the
conditions set forth in the remaining provisions of this Section 6.4.
(b) Drag-Along Notice. A notice regarding any Drag-Along Sale (a
"Drag-Along Notice") shall be delivered within two Business Days following
approval of any Drag-Along Sale by Newco or the PCA Holders to each Stockholder.
The Drag-Along Notice shall include a copy of a bona fide offer from the
intended buyer, which shall set forth the principal terms of the Drag-Along
Sale, including the name and address of the intended buyer.
(c) Drag-Along Sale Obligations. In connection with any Drag-Along
Sale, the Stockholders shall, and shall elect directors who shall, take all
necessary or desirable actions in connection with the consummation of the
Drag-Along Sale. If the Drag-Along Sale is structured as: (i) a merger or
consolidation, each Stockholder shall waive any dissenters rights, appraisal
rights or similar rights in connection with such merger or consolidation; (ii) a
sale of stock, each Stockholder shall agree to sell all of its Shares and rights
to acquire Shares on the terms and conditions so approved; or (iii) a sale or
assets, each Stockholder shall vote in favor of such sale and any subsequent
liquidation of Newco or other distribution of the proceeds therefrom. Each
Stockholder shall take all necessary or desirable actions in connection with the
consummation of the Drag-Along Sale reasonably requested by PCA or Newco, and
each Stockholder shall be obligated to agree on a pro rata, several (and not
joint) basis (based on the share of the aggregate proceeds paid in such
Drag-Along Sale) to any indemnification obligations that the PCA Holders agree
to provide in connection with such Drag-Along Sale (other than any such
obligations that relate specifically to a particular holder of Shares such as
indemnification with respect to representations and warranties given by a holder
regarding such holder's title to and ownership of Shares).
(d) Conditions to Drag-Along Sale Obligations. The obligations of
each Stockholder with respect to a Drag-Along Sale are subject to the
satisfaction of the following conditions: (i) the consideration to be received
by the Stockholders with respect to the Drag-Along Sale shall consist only of
cash, publicly-traded securities, or a combination of cash and publicly-traded
Securities; (ii) if any holders of a class or series of Shares are given an
option as to the form and amount of consideration to be received, each holder of
such class or series of Shares will be given the same option; (iii) each holder
of then currently exercisable rights to acquire shares of a class or series of
Shares will be given an opportunity to exercise such rights prior to the
consummation of the Drag-Along Sale and participate in such sale as holders of
such class or series of Shares; and (iv) each Stockholder shall be entitled to
receive consideration per each Share in connection with the Drag-Along Sale at
least equivalent to the consideration received per each Share of the same class
and series by any PCA Holder in connection with the Drag-Along Sale.
(e) Expenses. Each Stockholder will bear its pro-rata share (based
on the share
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of the aggregate proceeds paid in such Drag-Along Sale) of the costs of any sale
of Shares pursuant to a Drag-Along Sale to the extent such costs are incurred
for the benefit of all holders of Common Stock and are not otherwise paid by
Newco or the acquiring party. For purposes of this Section 6.4(e), costs
incurred in exercising reasonable efforts to take all necessary actions in
connection with the consummation of a Drag-Along Sale in accordance with this
Section 6.4 shall be deemed to be for the benefit of all holders of Common
Stock. Costs incurred by Stockholders on their own behalf will not be considered
costs of the transaction hereunder.
(f) Exception to Drag-Along. Notwithstanding anything to the
contrary contained in this Section 6.4, no Stockholder shall have any obligation
under this Section 6.4 with respect to a Drag-Along Sale if the Drag-Along
Notice with respect to the Drag-Along Sale is received by TPI after the holders
of TPI Registrable Securities have requested a Demand Registration and for a
period thereafter ending on the date following consummation of the sale of all
Shares subject to such Demand Registration unless, in the opinion of the
managing underwriter for such Demand Registration, the per Share consideration
payable pursuant to the Drag-Along Sale exceeds the net proceeds per Share
expected to be received by selling stockholders pursuant to the Demand
Registration.
6.5 Indirect Transfers of Interests. Any Transfer of equity
securities of PCA which results in the group of Persons holding such equity
securities immediately following the transactions contemplated in the
Contribution Agreement from ceasing to beneficially own, as a group, directly or
indirectly, 50.1% or more of the equity securities of PCA or enough voting
equity of PCA to be able to cause a majority of the board of managers (or
equivalent governing body or members) to be elected shall be deemed to be a
Transfer of Shares hereunder and any such Transfer shall be subject to the
provisions of this Article VI as if PCA had directly transferred Shares.
6.6 Legends. A copy of this Agreement shall be filed with the
Secretary of Newco and kept with the records of Newco. Each of the Stockholders
hereby agrees that each outstanding certificate representing Shares shall bear a
conspicuous legend reading substantially as follows:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933 or the applicable
state and other securities laws and may not be sold, pledged,
hypothecated, encumbered, disposed of or otherwise transferred
without compliance with the Securities Act of 1933 or any
exemption thereunder and applicable state and other securities
laws. The securities represented by this Certificate are subject
to the restrictions on transfer and other provisions of a
Stockholders Agreement dated as of April 12, 1999, (as amended
from time to time, the "Agreement") by and among Packing
Corporation of America (the "Company") and certain of its
stockholders, and may not be sold, pledged, hypothecated,
encumbered, disposed of or otherwise transferred except in
accordance therewith. A copy of the Agreement is on file at the
principal executive offices of the Company.
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ARTICLE VII
RIGHTS ON NEW SECURITY ISSUANCE
7.1 Preemptive Rights. Newco hereby grants to each Stockholder the
irrevocable and exclusive first option (the "First Option") to purchase all or
part of its Pro Rata Portion of any New Securities which Newco may, from time to
time after the date of this Agreement, propose to issue and sell or otherwise
transfer.
7.2 Notices With Respect to Proposed Issuance of New Securities. In
the event Newco proposes to undertake an issuance or other transfer of New
Securities, it shall give each Stockholder entitled to a First Option pursuant
to this Article VII written notice (the "Company Notice") of its intention,
describing in detail the type of New Securities, the price and the terms upon
which Newco proposes to issue or otherwise transfer such New Securities. Each
such Stockholder shall have 10 Business Days from the date of receipt of any
such Company Notice to agree to purchase, pursuant to the exercise of the First
Option, up to such Stockholder's Pro Rata Portion of each type and class and
series of such New Securities (i.e., the same strips) for the price and upon the
terms and conditions specified in the Company Notice by giving written notice to
Newco and stating therein the quantity of New Securities to be purchased.
7.3 Company's Right to Complete Proposed Sale of New Securities to
the Extent Preemptive Rights are Not Exercised. In the event the Stockholders
fail to exercise a preemptive right with respect to any New Securities within
the periods specified in Section 7.2, Newco shall have 90 days thereafter to
sell or enter into an agreement (pursuant to which the sale of such New
Securities shall be closed, if at all, within 45 days from the date of said
agreement) to sell the New Securities not elected to be purchased by the
Stockholders at the price and upon terms not substantially more favorable to the
prospective purchasers of such securities than those specified in Newco Notice.
In the event Newco has not sold the New Securities or entered into an agreement
to sell the New Securities within said 90-day period. Newco shall not thereafter
issue or sell or otherwise transfer such New Securities without first offering
such securities to the Stockholders in the manner provided in this Article VII.
7.4 Closing of Purchase. If a Stockholder elects to purchase up to
its Pro Rata Portion of any New Securities set forth in any Company Notice, such
purchase shall be consummated at such time and at such location selected by
Newco upon reasonable advance notice. At the consummation of any purchase and
sale of New Securities pursuant to this Article VII: (i) Newco shall issue or
otherwise transfer to the Stockholder the certificates evidencing the New
Securities being purchased, together with such other documents or instruments
reasonably required by counsel for the Stockholder to consummate such purchase
and sale; (ii) the Stockholder will deliver the cash consideration payable by
wire transfer of immediately available funds to an account or accounts
designated in writing by Newco (such designation to be made no later than two
Business Days prior to the date of such consummation); (iii) Newco shall deliver
to the Stockholder a written representation that the New Securities are being
purchased and sold free and clear of any and all Encumbrances; and (iv) the
Stockholder shall deliver to Newco such written investment representations as
may reasonably be required by counsel to Newco for securities Laws purposes and
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all other applicable representations and warranties as other purchasers of New
Securities. Notwithstanding the foregoing, any purchase of New Securities
pursuant to this Article VII shall be on the same terms and conditions as set
forth in the Company Notice.
ARTICLE VIII
TERM
8.1 Term. Subject to the next sentence, unless earlier terminated by
mutual agreement of TPI and PCA, this Agreement shall terminate upon the
earliest to occur of: (i) the complete liquidation or dissolution of Newco or
its Subsidiaries; (ii) a Public Offering; (iii) such date as TPI and its
Affiliates first hold less than 17-1/2% of Newco's outstanding Common Stock or;
(iv) the acquisition of all or substantially all of the stock or assets of TPI
(whether by stock sale, asset sale, merger, consolidation, combination or
otherwise) by a Person engaged, directly or indirectly, in a business within the
Business Scope with annual revenues from such business in excess of $100
million; provided; however, that in the case of termination pursuant to clause
(iv), TPI (or its successor in interest) shall (unless or until this Agreement
is terminated pursuant to clauses (i)-(iii)) have the right at each election of
directors to designate as the two TPI Directors of Newco and each Subsidiary who
are not directors, officers, employees or affiliates of such Person and are
approved by PCA, such approval not to be unreasonably withheld; provided,
further, that in case of any termination pursuant to this Section 8.1, unless
otherwise determined by PCA, this Agreement shall nevertheless remain in full
force and effect with respect to the drag-along provisions set forth in Section
6.4 and all related definitions and provisions to the extent necessary or
desirable to give full force and effect to Section 6.4. The rights of each of
TPI and PCA to terminate this Agreement by mutual agreement and the right of PCA
to terminate this Agreement with respect to the drag-along provisions of Section
6.4 are not assignable by TPI or PCA, and shall not inure to the benefit of any
transferee, successor or assign of TPI or TPI, other than to an Affiliate of
such party who is (or becomes) a Stockholder, without the prior written consent
of the other. Upon the termination of this Agreement pursuant to clauses
(i)-(iv) (regardless of whether certain provisions of this Agreement survive
such termination), TPI shall sell the 45 shares of Junior Preferred Stock held
by it to PCA for the fair market value thereof, as determined by the auditors of
Newco.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if: (i) delivered in person
(to the individual whose attention
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is specified below) or via facsimile (followed immediately with a copy in the
manner specified in clause (ii) hereof); (ii) sent by prepaid first-class
registered or certified mail, return receipt requested; or (iii) sent by
recognized overnight courier service, as follows:
to Newco:
Packaging Corporation of America
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
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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
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not make or permit to be made any press release or similar public announcement
or communication concerning the execution or performance of this Agreement
unless specifically approved in advance by all parties hereto. In the event,
however, that legal counsel for any party is of the opinion that a press release
or similar public announcement or communication is required by Law or by the
rules and regulations of any stock exchange on which such party's securities (or
the securities of one of such party's Affiliates) are traded, then such party
may issue a public announcement limited solely to that which legal counsel for
such party advises is required under such Law or such rules and regulations (and
the party making any such announcement shall provide a copy thereof to the other
party for review before issuing such announcement).
9.6 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Newco, TPI, PCA or their respective successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
9.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without giving effect to its principles of conflicts
of laws. Each party hereto agrees that it shall bring any action or proceeding
in respect of any claim arising out of or related to this agreement or the
transactions contained in or contemplated by this agreement, whether in tort or
contract or at law or in equity, exclusively in any United States federal court
or any state court located in the State of Illinois (the "Chosen Courts") and:
(i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii)
waives any objection to laying venue in any such action or proceeding in the
Chosen Courts; (iii) waives any objection that the Chosen Courts are an
inconvenient forum or do not have jurisdiction over any party hereto; and (iv)
agrees that service of process upon such party in any such action or proceeding
shall be effective if notice is given in accordance with Section 9.1 of this
Agreement.
9.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
9.9 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof or thereof.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable: (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision; and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
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9.10 Headings. The heading references and the table of contents
herein are for convenience purposes only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
9.11 Equitable Relief. Each party acknowledges that money damages
would be inadequate to protect against any actual or threatened breach of this
Agreement by any party and that each party shall be entitled to equitable
relief, including specific performance and/or injunction, without posting bond
or other security in order to enforce or prevent any violations of the
provisions of this Agreement.
9.12 No Partnership. This Agreement shall not constitute an
appointment of any party as the agent of any other party, nor shall any party
have any right or authority to assume, create or incur in any manner any
obligation or other liability of any kind, express or implied, against, in the
name or on behalf of, any other party. Nothing herein or in the transactions
contemplated by this Agreement shall be construed as, or deemed to be, the
formation of a partnership by or among the parties hereto.
* * * *
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
TENNECO PACKAGING INC.
By: /s/ 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
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EXHIBIT 10.8
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
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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
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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.
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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
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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:
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(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-
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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
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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
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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.
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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;
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(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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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 Agree ment
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.
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<PAGE>
(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
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<PAGE>
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.
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<PAGE>
(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.
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<PAGE>
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
_____________________________________
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EXHIBIT 10.9
FINAL
HOLDING COMPANY SUPPORT AGREEMENT
THIS HOLDING COMPANY SUPPORT AGREEMENT (this "Agreement"), dated as
of April 12, 1999, is made by and between PCA Holdings LLC, a Delaware limited
liability company ("Holdings"), and Packaging Corporation of America, a Delaware
corporation (the "Company").
WHEREAS, Holdings, the Company and Tenneco Packaging Inc. ("TPI")
are parties to that certain Contribution Agreement, dated January 25, 1999, as
amended by that letter agreement dated April 12, 1999 among the Company, TPI and
Holdings (the "Contribution Agreement"), pursuant to which Holdings has agreed
to contribute cash and become a stockholder in the Company (the "Holdings
Investment") and TPI has agreed to contribute substantially all of the assets of
its Containerboard Business (as defined in the Contribution Agreement) to the
Company in exchange for outstanding common stock of the Company, in each case
pursuant to the terms and subject to the conditions set forth therein;
WHEREAS, Holdings was organized for the purpose of making the
Holdings Investment and upon consummation of the transactions contemplated in
the Contribution Agreement (the "Closing") and immediately prior to and on the
Closing Holdings will not own any securities and will not be engaged in any
business activities or operations (other than with respect to the Holdings
Investment and in connection with the transactions contemplated by the
Contribution Agreement); and
WHEREAS, the Company desires to reimburse Holdings for certain fees,
costs and expenses incurred, directly or indirectly, by Holdings as a result of
the Holdings Investment.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, Holdings and the Company hereby agree as follows:
1. Reimbursement. The Company shall promptly reimburse Holdings for
all fees, costs and expenses as may be incurred or become payable (whether prior
to, upon or following the Closing) by Holdings or its members, affiliates,
officers and employees arising out of, in connection with, or relating to the
Holdings Investment (the "Holdings Investment Expenses"), which shall include,
but not be limited to, Holdings' operating expenses, franchise taxes and other
taxes imposed on Holdings, and expenses of Holdings associated with Holdings'
financial or other reporting obligations.
<PAGE>
2. Term. This Agreement shall continue until the consummation of the
complete sale, transfer or other disposition of all of the Holdings Investment
to any Person or group of Persons (other than to Madison Dearborn Capital
Partners III, L.P. ("MDP") or any of its direct or indirect members or any of
its or their affiliates). Except as consented to by Holdings, no termination of
this Agreement whether pursuant to this Section 2 or otherwise, shall affect the
Company's reimbursement obligations hereunder with respect to the fees, costs,
expenses and Losses (as defined below) incurred by Holdings or other Holdings
Parties (as defined below) and not reimbursed by the Company as of the effective
date of such termination.
3. Liability. None of Holdings, any of its affiliates, or any of
their respective direct or indirect officers, directors, managers, members,
partners, equity owners, employees, agents, representatives, successors or
assigns (collectively, "Holdings Parties") shall be liable to the Company, any
of its subsidiaries or affiliates or any of their respective direct or indirect
stockholders, equity owners, employees, agents, representatives, successors or
assigns, for any loss, liability, damage or expense arising out of or in
connection with the any services performed to or for the Company.
4. Indemnification. The Company agrees to defend, indemnify and hold
harmless each of the Holdings Parties from and against, and to reimburse each of
the Holdings Parties for, all out-of-pocket, legal and other costs and expenses
incurred by it in connection with or relating to investigating, preparing to
defend, or defending any actions, claims or other proceedings (including any
investigation or inquiry) arising in any manner out of or in connection with
this Agreement (whether or not such indemnified person is a named party in such
proceeding); provided that, the foregoing notwithstanding, the Company's
obligations under this Section shall be subject to the dollar limitation set
forth below in Section 5.
5. Covenants. Each of Holdings and the Company covenants and agrees
that, except as may otherwise be agreed to in writing in advance by TPI, during
the period from the Closing Date until such time when TPI no longer holds any of
(x) the equity securities of the Company issued to TPI on the Closing Date (as
defined in the Contribution Agreement) or (y) any securities issued with respect
to the securities referred to in the foregoing clause (x) by way of a stock
dividend, stock split or in connection with a recapitalization or subsidiary
merger (the period from the date hereof until such time being herein referred to
as the "TPI Holding Period"):
a. neither the Company, any of its subsidiaries or any of their
respective successors or assigns shall, directly or
indirectly, pay or become obligated to pay (or accrue or
become obligated to accrue for) any fees or other compensation
for services rendered to Holdings, MDP or their respective
members or affiliates, and neither Holdings nor any of its
members will charge or seek payment of any such amounts other
than expense
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<PAGE>
reimbursement as contemplated by Section 1 above but subject
to paragraph (b); and
b. the Company's payment obligations under this Agreement shall
be limited to payments pursuant to Section 4 and to Holdings
Investment Expenses (as defined herein as of the date hereof)
and shall not exceed $250,000 in the aggregate per annum.
6. Notices. Any notice, report or payment required or permitted to
be given or made under this Agreement by one party to the other shall be deemed
to have been duly given or made if personally delivered, if mailed by registered
or certified mail, postage prepaid, or if sent by facsimile transmission and the
facsimile transmission is promptly confirmed by telephone confirmation thereof,
to the other party at the following addresses and facsimile numbers (or at such
other address or facsimile number as shall be given in writing by one party to
the other):
If to Holdings:
PCA Holdings LLC
c/o Madison Dearborn Partners, LLC
Three First National Plaza, Suite 3800
Chicago, IL 60602
Fax: (312) 895-1056
Attn: Samuel M. Mencoff
Justin S. Huscher
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Fax: (312) 861-2200
Attn: William S. Kirsch, P.C.
If to the Company:
Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Fax: (847) 482-4589
Attn: Paul T. Stecko
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<PAGE>
7. Entire Agreement; Modification. This Agreement supersedes all
prior and contemporaneous understandings, conditions and agreements, oral or
written, express or implied, concerning the reimbursement of Holdings' expenses
in the manner described herein, but shall not be construed to limit any payments
to which Holdings may be entitled under the Contribution Agreement or any of the
Ancillary Agreements or any other agreement entered into in connection with the
Closing relating to fees and/or expense reimbursement obligations of the Company
to Holdings (so long as the Company's obligations under any such agreement are,
together with the Company's obligations hereunder, subject to the limitations
set forth in Section 5 hereof). This Agreement may not be modified except by an
instrument in writing executed by each of Holdings and the Company and, in the
case of Sections 2, 5 and 7 of this Agreement, during the TPI Holding Period, by
TPI (who, during the TPI Holding Period, is a third party beneficiary of
Sections 2,5 and 7).
8. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of that provision or any other provision
hereof.
9. Assignment. Neither Holdings nor the Company may assign its
rights or obligations under this Agreement without the express written consent
of the other.
10. Choice of Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois.
* * * * *
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IN WITNESS WHEREOF, Holdings and the Company have executed this
Holding Company Support Agreement as of the date and year first above written.
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
ACKNOWLEDGED AND AGREED BY:
TENNECO PACKAGING INC.
By: /s/ James V. Faulkner, Jr.
-------------------------------
Name: James V. Faulkner, Jr.
Title: Vice President
<PAGE>
EXHIBIT 10.10
FACILITY USE AGREEMENT
BETWEEN
TENNECO PACKAGING INC.
as Landlord
AND
PACKAGING CORPORATION OF AMERICA
as Tenant
Facility Address:
1900 West Field Court
Lake Forest, Illinois 60045
Dated: As of April 12, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Recitals; Defined Terms................................................2
2. Prime Lease............................................................2
3. Premises Demised.......................................................2
4. Relocation of Tenant to First Floor of Building........................3
5. Common Areas and Access................................................6
6. Term...................................................................7
7. Rent...................................................................8
8. Services Provided By Landlord.........................................13
9. Use...................................................................15
10. Compliance with Legal Requirements....................................15
11. Environmental Compliance..............................................16
12. Repairs and Maintenance...............................................17
13. Utilities.............................................................18
14. Alterations; Liens....................................................18
15. Assignment and Subleasing.............................................20
16. Damage or Destruction.................................................22
17. Eminent Domain........................................................22
18. Insurance.............................................................23
19. Subrogation and Waiver................................................24
20. Indemnification.......................................................24
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21. Interruption of Services..............................................24
22. Subordination and Nondisturbance......................................25
23. Landlord's Right of Entry.............................................26
24. Rules and Regulations.................................................26
25. Tenant's Default; Rights and Remedies.................................26
26. Holding Over..........................................................29
27. Quiet Enjoyment.......................................................30
28. Mutual Representation of Authority....................................30
29. Real Estate Brokers...................................................30
30. Business Hours - Holidays.............................................30
31. Estoppel Certificate..................................................31
32. No Recording..........................................................31
33. Late Payments.........................................................31
34. Surrender; Restoration................................................31
35. Waiver................................................................32
36. Governing Law.........................................................32
37. Notices...............................................................32
38. Table of Contents - Captions..........................................33
39. Dispute Resolution....................................................33
40. Counterparts..........................................................34
41. Audit.................................................................34
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42. Signs.................................................................34
43. Entire Agreement......................................................34
44. Release...............................................................34
Exhibit "A" -- First Floor Space Plan
Exhibit "B" -- Form of Landlord's Annual Statement
Exhibit "C" -- Current Categories of Expense Items
Exhibit "D" -- [Intentionally Deleted]
Exhibit "E" -- Calculation of Tenant's Proportionate Share
Exhibit "F" -- Additional Services to be Billed as Additional Charges
Exhibit "G" -- Rules and Regulations
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<PAGE>
FACILITY USE AGREEMENT
This Facility Use Agreement (this "Lease") is entered into as of April 12,
1999, by and between TENNECO PACKAGING INC., a Delaware corporation, with
offices at 1900 West Field Court, Lake Forest, Illinois 60045 ("Landlord"), and
PACKAGING CORPORATION OF AMERICA, a Delaware corporation, with offices at 1900
West Field Court, Lake Forest, Illinois 60045 ("Tenant").
INTRODUCTORY STATEMENTS
A. Pursuant to a Contribution Agreement dated as of January 25, 1999 (the
"Contribution Agreement") between Landlord, PCA HOLDINGS LLC, a Delaware limited
liability company ("PCA Holdings"), and Tenant, Landlord and PCA Holdings have
organized Tenant to acquire and operate the Containerboard Business (as such
term is defined in the Contribution Agreement), and Landlord has contributed to
Tenant substantially all of the assets and certain liabilities of Landlord's
Containerboard Business.
B. In connection with the acquisition and operation of substantially all
of the assets and liabilities of the Containerboard Business, Tenant has
determined that it is in its best interest to be located in the space which is
the subject of this Lease, for the term herein provided.
C. Landlord is the lessee of the building located in Conway Park at Lake
Forest Office Park and commonly known as 1900 West Field Court, Lake Forest,
Illinois (the "Building") and the land on which the Building is located (the
"Land") and all appurtenances belonging to or appertaining to the Land pursuant
to that certain Lake Forest Lease dated as of December 17, 1997 (the "Prime
Lease"), between Credit Suisse Leasing 92A, L.P., a Delaware limited partnership
("Prime Landlord"), as lessor, and Landlord, as lessee. The Building and the
Land together are sometimes referred to herein collectively as the "Property".
D. Tenant desires to lease from Landlord and Landlord desires to lease to
Tenant office space in certain portions of the Building, as more particularly
set forth in the Lease, and allow Tenant to use, in common with Landlord's
employees, guests and invitees, various common areas and amenities of the
Building.
E. The parties desire to enter into this Lease defining their respective
rights, duties, obligations and liabilities relating to the Premises.
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WITNESSETH
NOW THEREFORE, Landlord and Tenant, in consideration of the mutual
promises and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
each with intent to be legally bound, for themselves and their respective
successors and assigns, agree as follows:
1. Recitals; Defined Terms. The foregoing recitals are acknowledged to be
accurate and are incorporated herein by reference. Capitalized terms used but
not otherwise defined herein shall have the meanings given to such terms in the
Contribution Agreement.
2. Prime Lease. Tenant acknowledges having received a copy of the Prime
Lease, and Tenant and Landlord agree that this Lease is and shall be subject to
and subordinate to the Prime Lease in all respects. Tenant is not hereby
assuming any of the obligations of Landlord to Prime Landlord under the Prime
Lease, and Landlord shall remain liable to Prime Landlord thereunder.
3. Premises Demised.
a. Landlord leases and demises to Tenant and Tenant accepts from Landlord
those portions of the Building presently used by the employees of the
Containerboard Business for office space as of the Commencement Date (as
hereinafter defined), subject to relocation to the first floor of the Building
(excluding the portions of the first floor occupied by the computer and
telephone equipment room and the main lobby of the Building), as provided in
Section 4 hereof (such portions of the Building presently used by the employees
of the Containerboard Business for office space, and following such relocation
to the first floor of the Building, the first floor of the Building (excluding
the portions of the first floor occupied by the computer and telephone equipment
room and the main lobby of the Building), is referred to herein as the
"Premises"), together with the non-exclusive right to use portions of the
parking facility adjacent to the Building for parking passenger automobiles and
the non-exclusive right to use from time to time those portions of the Building
and the Land which Landlord designates as common areas, it being the intent of
the parties that stairways, halls, entrances, rest rooms on the lower level of
the building, the cafeteria, the exercise facilities in the Wellness Center, and
other facilities used in common by employees of Landlord and the Containerboard
Business immediately prior to the date of Closing of the transactions
contemplated by the Contribution Agreement will be designated and remain as
common areas, subject to the terms of Section 5 and Section 24 herein, provided,
however, that following the relocation of Tenant to the first floor of the
Building (as set forth in Section 5 hereof), Tenant shall not have the right to
use any portions of the second, third or fourth floors of the Building, except
to the extent permitted by, and subject to the conditions set forth in, the last
sentence of Section 5 hereof. Landlord agrees not to segregate or restrict
portions of the parking facility for its own use, or to designate for use by
Tenant segregated or specified portions of the parking facility, except to the
extent mandated by Legal Requirements.
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b. Tenant acknowledges that Landlord has made and is making no
representations or warranties with respect to the Property, the Building or the
Premises or any personal property of Landlord included with the Premises except
to the extent expressly set forth herein and in the Contribution Agreement, and
subject to such representations and warranties, if any, made herein and in the
Contribution Agreement, Tenant accepts the Premises and any such personal
property of Landlord in its existing "AS IS", "WHERE IS" condition and "WITH ALL
FAULTS".
4. Relocation of Tenant to First Floor of Building.
a. As of the Commencement Date, Tenant's Premises consists of office space
located in various portions of the Building which the Containerboard Employees
currently occupy. Landlord and Tenant acknowledge that it is in their best
interest to consolidate Tenant to a single contiguous area of the Building as
soon as practicable after the Commencement Date. Accordingly, Tenant agrees to
relocate all Containerboard Employees to the first floor of the Building
(excluding the computer room and the main lobby of the Building presently
located on the first floor) promptly following completion of the reconfiguration
of the first floor office space.
b. Landlord and Tenant agree to the reconfiguration of certain portions of
the first floor space as set forth on the conceptual space plan for the first
floor attached hereto as Exhibit "A" (the "First Floor Space Plan"). As soon as
practicable following the Commencement Date, Landlord shall cause the
construction and installation of demising walls and/or alterations to the first
floor space as shown on the First Floor Space Plan (the "Initial Tenant
Improvements"). The cost of moving the Containerboard Employees from other areas
of the Building to the first floor of the Building shall be borne by Tenant. The
cost of moving Landlord's employees out of the first floor of the Building to
other areas of the Building shall be borne by Landlord. The cost and expense
associated with the design and engineering (including the design and engineering
of the First Floor Space Plan), the preparation of plans and specifications and
working drawings, and the construction and installation of (i) the Initial
Tenant Improvements, (ii) demising walls and/or alterations to segregate
Landlord's and Tenant's portions of the computer room on the first floor of the
Building, and (iii) entry door security to restrict access to the portions of
the first floor of the Building to be occupied exclusively by Tenant shall be
shared equally between Landlord and Tenant.
c. Landlord and Tenant acknowledge and agree that the computer and
telephone equipment room located on the first floor of the building is and shall
remain a common area of the Building. Landlord's and Tenant's authorized
employees each shall have the right of access to the computer and telephone
equipment room on the first floor of the Building. Landlord and Tenant shall
institute reasonable security measures to restrict access to the computer room
only to authorized representatives and employees of Landlord and Tenant.
d. The parties may, by mutual agreement in writing, increase or decrease
the amount of office space or reconfigure the office space which is leased to
Tenant and, if necessary, in such event, the rent, taxes, other charges, and the
Tenant's Proportionate Share (defined below) will be equitably adjusted.
Notwithstanding the foregoing, in the event Tenant desires to vacate part of the
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Premises (the "Vacated Space"), Tenant shall notify Landlord in writing at least
thirty (30) days prior to the date Tenant expects to vacate the Vacated Space,
and Landlord shall have the right, but not the obligation, to recover the
Vacated Space, upon thirty (30) days' written notice to Tenant of Landlord's
exercise of its right of recovery. In such event the rent, taxes and other
charges and Tenant's Proportionate Share will be reduced in the same proportion
that the Vacated Space bears to the Premises. The terms of this Section 4(d)
shall not give Tenant the right or option to surrender or return any Vacated
Space to Landlord prior to the expiration or earlier termination of this Lease.
4.1 Option to Relocate Tenant to TA Building. Tenneco Automotive Inc.
("TAI"), an Affiliate of Landlord, is the present tenant under a lease (the
"Prime Lease") of the three-story office building located in Conway Park at Lake
Forest office park and commonly known as 500 North Field Drive, Lake Forest,
Illinois (the "New Building"). In connection with a transaction under
consideration by TAI, a portion of the New Building may become available for
occupancy by Tenant. Tenant agrees that Landlord shall have the right, subject
to the terms and conditions set forth below (the "Relocation Option"), to
relocate Tenant from the Building to the New Building. Landlord shall have the
right to exercise the Relocation Option any time during the first twelve (12)
months of the Term of this Agreement by giving written notice thereof to Tenant.
(a) Upon exercise by Landlord of the Relocation Option, each of Landlord
and Tenant will enter into a new facility use agreement for the New Building
("New Building Sublease"), which shall contain the terms and conditions set
forth below, and such other terms and conditions which are no less favorable
(but shall not be required to be more favorable) than the terms and conditions
set forth in this Agreement (the "Other Terms"), and other mutually acceptable
changes to the extent required to reflect differences between the New Building
and the Building:
(1) Landlord will provide building services and amenities in the New
Building at least equivalent in quantity and quality to the building
services and amenities provided to Tenant in the Building immediately
prior to relocation to the New Building, provided that Tenant shall have
the right to direct the provision of reasonable building services for the
New Building or decline services offered by Landlord for the New Building
and, in such case, Landlord shall be released from its obligation to
provide such services declined by Tenant and Tenant shall be permitted to
obtain any such services for its own account, except to the extent such
services relate to the maintenance and/or repair of the New Building or
are otherwise required to satisfy the obligations of the tenant under the
Prime Lease. Landlord will not be obligated to provide a Wellness Center
in the New Building, but employees of the Containerboard Business located
in the New Building will have the right to use the Wellness Center in the
Building.
(2) Landlord will convey or cause Tenneco Automotive to convey to
Tenant, by bill of sale in customary form, the owned furniture and office
equipment in the New Building, and Landlord will provide any leased office
equipment in the New Building, in each case at least equivalent in quality
and quantity to the office furniture and equipment owned and used by
Tenant in the Building, and Tenant will convey to Landlord, by bill of
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sale in customary form, all furniture and office equipment owned by Tenant
in the Building and Tenant will leave all owned furniture and office
equipment and leased office equipment in the Building upon relocation to
the New Building.
(3) Tenant will occupy the second and third floors of the New
Building (consisting of approximately 61,000 sq. ft.), to accommodate
Tenant's required 200 work stations and offices. Landlord will be
responsible for all out-of-pocket costs to move Tenant into the New
Building and to deliver premises in the New Building at least equivalent
in quality to the Premises. Tenant agrees to vacate the Premises and
relocate to the New Building as soon as practicable following completion
(i.e., subject only to completion of minor punchlist items) of the
reconfiguration of the premises to be occupied by Tenant in the New
Building, provided, however, that such relocation shall occur during a
weekend. In no event shall Landlord be responsible for any consequential,
indirect or business interruption costs paid, incurred or suffered by
Tenant occasioned by or arising out of the relocation to the New Building.
Landlord also shall be responsible for and shall pay the cost of all
alterations necessary to convert the common areas of the New Building to a
configuration suitable for multi-tenant occupancy. All determinations with
respect to (i) whether the Other Terms to be contained in the New Building
Sublease are no less favorable (but shall not be required to be more
favorable) than those set forth in this Agreement, and (ii) whether (x)
the quantity and quality of building services and amenities, (y) the
quantity and quality of furniture and office equipment, and (z) the
quality of the premises to be occupied by Tenant in the New Building are
"at least equivalent" with those required by the terms of this Section
4.1(a) (the matters referred to in the foregoing clauses (i) and (ii) are
referred to herein collectively as the "Equivalency Determinations") shall
be made jointly between the Chief Executive Officer of Tenant on the one
hand, and Theodore R. Tetzlaff (so long as he is one of the TPI/PCA
Directors (as such term is defined in the Stockholders Agreement), and if
Theodore R. Tetzlaff is not one of the TPI/PCA Directors, such other one
of the TPI/PCA Directors designated by Landlord), on the other hand. The
obligation of Landlord and Tenant to enter into the New Building Sublease
shall be subject to the joint agreement of the Chief Executive Officer of
Tenant and Theodore R. Tetzlaff (or if Theodore R. Tetzlaff is not one of
the TPI/PCA Directors, such other one of the TPI/PCA Directors designated
by Landlord), acting reasonably and in good faith, with respect to the
Equivalency Determinations.
(4) The initial term of the New Building Sublease will expire on the
Expiration Date of this Agreement (i.e., January 31, 2003). The rent and
occupancy costs which Tenant shall pay under the New Building Sublease
shall be the same rent and occupancy costs as Tenant would have paid under
this Agreement had Tenant remained in occupancy of the first floor of the
Building, adjusted as may be necessary to reflect any increases or
decreases in building services by Tenant as set forth in Subsection
4.1(a)(1) above. The rent and occupancy costs for calendar year 1999 shall
be subject to the BOC 1999 Cap, as set forth in Section 7(i) of this
Agreement. Tenant shall have the right to terminate the New Building
Sublease in the event total annual Building Occupancy Costs for
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the Building for any calendar year exceed the BOC Threshold Amount, as set
forth in Section 6(b) of this Agreement.
(5) Provided that Tenant is not in default under the New Building
Sublease, Tenant shall have the right to extend the term of the New
Building Sublease for one additional period of four (4) years (the
"Extension Period") following the expiration of the initial term
("Extension Option"). Tenant shall give Landlord written notice of its
exercise of the Extension Option not less than twelve (12) months prior to
the expiration of the initial term of the New Building Sublease. If Tenant
shall fail to exercise its Extension Option on or before the expiration of
such 12-month period, the Extension Option shall terminate and shall be
null and void. If Tenant shall exercise the Extension Option, the base
rent for the Extension Period shall be equal to the Tenant's proportionate
share of the contract rent payable under the Prime Lease of the New
Building, together with Tenant's proportionate share of all Building
Occupancy Costs (as defined in Section 7(a) of this Agreement) paid or
incurred by Landlord with respect to the New Building, adjusted as may be
necessary to reflect any increases or decreases in building services by
Tenant as set forth in Subsection 4.1(a)(1) above.
(6) Upon the execution and delivery of the New Building Sublease,
this Agreement will terminate, except with respect to each party's
indemnification obligations under Section 20 of this Agreement.
(b) Tenant agrees to keep the terms of this Relocation Option
confidential and agrees not to disclose to any person: (i) any non-public
information disclosed by Landlord or any of its Affiliates to Tenant regarding
the fact that discussions or negotiations are taking place concerning a possible
transaction with Tenneco Automotive, (ii) the terms of this Relocation Option,
or (iii) the fact that this Relocation Option exists, provided, however, that
Tenant may disclose the terms of this Relocation Option to its officers,
directors, shareholders, lenders and their respective outside legal counsel and
other professional advisors ("Tenant's Representatives") who shall be informed
of the confidential nature of the matters set forth in clauses (i), (ii) and
(iii) of this paragraph. The confidentiality requirements of this paragraph
shall not apply to any information (1) which is or becomes generally available
to the public (other than as a result of an unauthorized disclosure by Tenant or
any of Tenant's Representatives), or (2) which is required to be disclosed by
applicable law, regulation or court order.
5. Common Areas and Access. Subject to the terms of the last three
sentences of this Section 5, Tenant shall have full and unimpaired access to the
Building and the Premises at all times, and Tenant shall have the nonexclusive
right to use the private driveways on the Property which provide access to the
public road now known as "Field Court" for ingress and egress to the Building
and the Premises. Tenant shall have the nonexclusive right to use the truck
delivery docks, stairways, halls, entrances, rest rooms on the lower level,
cafeteria, exercise facilities, services and programs offered in the Wellness
Center, training rooms on the lower level and other facilities in and about the
Property (which are designated by Landlord as common areas) in common with
Landlord
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6. and any parties using the Property by, through or under Landlord,
subject to Landlord's Rules and Regulations which may be changed from time to
time in accordance with the terms of Section 24 hereof, and, in the case of the
training rooms, further subject to availability and reasonable advance
scheduling with Landlord on the same basis as Landlord's employees. Landlord
reserves the right to change, increase, reduce, restrict, limit or eliminate,
from time to time: the number, composition, dimensions or location of any
parking areas as long as same is in compliance with Legal Requirements; signs;
the Building name; the Building address; service areas; cafeteria; patio;
exercise facilities, services and programs offered in the Wellness Center;
training rooms on the lower level; walkways; roadways; or other common areas or
make alterations or additions to the Building, in its sole discretion, provided,
however, that Tenant's access to and use and enjoyment of the Premises shall not
be materially and adversely impacted by any of the foregoing. Notwithstanding
anything to the contrary contained in this Section 5, but subject to the terms
of Section 8(b) hereof, Landlord shall have the right to impose reasonable
restrictions on Tenant's access to certain common areas of the Building for
health and safety reasons (such as delivery areas, kitchen, mechanical rooms,
telephone rooms and electrical closets), and other portions of the Building used
and occupied principally by Landlord. Upon the relocation of Tenant to the first
floor of the Building, Tenant shall not be permitted to have access to or the
right to use any common areas, conference rooms, board room, training rooms or
video conference rooms on the second, third and fourth floors of the Building,
except that Tenant shall have the right from time to time to use the board room
on the fourth floor of the Building and the video conference rooms on the second
and fourth floors of the Building, subject in each case to availability and
reasonable advance scheduling with Landlord, and further subject, in the case of
the video conference rooms, to payment to Landlord of the use charge set forth
herein. Landlord agrees that Tenant shall be entitled to reserve the training
rooms on the lower level, the video conference rooms and the board room on the
same basis as Landlord's employees.
7. Term.
a. The term of this Lease (the "Term") shall commence on the date of
Closing of the transactions contemplated by the Contribution Agreement (the
"Commencement Date") and shall end on January 31, 2003 (the "Expiration Date"),
unless sooner terminated as provided herein.
b. Notwithstanding the Term of this Lease, Tenant shall have the right to
terminate this Lease, in the manner provided below, in the event the total
Building Occupancy Costs (as hereinafter defined) with respect to any calendar
year after calendar year 1999, as set forth in Landlord's Annual Statement,
exceed the aggregate sum of Fourteen Million Dollars ($14,000,000) (the "BOC
Threshold Amount") with respect to such calendar year. Tenant shall exercise its
right of termination by giving written notice thereof to Landlord (an "Early
Termination Notice") on or before the forty-fifth (45th) day following the date
on which Landlord renders a Landlord's Annual Statement reflecting total
Building Occupancy Costs in excess of the BOC Threshold Amount. The Early
Termination Notice delivered by Tenant shall designate the effective date of the
termination, which date shall be: (i) on the last day of a month, and (ii) at
least six (6) but not more than nine (9) months after the date of such
termination notice (such nine month period is referred to herein as the
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"Stub Period"). For purposes of determining whether the total Building Occupancy
Costs with respect to any calendar year after calendar year 1999 exceed the BOC
Threshold Amount, the BOC Threshold amount shall be adjusted (up or down, as
applicable) to reflect: (i) increases in Service Costs (as hereinafter defined)
resulting from utilization by Tenant of the services giving rise thereto in
amounts materially greater than Tenant's historical use of such services; and
(ii) decreases in Service Costs resulting from the termination by Tenant of the
utilization of such services (or part thereof) pursuant to Section 7(b) hereof.
In the event Tenant shall exercise its termination right, Tenant shall be
obligated to pay Rent (as hereinafter defined) during the entire Stub Period,
including, without limitation, Basic Rent (as hereinafter defined), except that
Tenant shall not be obligated to pay Rent on the amount by which total Building
Occupancy Costs exceed the BOC Threshold Amount during the first six (6) months
of the Stub Period.
8. Rent.
a. The basic rent (the "Basic Rent") during the Term shall be equal to
Tenant's Proportionate Share (as hereinafter defined), except to the extent that
certain expense items described below shall be billed to Tenant on the basis of
Tenant's actual use thereof, of all actual costs and expenses paid or incurred
by Landlord from time to time relating to the leasing (or if Landlord shall
become the owner of fee title to the Property, the ownership), use, management,
occupancy, operation, maintenance and repair of and necessary replacements for
the Property (referred to herein collectively as the "Building Occupancy
Costs"), including, without limitation, the following items:
(i) the Fixed Rent (as defined in the Prime Lease) and any other
amounts that Landlord is or may be required to pay to the Prime Landlord
pursuant to the Prime Lease (or any fixed rent and other amounts that may be
paid by Landlord under any lease that may replace the Prime Lease, or in the
event Landlord shall acquire fee title to the Property, the cost of capital
charged at Landlord's internal cost of funds applied to the purchase price paid
for the Property);
(ii) Taxes (as hereinafter defined);
(iii) insurance premiums;
(iv) Conway Park at Lake Forest Owner's Association dues and
assessments (special or otherwise);
(v) fuel costs and utility charges for electricity, heating,
ventilating and air conditioning;
(vi) the salaries, wages and benefits (including the amount of any
social security taxes, unemployment insurance contributions, union benefits and
other "fringe benefits") of the following individuals employed from time to time
by Landlord or an Affiliate of Landlord:
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(1) maintenance engineers to operate, maintain and repair the
Building systems, but not more than the pro-rata portion of such
maintenance engineers' time utilized for operating, maintaining and
repairing the Building;
(2) facility management personnel to operate and manage the
Property, the Building, and to arrange for and monitor the performance of
the services performed by vendors and contractors providing services to
the Property and the Building, but not more than the pro-rata portion of
such individuals' time devoted to the operation and management of the
Building;
(3) administrators and trainers to operate and manage the Wellness
Center, but not more than the pro-rata portion of such individuals' time
devoted to the operation and management of the Wellness Center;
(4) receptionists and switchboard operators to operate and manage
the telephone switchboard presently located in the main lobby of the
Building, and to receive guests and visitors, and issue visitor passes,
but not more than the pro-rata portion of such individuals' time devoted
to such activities;
(vii) the cost of all service contracts of vendors providing
services to the Property and the Building, including, without limitation,
property management, janitorial, maintenance, landscaping, window washing,
scavenger service, security, mailroom, photocopy service providers, food and
beverage services, HVAC maintenance services, etc.;
(viii) the cost of all leased machinery and equipment, including,
without limitation, leased office equipment, photocopiers, fax machines and
telephones;
(ix) the cost of any repairs, replacements, upgrades, alterations or
improvements made by Landlord to the Property or the Building which Landlord
reasonably believes are necessary and appropriate, provided, however, that if
the cost of any such repair, replacement, upgrade, alteration or improvement is
classified by Landlord for tax accounting purposes as capital in nature, the
cost shall be amortized over the useful life of the asset in the manner
determined by Landlord; and
(x) a replacement capital reserve relating to the estimated cost to
replace certain wearing components of the Building (such as roof, mechanical
components of the Building, chillers, and primary systems of the heating,
ventilating and cooling, the parking structure and electrical switch gear
serving the Building), provided, however, that the estimated cost to replace
such capital items shall be amortized over the expected useful life of the asset
in the manner determined by Landlord.
The categories of Building Occupancy Costs presently paid or incurred or
anticipated to be paid or
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incurred by Landlord relating to the Property are set forth on Exhibit "B"
attached hereto and made a part hereof. The Building Occupancy Costs which are
included in Basic Rent shall be those costs and expenses reasonably necessary to
lease (or to own, if Landlord shall become the owner of fee title to the
Property) manage, operate, maintain and repair the Property in a manner
consistent with first-class corporate headquarters office buildings in the
Conway Park at Lake Forest office park, and shall include, without limitation,
all costs and expenses necessary to comply with Legal Requirements (as
hereinafter defined).
b. Notwithstanding the foregoing, Landlord shall bill to Tenant the actual
cost utilized by Tenant with respect to the categories of expense items set
forth on Exhibit "C", together with a pro-rata allocation the fixed costs paid
or incurred by Landlord (collectively, the "Service Costs") with respect to the
administration and operation of the service (referred to herein individually as
a "Business Service" and collectively as "Business Services") to which such
expense item relates, which allocation shall be based upon the actual use of
such Business Services by each party, or such other basis of allocation as may
be set forth on Exhibit "C". Subject to the terms of Section 8(b) hereof with
respect to contractual arrangements with third-party service providers or
vendors for such Business Services, Tenant shall have the right to not utilize
any Business Service in its sole discretion and contract separately for such
Business Service. In such event, Tenant shall not be required to pay that
portion of the Service Costs associated with Business Services so separately
obtained by Tenant. To the extent Landlord does not have in place on the
Commencement Date the appropriate means to accurately record each parties'
actual use of the expense items to be billed based upon actual usage, Landlord
shall use reasonable commercial efforts to institute appropriate means of
recording each parties' actual use of these expense items, and Tenant agrees to
cooperate with Landlord's efforts. Until such time as Landlord has instituted
appropriate means to record the cost of the parties' actual use of these expense
items, Tenant shall pay Tenant's Proportionate Share with respect to such
expense items.
c. Basic Rent shall be payable in monthly installments in advance on the
first day of each calendar month during the Term in lawful money of the United
States of America. During the first and last months of the Term of this Lease,
if the Term commences on a date other than the first day of the month or ends on
a date other than the last day of a month, the Rent (as defined below) shall be
prorated based upon the actual number of days in such month.
d. In addition to the Basic Rent, Tenant shall pay Landlord, as additional
rent ("Additional Rent"), any and all other charges which Tenant is obligated to
pay to Landlord under the terms of this Lease, including but not limited to any
Additional Charges (as hereinafter defined). Additional Rent will be paid on a
one-twelfth (1/12) charge basis in advance with the monthly Basic Rent on the
first day of each calendar month during the Term. The charges for any Additional
Rent which are not included in the monthly rent shall be billed by Landlord to
Tenant and Tenant shall pay bills within thirty (30) days after the date they
are billed.
e. The terms "Basic Rent" and "Additional Rent" are sometimes collectively
referred to herein as "Rent" and shall include any and all sums due from Tenant
to Landlord under the terms
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of this Lease. All Rent shall be payable at the office of Landlord at 1900 West
Field Court, Lake Forest, Illinois 60045, or at such other address as directed
by notice from Landlord to Tenant. All Rent shall be due and payable without
notice, demand, abatement, offset, or right of recoupment, unless otherwise
specifically provided for in this Lease. If and to the extent Tenant is
obligated to pay any charge or expense item as Rent hereunder, and the same
charge or expense item also is included as an obligation of Tenant under the
Transition Services Agreement, Tenant shall pay such duplicate charge or expense
item as Rent under this Lease and not under the Transition Services Agreement,
unless the parties shall otherwise mutually agree. For administrative
convenience of Landlord and Tenant, Landlord may invoice Tenant for Rent using a
monthly rent invoice, provided, however, that the failure of Landlord to render
a rent invoice to Tenant shall not relieve Tenant of its obligation to pay Rent
on the first day of each month during the Term hereof.
f. As used in this Lease, the term "Tenant's Proportionate Share" shall
mean twenty-three and 85/100 percent (23.85%), which is approximately the number
of rentable square feet in the first floor of the Premises (excluding the
computer and telephone equipment room and the main lobby common areas), divided
by the number of total rentable square feet in the Building (excluding common
areas). The calculation of the Tenant's Proportionate Share is set forth in
Exhibit "E" attached hereto.
g. If the amount of any component of Basic Rent for a particular period is
not known, Landlord shall have the right to make reasonable estimates, forecasts
or projections of such amount for the purpose of determining the amount to
include with monthly Basic Rent. When the actual amount of the estimated item is
known, an adjustment will be made and Landlord shall refund any overpayment to
Tenant and Tenant shall pay any underpayment to Landlord, in the manner set
forth in Subparagraph 7(h) hereof. Landlord shall have the right from time to
time, but not more than four (4) times in any twelve (12) month period, to
change the amount of Basic Rent, and upon receipt by Tenant of written notice of
the change in the amount of Basic Rent, which notice shall identify the reason
for such change. Tenant shall commence paying, on the date of monthly Basic Rent
next due following Landlord's notice, the new amount of monthly Basic Rent. Upon
request by Tenant, Landlord shall provide Tenant with reasonably detailed
documentation supporting the change in Basic Rent, provided, however, that
Tenant's satisfaction or dissatisfaction with either (i) the reason for such
change in Basic Rent set forth in Landlord's notice, or (ii) Landlord's
documentation supporting such change in Basic Rent shall not limit or affect
Tenant's obligation to commence paying, on the date of monthly Basic Rent next
due following Landlord's notice, the new amount of monthly Basic Rent.
h. As soon as practicable after December 31 for the calendar year in which
the Lease commences, and for each calendar year thereafter (including the
calendar year following the year in which this Lease expires or is terminated),
Landlord shall deliver to Tenant a written statement setting forth in reasonable
detail the actual amount of Basic Rent during the immediately preceding year
(each such statement is referred to herein as a "Landlord's Annual Statement").
The form of the Landlord's Annual Statement shall be in substantially the form
of Exhibit "B" attached hereto. Within thirty (30) days after the delivery of
Landlord's Annual Statement to Tenant, Tenant
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shall pay to Landlord as Additional Rent the amount by which (i) the actual
amount of Basic Rent set forth in Landlord's Annual Statement for the preceding
year exceeds (ii) the aggregate of the monthly installments paid by Tenant on
account of Basic Rent for the immediately preceding year. In the event the
aggregate amount of the monthly installments paid by Tenant on account of Basic
Rent for such immediately preceding year exceeds the actual amount of Basic Rent
set forth in Landlord's Annual Statement for the immediately preceding year,
Landlord shall pay to Tenant the excess amount, without interest, within thirty
(30) days after delivery of the Landlord's Annual Statement. If the Term ends
other than on the last day of a calendar year, Tenant's Additional Rent as shown
on the Landlord's Annual Statement delivered after the end of the Term shall be
reduced proportionately and the payment due from Landlord or Tenant also shall
be apportioned and paid as aforesaid.
i. Notwithstanding anything to the contrary set forth in this Section 7,
for the calendar year ending on December 31, 1999, Tenant shall not be obligated
to pay Basic Rent on the amount by which the total Building Occupancy Costs paid
or incurred by Landlord for calendar year 1999 relating to the leasing (or if
Landlord shall become the owner of fee title to the Property, the ownership),
use, management, occupancy, operation, maintenance and repair of and necessary
replacements for the Property exceed the aggregate sum of Ten Million Dollars
($10,000,000) (the "BOC 1999 Cap"). For purposes of the foregoing determination,
the BOC 1999 Cap shall be adjusted (up or down, as applicable) to reflect: (i)
increases in Service Costs resulting from utilization by Tenant of Business
Services in amounts materially greater than Tenant's historical use of such
Services (including Tenant's historical use of such Services when the
Containerboard Business was operated as a division of Landlord); and (ii)
decreases in Service Costs resulting from the Termination by Tenant of the
utilization of such Services (or part thereof) pursuant to Section 7(b) hereof.
"Taxes" shall mean:
(1) All real estate taxes, assessments (special or otherwise), sewer
and water rents, rates and charges, and any other governmental levies,
impositions, rent tax, sales tax on rent, and charges of a similar nature
("Impositions"), which may be levied, assessed or imposed on or in respect
of all or any part of the Property and/or the Rent payable hereunder,
whether or not the Property constitutes one or more tax lots. If, however,
by law, any assessment may be divided and paid in annual installments,
then, for the purposes of this definition, such assessment shall be deemed
to have been so divided and to be payable in the maximum number of annual
installments permitted by law, together with interest payable during such
year on such annual installment and on all installments thereafter
becoming due as provided by law, all as if such assessment had been so
divided.
(2) Any reasonable and appropriate expenses incurred by Landlord in
contesting any of the foregoing or the assessed valuation of all or any
part of the Property.
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(3) If at any time during the Term the methods of taxation
prevailing at the date hereof shall be altered so that in lieu of or as a
substitute for the whole or any part of the Impositions now levied,
assessed or imposed on all or any part of the Property, there shall be
levied, assessed or imposed (i) an Imposition based on the income or Rents
received therefrom whether or not wholly or partially as a capital levy or
otherwise, or (ii) an Imposition measured by or based in whole or in part
upon all or any part of the Property and imposed on Landlord, then all
such Impositions shall be deemed to be Taxes.
"Taxes" shall not include: (i) Impositions upon, or arising from,
improvements or alterations outside of the Premises or to the Property or
Building made by Landlord or other tenants after the Commencement Date, and any
expenses in contesting such Impositions; (ii) penalties or interest paid by
Landlord on account of taxes; or (iii) income, gross profit, franchise or
similar taxes.
If, as a result of any application or proceeding brought by Landlord for a
reduction in the assessed valuation of the Property affecting any tax year
commencing after the Lease Commencement Date, there shall be a decrease in Taxes
for any such tax year, Landlord shall promptly refund to Tenant, Tenant's
Proportionate Share of the refund of the Taxes received by Landlord, including
refunds received after the expiration date of this Lease for periods during the
Term. Landlord may deduct from such refund Tenant's Proportionate Share of all
costs and expenses, including reasonable counsel fees, incurred by Landlord in
connection with the application or proceeding to reduce the Taxes.
9. Services Provided By Landlord.
a. Subject to the terms of Section 21 hereof, Landlord will provide Tenant
with substantially the same services that Landlord provides to other occupants
of the Building ("Services"). Services to be provided by Landlord may, at
Landlord's sole discretion, be provided, in whole or in part, by affiliates,
subsidiaries, contractors or vendors of Landlord. If Services are currently
provided by employees of Landlord, then Landlord shall not be obligated to hire
additional employees to perform the Services. Tenant agrees that all third
parties which currently provide any Services are acceptable. Landlord shall
provide Services to the extent, quantity, and quality that it provides such
services as of the Commencement Date of this Lease and shall not be required to
provide a level of Services which is greater than that provided immediately
prior to the Commencement Date of this Lease. Landlord shall not be required to
provide any Services to the extent that, in the Landlord's reasonable judgment,
(i) the performance of such services becomes unnecessary for Landlord's business
operations at the Building and the cessation of such service would not
materially diminish Tenant's use and enjoyment of the Premises; (ii) the
performance of such Services becomes commercially impractical as a result of a
cause or causes outside the reasonable control of Landlord; or (iii) to the
extent the performance of such Services would require Landlord to violate any
Legal Requirements. Landlord shall not be liable for any delay or failure of
performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control, provided that Landlord uses commercially
reasonable efforts to overcome such
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circumstances. LANDLORD MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, AND LANDLORD SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
SERVICES TO BE PROVIDED HEREUNDER.
b. Landlord shall give Tenant written notice (a "Vendor Contract Notice")
before entering into any new contracts with service providers or vendors, or
renewing or extending existing contractual arrangements with existing service
providers or vendors for Business Services. Tenant shall have the right, at that
time, to elect not to utilize the Business Services which are the subject of
Landlord's Vendor Contract Notice, provided that if Tenant does not so elect by
delivery of written notice to Landlord on or before the fifteenth (15th)
business day following receipt of a Vendor Contract Notice, Tenant may not
exercise its right to terminate such Business Service pursuant to Section 7(b)
hereof until such time as Tenant shall receive a subsequent Vendor Contract
Notice with respect thereto. Landlord shall endeavor to give Tenant as much
notice as reasonably possible before entering into new contracts with service
providers or vendors, or renewing or extending existing contractual arrangements
with existing service providers or vendors for Business Services, but in any
event not less than fifteen (15) business days. If Tenant fails to respond to
Landlord's Vendor Contract Notice, Tenant shall be deemed to have waived its
election not to utilize the Business Service which is the subject of the Vendor
Contract Notice for the term of the contract with such service provider or
vendor. If Tenant shall exercise its right not to utilize any Business Service,
Tenant shall have the right to procure such Business Services for itself, and
Landlord shall use commercially reasonable efforts to facilitate Tenant's use of
third party service providers and vendors (referred to herein as "Tenant's
Vendors"), subject to the following conditions:
(i) Landlord shall have the right to impose on Tenant's Vendors
reasonable restrictions and scheduling requirements with respect to access to
the building, use of the Building (including, without limitation, use of
driveways, loading dock, freight elevator, use common areas, storage rooms and
corridors), and scheduling of deliveries and pick-ups; and
(ii) Tenant shall be solely responsible for Tenant's Vendors,
including, without limitation, any bodily injury or property damage caused by or
arising out of Tenant's Vendors use of the Building.
c. Subject to the terms of Subsection 8(a) hereof, Landlord shall not be
required to provide to Tenant (i) any services which Landlord does not provide
to other occupants of the Building, or (ii) services to the extent that the cost
of providing such services exceeds in the future the cost of providing such
services as of the Commencement Date as the result of, and only to the extent
caused by, an organizational or operational change by Tenant (such services
described in clauses (i) and (ii) are referred to herein collectively as
"Additional Services"). Additional Services also shall include, without
limitation, the items set forth in Exhibit "F" attached hereto. Upon written
request by Tenant, Landlord shall have the right, but not the obligation, to
provide the requested Additional Services at the rate which reasonably reflects
the expense to Landlord to
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provide such Additional Services, and in the case of Additional Services under
clause (ii) of the preceding sentence, continue to provide the service but at an
increased rate which reasonably reflects the increased cost to Landlord of
providing such service (the cost and expense associated with such Additional
Services are referred to herein collectively as "Additional Charges"). If
Landlord elects not to provide the Additional Services requested by Tenant,
Tenant shall have the right to procure the Additional Services for itself,
subject to the terms and conditions set forth in clause (i) and clause (ii) of
Subsection 8(b) above. Additional Charges shall constitute Additional Rent under
this Lease. In the event Landlord elects to provide any Additional Services,
Landlord shall issue to Tenant a service work order, and Landlord shall
separately identify Additional Charges on the monthly invoice for Rent.
d. Tenant shall provide to Landlord on a timely basis any and all
information which may be necessary for Landlord to provide the Services. Tenant
shall be solely responsible for the timely delivery of such information, and the
accuracy and completeness thereof.
e. The charges for any Services which are not included in the monthly Rent
on a one-twelfth (1/12) annual charge basis will be billed by Landlord to Tenant
not more often than monthly and Tenant shall pay bills within thirty (30) days
after the date they are billed.
f. Any sales, value added, or similar taxes imposed on the Service
(including, without limitation, any telephone surcharge or tax imposed by the
City of Lake Forest with respect to telephone usage) shall be paid by Tenant to
Landlord in addition to the charges for the services.
g. Notwithstanding any other provision of this Lease to the contrary, the
parties may, by mutual agreement in writing, increase or decrease the charges
for the Services and, may add, delete, or modify the Services.
10. Use. Tenant shall have the right to use and occupy the Premises for
general office use and any other use consistent with (a) the current use of the
Premises by the Containerboard Business as of the Commencement Date, (b)
applicable Legal Requirements (as defined in Section 10 below), (c) the nature
of and the character of the Building, and (d) the uses of the Building by
Landlord. Tenant shall not have the right to use the roof or any portion thereof
for any purpose whatsoever, including the installation or use of any microwave
dishes or other communications radio antenna or other transmission or reception
equipment, except to the extent, if any, the roof of the Building is utilized by
the Containerboard Business as of the Commencement Date hereof.
11. Compliance with Legal Requirements. Tenant shall comply with all
applicable Legal Requirements insofar as they pertain to Tenant's use of the
Premises, including cases where Legal Requirements mandate repairs, alterations,
changes or additions to the Premises caused by Tenant's use of the Premises
during the Term. Landlord shall comply with Legal Requirements in every other
case. In the event Tenant's obligation to comply with Legal Requirements
requires any "Alterations" (defined in Section 14), then such Alterations shall
be made in accordance with the provisions of Section 14 of this Lease. Landlord
shall be responsible to make any Alterations
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resulting from the Premises' failure to comply with any Legal Requirements up to
and including the Commencement Date. "Legal Requirements" shall mean the
requirements of (a) all applicable laws, statutes, ordinances, codes, rules,
orders and regulations of all federal, state, county, and municipal governments,
and any and all of their departments, bureaus and agencies, including without
limitation all "Environmental Laws" (defined in Section 11 hereof) and the
Americans with Disabilities Act, (b) all rules, regulations and restrictions
from time to time established by the Conway Park at Lake Forest Owners'
Association, (c) any covenants, conditions and restrictions affecting the
Property, such as those contained in the Declaration recorded as Document No.
2552398, as amended by First Amendment to Annexation Agreement, recorded August
9, 1996 as Document No. 3860724, and as further amended by the First Amendment
to Declaration of Easements and Protective Covenants, Conditions and
Restrictions for Conway Park at Lake Forest, recorded September 24, 1997 as
Document No. 4024067, and (d) all rules, orders and regulations of the Board of
Fire Underwriters or equivalent association for the prevention of fires.
12. Environmental Compliance.
a. Tenant accepts, assumes and agrees to pay, perform or otherwise
discharge all liabilities and obligations arising after the Commencement Date,
under any "Environmental Laws" ("Assumed Environmental Liabilities") with
respect to conditions, events, occurrences, practices, releases of Hazardous
Substances or other acts or omissions after the Commencement Date and through
the Term hereunder relating directly to the use of the Premises and operations
conducted by Tenant and its employees, guests, invitees, contractors, vendors,
agents and representatives at the Premises. Assumed Environmental Liabilities
means all liabilities and obligations arising after the Commencement Date under
any Environmental Law with respect to conditions, events, occurrences,
practices, "Releases" of "Hazardous Substances" or other acts or omissions after
the Commencement Date relating directly to the operations conducted by Tenant
and its employees, guests, invitees, contractors, vendors, agents and
representatives at the Premises.
b. Tenant agrees to comply in all material respects with all applicable
"Environmental Laws" with respect to conditions, events, occurrences, practices,
"Releases" of "Hazardous Substances" or other acts or omissions as they pertain
to the manner in which Tenant uses the Premises during the Term hereunder.
"Environmental Laws" means CERCLA, the Resource Conservation and Recovery Act of
1976, and the Occupational Safety and Health Act of 1970, each as amended, and
any similar local, county, state and/or federal law or regulation relating to or
addressing the environment, health or safety, in each case as in effect on or
after the Commencement Date. "Governmental Authority" means any federal state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority. "Hazardous Substance(s)" means any substance that is
regulated under any Environmental Law or is deemed by any Environmental Law to
be hazardous, toxic, a contaminant, waste, a source of contamination or
pollutant. In the event Tenant's obligation to comply with Environmental Laws
requires any "Alterations" (defined in Section 14), then such Alterations shall
be made in accordance with the provisions of Section 14 of this Lease provided,
however, that Tenant shall not be required to make Alterations that are required
as a result of
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Landlord's use or ownership of the Property. Upon expiration or earlier
termination of the Lease, Tenant shall provide proof reasonably satisfactory to
Landlord of compliance with all Governmental Authority and Environmental Laws.
c. Tenant shall not generate, store, transport, treat, dispose of or use
on the Property Hazardous Substances, except Tenant's use in the Building of
cleaning supplies, copying fluids, other office and maintenance supplies and
other substances normally and customarily used by tenants of office space shall
not be deemed a violation of this Subsection 11(c) if such use is in compliance
with all Legal Requirements.
d. Landlord agrees to comply in all material respects with all applicable
Environmental Laws insofar as they pertain to Landlord's use or ownership of the
Property, unless said ownership compliance is due to a failure of the
Containerboard Business or Tenant to fulfill its obligations under Subsections
(a), (b) or (c) above.
e. Landlord and Tenant shall each defend, indemnify and save the other
harmless from any claims, fines, penalties, liabilities, losses, damages, costs
and expenses (including reasonable attorney's fees, expert witness fees and
other costs of defense) which arise from its breach of its respective agreements
contained in this Section 11. Landlord and Tenant expressly waive, release and
agree not to make any claim against the other or their Affiliates, except for
indemnification claims made pursuant to this Section 11, for the recovery of any
cost or damages, whether directly or by way of contribution, or for any other
relief whatsoever for environmental matters under Environmental Laws, whether
known or unknown, foreseen or unforeseen, now existing or applicable or
hereinafter enacted or applicable, providing for any right of recovery relating
to or arising out of the Premises, the operation or conduct of the
Containerboard Business and Tenant, or the "Release", threat of "Release" or
presence of Hazardous Substances. "Release" means any releasing, spilling,
leaking, discharging, disposing of, pumping, pouring, emitting, emptying,
injecting, leaching, dumping or allowing to escape. The procedures for
Landlord's and Tenant's indemnification hereunder shall be governed by Section
7.4 of the Contribution Agreement
f. Landlord's and Tenant's obligations under this Section 11 shall survive
the expiration or earlier termination of this Lease.
13. Repairs and Maintenance.
a. During the Term, Landlord shall, subject to the terms of Section 21
hereof, perform diligently, promptly and in a good and workmanlike manner all
maintenance, repairs and replacements to: the structural components of the
Building, including without limitation the roof, roofing system, exterior walls,
bearing walls, support beams, foundations, columns, exterior doors and windows,
and lateral support to the Building; (ii) assure water tightness of the Building
and the Premises (including caulking of the flashings) and repairs to the roof,
roofing system, curtain walls and windows, if required to assure watertightness;
(iii) the plumbing; lawn and fire sprinklers; heating, ventilation and air
conditioning systems; electrical and mechanical lines, equipment and
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systems, including without limitation elevators; (iv) the parking facility,
common areas of the Property and Building, including their lighting systems; (v)
exterior improvements to the Building, including walkways, shrubbery and
landscaping; (vi) the glass including cleaning and replacements; and (vii)
normal routine maintenance, cleaning, and janitorial services.
b. Tenant shall maintain the Premises and the fixtures and appurtenances
therein in good repair at all times, except to the extent such maintenance is
the responsibility of the Landlord pursuant to Section 12(a) above. During the
Term, Tenant shall not cause or perform any redecorating of the interior of the
Premises without the written consent of Landlord, which consent may be withheld
in Landlord's sole discretion.
c. Landlord, at Tenant's sole cost and expense, unless covered by any
insurance policy maintained by Landlord, shall make all repairs to the Building
(excluding the Premises) caused by the negligence or misconduct of Tenant, its
agents, independent contractors, representatives, or employers, and Tenant shall
promptly reimburse Landlord for the reasonable costs and expenses for such work.
14. Utilities. Landlord shall, subject to the terms of Section 21 hereof,
provide all utilities for the Premises consistent with the utilities provided at
the Commencement Date.
15. Alterations; Liens.
a. Tenant shall not make any alterations, improvements or installations
including placement of any signs (collectively, "Alterations") in or to the
Premises without the prior written consent of Landlord, which consent shall not
be unreasonably withheld, except that Landlord's consent may be withheld in
Landlord's sole and absolute discretion with respect to any proposed Alterations
affecting: (i) the structural components of the Building; (ii) the roof or
roofing system; (iii) exterior walls, bearing walls, support beams, foundations,
columns, exterior doors and windows, and lateral support to the Building; (iv)
curtain walls and windows; (v) the base building plumbing supply system and
fire/life safety systems (but relocation of sprinkler heads will be permitted
subject to Landlord's consent, which consent will not be unreasonably withheld);
(vi) the base building heating, ventilation and air conditioning systems (but
relocation of ductwork and ceiling vents will be permitted subject to Landlord's
consent, which consent will not be unreasonably withheld); (vii) base building
electrical and mechanical lines, equipment and systems, including, without
limitation, elevators; (viii) the parking facility, (ix) common areas of the
Property and Building, including their lighting systems; (x) exterior
improvements to the Building, including walkways, shrubbery, lawn and
landscaping; and (xi) the glass. In addition, Landlord shall have the right to
withhold consent, in Landlord's sole and absolute discretion, with respect to
any proposed Alterations to the interior of the Premises which would be visible
from outside the Building or which would diminish the design uniformity of the
Building.
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b. Any Alterations consented to by Landlord shall be made by Landlord or
Landlord's contractors, at the sole cost and expense of Tenant, unless Landlord
shall elect, at Landlord's option, to permit Tenant itself to arrange and
contract for the Alterations, each as hereinafter provided.
c. In the event that Landlord shall elect to permit Tenant to arrange and
contract for the Alterations, then Tenant shall, before permitting commencement
of the Alterations, furnish to Landlord for Landlord's review and approval all
necessary plans and specifications in reasonable detail, names and addresses of
proposed contractors, copies of contracts, and shall furnish necessary permits
and indemnification in form and amount reasonably satisfactory to Landlord,
against any and all claims, costs, damages, liabilities and expenses which may
arise in connection with the Alterations, and certificates of insurance in form
and amount reasonably satisfactory to Landlord from all contractors performing
labor or providing materials, insuring Landlord against any and all liabilities
which may arise out of or be connected in any way with the Alterations. Tenant
shall pay all costs and expenses relative to the Alterations. Tenant shall
permit Landlord to monitor the construction operations in connection with the
Alterations and to restrict, as may reasonably be required, the passage of
manpower and materials and the conducting of construction activity in order to
avoid unreasonable disruption to Landlord or to other tenants of the Building or
damage to the Property or the Premises. Tenant shall pay to Landlord, for
Landlord's overhead in connection with monitoring the Alterations, a sum equal
to five percent (5%) of Tenant's costs for the Alterations. Promptly following
completion of the Alterations, Tenant shall furnish to Landlord contractors'
affidavits, full and final waivers of lien and receipted bills covering all
labor and materials expended and used in connection with the Alterations.
Whether or not Tenant shall furnish Landlord with all the foregoing, Tenant
hereby agrees to indemnify Landlord and hold Landlord harmless from any and all
liabilities of any kind and description which may arise out of or be connected
in any way with any Alterations. Any Alterations performed by Tenant shall
comply with all Landlord's insurance requirements and with all applicable laws,
ordinances and regulations. Landlord's approval of plans and specifications or
supervision of construction operations, if any, shall not imply Landlord's
acknowledgment, opinion or belief that the Alterations complies with any such
applicable laws, ordinances or regulations, nor relieve Tenant from any
responsibility hereinabove imposed. Following the completion of the Alterations,
Tenant shall also provide Landlord with "as-built" drawings showing in detail
the full extent and nature of the Alterations.
d. In the event that Landlord shall elect to directly arrange and contract
for the Alterations on behalf of Tenant, Landlord shall assume full
responsibility for the preparation of plans and specifications for the
Alterations for the Tenant's approval, the contracting for all labor and
materials required by the Alterations, compliance of the Alterations with all
applicable laws, ordinances, regulations, insurance and other requirements, and
monitoring of the Alterations. Prior to contracting for any Alterations on
behalf of Tenant, Landlord shall prepare for Tenant's approval a budget of the
anticipated cost of the Alterations, and Landlord shall not contract for any
Alterations until Tenant has approved the proposed budget. Tenant shall pay to
Landlord the costs of the Alterations including, without limitation, the cost of
preparing the plans and specifications, the cost of permits, fees, labor and
materials required to complete the Alterations, and the cost, if any, to
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repair and/or redecorate the Premises as may be necessitated by the Alterations
(collectively, "Costs"). Landlord's charge to Tenant for Landlord's overhead in
connection with Landlord's performance of the Alterations shall be computed at
five percent (5%) of the total substantiated Costs. The Costs payable by Tenant
to Landlord and Landlord's charge therefor shall be deemed to be Additional Rent
and shall be paid by Tenant as the Alterations are performed, upon being billed
by Landlord.
e. Tenant, promptly following receipt of notice thereof, shall remove any
lien or claim of lien filed against the Property or any part thereof for
materials or labor performed by any contractors, subcontractors, workmen, or
suppliers engaged directly or indirectly by Tenant and Tenant hereby indemnifies
and holds Landlord harmless from and against any and all losses, costs, damages,
expenses, or liabilities including, but not limited to, reasonable attorneys'
fees and other costs incurred by Landlord as a result of or in any way related
to such claims or liens, or Tenant's failure to promptly remove any such claims
or liens.
16. Assignment and Subleasing.
a. Except as provided in Subsections 15(b) and 15(e) below, Tenant shall
not, without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole and absolute discretion, (i) assign, convey or
transfer this Lease or any interest under it; (ii) allow any transfer thereof or
any lien upon Tenant's interest by operation of law; (iii) sublet or license the
Premises, in whole or in part, or grant any party the right to occupy the
Premises or any part thereof; or (iv) permit the occupancy of the Premises or
any part thereof by anyone other than Tenant. The consent by Landlord to any
particular assignment, subletting or mortgaging shall not in any way be
considered a consent by Landlord to any other or further assignment, subletting
or mortgaging.
b. Tenant shall not, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, assign this Lease or permit any
transfer to (i) any corporation resulting from a merger or consolidation of
Tenant or (ii) a wholly-owned subsidiary of Tenant. In making its determination
as to whether to consent to any proposed assignment resulting from a merger or
consolidation of Tenant or to a wholly-owned subsidiary of Tenant, Landlord may
consider, among other things, the creditworthiness and business reputation of
the proposed assignee. Landlord shall be entitled to withhold its consent to any
proposed assignment if, at the time of the proposed assignment, the proposed
assignee or any of its Affiliates manufactures or produces products which
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compete with any products manufactured or produced by Landlord or any of its
Affiliates. Tenant's remedy, in the event that Landlord shall unreasonably
withhold its consent to an assignment shall be limited to injunctive relief or
declaratory judgment and in no event shall Landlord be liable for damages
resulting therefrom. For purposes hereof, a proposed assignee shall not be
deemed to compete with Landlord or its Affiliates by virtue of: (i) ownership of
less than 5% of the outstanding stock of any publicly-traded corporation, (ii)
the sale of competing products if such sales are not such proposed assignee's
primary business and such sales are less than $100 million per year, and (iii)
sales of products and services made in the Containerboard Business as of the
Closing Date (each as defined in the Contribution Agreement).
c. If Landlord consents to an assignment of this Lease, then the assignee
shall furnish to Landlord an assumption instrument pursuant to which such
assignee assumes all of Tenant's obligations hereunder accruing as of the
effective date of the assignment. Notwithstanding any assignment or transfer of
this Lease, and notwithstanding the acceptance of Rent by Landlord from an
assignee, transferee, or any other party, Tenant shall remain fully liable for
the payment of Rent and for the performance and observance of all other
obligations of this Lease on the part of Tenant to be performed or observed.
Tenant's liability shall be joint and several with any immediate and remote
successors in interest of Tenant, and such joint and several liability in
respect of Tenant's obligations under this Lease shall not be discharged,
released or impaired in any respect by any agreement or stipulation made by
Landlord extending the time of, or modifying any of the obligations of, this
Lease, or by any waiver or failure of Landlord to enforce any of the obligations
of this Lease.
d. Tenant shall not mortgage, pledge, assign or otherwise encumber its
interest in and to this Lease or the Rent payable hereunder without the prior
written consent of Landlord and Prime Landlord, which consent may be withheld in
the sole and absolute discretion of Landlord or Prime Landlord, as the case may
be, and any mortgage, pledge or assignment of the Tenant's interest hereunder
made without the prior written consent of the Landlord and Prime Landlord shall
be null and void and of no force or effect.
e. Notwithstanding the restrictions on assignment of this Lease set forth
in Subsection 15(a) above, but subject to any applicable restrictions set forth
in the Prime Lease, and provided that no Event of Default has occurred and is
continuing, and no event has occurred which, with the passage of time or giving
of notice or both, would constitute an Event of Default hereunder, Tenant shall
have the right to assign its interest as tenant under this Lease, in whole but
not in part, without the prior written consent of Landlord, in the event of a
sale of substantially all of the assets and business of Tenant, provided that
such sale transaction has been approved by 4 of the 5 TPI/PCA Directors (as such
terms is defined in the Stockholders Agreement) as set forth in the Stockholders
Agreement.
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17. Damage or Destruction.
a. If the Premises or the Building shall be so damaged by fire, other
casualty, acts of God or the elements (a "Casualty") so that it cannot, in
Landlord's good faith business judgment, be restored or made suitable for
Tenant's business needs within one hundred eighty (180) days after the date of
the Casualty, or if Prime Landlord exercises any right granted to it pursuant to
the Prime Lease to terminate the Prime Lease by reason of such Casualty, then
either Landlord or Tenant (as its sole remedy) may terminate this Lease by
written notice given to the other party within thirty (30) days after the date
of the Casualty. Any such termination of this Lease shall be effective as of the
date of the Casualty and the Rent shall abate from that date, and any Rent paid
for any period beyond such date shall be refunded to Tenant.
b. If this Lease is not terminated as provided in Subsection (a), then
Landlord shall, at its sole cost and expense, restore the Premises and/or the
Building as soon as reasonably practicable (and in all events within the time
periods set forth in Subparagraph (c) below) to the condition existing prior to
the Casualty (to the extent practicable), including without limitation any
tenant improvements other than those improvements constructed for Tenant after
the Commencement Date. During the restoration period, the Rent shall abate for
the period during which the Premises are not suitable for Tenant's business
needs. If only a portion of the Premises is damaged, the Rent shall abate
proportionately based upon the portion of the Premises that are not suitable for
Tenant's business needs and not used by Tenant.
c. If Landlord, subject to delays occasioned by the occurrence of events
of force majeure, does not restore the Premises and/or the Building as required
in Subparagraph (b) within the one hundred eighty (180) day period after the
date of the Casualty, Tenant may, as its sole remedy, terminate this Lease
without incurring any liability to Landlord subsequent to the Casualty, provided
(i) Tenant gives Landlord not less than thirty (30) days prior written notice
after the expiration of the applicable one hundred eighty (180) day period, and
(ii) Landlord does not complete the restoration during such thirty (30) day
period.
18. Eminent Domain.
a. If there is a taking of the Property or the Premises by right or threat
of eminent domain (a "Taking") which results in the remainder of the Premises
being unable to be restored, in Landlord's good faith business judgment, to a
complete architectural unit within one hundred twenty (120) days from the date
of the Taking ("Substantial Taking"), or if Prime Landlord exercises any right
granted to it pursuant to the Prime Lease to terminate the Prime Lease by reason
of such Taking, then either Landlord or Tenant (as its sole remedy) may
terminate this Lease by written notice given to the other party within thirty
(30) days after the date of the Taking. Any such termination of this Lease shall
be effective as of the date of the Taking and the Rent shall abate from that
date, and any Rent paid for any period beyond such date shall be refunded to
Tenant.
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b. If there shall be a Taking which does not constitute a Substantial
Taking, this Lease shall not terminate but Landlord shall, at its sole cost and
expense, with due diligence, restore the Premises as soon as reasonably
practicable to its condition before the Taking (to the extent practicable) but
excluding any improvements made for Tenant after the Commencement Date of this
Lease. During the restoration period, the Rent shall abate for the period during
which the Premises are not suitable for Tenant's business needs. If only a
portion of the Premises is taken, the Rent shall abate proportionately based
upon the portion of the Premises that are not suitable for Tenant's business
needs and not used by Tenant.
c. Tenant shall not be entitled to any part of the payment or award for a
Taking, provided that Tenant may file a claim, separate from Landlord's claim,
for any loss of Tenant's property, moving expenses, or for damages for cessation
or interruption of Tenant's Containerboard Business, provided such claim is not
for the value of the Leasehold and does not reduce Landlord's award therefor.
19. Insurance.
a. Landlord shall maintain, at its expense, during the Term, fire
insurance, with standard "all risk" coverage for the Building. Such coverage
shall equal one hundred percent (100%) of the replacement cost of the Building
and any parking facility, exclusive of excavation, footings and foundations.
b. Landlord shall maintain, at its expense, during the Term, comprehensive
general liability insurance covering injuries occurring on the Property, which
shall provide for a combined coverage for bodily injury and property damage in
an amount not less than Three Million Dollars ($3,000,000).
c. Tenant shall maintain, at its expense, during the Term, with insurance
companies reasonably acceptable to Landlord, comprehensive general liability
insurance for the Premises in a combined coverage for bodily injury and property
damage in an amount not less than Three Million Dollars ($3,000,000). Tenant
shall name Landlord, Prime Landlord, Existing Mortgagee (defined below) and any
mortgagee of the Property of which Landlord has advised Tenant in writing, as
additional insureds under such policy.
d. Tenant shall maintain, at its expense, during the Term, property
insurance on all personal property located in the Premises from damage or other
loss caused by fire or other casualty, including but not limited to, vandalism
and malicious mischief, perils covered by extended coverage, theft, sprinkler
leakage, water damage (however caused), explosion, malfunction or failure of
heating and cooling or other apparatus, and other similar risks in amounts not
less than the full insurable replacement value of such property.
e. Tenant shall maintain such worker's compensation insurance as is
required by applicable law.
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f. The policy or policies evidencing such insurance for Subsections (a),
(b), (c), and (d) shall provide that they may not be canceled or amended without
thirty (30) days' prior written notice being given to the party for whose
benefit such insurance has been obtained. Prior to the Commencement Date, each
party shall submit to the other insurance certificates demonstrating the
required policies are in effect.
g. Notwithstanding the foregoing, Landlord may self-insure provided
Landlord provides evidence reasonably satisfactory to Tenant that Landlord has
the financial ability to self-insure such obligation and the self-insurance
program must meet the requirements of any applicable laws pertaining to such
self-insurance programs and must meet any and all requirements and approvals of
any insurance commission of the state in which the Property is located and where
the subject matter of said self-insurance program is to be applicable.
20. Subrogation and Waiver.
The parties release each other and their respective authorized
representatives from any claims for injury to any person or damage to the
Property that are caused by or result from risks required to be insured against
under any all risk or fire insurance policies carried by either of the parties.
Each party to the extent possible shall obtain, for each policy of insurance,
provisions permitting waiver of any claim against the other party for loss or
damage within the scope of the insurance and each party to the extent permitted,
for itself and its insurer, waives all such insured claims against the other
party. If such waiver or agreement shall not be obtainable, or shall cease to be
obtainable without additional charge, the insured party shall so notify the
other party promptly after notice thereof. If the other party shall agree in
writing to pay the insurer's additional charge therefor, such waiver or
agreement shall (if obtainable) be included in the policy.
21. Indemnification.
a. Except as specifically provided to the contrary elsewhere in this Lease
and in addition to the indemnities provided for in the Contribution Agreement,
Tenant shall defend, indemnify and save harmless Landlord, its Affiliates,
subsidiaries, and any officers, directors, against all claims, liabilities,
losses, fines, penalties, damages, costs and expenses (including reasonable
attorneys' fees and other costs of litigation) because of injury, including
death, to any person, or damage or loss of any kind to any property caused by
any negligent action or omission of Tenant or Tenant's Vendors, or any failure
on the part of Tenant to perform all of its liabilities and obligations under
this Lease.
b. Except as specifically provided to the contrary elsewhere in this Lease
and in addition to the indemnities provided for in the Contribution Agreement,
Landlord shall defend, indemnify and save harmless Tenant, its Affiliates, and
any officers, directors, against all claims, liabilities, losses, fines,
penalties, damages, costs and expenses (including reasonable attorneys' fees and
other
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costs of litigation) because of injury, including death, to any person, or
damage or loss of any kind to any property caused by any negligent action or
omission of Landlord, or any failure on the part of Landlord, to perform its
obligations under this Lease.
c. Landlord's and Tenant's indemnification obligations under this Section
20 shall survive the expiration or earlier termination of this Lease.
22. Interruption of Services. Landlord shall not be liable to Tenant for
any damages, nor shall Tenant be entitled to any abatement of Rent due to any
interruption or failure to furnish or delay in furnishing any utilities or
Services, or for any diminution in the quality or quantity thereof, when such
delay, failure or diminution is occasioned, in whole or in part, by repairs,
renewals or improvements, by any strike, lockout or other labor trouble, failure
of any vendor, contractor or service provider to perform, by inability to secure
fuel or supplies for the Building, provided that Landlord uses commercially
reasonable efforts to overcome such circumstances, by any accident or casualty
whatsoever, by the act, omission, or default of Tenant, or any other cause or
circumstance beyond Landlord's reasonable control, and such failures or delays
or diminution shall never be deemed to constitute an eviction or disturbance of
the Tenant's use and possession of the Premises or relieve Tenant from paying
Rent or performing any of its obligations under this Lease. Notwithstanding the
foregoing, if the Premises are rendered untenantable as the result of any such
interruption or failure to furnish utilities or Services, and such
untenantability continues for a period of five (5) consecutive Business Days
(and provided that Tenant does not, in fact, use or occupy the Premises during
the period of such untenantability), then, commencing with the sixth such day
and continuing until such untenantability has been remedied, Basic Rent shall be
abated in proportion to the portion of the Premises so rendered untenantable. In
the Premises are rendered untenantable as the result of any such interruption or
failure to furnish utilities or Services, and such interruption of failure
continues for a period of thirty (30) or more consecutive days (a "Prolonged
Interruption"), and such Prolonged Interruption actually prevents the Tenant
from using and occupying the entire Premises or so much of the Premises that
Tenant is unable to conduct any of its business operations therein, then Tenant
shall have the right, after thirty (30) consecutive days of Prolonged
Interruption, to terminate this Lease by giving not less than ten (10) Business
Days advance written notice to Landlord, provided, however, that if Landlord
shall cause such utility or Service to be restored before the expiration of such
ten (10) Business Day period, this Lease shall not terminate.
23. Subordination and Nondisturbance. Tenant's interest in this Lease
shall be subject and subordinate in all respects to any fee owner, ground or
prime lease or the lien of any mortgage or deed of trust which may now or
hereafter be placed on the Property, including without limitation, (i) that
certain Lake Forest Lease dated as of December 17, 1997 between Credit Suisse
Leasing 92A, L.P. and Tenneco Packaging Inc. a Memorandum of which was recorded
in the Office of the Recorder of Deeds for Lake County, Illinois on February 10,
1998 as Document No. 4084981, and (ii) that certain Mortgage, Assignment of
Leases and Rents, Security Agreement and Financing Statement made by Credit
Suisse Leasing 92A, L.P. to State Street Bank and Trust Company, as Collateral
Agent ("Existing Mortgagee"), dated February 4, 1998 and recorded in the Office
of the
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Recorder of Deeds for Lake County, Illinois on February 10, 1998 as Document No.
4084980. Landlord shall request any present or future mortgagee, trustee, fee
owner, ground or prime lessor, or any person having an interest in the Premises
superior to this Lease (a "Superior Interest") to provide a written
subordination and nondisturbance agreement in recordable form, providing that so
long as Tenant performs all of the terms, covenants and conditions of this Lease
and agrees to attorn to the mortgagee, beneficiary of the deed of trust,
purchaser at a foreclosure sale, ground or prime lessor or fee owner, Tenant's
rights under this Lease shall not be disturbed and shall remain in full force
and effect for the Term, and Tenant shall not be joined by the holder of any
mortgage or deed of trust in any action or proceeding to foreclose thereunder,
unless such joinder is required for jurisdictional purposes. Landlord shall not
have any liability to Tenant if it is not able to obtain such subordination and
nondisturbance agreement.
24. Landlord's Right of Entry.
a. Landlord has the right to enter the Premises at any reasonable time
upon (i) twenty-four (24) hours' prior notice to Tenant, (ii) without notice in
case of emergency, for the purpose of performing maintenance, repairs, and
replacements to the Premises as are permitted or required under this Lease, and
(iii) without notice for entry for the purpose of performing routine services
which Landlord is required to provide under this Lease.
b. Upon reasonable advance notice to Tenant, Landlord may, during the
Term, show the Premises to prospective purchasers, mortgagees and tenants.
c. In exercising its rights under this Section, Landlord shall not
materially interfere with or disrupt the normal operation of Tenant's
Containerboard Business. Landlord, and any third parties entering the Premises
at Landlord's invitation or request shall at all times strictly observe Tenant's
rules relating to security on the Premises. Tenant shall have the right, in its
sole discretion, to designate a representative to accompany Landlord, or any
third parties, while they are on the Premises.
25. Rules and Regulations. Tenant agrees to comply with all reasonable
written rules and regulations which Landlord may establish for the protection
and welfare of Tenant, the Building and all the other tenants and occupants of
the Building, provided that all such rules and regulations (i) shall be applied
uniformly to all occupants of the Building, (ii) do not discriminate against
Tenant, and (iii) do not unreasonably interfere with Tenant's use of the
Premises. A copy of the current rules and regulations is attached as Exhibit "G"
hereto and by this reference made a part hereof. Tenant shall be given a copy of
any changes to the rules and regulations at least ten (10) days before they
become effective. In the event of a conflict between the rules and regulations,
and the provisions of this Lease, the provisions of this Lease shall prevail.
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26. Tenant's Default; Rights and Remedies.
a. The occurrence of any one or more of the following matters constitutes
an "Event of Default" by Tenant under this Lease:
(i) failure by Tenant to pay Basic Rent within five (5) Business
Days after receipt of written notice from landlord to Tenant;
(ii) failure by Tenant to pay any Additional Rent within five (5)
Business Days after receipt of written notice from Landlord to Tenant;
(iii) failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this Lease, if such failure continues for
thirty (30) days after receipt of written notice from Landlord to Tenant, except
that if the default cannot be cured within the thirty (30) day period, it shall
not be considered an Event of Default if Tenant commences to cure such default
within such thirty (30) day period and thereafter proceeds diligently and
continuously to effect such cure;
(iv) the making of any assignment by Tenant for the benefit of
creditors;
(v) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition of reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the petition is dismissed within sixty (60) days of the date filed);
(vi) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets; and
(vii) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets;
(viii) an assignment or subletting by Tenant in violation of Section
15 hereof.
b. If an Event of Default by Tenant occurs,
(i) Landlord may terminate this Lease, by giving Tenant not less
than ten (10) Business Days' written notice of Landlord's election to do so, in
which event the Term shall end, and all right, title and interest of Tenant
hereunder shall expire, on the date stated in such notice; or
(ii) Landlord may terminate the right of Tenant to possession of the
Premises without terminating the Lease by giving not less than ten (10) Business
Days' written notice to Tenant.
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c. If this Lease and the Term and estate hereby granted shall terminate
for an Event of Default as provided in Subsection (b), then
(i) Landlord and Landlord's agents may thereupon re-enter the
Premises or any part thereof by summary proceedings or by any other applicable
legal proceeding and may repossess the Premises and dispossess Tenant and any
other persons therefrom and remove any and all of its or their property and
effects from the Premises, and
(ii) Landlord, at its option, may relet the whole or any part of the
Premises from time to time, either in the name of Landlord or otherwise, to such
tenant(s), for such term(s) ending before, on or after the Expiration Date, at
such rental(s) and upon such other conditions, which may include concessions and
free rent periods, as Landlord may reasonably determine to be necessary.
Landlord, at Tenant's sole cost and expense, may make such reasonable repairs,
improvements, alterations, additions, decorations and other physical changes in
and to the Premises as Landlord, in its reasonable discretion, considers
advisable or necessary in connection with any such reletting or proposed
reletting, without relieving Tenant of any liability under this Lease or
otherwise affecting any such liability.
d. Should this Lease be terminated as provided in Subsection (b), or by or
under any other proceeding, or if Landlord shall re-enter the Premises, Landlord
shall be entitled to recover, and Tenant shall pay, in addition to any damages
or amounts provided for elsewhere in this Section 25 or under any other
provisions of this Lease, the then cost of:
(i) restoring the Premises to the same condition as that in which
Tenant has agreed to surrender them to Landlord on the Expiration Date; and
(ii) completing in accordance with this Lease any improvements to
the Premises that have been actually commenced as of the date of the Event of
Default, or for repairing any part thereof.
e. If an Event of Default by Tenant or any person claiming through or
under Tenant should occur, Landlord shall be entitled to seek to enjoin such
default and shall have the right to invoke any right allowed at law or in
equity, by statute or otherwise, as if re-entry, summary proceedings or other
specific remedies were not provided for in this Lease.
f. Should this Lease be terminated by Landlord as provided herein,
(i) Tenant shall pay to Landlord all Rent through the date upon
which this Lease was terminated for Tenant's Event of Default pursuant to
Subsection (b)(i) hereof, and
(ii) Tenant shall be liable for and shall pay to Landlord, as
damages, any deficiency between (A) the rent that would have been payable
hereunder for the period which
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otherwise would have constituted the unexpired portion of the Term and (B) the
net amount, if any, of rents ("Net Rent") collected under any reletting effected
pursuant to the provisions of this Section for any part of such period (first
deducting from the rents collected under any such reletting all of Landlord's
expenses in connection with the termination of this Lease or Landlord's
re-entry, including all repossession costs, brokerage commissions, legal
expenses, alteration costs and other expenses of preparing the Premises for such
reletting). Such deficiency shall be paid in monthly installments by Tenant on
the days specified in this Lease for the payment of installments of Basic Rent.
Landlord shall be entitled to recover from Tenant each monthly deficiency as the
same shall arise and no suit to collect the amount of the deficiency for any
month shall prejudice Landlord's right to collect the deficiency for any prior
or subsequent month by a similar proceeding or otherwise. A suit or suits for
the recovery of such deficiencies may be brought by Landlord from time to time
at its election.
g. Landlord shall be entitled to recover from Tenant, and Tenant shall pay
Landlord, on demand, as liquidated damages and not as a penalty, a sum equal to
the amount by which (A) the Basic Rent and Additional Rent payable hereunder
(reduced by any amounts collected by Landlord on account of monthly deficiencies
as provided in Subsection (f)(ii) above) for the period ending on the Expiration
Date and beginning on the latest of the date of termination of this Lease, the
date of re-entry by Landlord or the date through which monthly deficiencies
shall have been paid in full, exceeds (B) an amount equal to the then fair and
reasonable rental value of the Premises for the same period, both amounts
discounted to present value at the Interest Rate as defined below. If, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the Premises or any part thereof shall have been relet by Landlord for
the period which otherwise would have constituted all or any part of the
unexpired portion of the Term, the amount of rent upon such reletting shall be
deemed, prima facie, to be the fair and reasonable rental value for the part or
the whole of the Premises (as the case may be) so relet during the term of such
reletting. As used herein, "Interest Rate" shall mean an annual rate equal to
the Prime Rate as set forth in The Wall Street Journal on the date of the
default or, if The Wall Street Journal is not published that day, the first date
of publication thereafter.
h. In no event shall Tenant be entitled (A) to receive any excess of any
Net Rent under Subsection (f) over the sums payable by Tenant to Landlord
hereunder or (B) in any suit for the collection of damages pursuant to this
Section to a credit in respect of any Net Rent from a reletting except to the
extent that such Net Rent is actually received by Landlord. Should the Premises
or any part thereof be relet in combination with other space, then proper
apportionment on a square foot area basis shall be made of the rent received
from such reletting and the expenses of reletting.
i. If Landlord spends any money to cure such Event of Default by Tenant,
then Landlord shall also be entitled to interest on such expenditure at the
Interest Rate.
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j. Nothing contained herein shall be construed as limiting or precluding
the recovery by Landlord from Tenant of any sums or damages to which, in
addition to the damages particularly provided above, Landlord may lawfully be
entitled by reason of any default hereunder on the part of Tenant.
27. Holding Over. Should Tenant remain in possession of the Premises after
the expiration of this Lease, Tenant shall be a tenant from month-to-month of
the Premises under all the terms and conditions of this Lease, except that Rent
shall be at a rate one hundred fifty percent (150%) of the then applicable Rent,
prorated on a daily basis, provided, however, that if Tenant shall remain in
possession of the Premises after the expiration of the Stub Period, the
applicable Rent for the period of such hold-over shall not be limited by the BOC
Threshold Amount. If the Premises are not surrendered upon the termination date
or prior expiration of the Term, in addition to the use and occupancy charge set
forth above, Tenant shall indemnify and hold harmless Landlord against any and
all actual and direct damages suffered by Landlord resulting therefrom. Nothing
contained in this lease shall be construed as a consent by Landlord to the
occupancy or possession by Tenant of the Premises beyond the termination date or
prior expiration of the Term, and Landlord, upon said termination date or prior
expiration of the Term, or at any time thereafter (and notwithstanding that
Landlord may accept from Tenant one or more payments called for herein), shall
be entitled to the benefit of all legal remedies that now may be in force or may
be hereafter enacted relating to the immediate repossession of the Premises. The
provisions of this Section shall survive the expiration date or earlier
termination of the Term.
28. Quiet Enjoyment. Subject to Section 22 hereof, Landlord covenants that
if and for so long as Tenant pays the Rent and performs the covenants and
conditions hereof, Tenant shall peaceably and quietly have, hold and enjoy the
Premises for the Term, without interference by Landlord or anyone claiming by,
through or under landlord, or by anyone claiming superior title to Landlord.
Landlord agrees that it shall observe and comply in all material respects with
all of the terms, provisions, conditions, covenants and agreements to be
observed and performed by it under the Prime Lease, provided, however, that
nothing in this sentence shall prohibit, limit, diminish or otherwise affect the
right of the Landlord (i) to exercise any right provided under the Prime Lease,
(ii) acquire the Property, (iii) refinance the Prime Lease with another
financing lease, or (iv) effect a sale and lease-back transaction with respect
to the Property with any other party.
29. Mutual Representation of Authority.
a. Landlord and Tenant represent and warrant to each other that they have
full right, power and authority to enter into this Lease without the consent or
approval of any other entity or person and each party makes these
representations knowing that the other party will rely thereon.
b. The signatories on behalf of Landlord and Tenant further represent and
warrant that each has full right, power and authority to act for and on behalf
of Landlord and Tenant in entering into this Lease.
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c. Each party agrees that they will not raise or assert as a defense to
any obligation under this Lease or make any claim that this Lease is invalid or
unenforceable due to any failure of this document to comply with ministerial
requirements, including but not limited to requirements for corporate seals,
attestations, witnesses, notarization, or other similar requirements, and each
party hereby waives the right to assert any such defense or make any claim of
invalidity or unenforceability due to any of the foregoing.
30. Real Estate Brokers. The parties warrant that they have had no
dealings with any real estate broker or agent in connection with this Lease.
Each party covenants to pay, hold harmless, and indemnify the other from and
against any and all costs, expenses, or liabilities for any compensation,
commissions, and charges claimed by any broker or agent with respect to this
Lease or the negotiation thereof, based upon alleged dealings with the
indemnifying party.
31. Business Hours - Holidays.
a. As used in this Lease, "Business Hours" shall mean the hours of 7 a.m.
through 6 p.m., Monday through Friday except Holidays, and "Holidays" shall mean
New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the
Day after Thanksgiving, and Christmas. (Holidays may be added or deleted by
mutual agreement of Landlord and Tenant.)
b. During Business Hours, Tenant shall have access to the Premises, and
Landlord shall furnish, without extra charge, all services and utilities
required under this Lease. After Business Hours, Tenant shall have access to the
Premises, provided Tenant complies with Landlord's normal security procedures,
and Tenant pays Landlord a charge as established by Landlord for the use of
electricity and other services during non-Business Hours. Landlord may establish
and advise Tenant of any reasonable requirements for prior notification to
Landlord for Tenant's use of the Premises during non-Business Hours.
32. Estoppel Certificate.
a. Tenant agrees, upon not less than fifteen (15) days' prior written
request by Landlord, to deliver to Landlord a statement in writing signed by
Tenant certifying (i) that this Lease is unmodified and in full force and effect
(or if there have been modifications, identifying the modifications); (ii) the
date upon which Tenant began paying Rent and the date(s) to which the Rent has
been paid; (iii) that, to the best of Tenant's knowledge, Landlord is not in
default under any provision of this Lease, or, if in default, the nature
thereof; and (iv) that there has been no prepayment of Rent except as provided
for in this Lease.
b. Landlord, upon not less than fifteen (15) days' prior written request
from Tenant, shall furnish a statement in writing to Tenant covering the matters
set forth in Subsection (a), to the extent applicable to Landlord.
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33. No Recording. Landlord and Tenant agree not to record this Lease or
any memorandum of this Lease.
34. Late Payments. If either party fails to make a payment to the other
when due under the terms of this Lease, interest shall be added to the payment
at an annual rate equal to the Prime Rate (as set forth in The Wall Street
Journal from time to time) plus two percent (2%). In any case where payment is
required under this Lease and a specific time period is not set forth for making
such payment, the payment shall be due within thirty (30) days of the date a
bill is rendered for such payment, or for situations where a bill is not
rendered (e.g., a refund of an overpayment) the payment will be due thirty (30)
days from (a) the date that the precise amount of the payment can reasonably be
determined and (b) the party obligated to make the payment becomes aware of the
obligation to make the payment.
35. Surrender; Restoration.
a. At the expiration or earlier termination of this Lease, whether by
forfeiture, lapse of time or otherwise, or upon termination of Tenant's right to
possession of the Premises, Tenant will surrender and deliver up the Premises to
Landlord, in good condition and repair, reasonable wear and tear and loss by
fire or other casualty excepted. Tenant will vacate the Premises and leave it in
neat and clean condition and free of any Hazardous Substances brought onto the
Property by Tenant or its affiliates, subsidiaries, contractors, subcontractors,
employees, guests, or invitees after the Commencement Date of this Lease. In
addition to the provisions of Subsection (b) below, Landlord may require the
removal and restoration of (i) any special improvements in the Premises which
are solely for the benefit of Tenant or the Premises such as interfloor
stairways, supplemental air-conditioning, generators or raised flooring which
were constructed by or at the request of Tenant after the Commencement Date of
this Lease (other than the Initial Tenant Improvements), and (ii) any
improvements made by or for Tenant after the Commencement Date of the Lease. Any
such removal and restoration required by Landlord will be performed by Landlord
or its contractors at Tenant's cost and expense.
b. Tenant, at its sole cost and expense, shall remove any personal
property, furniture, and trade fixtures which it owns or leases from third
parties. Tenant shall pay Landlord for the cost to restore any damage caused by
such removal. Tenant shall verify the ownership of any such items before
removing them from the Premises. Any personal property, furniture, and trade
fixtures used by Tenant but which are owned by Landlord or leased by Landlord
from third parties shall not be removed by Tenant. Tenant shall leave the
Premises in a neat and clean condition.
36. Waiver. No consent or waiver, express or implied, by either party to
or of any breach or default by the other party in the performance by such other
party of its obligations under or in
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connection with this Lease shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the performance by such other
party of the same or any other obligation of such party. Failure on the part of
any party to complain of any act or failure to act of the other party or to
declare the other party in default, irrespective of how long such failure
continues, shall not constitute a waiver by such party of its rights hereunder.
37. Governing Law. This Lease shall be construed and interpreted in
accordance with the laws of the State of Illinois.
38. Notices. All notices given pursuant to the provisions of this Lease
shall be in writing, addressed to the party to whom notice is given and hand
delivered or sent registered or certified mail, return receipt requested, in a
postpaid envelope or by nationally recognized overnight delivery service to the
addresses set forth below. All notices shall be deemed given upon receipt or
rejection. Either party by notice to the other may change or add persons and
places where notices are to be sent or delivered.
Notice Addresses: If to Landlord:
Tenneco Packaging Inc.
1900 West Field Court
Lake Forest, Illinois 60045
Attention: President
Facsimile No.: (847) 482-4589
With a copy to:
Tenneco Packaging Inc.
1900 West Field Court
Lake Forest, Illinois 60045
Attention: General Counsel
Facsimile No.: (847) 482-4589
If to Tenant:
Packaging Corporation of America
1900 West Field Court
Lake Forest, Illinois 60045
Attention: President
Facsimile No.: (847) 482-_____
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<PAGE>
With a copy to:
PCA Holdings LLC
c/o Madison Dearborn Partners, Inc.
Three First National Plaza
Suite 3800
Chicago, Illinois 60602
Attention: Samuel M. Mencoff
and Justin S. Huscher
Facsimile No.: (312) 895-1056
39. Table of Contents - Captions. The Table of Contents and the captions
appearing in this Lease and its Exhibits are inserted only as a matter of
convenience and do not define, limit, construe or describe the scope or intent
of the sections of this Lease or its Exhibits nor in any way affect this Lease
or its Exhibits.
40. Dispute Resolution.
a. Prior to commencing any action, suit or proceeding in connection with
this Lease, the parties shall first in good faith consult among appropriate
officers of Landlord and Tenant, which shall begin promptly after one party has
delivered to the other a written request for consultation. At any time
thereafter, either party may request in writing that the dispute be referred to
appropriate senior executives of Landlord and Tenant. Within ten (10) Business
Days after such request, the senior executives (and not their designees) shall
meet and attempt in good faith to resolve the dispute.
b. Neither party shall file any action, suit or proceeding in connection
with this Agreement until twenty (20) Business Days after a request is made for
a senior executive meeting as provided for in Subsection (a).
41. Counterparts. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original but all of which, when taken together,
shall constitute one and the same instrument.
42. Audit. Landlord shall maintain reasonably complete records of all
costs and expenses which comprise the Rent payable hereunder by Tenant to
Landlord. Tenant shall have the right, through itself or its representatives, at
Tenant's sole cost and expense, to examine, copy and audit such records at all
reasonable times at Landlord's office during business hours. Landlord's
calculation of Basic Rent as set forth on any Landlord's Annual Statement shall
be conclusive and binding upon Tenant unless, within forty-five (45) days after
the date Landlord renders the Landlord's Annual Statement, Tenant shall notify
Landlord that it disputes the correctness of any
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charge set forth on Landlord's Annual Statement. Tenant shall have a period of
sixty (60) days to complete any audit it desires to undertake. If the result of
the audit conducted by Tenant or its representative determines that Landlord has
overcharged Tenant, Landlord shall promptly refund to Tenant any overpayment,
together with interest at the rate set forth in the "Late Payments" section of
this Lease. Tenant shall promptly pay Landlord if the audit determines that
there has been any undercharge.
43. Signs. In the event Landlord, in its sole discretion, shall institute
the use of a directory in the main lobby of the Building (but without any
obligation to do so), Landlord shall place the Tenant's name and location on the
directory in the Building, and afford Tenant, without charge, the placing of the
customary number of names in the Building directory. Tenant shall not be
permitted to erect, install, affix or exhibit any other signage in the Building,
the Premises or on the Property without the express written consent of Landlord,
which consent may be withheld by Landlord in its sole discretion.
44. Entire Agreement. This Lease (which includes each of the Exhibits
attached hereto) contains the entire agreement between the parties with respect
to the subject matter hereof, and all prior negotiations and agreements are
merged into this Lease. This Lease may not be changed, modified, terminated or
discharged, in whole or in part, nor any of its provisions waived except by a
written instrument which (a) shall expressly refer to this Lease and (b) shall
be executed by the party against whom enforcement of the change, modification,
termination, discharge or waiver shall be sought.
45. Release. Tenant, on behalf of itself and its officers, directors,
employees, agents, representatives, guests and invitees, and its and their
respective heirs, legal representatives, successors and assigns, hereby remise,
and release and forever discharge Landlord, its officers, directors, employees,
affiliates, agents, representatives and independent contractors, and its and
their respective heirs, legal representatives, successors and assigns, of and
from any and all manner of actions, cause and causes of actions, lawsuits,
claims, demands and liability, in law or in equity, arising out of or relating
to the use by Tenant and its officers, directors, employees, agents,
representatives, guests and invitees of the Wellness Center in the Building,
except to the extent caused by the gross negligence of Landlord.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Facility
Use Agreement as of the day and year first above written.
LANDLORD:
TENNECO PACKAGING INC.,
a Delaware corporation
By: /s/ James V. Faulkner, Jr.
-----------------------------------
Its: Vice President
-----------------------------------
TENANT:
PACKAGING CORPORATION OF
AMERICA, a Delaware corporation
By: /s/ Richard B. West
-----------------------------------
Its: Vice President
-----------------------------------
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EXHIBIT 10.11
HUMAN RESOURCES AGREEMENT
Tenneco Inc., a Delaware corporation; ("Tenneco"), Tenneco Packaging
Inc., a wholly-owned subsidiary of Tenneco ("TPI") and Packaging Corporation of
America, a Delaware corporation ("Newco"), hereby agree to the terms and
conditions hereof regarding certain labor, employment, compensation and benefit
matters occasioned by the transactions described in that certain Contribution
Agreement dated as of January 25, 1999, by, between and among TPI, PCA Holdings
LLC, a Delaware limited liability company ("PCA") and Newco (the "Transaction").
1. Definitions
The following term, when capitalized herein, shall have the meaning
set forth in this Section 1. All other capitalized terms contained but not
otherwise defined herein shall have the meaning ascribed to them in the
Contribution Agreement.
"Newco Employees" shall mean the active employees of the
Containerboard Business on the Closing Date who become employees of
Newco or one of its subsidiaries immediately following the
Transaction.
2. General Employment Matters
2.1 Contemporaneously with the contribution of the Containerboard
Business to Newco (the "Closing Date"), TPI shall cause the employment of all
active employees of the Containerboard Business (including those considered
active despite being absent on that date for reasons such as short-term illness
or vacation) to be transferred to Newco. The Schedule entitled "Schedule 1 to
Human Resources Agreement", sets forth a list of certain employees of the
Containerboard Business who it is anticipated will be Newco Employees; and
beginning with the list, the parties will finalize the personnel to be
transferred to Newco prior to the Closing Date. Except as otherwise specifically
provided herein or in the Contribution Agreement, Newco shall assume and
thereafter pay, perform and discharge any and all employment, compensation and
benefit liabilities incurred or accrued after the Closing Date, with respect to
all Newco Employees and their dependents. The responsibility for all employment,
compensation and benefit liabilities incurred or accrued on or before the
Closing Date shall be as provided in the Contribution Agreement. Notwithstanding
anything else herein, Newco shall recognize the vacation accrual of the Newco
Employees as of the Closing Date provided the amount of such obligation is
accrued in the Final Working Capital Statement. Any employee of the
Containerboard Business who is absent from active service on the Closing Date by
reason of such employee's entitlement to short-term disability, long-term
disability or workers' compensation
<PAGE>
benefits shall be afforded employment by Newco effective upon his or her
availability to return to active service under the terms and conditions of
employment applicable to comparably situated employees on the date of his or her
return; provided, that, for the period prior to such return to active service,
such person shall remain covered under the TPI benefit plans as such person was
covered as of the Closing Date and TPI shall remain responsible for all employee
benefit obligations accrued or incurred by or payable to such person during such
period, and the rights of any such person and his or her dependents with respect
to employment, compensation and benefits shall be determined by the terms and
conditions of employment applicable immediately prior to the Closing Date (as
they may be amended from time to time by Tenneco or TPI) and nothing herein
shall be construed to require that such person receive any right greater than
that applicable to any comparably situated person who is an active employee of
the Containerboard Business on the Closing Date. TPI shall be responsible for
all obligations related to or arising from any person who is not employed by
Newco as of the Closing Date, including any person who has retired or terminated
employment on or prior to the Closing Date and TPI shall indemnify Newco from
and against any and all such obligations.
2.2 The initial compensation (base salary or wage level) of each
Newco Employee shall be the same as his/her compensation (base salary or wage
level) immediately prior to the Closing Date. Nothing in this Agreement shall
give any Newco Employee any right to continued employment with Newco beyond the
Closing Date.
2.3 Except as specifically provided herein, Newco shall cause to be
provided employee compensation and benefit plans and programs to the Newco
Employees by having such persons continue to participate in the TPI and Tenneco
plans during the applicable transition period as provided herein. At the Closing
Date, or conclusion of the transition period, if applicable, Newco shall adopt
such plans which will give effect to the following:
(i) effective immediately after the Hourly Plan Transition
Date, a defined benefit pension plan covering hourly Newco Employees
substantially equivalent to the defined benefit plans covering the hourly
Newco Employees immediately prior to the Hourly Plan Transition Date, but
counting pre-Hourly Plan Transition Date service and participation to the
extent counted by Tenneco and TPI plans prior to the Hourly Plan
Transition Date for all purposes, including without limitation benefit
accrual; provided that such Newco Plan may offset benefits by benefits
actually provided under Tenneco and TPI plans;
(ii) effective immediately after the DC Plan Transition Date,
the Newco DC Plan, as defined in section 4.4 hereof, provided, that pre-DC
Plan Transition Date service and participation shall be counted for all
purposes and provided further that matching contributions shall not be
made in Tenneco stock;
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(iii) immediately after the Salaried Plan Transition Date, a
structure substantially equivalent to the Tenneco Supplemental Executive
Retirement Plan (the "SERP"), including any and all special appendices and
other documents providing special benefits for individual Newco Employees
(the "Special Benefits");
(iv) structures substantially equivalent to the Tenneco Inc.
Executive Incentive Compensation Plan and the Tenneco Inc. Deferred
Compensation Plan;
(v) severance benefits under which Newco shall provide Newco
Employees who are separated from service within one year of the Closing
Date, severance benefits in circumstances, of a type and amount and
subject to rules equivalent to those applicable to similarly-situated
employees of TPI immediately prior to the Closing Date; and
(vi) effective as of the Closing Date, except as otherwise
provided herein, other welfare plans (including retiree medical and life
benefits for those employees not covered by Section 6.1(b)) and
compensation and benefits which are substantially equivalent to those
covering the Newco Employees immediately prior to the Closing Date.
Except as specifically provided herein, such Newco Plans shall be continued
without material modification or amendment until at least December 31, 1999;
provided, that no modification or amendment may be made without the written
consent of the affected employee to any Special Benefit under the SERP at any
time after the Closing Date which could not have been made prior thereto, and,
provided further, that at all times such Special Benefits shall be binding upon
any successor to Newco. Newco and Newco Plans shall, in addition to the specific
requirements stated above, count service and participation to the extent counted
by Tenneco, TPI and plans maintained by either for all compensation and benefit
purposes, to the extent such service recognition does not result in a
duplication of benefits.
3. Collective Bargaining
3.1 Newco shall assume all collective bargaining agreements covering
employees of the Containerboard Business as of the Closing Date, but only to the
extent that such collective bargaining agreements cover Newco Employees. This
assumption shall not restrict any right Newco may have to renegotiate, reopen or
otherwise seek changes in any of such agreements.
3.2 Upon the Closing Date, Newco shall recognize all incumbent labor
organizations which, as of that date, have established collective bargaining
relationships
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covering employees in the Containerboard Business, but only to the extent that
such collective bargaining relationships cover Newco Employees.
3.3 Without limiting the generality of Newco's obligations under
Sections 3.1 and 3.2, Newco shall provide Newco Employees the terms and
conditions of whose employment is subject to collective bargaining agreements
and/or established by collective bargaining relationships, with the wages,
benefits, and terms and conditions of employment required by such agreements
including contributions to multi employer pension plans, except that: (i)
participation in the Tenneco Inc. Employee Stock Purchase Plan will cease as of
the Closing Date; (ii) no additional amounts may be invested in Tenneco stock in
any defined contribution plan maintained by Newco after the Closing Date; and
(iii) except as specifically provided herein, participation in any and all
Tenneco sponsored employee benefits plans shall cease as of the Closing Date,
but Newco shall afford Newco Employees covered by Sections 3.1 and 3.2 benefits
identical to the benefits provided under such plans prior to the Closing Date,
except as provided in items (i) and (ii) of this sentence.
4. Pension Benefits
4.1 (a) Tenneco shall cause the Tenneco Retirement Plan to provide
continued coverage for salaried Newco Employees until the earlier of (i) five
years from the Closing Date, or (ii) the date specified in the notice provided
to Tenneco by Newco that such arrangement will terminate (the "Salaried Plan
Transition Date"). The Tenneco Retirement Plan shall not be required to permit
persons who become employed by Newco after the Closing Date (and who are not
already a participant) to participate. Newco shall use its best efforts to
design a qualified plan structure that will succeed the Tenneco Retirement Plan
for such salaried Newco Employees. The Tenneco Retirement Plan shall be amended
to provide that the salaried Newco Employees' service and compensation earned
with Newco (or an affiliate in the Containerboard Business) shall be considered
under such plan as if it were earned with TPI. The Tenneco Retirement Plan shall
retain all of the benefits accrued as of the Salaried Plan Transition Date with
respect to each Newco Employee that has participated therein. In addition, the
Tenneco Retirement Plan shall be amended to provide that service with Newco
after the Salaried Plan Transition Date will be recognized as service under such
plan for purposes of determining such person's eligibility for benefits
thereunder (but not for purposes of determining additional retirement benefit
accruals beyond that accrued as of the Salaried Plan Transition Date).
(b) Newco shall pay an amount in cash, as Tenneco shall direct, for
the continued coverage of the salaried Newco Employees in the Tenneco Retirement
Plan. The amount of such payment with respect to each 12 month period following
the Closing Date shall be the dollar amount as set forth in the following chart;
provided, if there is a material increase in the pension costs with respect to
the salaried employees of
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Newco participating therein as a result of salary increases which exceed in the
aggregate the assumed salary increase applicable to the plan, the parties shall
negotiate in good faith an appropriate adjustment in such amount.
- --------------------------------------------------------------------------------
Dollar Amount
Year of Coverage (millions)
- --------------------------------------------------------------------------------
First 4
- --------------------------------------------------------------------------------
Second 4
- --------------------------------------------------------------------------------
Third 6
- --------------------------------------------------------------------------------
Fourth 8
- --------------------------------------------------------------------------------
Fifth 10
- --------------------------------------------------------------------------------
The amount payable to Tenneco shall be prorated for any partial year of
participation.
4.2 (a) TPI shall cause its defined benefit pension plan covering
hourly employees (the "TPI Hourly Plan") to provide continued coverage for
current and future hourly employees of Newco that are currently participants
therein or would be eligible for participation under the terms of said plan
until the earlier of (i) December 31, 2000 or (ii) the date specified in the
notice provided to TPI by Newco that such arrangement will terminate (the
"Hourly Plan Transition Date"). The TPI Hourly Plan shall be amended to provide
that service and compensation (if applicable) earned with Newco (or an affiliate
in the Containerboard Business) by such hourly employees shall be considered
under the TPI Hourly Plan as if it were earned with TPI. The TPI Hourly Plan
shall retain all of the benefits accrued as of the Hourly Plan Transition Date
with respect to each Newco Employee that has participated therein. In addition,
the TPI Hourly Plan shall be amended to provide that service with Newco after
the Hourly Plan Transition Date will be recognized as service under such plan
for purposes of determining such person's eligibility for benefits thereunder
(but not for purposes of determining additional retirement benefit accruals
beyond that accrued as of the Hourly Plan Transition Date).
(b) Newco shall pay an amount in cash, as Tenneco shall direct, for
the continued coverage of the hourly Newco employees in the TPI Hourly Plan. The
annual amount of such payment shall be $1.2 million; provided, that in the event
that there is a material increase in pension costs with respect to the hourly
Newco Employees because of an increase in the size of the hourly workforce or
because increased benefits are negotiated with one or more unions or otherwise,
the parties hereto shall negotiate in good faith an appropriate increase in the
amount to be paid by Newco for such continued coverage. This payment shall be
prorated for any partial year of participation.
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(c) Newco shall not assume any obligation accrued under the Tenneco
Retirement Plan or the TPI Hourly Plan, and no assets shall be transferred from
any such plan to Newco. Tenneco and TPI shall indemnify and save Newco harmless
from and against any and all obligations and liabilities, of whatever nature,
arising from or related to the Tenneco Retirement Plan and the TPI Hourly Plan.
4.3 (a) Tenneco shall amend, or cause to be amended, the qualified
defined benefit pension plans to provide that all benefits accrued as of the
applicable transition date by Newco employees that participate therein will be
fully vested and non-forfeitable. Tenneco shall inform the Newco employees of
their accrued benefits within a reasonable time after the transition date.
(b) Tenneco shall amend, or cause to be amended, the qualified
defined benefit pension plans to provide that service with Newco will be used to
determine whether Newco Employees who are participants in such plans attain
eligibility for subsidized early retirement benefits. Newco shall provide to
Tenneco such information as it shall request in order to determine service with
Newco and its subsidiaries for purposes of applying this Section 4.3.
(c) Under Tenneco's qualified defined benefit pension plans, the
Transaction will not be treated as a separation from service for purposes of
entitling Newco Employees to commence receiving benefits until they attain
normal retirement age under the terms of such plans. Tenneco's qualified defined
benefit pension plans will count separation from service with Newco as such a
separation from service as to Newco Employees.
Notwithstanding any other provision hereof, if Tenneco determines
that the present value of the accrued benefit of any Newco Employee under
Tenneco's qualified defined benefit pension plans as of the applicable
transition date is not greater than $5,000 or such other amount permitted by
law, such Newco Employee's accrued benefit may, at Tenneco's discretion, be paid
to him or her in a lump sum, and he or she shall have no further interest in or
claim against Tenneco qualified defined benefit pension plans.
(d) Tenneco's qualified defined benefit pension plans shall not be
required to count service with Newco and its subsidiaries after the applicable
transition date for the purpose of benefit accrual or to adjust benefits
pursuant to any future collective bargaining agreement entered into by Newco.
4.4 The participation of Newco Employees in Tenneco's qualified
defined contribution plans shall cease as of December 31, 1999 (or such earlier
date as determined by Newco, the "DC Plan Transition Date"). Upon cessation of
participation in the Tenneco DC Plan, Newco shall extend coverage under one or
more defined contribution plans established by Newco (the "Newco DC Plan"), and
Tenneco's
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qualified defined contribution plans shall transfer the account balances of all
Newco Employees to the Newco DC Plan. Such transfer shall be in cash, except
that the Newco DC Plan will accept Tenneco stock for the Tenneco stock fund
portion of such account balances, and participant promissory notes for the
outstanding participant loans. The Newco DC Plan shall not offer Tenneco stock
as an investment option for contributions or transfers made on or after the
Closing Date.
5. Executive Compensation
5.1 Participation by Newco Employees in future benefit accruals
under the Tenneco Supplemental Executive Retirement Plan shall cease as of the
Salaried Plan Transition Date; however, those plans shall continue to cover the
Newco Employees who have accrued benefits under that plan on the Salaried Plan
Transition Date. Rules similar to the rules of Section 4 hereof shall apply to
that plan. Tenneco shall not charge Newco for any payments made to Newco
Employees under that plan.
5.2 The participation of Newco Employees in the Tenneco Inc.
Deferred Compensation Plan (the "DC Plan") shall cease as of the Closing Date.
As of the Closing Date, Newco shall assume the liability for the accounts of
Newco Employees in the DC Plan. Tenneco shall transfer to Newco all amounts
credited to Newco Employees under the DC Plan along with cash equal to such
accounts and the total of each Newco Employee's accounts in the DC Plan as of
the Closing Date shall become the opening balance of his account in the Newco
Non-qualified Deferred Compensation Plan as of the Closing Date.
6. Welfare Benefits
6.1 (a) The Newco Employees and their dependents shall continue to
participate in all Tenneco welfare benefit plans for the period commencing with
the Closing Date and ending on December 31, 1999 (or such earlier date as
determined by Newco). Newco shall reimburse Tenneco for all direct benefit costs
incurred by Newco Employees and their dependents under such plans during such
period in a manner consistent with past practice together with a reasonable
administrative fee. Newco may substitute a plan of its own sponsorship providing
equivalent benefits for any such benefit.
(b) Newco Employees shall not be deemed to have retired or
otherwise separated from service solely on account of the Transaction for
purposes of entitling them to elect retiree medical and life benefits. Newco
Employees who are eligible to retire and receive retiree medical and life
benefits under the Tenneco and TPI plans on or before the Closing Date, or who
attain eligibility counting service with Newco and age attained within two years
of the Closing Date, may upon separation from service with Newco elect to
receive such benefits in accordance with the rules of the applicable
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Tenneco and TPI plans as then in effect including, without limitation, the
requirement that an eligible employee who does not elect coverage upon initial
eligibility may not, at a later date, elect such coverage. No other Newco
Employee may elect to receive such benefits. If a Newco Employee once elects
such coverage and then elects not to continue it, he or she may not again elect
such coverage.
7. General
7.1 The parties hereto agree to administer all plans consistently
herewith and to the extent necessary to amend plans accordingly.
7.2 This agreement shall not confer third-party beneficiary rights
upon any Newco Employee or any other person or entity.
7.3 Each party shall bear all costs and expenses, including but not
limited to legal and actuarial fees, incurred in the design, drafting and
implementation of its plans and compensation structures and the amendment of its
existing plans or compensation structures.
7.4 All or a portion of any or all of the powers, rights, duties and
obligations of Tenneco or TPI hereunder may be assigned to any current or future
parent, subsidiary, affiliate (including, without limitation, Tenneco Management
Corporation and Tenneco Business Services, Inc. or successor to all or any
material portion of the business of Tenneco or TPI. For purposes hereof, it is
specifically provided that each of specialty packaging and automotive is a
material portion of the business of Tenneco. Such assignment may be made to such
permitted assignees and in such form and manner as TPI and Tenneco shall
determine in their discretion.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the 12th day of April 1999.
TENNECO INC.
By /s/ Paul T. Stecko
------------------------------
TENNECO PACKAGING INC.
By: /s/ James V. Faulkner, Jr.
------------------------------
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
------------------------------
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<PAGE>
EXHIBIT 10.12
FINAL -SPECIALTY
PURCHASE/SUPPLY AGREEMENT
(Corrugated Products and Containerboard)
PURCHASE/SUPPLY AGREEMENT dated as of April 12, 1999, between
PACKAGING CORPORATION OF AMERICA, a Delaware corporation ("Seller"), and TENNECO
PACKAGING SPECIALTY AND CONSUMER PRODUCTS INC., a Delaware corporation
("Buyer").
PRELIMINARY STATEMENT
A. Seller and Tenneco Packaging, Inc. ("TPI"), an affiliate of
Buyer, each are party to that Contribution Agreement, dated January 25, 1999
(the "Contribution Agreement"), pursuant to which Seller has agreed to acquire
the Containerboard Business (as defined therein) of TPI, upon the terms and
subject to the conditions set forth in the Contribution Agreement, for $2.2
billion in cash, securities and assumption of indebtedness. As of and following
the closing on the date hereof of the transactions contemplated by the
Contribution Agreement (the "Closing"), Seller owns and operates (i) various
paper mills, including mills located at Counce, Tennessee; Filer City, Michigan;
Tomahawk, Wisconsin; and Valdosta, Georgia (each a "Mill"), each of which
produces various grades and types of containerboard products including liner
board and medium, and (ii) various box plants which produce various grades and
types of corrugated products (each a "Box Plant").
B. In the Contribution Agreement, TPI has agreed to cause Buyer to
purchase from Seller, and Seller has agreed to sell to Buyer, certain
containerboard, including linerboard and medium ("Containerboard") and certain
corrugated products (the "Corrugated Products") produced by Seller, at the
prices set forth herein, for five years after the Closing thereunder. Execution
and delivery of this Agreement is a condition to the Closing.
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale.
1.1 Purchases. Subject to the terms and conditions set forth herein,
Buyer agrees to purchase and Seller agrees to supply at the locations listed on
Attachment A ("Buyer Locations") the percentage of Buyer's requirements listed
on Attachment A for Containerboard and Corrugated Products (as may be updated or
modified from time to time as mutually agreed upon by the parties, including New
Products, the "Products") for such locations (so long as Seller produces such
Products). The Buyer Locations constitute all of the facilities of Buyer that
have purchased Containerboard or Corrugated Products from TPI during the
12-month period prior to the date hereof. New Products means Containerboard and
Corrugated Products that are either (i) not of a type to be purchased by Buyer
from Seller hereunder as of the date hereof, or (ii) a Product that Seller
requests to be treated as a New Product pursuant to Section 1.6 hereunder.
1.2 Purchase Orders. All of Buyer's purchases shall (subject to the
last sentence of this Section 1.2) be made on the form of purchase orders used
by Buyer at each of the Buyer
<PAGE>
Locations as of January 25, 1999 between such Buyer Location and the Mills or
the Box Plants (hereinafter referred to as "Orders"), and this Agreement shall
be deemed to be incorporated into all such Orders. With respect to Corrugated
Products, a Buyer Location may issue a blanket purchase order for Products
hereunder, with releases, which may be written, verbal or electronic, issued
from time to time under such blanket purchase orders for specific purchases. Any
such release shall be deemed an Order. Each Order shall specify the type and
quantity of Products, the delivery requirements (or, in the case of
Containerboard, the requested shipping date), and any other relevant
information, all of which (including the purchase orders) shall be in form and
with terms and conditions consistent with past practices as of and during the
12-month period prior to the date hereof. In the event any term of any purchase
order is inconsistent with, or more onerous to Seller than, the terms of this
Agreement, the terms of this Agreement shall control.
1.3 Acceptance. Seller shall be deemed to have accepted all Orders
received from Buyer unless Seller notifies Buyer in writing within two business
days of receipt of a specific Order that Seller is not accepting such Order.
1.4 Lead Time. Buyer will cooperate with Seller to develop
reasonable procedures designed to provide Seller with as much lead time as
reasonably practical when placing or changing Orders. Similarly, if Seller
ceases to manufacture particular Products, Seller shall provide Buyer with as
much lead time as reasonably practical to allow for Buyer to make alternative
arrangements to purchase such Products from one or more third parties. If Seller
is unable to ship the Products for delivery on the required or requested date,
Seller shall give Buyer notice thereof as soon as reasonably practical.
1.5 Exceptions to Requirements. Notwithstanding Section 1.1 hereof:
(a) General Exceptions. Buyer may purchase Products from third
parties if (and only if):
(i) Seller is unable to meet Buyer's specifications set
forth in an Order for a Product (which specifications will be
consistent with, and subject to tolerances and allowances with
respect to Product specifications as permitted in accordance with,
past practices as of and during the 12-month period prior to the
date of this Agreement, subject to changes arising from Buyer's bona
fide business requirements provided that such changes (A) do not
change any term, such as price, specifically addressed in this
Agreement, and (B) the increased costs from any changes shall be
borne by Buyer, notwithstanding any other provision of the this
Agreement, including clause (A) above, to the contrary), in which
case Buyer shall not be obligated to purchase such Products in such
Order for which the specifications can not be met from Seller in the
future until such time as Seller is capable of producing such
Products meeting such specifications;
(ii) Seller is unable to meet Buyer's delivery
requirements (or, in the case of Containerboard, the requested
shipping date) set forth in an Order (provided such delivery
requirements are in accordance with past practices as of and during
the 12-month period prior to the date of this Agreement, subject to
changes arising from Buyer's bona fide business requirements
provided that such changes (A) do not change any term, such as
price, specifically addressed in this Agreement, and (B) the
increased costs from any changes shall be borne by Buyer,
notwithstanding any other
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<PAGE>
provision of the this Agreement, including clause (A) above, to the
contrary), in which case Buyer shall not be obligated to purchase
the quantity of the Products specified in such Order for which the
delivery requirements or requested shipping date can not be met from
Seller; or
(iii) Seller rejects any Orders for any other reason, in
which case Buyer shall not be obligated to purchase the quantity of
the Products specified in such Orders from Seller.
The exceptions set forth in clauses (ii) and (iii), above, shall apply only to
the specific Orders, and not to future Orders covering the same Products, unless
the reason for the rejection of an Order under clause (iii) is because Seller
does not manufacture or is not capable of manufacturing such Products, in which
case clause (iii) will, with respect to such Products, apply to future Orders,
to the extent set forth in clause (i) as if such rejection had been made
pursuant to clause (i).
(b) Hexacomb. Seller acknowledges that Hexacomb Corporation
("Hexacomb") currently has a contract with Georgia-Pacific Corporation ("GP") to
purchase containerboard at certain volumes and prices as set forth in such
contract, and that approximately 11,000 tons of containerboard remain to be
purchased under such GP contract. A copy of such GP contract, as amended by
various letter agreements among the parties, is attached hereto as Attachment B.
During the term of this Agreement, Hexacomb shall place all orders for
Containerboard with Seller. Seller shall place orders with GP for
containerboard, on behalf of Hexacomb under the GP contract, for shipment to
Hexacomb, in such amounts as Seller shall determine (provided that Seller shall
place orders for at least 1,500 tons per month with GP, provided that Hexacomb
has ordered at least such amount from Seller), until the terms of the GP
contract have been satisfied. Hexacomb shall pay GP directly for such
containerboard, and Seller is not assuming any obligations of Hexacomb or any
other party under the GP contract.
1.6 Good Faith Cooperation; Past Practices. The parties shall
perform their respective duties and exercise their respective rights under this
Agreement in the utmost good faith and fair dealing, and, subject to the
specific terms on the face of this Agreement (and not including terms in
purchase orders), in a manner consistent with past dealings and practices
(including delivery requirements and tolerances and allowances with respect to
Product specifications) as of and during the 12-month period prior to the date
of this Agreement (subject to changes arising from Buyer's bona fide business
requirements provided that such changes (a) do not change any term, such as
price, specifically addressed in this Agreement, and (b) the increased costs
from any changes shall be borne by Buyer, notwithstanding any other provision of
the this Agreement (including clause (a) above) to the contrary. In the event
Buyer materially changes its specifications for Products hereunder, Seller may
request that the Product be deemed to constitute a New Product, in which event
Section 4.3 shall be applicable.
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<PAGE>
2. Term. Unless earlier terminated in accordance with the terms hereof,
this Agreement shall be in effect for a period of five years commencing on the
date hereof.
3. Delivery.
3.1 Deliveries. Delivery of Products shall be made F.O.B. delivered
to the Buyer Locations in accordance with the schedule and quantities set forth
on Buyer's Orders or such other locations as agreed to by Buyer and Seller.
Seller shall effect delivery in accordance with Buyer's reasonable instructions
in each Order, including instructions concerning load tags, delivery
appointments, pallets, drop trailers, and packaging/strapping, provided such
instructions are in accordance with past practices as of and during the 12-month
period prior to the date of this Agreement, subject to changes arising from
Buyer's bona fide business requirements, provided that the increased costs from
any changes shall be borne by Buyer. Buyer and Seller will cooperate to
establish preferred carriers to minimize freight expenses.
3.2 Title. Title, possession and risk of loss of all Products sold
hereunder shall pass to Buyer when the Product leaves the Mill (in the case of
Containerboard) or when the Product is unloaded at the Buyer Locations (in the
case of Corrugated Products), or such other locations as agreed to by Buyer and
Seller.
3.3 Delivery Performance. If Seller fails to achieve a 95% on-time
delivery performance for Corrugated Products at any Buyer Location (other than
the Buyer Location located in Waco, Texas, which shall have a 90% on-time
delivery requirement) for any two months in any 12 consecutive month period,
Buyer may deliver Seller a notice of deficient performance with respect to such
Buyer Location. If Seller fails to achieve a 95% (90% for Waco) on-time delivery
performance at such Buyer Location during any 30 consecutive day period during
the 90 days following delivery of such notice of deficient performance, Buyer
shall have the right, in addition to any other rights available to it under this
Agreement, to cancel this Agreement with respect to such Buyer Location upon 30
days written notice to Seller. This Section 3.3 shall not apply to
Containerboard, and shall not apply if the reason Seller has not shipped
Products to a Buyer Location is due to Buyer's default under this Agreement.
4. Price and Similar Terms.
4.1 Corrugated Products. The purchase price for the Corrugated
Products purchased and delivered during the term hereof shall be Seller's prices
and terms of payment in effect on the date of shipment as provided below:
(a) Initial Price. The initial purchase prices for Corrugated
Products shall be the prices as currently charged by Tenneco Packaging to the
various Buyer Locations as of the date hereof, which prices were determined in a
manner consistent with Tenneco Packaging's historical practices (without any
rebates or year-end discounts). The initial price for new Corrugated Products
shall be determined by Section 4.3 hereof. Except as adjusted in accordance with
the terms of this Agreement, prices shall be firm during the Term.
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(b) Adjustments.
(i) Board Costs. Prices of Corrugated Products sold
under this Agreement shall be periodically adjusted up or down
("Adjustments") based on changes in the low value of the range (if a range
is provided) or the stated price (if no range is provided) for linerboard
and corrugating medium as listed in the "Price Watch: Paperboard/
Packaging" data published once a month in Pulp and Paper Week (an example
"Price Watch:Paperboard/Packaging" is attached hereto for illustrative
purposes only as Attachment C ). The Buyer Locations located in the
following states will use the "West" product pricing listed in "Price
Watch: Paperboard/Packaging": Washington, Oregon, California, Montana,
Idaho, Nevada, Wyoming, Colorado, Utah, Arizona and New Mexico. All other
Buyer Locations will use the "East" product pricing listed in "Price
Watch: Paperboard/Packaging." Price increases or decreases shall be
calculated as provided and illustrated in Attachment D hereto. Price
adjustments, whether increases or decreases, shall be made thirty days
after the publication date of "Price Watch: Paperboard/Packaging," but
only if the cumulative change from an existing price equals or exceeds
$10.00 per ton. "Price Watch" changes identified to specific geographic
regions shall trigger Adjustments applicable only to the affected regions.
(ii) Non-Board Costs. Adjustments shall also be made
during each calendar year of the Term to accommodate positive or negative
changes in Seller's costs for freight, energy, labor, factory overhead and
other non-Containerboard related costs ("Non-board Costs"). These
Adjustments shall be made once each calendar year, if applicable. During
February of each calendar year of the Term beginning February 2000, Seller
shall prepare a proposed Adjustment to accommodate changes in Non-board
Costs since the previous February's Non-board Costs Adjustment. Seller's
proposed Adjustments and written justification therefor, including
substantiation thereof, shall be mailed by Seller to Buyer by February 28
of each year. Any Adjustment for Non-board Costs changes shall not take
effect until Buyer and Seller agree on the amount of the Adjustment. In
any event, such Adjustment shall be effective not earlier than June 1 nor
later than June 30 following the applicable February computation. Any such
Price changes shall be limited to a maximum annual increase of 1.0%.
(iii) Negotiations and Arbitration. Any negotiation of
Adjustments required by this Section 4.1(b) shall be done in good faith.
In the event that the Parties are unable to reach agreement on revised
pricing, as called for by any of the provisions of this Section 4.1(b),
then the matter shall be submitted to arbitration. The arbitration shall
be conducted by a single arbitrator under the then-current rules of the
American Arbitration Association. The arbitrator shall be chosen by mutual
agreement from a list of persons knowledgeable in the area of corrugated
purchasing. The parties shall instruct the arbitrator to make its decision
as promptly as practical, and to effectuate the intent of the parties as
specified in this Agreement, including Section 1.6 and other Sections of
this Agreement. The arbitrator shall have the discretion to awards costs
to either party. The decision and award of the arbitrator shall be based
upon its interpretation and enforcement of the terms of this Agreement and
shall be final and binding.
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<PAGE>
4.2 Containerboard Prices. The purchase price for the Containerboard
purchased and delivered during the term hereof shall be Seller's prices and
terms of payment in effect on the date of shipment as provided below:
(a) Initial Prices. The initial prices payable for all
Containerboard purchased and delivered during the first calendar month
hereof shall be the current Georgia Pacific or Tenneco Packaging prices
(as appropriate) in effect on the date hereof, which prices (as to Tenneco
Packaging) were determined in a manner consistent with TPI's historical
practices (without any rebates or year-end discounts).
(b) Adjustments. The prices payable for all Containerboard
purchased and delivered hereunder during the subsequent calendar months
shall be adjusted based on changes in the low value of the range (if a
range is provided) or the stated price (if no range is provided) for the
applicable grades listed in the "Price Watch: Paperboard/Packaging" data
published once a month in Pulp and Paper Week. The Buyer Locations located
in the following states will use the "West" product pricing listed in the
"Price Watch: Paperboard/Packaging:" Washington, Oregon, California,
Montana, Idaho, Nevada, Wyoming, Colorado, Utah, Arizona and New Mexico.
All other Buyer Locations will use the "East" product pricing listed in
the "Price Watch: Paperboard/Packaging." Prices shall be increased or
decreased on a dollar for dollar basis in order to reflect the change in
the short ton price. Price adjustments, whether increases or decreases,
shall be made on the first day of the month following the publication date
of "Price Watch: Paperboard/Packaging," but only if the cumulative change
from an existing price equals or exceeds $10.00 per ton. "Price Watch"
changes identified to specific geographic regions shall trigger
Adjustments applicable only to the affected regions.
4.3 New Products. The price for New Products shall be determined by
reference to the pricing factors for similar Products being sold by Seller
hereunder at the same Buyer Location, including quantity, size, board
combination, print coverage and margin. In the event the parties cannot agree on
the price for a New Product, the matter shall be submitted to arbitration as set
forth in Section 4.1(b)(iii) hereof.
4.4 Books and Records. Buyer shall have the right, at Buyer's
expense, upon reasonable notice and during normal business hours, to review
Seller's books and records with respect to Seller's Non-Board Costs and the
pricing of any new Products that Buyer agrees to purchase from Seller and Seller
agrees to sell to Buyer pursuant to Section 4.3 hereof. Seller shall have the
right, at Seller's expense, upon reasonable notice and during normal business
hours, to review Buyer's books and records relating to purchases of Products at
the Buyer Locations to verify compliance with the requirements of Section 1
hereof, including Buyer's purchases of Products from persons other than Seller.
All information obtained through any such review by either party or their
respective agents pursuant to this Section 4.4 shall be held in confidence.
Notwithstanding the foregoing, either party may require that the other party's
review be conducted by such other party's outside accountants if the first party
has a good faith concern that such disclosure would involve disclosure of
proprietary or confidential information.
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<PAGE>
5. Payment Terms. Terms of Payment shall be net 30 days. All payments
shall be made at such place of payment as designated by Seller in writing to
Buyer. Each party shall promptly reimburse the other party for any and all costs
and expenses of any nature or kind whatsoever (including but not limited to
attorneys' fees) in seeking to collect an unpaid amount
6. Warranty.
6.1 General. Seller warrants that (a) it will have good title to all
Products, (b) the Products will be free and clear of all liens and encumbrances,
(c) the Products will be of good material and workmanship, free from material
defects, and (i) with respect to Corrugated Products, in conformance with
Buyer's specifications, and (ii) with respect to Containerboard, in conformance
with the specifications for Containerboard set forth in Attachment E (as the
parties may agree in writing to amend or modify such specifications from time to
time), consistent, with respect to both Corrugated Products and Containerboard,
with the provisions of Section 1.6 hereof as they relate to tolerances and
allowances and other specifications, and (iv) the Products will be in compliance
with specifications that Seller meets for shipments to Seller's own container
plants or used for its own products. Any claims involving non-complying or
damaged Products or for shortages shall be made within 60 days after delivery to
Buyer, unless Buyer first learns of such non-compliance from a third party more
than 60 days after the date of delivery to Buyer, in which event Buyer shall
give Seller notice as soon as reasonably practical after learning of such
non-compliance. All other claims shall be made promptly after Buyer learns of
such claim.
6.2 Compliance with Law. Seller shall, insofar as it relates to
compliance with material laws, rules and regulations, perform its services under
the Agreement in a manner generally consistent with past practices of TPI in
conducting the Containerboard Business as of and during the 12-month period
prior to the date hereof, including the Fair Labor Standards Act of 1938, the
Walsh-Healey Public Contracts Act, the Contract Work Hours and Safety Standards
Act, and laws prohibiting the use of convict labor. To the extent TPI, in
conducting the Containerboard Business as of and during the 12-month period
prior to the date hereof, furnished to Buyer Material Safety Data Sheets
containing health, safety, and other hazard communication information on the
Products consistent with OSHA's Hazard Communications Standard, Seller shall
continue to provide such information to Buyer.
6.3 Disclaimer of Year 2000 Compliance Warranty SELLER (AND ITS
AFFILIATES) AND BUYER (AND ITS AFFILIATES) EXPRESSLY DISCLAIM ANY WARRANTIES
THAT THE PRODUCTS PROVIDED BY SELLER AND/OR ITS AFFILIATES TO BUYER UNDER THIS
AGREEMENT ARE YEAR 2000 COMPLIANT, THAT IS, THAT SOFTWARE, HARDWARE AND OTHER
EQUIPMENT USED IN THE PROVISION OF THE PRODUCTS HEREUNDER WILL ACCURATELY
PROCESS DATE DATA SUCH THAT: (a) NO VALUE FOR A DATE WILL CAUSE ANY INTERRUPTION
IN PROCESSING, (b) DATE-BASED FUNCTIONALITY OPERATES CONSISTENTLY FOR DATES
PRIOR TO, DURING AND AFTER THE YEAR 2000, AND (c) LEAP YEARS WILL BE ACCURATELY
RECOGNIZED AND PROCESSED.
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6.4 Disclaimer of All Other Warranties. EXCEPT AS PROVIDED HEREIN,
SELLER (AND ITS AFFILIATES) DOES NOT MAKE ANY REPRESENTATIONS, WARRANTIES
(INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR
GUARANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCTS PROVIDED HEREUNDER.
7. Force Majeure. Neither Buyer nor Seller shall be liable for inability
to perform where such inability is the result of fire, flood, natural calamity,
weather, strike, government act or order, or any other cause reasonably beyond
the control of the party failing to perform. In the event Seller is excused from
performing because of force majeure, Buyer may obtain Products from alternative
sources, and may, if required to do so, honor reasonable commitments beyond the
expiration of the event of force majeure without liability to Seller, provided
that Buyer has acted reasonably under the circumstances in making such
commitments and that it was necessary for Buyer to make such commitments. In the
event Buyer is excused from performing because of force majeure, Seller may, if
required to do so, honor reasonable commitments beyond the expiration of the
event of force majeure without liability to Buyer, provided that Seller has
acted reasonably under the circumstances in making such commitments and that it
was necessary for Seller to make such commitments.
8. Default. In the event either party materially defaults in the prompt or
full performance of any material provision of this Agreement and such default
was wanton, willful and intentional, the other party shall give written notice
of such default and the defaulting party shall have thirty (30) days to cure
such default. If such default is not cured to the non-defaulting party's
reasonable satisfaction, the non-defaulting party shall have the right to
terminate this Agreement effective immediately. A party that is in default under
this Agreement and to whom a notice of default has been given with respect to
such default shall not have the right to terminate this Agreement.
9. Limitation of Damages. Buyer will have no liability to Seller except to
purchase and pay for Products and Seller will have no liability to Buyer except
to sell and deliver Products as set forth herein. In the event of a default in
payment for delivered Products, Seller's remedy shall be limited to the unpaid
contract price, together with such incidental damages, if any, as allowed by the
Uniform Commercial Code. In the event of any other default, the non-defaulting
party's damages shall be limited to the difference between the market or cover
price and unpaid contract price, together with such incidental damages, if any,
as allowed by the Uniform Commercial Code, but only for Products purchased
pursuant to Orders pursuant to this Agreement.
10. Separate Sales. Each shipment of Products under this Agreement shall
constitute a separate and distinct sale, and any default by either party with
respect to any shipment shall not affect the right of the other party to insist
upon full performance of the provisions of this Agreement for its full term.
11. Miscellaneous.
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11.1 Notices. All notices or other communications hereunder (other
than purchase orders and similar communications) shall be deemed to have been
duly given and made if in writing and if served by personal delivery upon the
party for whom it is intended, if delivered by registered or certified mail,
return receipt requested, or by a national courier service, or if sent by
facsimile transmission; provided that the facsimile transmission is promptly
confirmed by telephone confirmation thereof, to the person at the address set
forth below, or such other address as may be designated in writing hereafter, in
the same manner, by such person:
If to Seller: Packaging Corporation of America
1900 Field Court
Lake Forest, Illinois 60045
Facsimile:
Telephone:
Attn: Chief Executive Officer
If to Buyer: Tenneco Packaging Specialty and Consumer Products Inc.
1900 Field Court
Lake Forest, Illinois 60045
Facsimile: 847-482-4589
Telephone: 847-482-2430
Attn: General Counsel
Either party may from time to time change the address or facsimile number to
which notices shall be given by giving the other party written notice thereof.
Purchase orders and similar communication may be given in any commercially
reasonable fashion, based on the parties' course of dealing.
11.2 No Third Party Benefits. This Agreement is made for the sole
benefit of Seller and Buyer and no other person shall have any right or remedy
or other legal interest of any kind under or by reason of this Agreement.
11.3 Waiver. The failure of either party to insist in any one or
more instances upon strict performance of any of the provisions of this
Agreement, or to take advantage of any of its rights, shall not operate as a
continuing waiver of such provisions or rights and shall not prevent such party
from insisting upon such provisions and taking advantage of such rights in the
future.
11.4 Assignment. Neither party to this Agreement may assign any of
its rights or obligations hereunder without the prior written consent of the
other party hereto, except that (i) in the event a party hereto merges or
consolidates with another person or transfers substantially all of its assets to
another person, such party's rights and obligations shall be assigned to and
assumed by such other person and (ii) in the event Buyer transfers ownership of
a Buyer Location, Buyer shall assign its rights and obligations hereunder to the
new owner of such Buyer Location pursuant to a written assignment and assumption
agreement which requires the purchaser of such Buyer Location to assume all of
Buyer's rights and obligations under this Agreement with respect to such Buyer
Location without limitation or qualification for the balance of the term of this
Agreement. This
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Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns hereunder.
11.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard to
its conflict of laws provision.
11.6 Entire Agreement. This Agreement embodies the entire agreement
between the parties with respect to the purchase and sales of Products and
cancels and supersedes any prior agreements, representations, or purchase orders
between the parties with respect to the matters covered in this Agreement.
Except for Buyer Locations, Products, delivery requirements, and price, no other
terms and conditions appearing on purchase orders, acknowledgments or other
forms shall be binding unless expressly agreed to by both parties in writing. No
amendment of this Agreement shall be effective unless stated in writing and
signed by both parties. The Attachments hereto are an integral part of this
Agreement and are incorporated by reference herein.
11.7 Severability. In the event that any provision of this Agreement
is held illegal or invalid for any reason, such illegality or invalidity shall
at the option of the party against whom the same is asserted not affect the
remaining parts of this Agreement, but this Agreement shall be construed and
enforced as if the illegal or invalid provision had never been inserted herein.
11.8 Interpretation. The word "including" shall mean "including
without limitation." The headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation of this Agreement. The rights
and remedies they may have at law or in equity, which shall survive and remain
available notwithstanding the expiration of any rights hereunder.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as
of the day first above written.
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
---------------------------------------
Name: Richard B. West
-------------------------------------
Title: Secretary
------------------------------------
TENNECO PACKAGING SPECIALTY AND
CONSUMER PRODUCTS INC.
By: /s/ James V. Faulkner, Jr.
---------------------------------------
Name: James V. Faulkner, Jr.
-------------------------------------
Title: Vice president
------------------------------------
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EXHIBIT 10.13
FINAL - FOLDING CARTON
PURCHASE/SUPPLY AGREEMENT
(Corrugated Products)
PURCHASE/SUPPLY AGREEMENT dated as of April 12, 1999, between
PACKAGING CORPORATION OF AMERICA, a Delaware corporation ("Seller"), and TENNECO
PACKAGING INC., a Delaware corporation ("Buyer").
PRELIMINARY STATEMENT
A. Seller and Tenneco Packaging, Inc. ("TPI"), an affiliate of
Buyer, each are party to that Contribution Agreement, dated January 25, 1999
(the "Contribution Agreement"), pursuant to which Seller has agreed to acquire
the Containerboard Business (as defined therein) of TPI, upon the terms and
subject to the conditions set forth in the Contribution Agreement, for $2.2
billion in cash, securities and assumption of indebtedness. As of and following
the closing on the date hereof of the transactions contemplated by the
Contribution Agreement (the "Closing"), Seller owns and operates various box
plants which produce various grades and types of corrugated products (each a
"Box Plant").
B. In the Contribution Agreement, TPI has agreed to cause Buyer to
purchase from Seller, and Seller has agreed to sell to Buyer, certain corrugated
products (the "Corrugated Products") produced by Seller, at the prices set forth
herein, for five years after the Closing thereunder. Execution and delivery of
this Agreement is a condition to the Closing.
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale.
1.1 Purchases. Subject to the terms and conditions set forth herein,
Buyer agrees to purchase and Seller agrees to supply at the locations listed on
Attachment A ("Buyer Locations") the percentage of Buyer's requirements listed
on Attachment A for Corrugated Products (as may be updated or modified from time
to time as mutually agreed upon by the parties, including New Products, the
"Products") for such locations (so long as Seller produces such Products). The
Buyer Locations constitute all of the folding carton facilities of Buyer that
have purchased Corrugated Products from TPI during the 12-month period prior to
the date hereof. New Products means Corrugated Products that are either (i) not
of a type to be purchased by Buyer from Seller hereunder as of the date hereof,
or (ii) a Product that Seller requests to be treated as a New Product pursuant
to Section 1.6 hereunder.
1.2 Purchase Orders. All of Buyer's purchases shall (subject to the
last sentence of this Section 1.2) be made on the form of purchase orders used
by Buyer at each of the Buyer Locations as of January 25, 1999, between such
Buyer Location and the Box Plants (hereinafter referred to as "Orders"), and
this Agreement shall be deemed to be incorporated into all such Orders. With
respect to Corrugated Products, a Buyer Location may issue a blanket purchase
order for Products hereunder, with releases, which may be written, verbal or
electronic, issued from time to time under such blanket purchase orders for
specific purchases. Any such release shall be deemed
<PAGE>
an Order. Each Order shall specify the type and quantity of Products, the
delivery requirements, and any other relevant information, all of which
(including the purchase orders) shall be in form and with terms and conditions
consistent with past practices as of and during the 12-month period prior to the
date hereof. In the event any term of any purchase order is inconsistent with,
or more onerous to Seller than, the terms of this Agreement, the terms of this
Agreement shall control.
1.3 Acceptance. Seller shall be deemed to have accepted all Orders
received from Buyer unless Seller notifies Buyer in writing within two business
days of receipt of a specific Order that Seller is not accepting such Order.
1.4 Lead Time. Buyer will cooperate with Seller to develop
reasonable procedures designed to provide Seller with as much lead time as
reasonably practical when placing or changing Orders. Similarly, if Seller
ceases to manufacture particular Products, Seller shall provide Buyer with as
much lead time as reasonably practical to allow for Buyer to make alternative
arrangements to purchase such Products from one or more third parties. If Seller
is unable to ship the Products for delivery on the required or requested date,
Seller shall give Buyer notice thereof as soon as reasonably practical.
1.5 Exceptions to Requirements. Notwithstanding Section 1.1 hereof,
Buyer may purchase Products from third parties if (and only if):
(i) Seller is unable to meet Buyer's specifications set forth
in an Order for a Product (which specifications will be consistent with,
and subject to tolerances and allowances with respect to Product
specifications as permitted in accordance with, past practices as of and
during the 12-month period prior to the date of this Agreement, subject to
changes arising from Buyer's bona fide business requirements provided that
such changes (A) do not change any term, such as price, specifically
addressed in this Agreement, and (B) the increased costs from any changes
shall be borne by Buyer, notwithstanding any other provision of the this
Agreement, including clause (A) above, to the contrary), in which case
Buyer shall not be obligated to purchase such Products in such Order for
which the specifications can not be met from Seller in the future until
such time as Seller is capable of producing such Products meeting such
specifications;
(ii) Seller is unable to meet Buyer's delivery requirements
set forth in an Order (provided such delivery requirements are in
accordance with past practices as of and during the 12-month period prior
to the date of this Agreement, subject to changes arising from Buyer's
bona fide business requirements provided that such changes (A) do not
change any term, such as price, specifically addressed in this Agreement,
and (B) the increased costs from any changes shall be borne by Buyer,
notwithstanding any other provision of the this Agreement, including
clause (A) above, to the contrary), in which case Buyer shall not be
obligated to purchase the quantity of the Products specified in such Order
for which the delivery requirements or requested shipping date can not be
met from Seller; or
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<PAGE>
(iii) Seller rejects any Orders for any other reason, in which
case Buyer shall not be obligated to purchase the quantity of the Products
specified in such Orders from Seller.
The exceptions set forth in clauses (ii) and (iii), above, shall apply only to
the specific Orders, and not to future Orders covering the same Products, unless
the reason for the rejection of an Order under clause (iii) is because Seller
does not manufacture or is not capable of manufacturing such Products, in which
case clause (iii) will, with respect to such Products, apply to future Orders,
to the extent set forth in clause (i) as if such rejection had been made
pursuant to clause (i).
1.6 Good Faith Cooperation; Past Practices. The parties shall
perform their respective duties and exercise their respective rights under this
Agreement in the utmost good faith and fair dealing, and, subject to the
specific terms on the face of this Agreement (and not including terms in
purchase orders), in a manner consistent with past dealings and practices
(including delivery requirements and tolerances and allowances with respect to
Product specifications) as of and during the 12-month period prior to the date
of this Agreement (subject to changes arising from Buyer's bona fide business
requirements provided that such changes (a) do not change any term, such as
price, specifically addressed in this Agreement, and (b) the increased costs
from any changes shall be borne by Buyer, notwithstanding any other provision of
the this Agreement (including clause (a) above) to the contrary. In the event
Buyer materially changes its specifications for Products hereunder, Seller may
request that the Product be deemed to constitute a New Product, in which event
Section 4.3 shall be applicable.
2. Term. Unless earlier terminated in accordance with the terms hereof,
this Agreement shall be in effect for a period of five years commencing on the
date hereof.
3. Delivery.
3.1 Deliveries. Delivery of Products shall be made F.O.B. delivered
to the Buyer Locations in accordance with the schedule and quantities set forth
on Buyer's Orders or such other locations as agreed to by Buyer and Seller.
Seller shall effect delivery in accordance with Buyer's reasonable instructions
in each Order, including instructions concerning load tags, delivery
appointments, pallets, drop trailers, and packaging/strapping, provided such
instructions are in accordance with past practices as of and during the 12-month
period prior to the date of this Agreement, subject to changes arising from
Buyer's bona fide business requirements, provided that the increased costs from
any changes shall be borne by Buyer. Buyer and Seller will cooperate to
establish preferred carriers to minimize freight expenses.
3.2 Title. Title, possession and risk of loss of all Products sold
hereunder shall pass to Buyer when the Product is unloaded at the Buyer
Locations, or such other locations as agreed to by Buyer and Seller.
3.3 Delivery Performance. If Seller fails to achieve a 95% on-time
delivery performance for Corrugated Products at any Buyer Location for any two
months in any 12 consecutive month period, Buyer may deliver Seller a notice of
deficient performance with respect
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to such Buyer Location. If Seller fails to achieve a 95% on-time delivery
performance at such Buyer Location during any 30 consecutive day period during
the 90 days following delivery of such notice of deficient performance, Buyer
shall have the right, in addition to any other rights available to it under this
Agreement, to cancel this Agreement with respect to such Buyer Location upon 30
days written notice to Seller. This Section 3.3 shall not apply if the reason
Seller has not shipped Products to a Buyer Location is due to Buyer's default
under this Agreement.
4. Price and Similar Terms.
4.1 Corrugated Products. The purchase price for the Corrugated
Products purchased and delivered during the term hereof shall be Seller's prices
and terms of payment in effect on the date of shipment as provided below:
(a) Initial Price. The initial purchase prices for Corrugated
Products shall be the prices as currently charged by Tenneco Packaging to the
various Buyer Locations as of the date hereof, which prices were determined in a
manner consistent with Tenneco Packaging's historical practices (without any
rebates or year-end discounts). The initial price for new Corrugated Products
shall be determined by Section 4.3 hereof. Except as adjusted in accordance with
the terms of this Agreement, prices shall be firm during the Term.
(b) Adjustments.
(i) Board Costs. Prices of Corrugated Products sold
under this Agreement shall be periodically adjusted up or down
("Adjustments") based on changes in the low value of the range (if a range
is provided) or the stated price (if no range is provided) for linerboard
and corrugating medium as listed in the "Price Watch:
Paperboard/Packaging" data published once a month in Pulp and Paper Week
(an example "Price Watch:Paperboard/Packaging" is attached hereto for
illustrative purposes only as Attachment C ). The Buyer Locations located
in the following states will use the "West" product pricing listed in
"Price Watch: Paperboard/Packaging": Washington, Oregon, California,
Montana, Idaho, Nevada, Wyoming, Colorado, Utah, Arizona and New Mexico.
All other Buyer Locations will use the "East" product pricing listed in
"Price Watch: Paperboard/Packaging." Price increases or decreases shall be
calculated as provided and illustrated in Attachment D hereto. Price
adjustments, whether increases or decreases, shall be made thirty days
after the publication date of "Price Watch: Paperboard/Packaging," but
only if the cumulative change from an existing price equals or exceeds
$10.00 per ton. "Price Watch" changes identified to specific geographic
regions shall trigger Adjustments applicable only to the affected regions.
(ii) Non-Board Costs. Adjustments shall also be made
during each calendar year of the Term to accommodate positive or negative
changes in Seller's costs for freight, energy, labor, factory overhead and
other non-Containerboard related costs ("Non-board Costs"). These
Adjustments shall be made once each calendar year, if applicable. During
February of each calendar year of the Term beginning February 2000, Seller
shall prepare a proposed Adjustment to accommodate changes in Non-board
Costs
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<PAGE>
since the previous February's Non-board Costs Adjustment. Seller's
proposed Adjustments and written justification therefor, including
substantiation thereof, shall be mailed by Seller to Buyer by February 28
of each year. Any Adjustment for Non-board Costs changes shall not take
effect until Buyer and Seller agree on the amount of the Adjustment. In
any event, such Adjustment shall be effective not earlier than June 1 nor
later than June 30 following the applicable February computation. Any such
Price changes shall be limited to a maximum annual increase of 1.0%.
(iii) Negotiations and Arbitration. Any negotiation of
Adjustments required by this Section 4.1(b) shall be done in good faith.
In the event that the Parties are unable to reach agreement on revised
pricing, as called for by any of the provisions of this Section 4.1(b),
then the matter shall be submitted to arbitration. The arbitration shall
be conducted by a single arbitrator under the then-current rules of the
American Arbitration Association. The arbitrator shall be chosen by mutual
agreement from a list of persons knowledgeable in the area of corrugated
purchasing. The parties shall instruct the arbitrator to make its decision
as promptly as practical, and to effectuate the intent of the parties as
specified in this Agreement, including Section 1.6 and other Sections of
this Agreement. The arbitrator shall have the discretion to awards costs
to either party. The decision and award of the arbitrator shall be based
upon its interpretation and enforcement of the terms of this Agreement and
shall be final and binding.
4.2 INTENTIONALLY OMITTED
4.3 New Products. The price for New Products shall be determined by
reference to the pricing factors for similar Products being sold by Seller
hereunder at the same Buyer Location, including quantity, size, board
combination, print coverage and margin. In the event the parties cannot agree on
the price for a New Product, the matter shall be submitted to arbitration as set
forth in Section 4.1(b)(iii) hereof.
4.4 Books and Records. Buyer shall have the right, at Buyer's
expense, upon reasonable notice and during normal business hours, to review
Seller's books and records with respect to Seller's Non-Board Costs and the
pricing of any new Products that Buyer agrees to purchase from Seller and Seller
agrees to sell to Buyer pursuant to Section 4.3 hereof. Seller shall have the
right, at Seller's expense, upon reasonable notice and during normal business
hours, to review Buyer's books and records relating to purchases of Products at
the Buyer Locations to verify compliance with the requirements of Section 1
hereof, including Buyer's purchases of Products from persons other than Seller.
All information obtained through any such review by either party or their
respective agents pursuant to this Section 4.4 shall be held in confidence.
Notwithstanding the foregoing, either party may require that the other party's
review be conducted by such other party's outside accountants if the first party
has a good faith concern that such disclosure would involve disclosure of
proprietary or confidential information.
5. Payment Terms. Terms of Payment shall be net 30 days. All payments
shall be made at such place of payment as designated by Seller in writing to
Buyer. Each party shall
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promptly reimburse the other party for any and all costs and expenses of any
nature or kind whatsoever (including but not limited to attorneys' fees) in
seeking to collect an unpaid amount
6. Warranty.
6.1 General. Seller warrants that (a) it will have good title to all
Products, (b) the Products will be free and clear of all liens and encumbrances,
(c) the Products will be of good material and workmanship, free from material
defects, and in conformance with Buyer's specifications (as the parties may
agree in writing to amend or modify such specifications from time to time),
consistent with the provisions of Section 1.6 hereof as they relate to
tolerances and allowances and other specifications, and (iv) the Products will
be in compliance with specifications that Seller meets for shipments to Seller's
own container plants or used for its own products. Any claims involving
non-complying or damaged Products or for shortages shall be made within 60 days
after delivery to Buyer, unless Buyer first learns of such non-compliance from a
third party more than 60 days after the date of delivery to Buyer, in which
event Buyer shall give Seller notice as soon as reasonably practical after
learning of such non-compliance. All other claims shall be made promptly after
Buyer learns of such claim.
6.2 Compliance with Law. Seller shall, insofar as it relates to
compliance with material laws, rules and regulations, perform its services under
the Agreement in a manner generally consistent with past practices of TPI in
conducting the Containerboard Business as of and during the 12-month period
prior to the date hereof, including the Fair Labor Standards Act of 1938, the
Walsh-Healey Public Contracts Act, the Contract Work Hours and Safety Standards
Act, and laws prohibiting the use of convict labor. To the extent TPI, in
conducting the Containerboard Business as of and during the 12-month period
prior to the date hereof, furnished to Buyer Material Safety Data Sheets
containing health, safety, and other hazard communication information on the
Products consistent with OSHA's Hazard Communications Standard, Seller shall
continue to provide such information to Buyer.
6.3 Disclaimer of Year 2000 Compliance Warranty SELLER (AND ITS
AFFILIATES) AND BUYER (AND ITS AFFILIATES) EXPRESSLY DISCLAIM ANY WARRANTIES
THAT THE PRODUCTS PROVIDED BY SELLER AND/OR ITS AFFILIATES TO BUYER UNDER THIS
AGREEMENT ARE YEAR 2000 COMPLIANT, THAT IS, THAT SOFTWARE, HARDWARE AND OTHER
EQUIPMENT USED IN THE PROVISION OF THE PRODUCTS HEREUNDER WILL ACCURATELY
PROCESS DATE DATA SUCH THAT: (a) NO VALUE FOR A DATE WILL CAUSE ANY INTERRUPTION
IN PROCESSING, (b) DATE-BASED FUNCTIONALITY OPERATES CONSISTENTLY FOR DATES
PRIOR TO, DURING AND AFTER THE YEAR 2000, AND (c) LEAP YEARS WILL BE ACCURATELY
RECOGNIZED AND PROCESSED.
6.4 Disclaimer of All Other Warranties. EXCEPT AS PROVIDED HEREIN,
SELLER (AND ITS AFFILIATES) DOES NOT MAKE ANY REPRESENTATIONS, WARRANTIES
(INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR
GUARANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCTS PROVIDED HEREUNDER.
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<PAGE>
7. Force Majeure. Neither Buyer nor Seller shall be liable for inability
to perform where such inability is the result of fire, flood, natural calamity,
weather, strike, government act or order, or any other cause reasonably beyond
the control of the party failing to perform. In the event Seller is excused from
performing because of force majeure, Buyer may obtain Products from alternative
sources, and may, if required to do so, honor reasonable commitments beyond the
expiration of the event of force majeure without liability to Seller, provided
that Buyer has acted reasonably under the circumstances in making such
commitments and that it was necessary for Buyer to make such commitments. In the
event Buyer is excused from performing because of force majeure, Seller may, if
required to do so, honor reasonable commitments beyond the expiration of the
event of force majeure without liability to Buyer, provided that Seller has
acted reasonably under the circumstances in making such commitments and that it
was necessary for Seller to make such commitments.
8. Default. In the event either party materially defaults in the prompt or
full performance of any material provision of this Agreement and such default
was wanton, willful and intentional, the other party shall give written notice
of such default and the defaulting party shall have thirty (30) days to cure
such default. If such default is not cured to the non-defaulting party's
reasonable satisfaction, the non-defaulting party shall have the right to
terminate this Agreement effective immediately. A party that is in default under
this Agreement and to whom a notice of default has been given with respect to
such default shall not have the right to terminate this Agreement.
9. Limitation of Damages. Buyer will have no liability to Seller except to
purchase and pay for Products and Seller will have no liability to Buyer except
to sell and deliver Products as set forth herein. In the event of a default in
payment for delivered Products, Seller's remedy shall be limited to the unpaid
contract price, together with such incidental damages, if any, as allowed by the
Uniform Commercial Code. In the event of any other default, the non-defaulting
party's damages shall be limited to the difference between the market or cover
price and unpaid contract price, together with such incidental damages, if any,
as allowed by the Uniform Commercial Code, but only for Products purchased
pursuant to Orders pursuant to this Agreement.
10. Separate Sales. Each shipment of Products under this Agreement shall
constitute a separate and distinct sale, and any default by either party with
respect to any shipment shall not affect the right of the other party to insist
upon full performance of the provisions of this Agreement for its full term.
11. Miscellaneous.
11.1 Notices. All notices or other communications hereunder (other
than purchase orders and similar communications) shall be deemed to have been
duly given and made if in writing and if served by personal delivery upon the
party for whom it is intended, if delivered by registered or certified mail,
return receipt requested, or by a national courier service, or if sent by
facsimile transmission; provided that the facsimile transmission is promptly
confirmed by telephone
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confirmation thereof, to the person at the address set forth below, or such
other address as may be designated in writing hereafter, in the same manner, by
such person:
If to Seller: Packaging Corporation of America
1900 Field Court
Lake Forest, Illinois 60045
Facsimile:
Telephone:
Attn: Chief Executive Officer
If to Buyer: Tenneco Packaging Inc.
1900 Field Court
Lake Forest, Illinois 60045
Facsimile: 847-482-4589
Telephone: 847-482-2430
Attn: General Counsel
Either party may from time to time change the address or facsimile number to
which notices shall be given by giving the other party written notice thereof.
Purchase orders and similar communication may be given in any commercially
reasonable fashion, based on the parties' course of dealing.
11.2 No Third Party Benefits. This Agreement is made for the sole
benefit of Seller and Buyer and no other person shall have any right or remedy
or other legal interest of any kind under or by reason of this Agreement.
11.3 Waiver. The failure of either party to insist in any one or
more instances upon strict performance of any of the provisions of this
Agreement, or to take advantage of any of its rights, shall not operate as a
continuing waiver of such provisions or rights and shall not prevent such party
from insisting upon such provisions and taking advantage of such rights in the
future.
11.4 Assignment. Neither party to this Agreement may assign any of
its rights or obligations hereunder without the prior written consent of the
other party hereto, except that (i) in the event a party hereto merges or
consolidates with another person or transfers substantially all of its assets to
another person, such party's rights and obligations shall be assigned to and
assumed by such other person and (ii) in the event Buyer transfers ownership of
a Buyer Location, Buyer shall assign its rights and obligations hereunder to the
new owner of such Buyer Location pursuant to a written assignment and assumption
agreement which requires the purchaser of such Buyer Location to assume all of
Buyer's rights and obligations under this Agreement with respect to such Buyer
Location without limitation or qualification for the balance of the term of this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns hereunder.
11.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard to
its conflict of laws provision.
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11.6 Entire Agreement. This Agreement embodies the entire agreement
between the parties with respect to the purchase and sales of Products and
cancels and supersedes any prior agreements, representations, or purchase orders
between the parties with respect to the matters covered in this Agreement.
Except for Buyer Locations, Products, delivery requirements, and price, no other
terms and conditions appearing on purchase orders, acknowledgments or other
forms shall be binding unless expressly agreed to by both parties in writing. No
amendment of this Agreement shall be effective unless stated in writing and
signed by both parties. The Attachments hereto are an integral part of this
Agreement and are incorporated by reference herein.
11.7 Severability. In the event that any provision of this Agreement
is held illegal or invalid for any reason, such illegality or invalidity shall
at the option of the party against whom the same is asserted not affect the
remaining parts of this Agreement, but this Agreement shall be construed and
enforced as if the illegal or invalid provision had never been inserted herein.
11.8 Interpretation. The word "including" shall mean "including
without limitation." The headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation of this Agreement. The rights
and remedies they may have at law or in equity, which shall survive and remain
available notwithstanding the expiration of any rights hereunder.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as
of the day first above written.
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
---------------------------------------
Name: Richard B. West
-------------------------------------
Title: Secretary
------------------------------------
TENNECO PACKAGING INC.
By: /s/ James V. Fanlkner, Jr.
---------------------------------------
Name: James V. Fanlkner, Jr.
-------------------------------------
Title: Vice President
------------------------------------
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EXHIBIT 10.14
FINAL- AUTOMOTIVE
PURCHASE/SUPPLY AGREEMENT
(Corrugated Products)
PURCHASE/SUPPLY AGREEMENT dated as of April 12, 1999, between
PACKAGING CORPORATION OF AMERICA, a Delaware corporation ("Seller"), and TENNECO
AUTOMOTIVE INC., a Delaware corporation ("Buyer").
PRELIMINARY STATEMENT
A. Seller and Tenneco Packaging, Inc. ("TPI"), an affiliate of
Buyer, each are party to that Contribution Agreement, dated January 25, 1999
(the "Contribution Agreement"), pursuant to which Seller has agreed to acquire
the Containerboard Business (as defined therein) of TPI, upon the terms and
subject to the conditions set forth in the Contribution Agreement, for $2.2
billion in cash, securities and assumption of indebtedness. As of and following
the closing on the date hereof of the transactions contemplated by the
Contribution Agreement (the "Closing"), Seller owns and operates various box
plants which produce various grades and types of corrugated products (each a
"Box Plant").
B. In the Contribution Agreement, TPI has agreed to cause Buyer to
purchase from Seller, and Seller has agreed to sell to Buyer, certain corrugated
products (the "Corrugated Products") produced by Seller, at the prices set forth
herein, for five years after the Closing thereunder. Execution and delivery of
this Agreement is a condition to the Closing.
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale.
1.1 Purchases. Subject to the terms and conditions set forth herein,
Buyer agrees to purchase and Seller agrees to supply at the locations listed on
Attachment A ("Buyer Locations") the percentage of Buyer's requirements listed
on Attachment A for Corrugated Products (as may be updated or modified from time
to time as mutually agreed upon by the parties, including New Products, the
"Products") for such locations (so long as Seller produces such Products). The
Buyer Locations constitute all of the facilities of Buyer that have purchased
Corrugated Products from TPI during the 12-month period prior to the date
hereof. New Products means Corrugated Products that are either (i) not of a type
required to be purchased by Buyer from Seller hereunder as of the date hereof,
or (ii) a Product that Seller requests to be treated as a New Product pursuant
to Section 1.6 hereunder.
1.2 Purchase Orders. All of Buyer's purchases shall (subject to the
last sentence of this Section 1.2) be made on the form of purchase orders used
by Buyer at each of the Buyer Locations as of or prior to January 25, 1999
(hereinafter referred to as "Orders"), copies of which are attached hereto as
Attachment B, and this Agreement shall be deemed to be incorporated into all
such Orders. With respect to Corrugated Products, a Buyer Location may issue a
blanket purchase order for Products hereunder, with releases, which may be
written, verbal or electronic, issued from time to time under such blanket
purchase orders for specific purchases. Any such release shall be
<PAGE>
deemed an Order. Each Order shall specify the type and quantity of Products, the
delivery requirements (or, in the case of Containerboard, the requested shipping
date), and any other relevant information, all of which (including the purchase
orders) shall be in form and with terms and conditions consistent with past
practices as of and during the 12-month period prior to the date hereof. In the
event any term of any purchase order is inconsistent with, or more onerous to
Seller than, the terms of this Agreement, the terms of this Agreement shall
control.
1.3 Acceptance. Seller shall be deemed to have accepted all Orders
received from Buyer unless Seller notifies Buyer in writing within two business
days of receipt of a specific Order that Seller is not accepting such Order.
1.4 Lead Time. Buyer will cooperate with Seller to develop
reasonable procedures designed to provide Seller with as much lead time as
reasonably practical when placing or changing Orders. Similarly, if Seller
ceases to manufacture particular Products, Seller shall provide Buyer with as
much lead time as reasonably practical to allow for Buyer to make alternative
arrangements to purchase such Products from one or more third parties. If Seller
is unable to ship the Products for delivery on the required or requested date,
Seller shall give Buyer notice thereof as soon as reasonably practical.
1.5 Exceptions to Requirements. Notwithstanding Section 1.1 hereof,
Buyer may purchase Products from third parties if (and only if):
(i) Seller is unable to meet Buyer's specifications set forth
in an Order for a Product (which specifications will be consistent with,
and subject to tolerances and allowances with respect to Product
specifications as permitted in accordance with, past practices as of and
during the 12-month period prior to the date of this Agreement, subject to
changes arising from Buyer's bona fide business requirements provided that
such changes (A) do not change any term, such as price, specifically
addressed in this Agreement, and (B) the increased costs from any changes
shall be borne by Buyer, notwithstanding any other provision of the this
Agreement, including clause (A) above, to the contrary), in which case
Buyer shall not be obligated to purchase such Products in such Order for
which the specifications can not be met from Seller in the future until
such time as Seller is capable of producing such Products meeting such
specifications;
(ii) Seller is unable to meet Buyer's delivery requirements
set forth in an Order (provided such delivery requirements are in
accordance with past practices as of and during the 12-month period prior
to the date of this Agreement, subject to changes arising from Buyer's
bona fide business requirements provided that such changes (A) do not
change any term, such as price, specifically addressed in this Agreement,
and (B) the increased costs from any changes shall be borne by Buyer,
notwithstanding any other provision of the this Agreement, including
clause (A) above, to the contrary), in which case Buyer shall not be
obligated to purchase the quantity of the Products specified in such Order
for which the delivery requirements or requested shipping date can not be
met from Seller; or
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(iii) Seller rejects any Orders for any other reason, in which
case Buyer shall not be obligated to purchase the quantity of the Products
specified in such Orders from Seller.
The exceptions set forth in clauses (ii) and (iii), above, shall apply only to
the specific Orders, and not to future Orders covering the same Products, unless
the reason for the rejection of an Order under clause (iii) is because Seller
does not manufacture or is not capable of manufacturing such Products, in which
case clause (iii) will, with respect to such Products, apply to future Orders,
to the extent set forth in clause (i) as if such rejection had been made
pursuant to clause (i).
1.6 Good Faith Cooperation; Past Practices. The parties shall
perform their respective duties and exercise their respective rights under this
Agreement in the utmost good faith and fair dealing, and, subject to the terms
hereof, in a manner consistent with past dealings and practices (including
delivery requirements and tolerances and allowances with respect to Product
specifications) as of and during the 12-month period prior to the date of this
Agreement (subject to changes arising from Buyer's bona fide business
requirements provided that such changes (a) do not change any term, such as
price, specifically addressed in this Agreement, and (b) the increased costs
from any changes shall be borne by Buyer, notwithstanding any other provision of
the this Agreement (including clause (a) above) to the contrary. In the event
Buyer materially changes its specifications for Products hereunder, Seller may
request that the Product be deemed to constitute a New Product, in which event
Section 4.3 shall be applicable.
2. Term. Unless earlier terminated in accordance with the terms hereof,
this Agreement shall be in effect for a period of five years commencing on the
date hereof.
3. Delivery.
3.1 Deliveries. Delivery of Products shall be made F.O.B. delivered
to the Buyer Locations in accordance with the schedule and quantities set forth
on Buyer's Orders or such other locations as agreed to by Buyer and Seller.
Seller shall effect delivery in accordance with Buyer's reasonable instructions
in each Order, including instructions concerning load tags, delivery
appointments, pallets, drop trailers, and packaging/strapping, provided such
instructions are in accordance with past practices as of and during the 12-month
period prior to the date of this Agreement, subject to changes arising from
Buyer's bona fide business requirements, provided that the increased costs from
any changes shall be borne by Buyer. Buyer and Seller will cooperate to
establish preferred carriers to minimize freight expenses.
3.2 Title. Title, possession and risk of loss of all Products sold
hereunder shall pass to Buyer when the Product is unloaded at the Buyer
Locations, or such other locations as agreed to by Buyer and Seller.
3.3 Delivery Performance. If Seller fails to achieve a 95% on-time
delivery performance for Corrugated Products at any Buyer Location for any two
months in any 12 consecutive month period, Buyer may deliver Seller a notice of
deficient performance with respect to such Buyer Location. If Seller fails to
achieve a 95% on-time delivery performance at such Buyer
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Location during any 30 consecutive day period during the 90 days following
delivery of such notice of deficient performance, Buyer shall have the right, in
addition to any other rights available to it under this Agreement, to cancel
this Agreement with respect to such Buyer Location upon 30 days written notice
to Seller. This Section 3.3 shall not apply if the reason Seller has not shipped
Products to a Buyer Location is due to Buyer's default under this Agreement.
4. Price and Similar Terms.
4.1 Corrugated Products. The purchase price for the Corrugated
Products purchased and delivered during the term hereof shall be Seller's prices
and terms of payment in effect on the date of shipment as provided below:
(a) Initial Price. The initial purchase prices for Corrugated
Products shall be the prices as currently charged by Tenneco Packaging to the
various Buyer Locations as of the date hereof, which prices were determined in a
manner consistent with Tenneco Packaging's historical practices. The initial
price for new Corrugated Products shall be determined by Section 4.3 hereof
(without any rebates or year-end discounts). Except as adjusted in accordance
with the terms of this Agreement, prices shall be firm during the Term.
(b) Adjustments.
(i) Board Costs. Prices of Corrugated Products sold
under this Agreement shall be periodically adjusted up or down
("Adjustments") based on changes in the low value of the range (if a range
is provided) or the stated price (if no range is provided) for linerboard
and corrugating medium as listed in the "Price Watch:
Paperboard/Packaging" data published once a month in Pulp and Paper Week
(an example "Price Watch:Paperboard/Packaging" is attached hereto for
illustrative purposes only as Attachment C ). The Buyer Locations located
in the following states will use the "West" product pricing listed in
"Price Watch: Paperboard/Packaging": Washington, Oregon, California,
Montana, Idaho, Nevada, Wyoming, Colorado, Utah, Arizona and New Mexico.
All other Buyer Locations will use the "East" product pricing listed in
"Price Watch: Paperboard/Packaging." Price increases or decreases shall be
calculated as provided and illustrated in Attachment D hereto. Price
adjustments, whether increases or decreases, shall be made thirty days
after the publication date of "Price Watch: Paperboard/Packaging," but
only if the cumulative change from an existing price equals or exceeds
$10.00 per ton. "Price Watch" changes identified to specific geographic
regions shall trigger Adjustments applicable only to the affected regions.
(ii) Non-Board Costs. Adjustments shall also be made
during each calendar year of the Term to accommodate positive or negative
changes in Seller's costs for freight, energy, labor, factory overhead and
other non-Containerboard related costs ("Non-board Costs"). These
Adjustments shall be made once each calendar year, if applicable. During
February of each calendar year of the Term beginning February 2000, Seller
shall prepare a proposed Adjustment to accommodate changes in Non-board
Costs since the previous February's Non-board Costs Adjustment. Seller's
proposed Adjustments
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and written justification therefor, including substantiation thereof,
shall be mailed by Seller to Buyer by February 28 of each year. Any
Adjustment for Non-board Costs changes shall not take effect until Buyer
and Seller agree on the amount of the Adjustment. In any event, such
Adjustment shall be effective not earlier than June 1 nor later than June
30 following the applicable February computation. Any such Price changes
shall be limited to a maximum annual increase of 1.0%.
(iii) Negotiations and Arbitration. Any negotiation of
Adjustments required by this Section 4.1(b) shall be done in good faith.
In the event that the Parties are unable to reach agreement on revised
pricing, as called for by any of the provisions of this Section 4.1(b),
then the matter shall be submitted to arbitration. The arbitration shall
be conducted by a single arbitrator under the then-current rules of the
American Arbitration Association. The arbitrator shall be chosen by mutual
agreement from a list of persons knowledgeable in the area of corrugated
purchasing. The parties shall instruct the arbitrator to make its decision
as promptly as practical, and to effectuate the intent of the parties as
specified in this Agreement, including Section 1.6 and other Sections of
this Agreement. The arbitrator shall have the discretion to awards costs
to either party. The decision and award of the arbitrator shall be based
upon its interpretation and enforcement of the terms of this Agreement and
shall be final and binding.
4.3 New Products. The price for New Products shall be determined by
reference to the pricing factors for similar Products being sold by Seller
hereunder at the same Buyer Location, including quantity, size, board
combination, print coverage and margin. In the event the parties cannot agree on
the price for a New Product, the matter shall be submitted to arbitration as set
forth in Section 4.1(b)(iii) hereof.
4.4 Books and Records. Buyer shall have the right, at Buyer's
expense, upon reasonable notice and during normal business hours, to review
Seller's books and records with respect to Seller's Non-Board Costs and the
pricing of any new Products that Buyer agrees to purchase from Seller and Seller
agrees to sell to Buyer pursuant to Section 4.3 hereof. Seller shall have the
right, at Seller's expense, upon reasonable notice and during normal business
hours, to review Buyer's books and records relating to purchases of Products at
the Buyer Locations to verify compliance with the requirements of Section 1
hereof, including Buyer's purchases of Products from persons other than Seller.
All information obtained through any such review by either party or their
respective agents pursuant to this Section 4.4 shall be held in confidence.
Notwithstanding the foregoing, either party may require that the other party's
review be conducted by such other party's outside accountants if the first party
has a good faith concern that such disclosure would involve disclosure of
proprietary or confidential information.
5. Payment Terms. Terms of Payment shall be net 30 days. All payments
shall be made at such place of payment as designated by Seller in writing to
Buyer. Each party shall promptly reimburse the other party for any and all costs
and expenses of any nature or kind whatsoever (including but not limited to
attorneys' fees) in seeking to collect an unpaid amount
6. Warranty.
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6.1 General. Seller warrants that (a) it will have good title to all
Products, (b) the Products will be free and clear of all liens and encumbrances,
(c) the Products will be of good material and workmanship, free from defects,
and in conformance with Buyer's specifications (as the parties may agree in
writing to amend or modify such specifications from time to time), consistent,
with respect to both Corrugated Products and Containerboard, with the provisions
of Section 1.6 hereof as they relate to tolerances and allowances, and (iv) the
Products will be in compliance with specifications that Seller meets for
shipments to Seller's own container plants or used for its own products. Any
claims involving non-complying or damaged Products or for shortages shall be
made within 60 days after delivery to Buyer, unless Buyer first learns of such
non-compliance from a third party more than 60 days after the date of delivery
to Buyer, in which event Buyer shall give Seller notice as soon as reasonably
practical after learning of such non-compliance. All other claims shall be made
promptly after Buyer learns of such claim.
6.2 Compliance with Law. Seller shall, insofar as it relates to
compliance with material laws, rules and regulations, perform its services under
the Agreement in a manner generally consistent with past practices of TPI in
conducting the Containerboard Business as of and during the 12-month period
prior to the date hereof, including the Fair Labor Standards Act of 1938, the
Walsh-Healey Public Contracts Act, the Contract Work Hours and Safety Standards
Act, and laws prohibiting the use of convict labor. To the extent TPI, in
conducting the Containerboard Business as of and during the 12-month period
prior to the date hereof, furnished to Buyer Material Safety Data Sheets
containing health, safety, and other hazard communication information on the
Products consistent with OSHA's Hazard Communications Standard, Seller shall
continue to provide such information to Buyer.
7. Force Majeure. Neither Buyer nor Seller shall be liable for inability
to perform where such inability is the result of fire, flood, natural calamity,
weather, strike, government act or order, or any other cause reasonably beyond
the control of the party failing to perform. In the event Seller is excused from
performing because of force majeure, Buyer may obtain Products from alternative
sources, and may, if required to do so, honor reasonable commitments beyond the
expiration of the event of force majeure without liability to Seller, provided
that Buyer has acted reasonably under the circumstances in making such
commitments and that it was necessary for Buyer to make such commitments. In the
event Buyer is excused from performing because of force majeure, Seller may, if
required to do so, honor reasonable commitments beyond the expiration of the
event of force majeure without liability to Buyer, provided that Seller has
acted reasonably under the circumstances in making such commitments and that it
was necessary for Seller to make such commitments.
8. Default. In the event either party defaults in the prompt or full
performance of any material provision of this Agreement and such default was
intentional, the other party shall give written notice of default and the
defaulting party shall have thirty (30) days to cure the default. If the default
is not cured to the non-defaulting party's reasonable satisfaction, the
non-defaulting party shall have the right to terminate this Agreement effective
immediately. A party that is in default under this Agreement and to whom a
notice of default has been given with respect to such default shall not have the
right to terminate this Agreement. In determining the materiality of a default,
the occurrence or recurrence of an event or of similar events may be considered.
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9. Limitation of Damages. Buyer will have no liability to Seller except to
purchase and pay for Products and Seller will have no liability to Buyer except
to sell and deliver Products as set forth herein. In the event of a default in
payment for delivered Products, Seller's remedy shall be limited to the unpaid
contract price, together with such incidental damages, if any, as allowed by the
Uniform Commercial Code. In the event of any other default, the non-defaulting
party's damages shall be limited to the difference between the market or cover
price and unpaid contract price, together with such incidental damages, if any,
as allowed by the Uniform Commercial Code, but only for Products purchased to
Orders pursuant to this Agreement.
10. Separate Sales. Each shipment of Products under this Agreement shall
constitute a separate and distinct sale, and any default by either party with
respect to any shipment shall not affect the right of the other party to insist
upon full performance of the provisions of this Agreement for its full term.
11. Miscellaneous.
11.1 Notices. All notices or other communications hereunder (other
than purchase orders and similar communications) shall be deemed to have been
duly given and made if in writing and if served by personal delivery upon the
party for whom it is intended, if delivered by registered or certified mail,
return receipt requested, or by a national courier service, or if sent by
facsimile transmission; provided that the facsimile transmission is promptly
confirmed by telephone confirmation thereof, to the person at the address set
forth below, or such other address as may be designated in writing hereafter, in
the same manner, by such person:
If to Seller: Packaging Corporation of America
1900 Field Court
Lake Forest, Illinois 60045
Facsimile:
Telephone:
Attn: Chief Executive Officer
If to Buyer: Tenneco Automotive Inc.
500 West Field Drive
Lake Forest, Illinois 60045
Facsimile:
Telephone:
Attn:
Either party may from time to time change the address or facsimile number to
which notices shall be given by giving the other party written notice thereof.
Purchase orders and similar communication may be given in any commercially
reasonable fashion, based on the parties' course of dealing.
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11.2 No Third Party Benefits. This Agreement is made for the sole
benefit of Seller and Buyer and no other person shall have any right or remedy
or other legal interest of any kind under or by reason of this Agreement.
11.3 Waiver. The failure of either party to insist in any one or
more instances upon strict performance of any of the provisions of this
Agreement, or to take advantage of any of its rights, shall not operate as a
continuing waiver of such provisions or rights and shall not prevent such party
from insisting upon such provisions and taking advantage of such rights in the
future.
11.4 Assignment. Neither party to this Agreement may assign any of
its rights or obligations hereunder without the prior written consent of the
other party hereto, except that (i) in the event a party hereto merges or
consolidates with another person or transfers substantially all of its assets to
another person, such party's rights and obligations shall be assigned to such
other person and (ii) in the event Buyer transfers ownership of a Buyer
Location, Buyer shall assign its rights and obligations hereunder to the new
owner of such Buyer Location pursuant to a written assignment and assumption
agreement, a copy of which shall be provided to Seller. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns hereunder.
11.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard to
its conflict of laws provision.
11.6 Entire Agreement. This Agreement embodies the entire agreement
between the parties with respect to the purchase and sales of Products and
cancels and supersedes any prior agreements, representations, or purchase orders
between the parties with respect to the matters covered in this Agreement.
Except for Buyer Locations, Products, delivery requirements, and price, no other
terms and conditions appearing on purchase orders, acknowledgments or other
forms shall be binding unless expressly agreed to by both parties in writing. No
amendment of this Agreement shall be effective unless stated in writing and
signed by both parties. The Attachments hereto are an integral part of this
Agreement and are incorporated by reference herein.
11.7 Severability. In the event that any provision of this Agreement
is held illegal or invalid for any reason, such illegality or invalidity shall
at the option of the party against whom the same is asserted not affect the
remaining parts of this Agreement, but this Agreement shall be construed and
enforced as if the illegal or invalid provision had never been inserted herein.
11.8 Interpretation. The word "including" shall mean "including
without limitation." The headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation
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of this Agreement. The rights and remedies they may have at law or in equity,
which shall survive and remain available notwithstanding the expiration of any
rights hereunder.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as
of the day first above written.
PACKAGING CORPORATION OF AMERICA
By: /s/ Richard B. West
---------------------------------------
Name: Richard B. West
-------------------------------------
Title: Secretary
------------------------------------
TENNECO AUTOMOTIVE INC.
By: /s/ R.D. Harlow
---------------------------------------
Name: R.D. Harlow
-------------------------------------
Title: Senior Vice President
------------------------------------
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EXHIBIT 10.15
TECHNOLOGY, FINANCIAL AND ADMINISTRATIVE
TRANSITION SERVICES AGREEMENT
THIS TECHNOLOGY, FINANCIAL AND ADMINISTRATIVE TRANSITION SERVICES
AGREEMENT (this "Transition Services Agreement") is made and entered into as of
April 12, 1999, between TENNECO PACKAGING INC., a Delaware corporation ("TPI"),
and PACKAGING CORPORATION OF AMERICA, a Delaware corporation ("PCA").
RECITALS
WHEREAS, TPI, PCA Holdings LLC and PCA each are party to a
Contribution Agreement, made and entered into as of January 25, 1999 (the
"Contribution Agreement"), pursuant to which TPI and PCA Holdings LLC have
organized PCA to acquire and operate the Containerboard Business (as defined
therein); and
WHEREAS, the Containerboard Business uses certain technology,
financial and administrative services provided by TPI, its Affiliates and/or
certain outside service providers, and PCA desires to obtain the use of such
services for the purpose of enabling PCA to manage an orderly separation of the
Containerboard Business from TPI's other businesses and operations.
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:
1. 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 have the meaning as it is defined in the
Contribution Agreement.
"Party" shall mean either TPI or PCA; "Parties" shall mean TPI and
PCA.
"TPI Technology, Financial and Administrative Services" shall mean
the services set forth in Annex A.
"PCA Technology, Financial and Administrative Services" shall means
the services set forth in Annex B.
<PAGE>
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Transition Services Agreement and, unless otherwise indicated, shall have
such meaning throughout this Transition Services Agreement.
1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder", and words of
similar import, when used in this Transition Services Agreement, shall refer to
this Transition Services Agreement as a whole and not to any particular
provision of this Transition Services 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."
2. SUPPORT AND ADMINISTRATIVE SERVICES
2.1 Provision of Services by TPI. TPI shall provide or have provided
(through its Affiliates and/or certain outside service providers) to PCA the TPI
Technology, Financial and Administrative Services set forth in Annex A. TPI also
shall provide to PCA additional services not set forth on Annex A, but requested
by PCA that previously had been provided by TPI to the Containerboard Business
during the twelve (12) month period prior to the Closing Date ("Additional
Services"), if TPI has the personnel and equipment reasonably necessary to
provide such Additional Services. All Services shall be provided in a manner and
at a level of quantity and quality substantially consistent with the past
practices and operation of the Containerboard Business by TPI during the twelve
(12) month period prior to the Closing Date, and in any event, at a level
consistent with the objectives set forth in Attachment 1 exercising
substantially the same degree of care and skill as it historically has provided
to the Containerboard Business. Notwithstanding the foregoing, TPI will not
provide the services identified in Annex A-1, Excluded Services.
2.2 Provision of Services by PCA. PCA shall provide to TPI the PCA
Technology, Financial and Administrative Services set forth in Annex B. All
Services shall be provided in a manner and at a level of quantity and quality
substantially consistent with the past practices and provision of such Services
by the Containerboard Business to TPI during the twelve (12) month period prior
to the Closing Date exercising substantially the same degree of care and skill
as it exercises in performing the same or similar services for its own business
and operations.
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2.3 Required Third Party Consents.
(a) TPI or its Affiliates will obtain the consents of any relevant
third party required for TPI to provide or have provided the TPI Technology,
Financial and Administrative Services to PCA pursuant to this Agreement. If such
consent cannot be obtained, the Parties will arrange for alternative methods of
delivering the necessary service in the manner and at the level and cost
provided in this Agreement.
(b) As a precondition to PCA providing services hereunder, TPI will
obtain, at its sole expense, the consent of any relevant third party required
for PCA to provide the PCA Technology, Financial and Administrative Services to
TPI pursuant to this Agreement. If such consent cannot be obtained, TPI with
PCA's assistance will arrange for alternative methods of delivering the
necessary service in the manner provided in this Agreement. Any PCA costs for
providing any alternative method of delivering the necessary service will be
passed along to TPI.
3. PRICING, BILLING AND PAYMENT
3.1 Pricing. The cost to PCA for the TPI Technology, Financial and
Administrative Services listed on Annex A-2 shall be the lesser of (i) the
actual cost on a fully loaded basis without allocation of corporate overhead
("TPI's Cost") and (ii) 105% of the amounts reflected on Annex A-2 across from
such Service. The cost to PCA for the TPI Technology, Financial and
Administrative Services set forth on Annex A and not listed on Annex A-2 will be
the agreed upon rates as specifically set forth in Annex A. The cost to PCA for
any Additional Services will be TPI's Cost. If and to the extent PCA is
obligated to pay any fees for a TPI Technology, Financial and Administrative
Service or Additional Service hereunder, and a fee, charge or expense is charged
PCA for the same service as Rent under Facilities Use Agreement between TPI and
PCA, PCA shall pay such fee, charge or expense under the Facilities Use
Agreement and not under this Transition Services Agreement, unless the parties
shall otherwise mutually agree. All PCA Technology, Financial and Administrative
Services shall be charged to and payable by TPI on a monthly basis at the actual
cost on a fully loaded basis without allocation of corporate overhead ("PCA's
Cost").
3.2 Billing, Payments and Adjustments. Charges for TPI and PCA
Technology, Financial and Administrative Services and Additional Services shall
be billed monthly to the recipient Party by the service-providing Party. The
recipient Party shall remit the amount due for such services to the
service-providing Party within thirty (30) days after receipt of any such bill.
If any adjustment is needed to properly reflect the cost to PCA pursuant to
Section 3.1 for a particular TPI Technology, Financial and Administrative
Service, such adjustment will be made quarterly within thirty (30) days after
the billing date for the third month of the subject quarter. TPI will afford
PCA, upon reasonable notice, access to such information, records and
documentation of TPI as PCA may reasonably request in order to verify TPI's Cost
for any TPI Technology, Financial and Administrative Service or additional
Service. If PCA disputes TPI's Cost for a particular Service, PCA may request an
arbitration hearing to be conducted by a neutral arbitrator, mutually agreed
upon by the Parties, to verify the accuracy
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of TPI's Cost. If the neutral arbitrator determines that TPI's Cost is less than
the cost charged, TPI will credit the difference to PCA and pay for the neutral
arbitrator's services. Otherwise, PCA will pay for the neutral arbitrator's
services.
4. WARRANTIES AND LIABILITIES
4.1 Warranty. TPI (and its Affiliates) and PCA (and its Affiliates)
each warrant that the Services provided hereunder by it will be performed in a
good workmanlike and timely manner and at a level of quantity and quality
substantially consistent with the past practices regarding the same provision of
services.
4.2 Compliance with Law. Each Party shall, insofar as it relates to
compliance with material laws, rules and regulations, perform its Services under
this Transition Services Agreement in a manner generally consistent with past
practices of TPI in conducting the Containerboard Business and the
Containerboard Business in the provision of Services to TPI as of and during the
12-month period prior to the date hereof, including the Fair Labor Standards Act
of 1938, the Walsh-Healey Public Contracts Act, the Contract Work Hours and
Safety Standards Act, and laws prohibiting the us of convict labor.
4.3 Infringement Indemnification. TPI shall indemnify, defend and
hold PCA harmless against any claim of patent or copyright infringement or
infringement of any other rights relating to PCA's use of the Services provided
hereunder by TPI, and shall bear all costs and expenses, including reasonable
attorneys' fees, arising from or related to any such claim so long as PCA
provides TPI with prompt notice of such claim, provided that TPI shall have no
obligation with respect to claims based on use of such Services in combination
with other processes or products.
4.4 Disclaimer of Year 2000 Compliance Warranty. TPI (AND ITS
AFFILIATES) AND PCA (AND ITS AFFILIATES) EXPRESSLY DISCLAIM ANY WARRANTIES THAT
THE SERVICES PROVIDED BY TPI AND/OR ITS AFFILIATES TO PCA OR BY PCA AND/OR ITS
AFFILIATES TO TPI UNDER THIS TRANSITION SERVICES AGREEMENT (INCLUDING WITHOUT
LIMITATION THE YEAR 2000 SERVICES SET FORTH IN ANNEX A) ARE YEAR 2000 COMPLIANT,
THAT IS, THAT SOFTWARE, HARDWARE AND OTHER EQUIPMENT USED IN THE PROVISION OF
THE SERVICES HEREUNDER WILL ACCURATELY PROCESS DATE DATA SUCH THAT: (a) NO VALUE
FOR A DATE WILL CAUSE ANY INTERRUPTION IN PROCESSING, (b) DATE-BASED
FUNCTIONALITY OPERATES CONSISTENTLY FOR DATES PRIOR TO, DURING AND AFTER THE
YEAR 2000, AND (c) LEAP YEARS WILL BE ACCURATELY RECOGNIZED AND PROCESSED.
NOTWITHSTANDING THE FOREGOING AND SUBJECT TO THE CAP LIMITATIONS SET FORTH IN
ANNEX B, SECTIONS 4 AND 5, THE PARTIES WILL WORK TOGETHER AND USE THEIR
COMMERCIALLY REASONABLE EFFORTS TO RENDER THE PCA SYSTEMS ADDRESSED BY THE TPI
Y2K PROJECT PLAN YEAR 2000 COMPLIANT IN 1999.
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4.5 Disclaimer of All Other Warranties. EXCEPT AS PROVIDED HEREIN,
NEITHER TPI (AND ITS AFFILIATES) NOR PCA (AND ITS AFFILIATES) MAKE ANY
REPRESENTATIONS, WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE) OR GUARANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
SERVICES PROVIDED HEREUNDER.
4.6 Limitation on Liability. A Party's maximum liability to, and the
sole remedy of, the other Party for breach of this Transition Services Agreement
caused by mistake constituting gross negligence or error constituting gross
negligence or by willful misconduct with respect to the Services provided under
sections 1.c. and 1.d. of Annex A, Annex B and for which a Party provides
assistance (including but not limited to Annex A, sections 1.a.v, 1.a.x,
1.e.ii., 1.e.vii., 1.e.xiii., 1.f., 3.b., 3.d., and 4.a.), or for breach,
mistake or error with respect to all other Services, shall be for the Party upon
receipt of written notice from the other Party of such breach, to use
commercially reasonable efforts to cure the breach at its expense, including
retaining a third party to provide the particular service, and reimbursement of
the actual direct monetary out-of-pocket damages directly caused by such Party's
actions. However, a Party shall not be liable to other Party for any breach of
this Transition Services Agreement if either (a) the Party is unable to perform
the particular Service due to the the other Party's failure to provide proper
guidance, requisite assistance or requisite cooperation as identified in Annexes
A and B or (b) to the extent the other Party contributed to such breach.
4.7 No Consequential, Incidental or Special Damages. In no event
shall either Party be liable to the other Party for any consequential,
incidental or special damages suffered by the other Party arising out of this
Transition Services Agreement, whether resulting from negligence of a Party or
otherwise.
5. FORCE MAJEURE
No Party shall be responsible for, or be considered to be in breach hereunder
because of, failure or delay in delivery of any service hereunder, nor shall any
Party be responsible for failure or delay in receiving such service, if caused
by an act of God or public enemy, war, government acts or regulations, fire,
flood, embargo, quarantine, epidemic, labor stoppages beyond its reasonable
control, accident, unusually severe weather or other cause similar or dissimilar
to the foregoing beyond its control.
6. TERM AND TERMINATION
This Transition Services Agreement shall be effective on the Closing Date and
will continue thereafter for an initial term of one year (the "Transition
Period"). PCA may extend the Transition Period with respect to any TPI
Technology, Financial and Administrative Service or Additional Service for an
additional six month period, for an up charge of 15% of the cost of such TPI
Technology, Financial and Administrative Service or Additional Service
hereunder, by giving TPI notice ninety (90) days prior to the end of the initial
Transition Period. PCA may terminate any of the TPI Technology, Financial or
Administrative Services or Additional
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Services at any time on ninety (90) days prior written notice to TPI. PCA may
reduce or phase-down the TPI Technology, Financial or Administrative Services or
Additional Services during the Transition Period upon reasonable prior written
notice to TPI, in which case the charge to PCA will be reduced to reflect TPI's
Cost for rendering such reduced Services. TPI may terminate any such PCA
Technology, Financial or Administrative Services upon reasonable prior written
notice to PCA, in which case the charge to TPI will be reduced to reflect PCA's
Cost (calculated in substantially the same manner as TPI's Cost) for rendering
such reduced Services. Sections 4.2-4.5, 7, 8.1 and 8.2 shall survive
termination of this Transition Services Agreement.
7. PROPRIETARY INFORMATION AND RIGHTS
Each Party acknowledges that the other Party possesses and will continue to
possess information that has been created, discovered or developed by it and/or
in which property rights have been assigned or otherwise conveyed to it, which
information has commercial value and is not in the public domain. The
proprietary information of each Party will be and remain the sole property of
such Party and its assigns. Each Party will use the same degree of care that it
normally uses to protect its own proprietary information to prevent disclosing
to third parties the information of the other Party that it possesses. No Party
will make any use of any information of the other which has been identified as
proprietary except as contemplated or required by the terms of this Transition
Services Agreement. Notwithstanding the foregoing, this Section will not apply
to any information that a Party can demonstrate was, at the time of disclosure
to it, either in the public domain through no fault of such Party, received
after disclosure to it from a third party who had a lawful right to disclose
such information to it, or already in possession of or independently developed
by the receiving Party.
8. MISCELLANEOUS
8.1 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 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 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.
-6-
<PAGE>
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:
Packaging Corporation of America
1900 West Field Court
Suite 100
Lake Forest, IL 60045
Attention: Chief Financial Officer
Facsimile: (847) 482-2191
with a copy to:
Madison Dearborn Partners, Inc.
Three First National Plaza
Suite 3800
Chicago, IL 60602
Attention: Samuel M. Mencoff
Justin S. Huscher
Facsimile: (312) 895-1000
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch
Facsimile: (312) 861-2200
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.
-7-
<PAGE>
8.2 Amendment; Waiver. Any provision of this Transition Services
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by PCA and TPI, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 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.
8.3 Assignment; Successors and Assigns. Neither Party may assign any
of its rights or obligations under this Transition Services Agreement without
the prior written consent of the other Party, provided, however, that either
party may assign its rights and delegate its obligations under this Transition
Service Agreement to any of its affiliates, divested affiliates or divested
business units or an outside service provider so long as it continues to be
responsible for any obligations hereunder in the event an obligation is not met,
and PCA may collaterally assign its rights and obligations under this Transition
Services Agreement to its lenders. This Transition Services Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
8.4 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
THIS TRANSITION SERVICES AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS. JURISDICTION AND SELECTION OF FORUM SHALL BE
SUBJECT TO SECTION 10.11 OF THE CONTRIBUTION AGREEMENT.
8.5 Counterparts. This Transition Services 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.
8.6 Severability. The provisions of this Transition Services
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 Transition Services
Agreement, or the application thereof to any Party 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 Transition Services 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.
8.7 Human Resources Agreement. To the extent that any provision in
this Transition Services Agreement is determined to be in conflict with any
provision in the Human Resources Agreement, except for the second sentence of
Section 4.2(c) thereof, the terms of this Transition Services Agreement shall
prevail.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed or caused this
Transition Services Agreement to be executed as of the date first written above.
Tenneco Packaging Inc.
By: /s/ James V. Fanlkner, Jr.
-------------------------------
Name: James V. Fanlkner, Jr.
Title: Vice President
Packaging Corporation of America
By: /s/ Justin S. Huscher
Name: Justin S. Huscher
Title: Assistant Secretary
-9-
<PAGE>
EXHIBIT 10.16
MADISON DEARBORN PARTNERS, INC.
January 25, 1999
PERSONAL AND CONFIDENTIAL
Mr. Paul T. Stecko
1900 West Field Court
Lake Forest, IL 60045
Dear Paul:
On behalf of Packaging Corporation of America (the "Company"), I am pleased
to offer you the position of Chairman and Chief Executive Officer of the
Company, under the following terms and conditions:
1) Your employment will commence on the closing of the transaction by
which the Containerboard Business of Tenneco Packaging Inc. is
contributed to the Company.
2) You will be paid a base salary of $600,000 a year, which shall be
subject to such increases as may from time to time be approved by
the Board of Directors of the Company or such committee of the Board
to which such power has been delegated, payable according to the
regular pay schedule for salaried employees. You will be paid a
bonus with respect to each calendar year as determined by the Board
or such a committee, but in no event shall your bonus with respect
to each of the years 1999, 2000 and 2001 be less than $500,000.
3) You will be a participant in all employee benefit plans applicable
to salaried employees generally and all executive officer
compensation plans applicable to senior executives of the Company.
4) You will receive an annual perquisites allowance of at least $60,000
which you may receive in either cash, perquisites or a combination
at your election.
5) You will have four weeks vacation per year.
SAMUEL M. MENCOFF
MADISON DEARBORN PARTNERS, INC.
THREE FIRST NATIONAL PLAZA - SUITE 3800 - CHICAGO, ILLINOIS 60602
TELEPHONE 312.895.1050 FACSIMILE 312.895.1051
E-MAIL: [email protected]
<PAGE>
Mr. Paul T. Stecko
January 25, 1999
Page 2
6) Upon commencement of your employment you will be paid a signing
bonus of $1,000,000, and will use 100% of the after tax-proceeds to
purchase the Company's common stock.
7) You will be entitled to a supplemental benefit pension plan from a
non-qualified defined pension benefit plan calculated on the basis
of the following formula: (annual salary + bonus) x (years of
service) x (.0167), where years of service will equal your actual
service with the Company plus 5 years. This benefit will be payable
in a lump sum at your election, with the lump sum determined under
factors equivalent to the factors currently in use with respect to
the Tenneco Inc. Supplemental Executive Retirement Plan. These
benefits will be payable upon you separation from service but, prior
to age 62, there will be a 4% per year reduction for early payment.
8) If your employment is terminated by the Company other than on
account of death, total and permanent disability or cause (and you
have not received aggregate value of at least $8 million in cash
and/or publicly-tradable securities with respect to your ownership
of your Company equity securities), you will be paid a severance
benefit in an amount equal to three times the total of your base
salary plus the highest bonus which you have received in the 3-year
period preceding such termination and all of your common stock and
stock options will fully-vest and become exercisable. You will be
entitled to the same benefit if your employment is constructively
terminated. Constructive termination shall mean: any of:
(i) diminishment of your status, position, duties or
responsibilities, (ii) reduction in your salary, bonus opportunity,
perquisites or pension or welfare benefits, taken as a whole, or
(iii) the effective requirement of your relocation because of a
transfer of your place of employment beyond a 30 mile radius from
Lake Forest, Illinois.
9) You will purchase 20% of the common stock of the Company offered to
management at closing as part of the management equity incentive
plan. To assist you in making this purchase, the Company will
arrange $1 million in bank financing, guaranteed by the Company and
recourse only against your common stock.
10) At closing, you will be granted 20% of the options to purchase
common stock of the Company offered to management at closing. The
exercise price of these options will be equivalent to the purchase
price of the Company's common stock at closing.
11) The stock and stock options described in sections 9 and 10 hereof
will vest over 5 years from the closing at 20% per year.
The terms set forth herein will be the basis for formalized provisions
covering these terms to be incorporated into the Executive Agreement to be
entered into between you and the Company on or prior to closing under the
Contribution Agreement.
<PAGE>
Mr. Paul T. Stecko
January 25, 1999
Page 3
Please acknowledge your agreement of these terms by executing a copy of this
letter in the space provided below and returning it to me.
Sincerely,
PCA HOLDINGS LLC
By: /s/ Samuel M. Mencoff
---------------------------------
Its: President, Vice President
and Managing Director
ACKNOWLEDGED AND ACCEPTED:
- ---------------------------------
Paul T. Stecko
On this day of January 1999.
----
<PAGE>
EXHIBIT 10.17
Madison Dearborn Partners, Inc.
May 19, 1999
Mr. Paul T. Stecko
Chairman and CEO
Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Dear Paul:
This will confirm our discussions regarding the revised vesting schedule of your
PCA common stock and stock options.
VESTING SCHEDULE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
At First Second Third Fourth Fifth
Closing Anniversary Anniversary Anniversary Anniversary Anniversary
------- ----------- ----------- ----------- ----------- -----------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock 3,010 3,010 3,010 3,010 3,010 3,010
Stock Options -- -- 218 1,831 3,445 5,059
-- -- ----- ----- ----- -----
3,010 3,010 3,228 4,841 6,455 8,069
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
If you were to leave PCA before the earlier of (i) two years from the date that
you purchased your stock or (ii) an IPO or sale of the Company, you will repay
your $1 million signing bonus.
If you agree with the foregoing, please sign in the space provided below and
return a copy of this letter to me. Your Management Equity Agreement will be
revised accordingly.
Sincerely,
/s/ Samuel M. Mencoff
Samuel M. Mencoff
Agreed and Acknowledged
On this 20th day of May, 1999
/s/ Paul T. Stecko
- ---------------------------
Paul T. Stecko
[LETTERHEAD]
<PAGE>
EXHIBIT 12.1
PACKAGING CORPORATION OF AMERICA
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
------------------------------------------------------ ----------------------------------
Pro Forma Pro Forma
1994 1995 1996 1997 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes 127,246 371,229 150,182 46,104 118,968 2,509 33,396 (214,590) (16,642)
Fixed charges 38,876 39,931 44,736 35,500 34,846 167,749 8,258 8,151 41,980
------- ------- ------- ------- ------- --------- -------- ---------- ----------
Earnings (loss) 166,122 411,160 194,918 81,604 153,814 170,258 41,654 (206,439) 25,338
------- ------- ------- ------- ------- --------- -------- ---------- ----------
------- ------- ------- ------- ------- --------- -------- ---------- ----------
Fixed Charges:
Interest expense 740 1,485 5,129 3,739 2,782 159,851 741 221 39,511
Interest portion of rent expense 38,136 38,446 39,607 31,761 32,064 7,898 7,517 7,930 2,469
------- ------- ------- ------- ------- --------- -------- ---------- ----------
Fixed charges 38,876 39,931 44,736 35,500 34,846 167,749 8,258 8,151 41,980
------- ------- ------- ------- ------- --------- -------- ---------- ----------
------- ------- ------- ------- ------- --------- -------- ---------- ----------
Ratio of earnings to fixed charges 4.27 10.30 4.36 2.30 4.41 1.01 5.04 Note 1 Note 1
------- ------- ------- ------- ------- --------- -------- ---------- ----------
------- ------- ------- ------- ------- --------- -------- ---------- ----------
</TABLE>
Note 1: Due to the net loss, earnings were insufficient to cover fixed charges
by $214,590 and $16,642 for the three months ended March 31, 1999,
actual and pro forma, respectively.
<PAGE>
EXHIBIT 12.2
<TABLE>
<CAPTION>
PACKAGING CORPORATION OF AMERICA
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
Year Ended December 31, Three Months Ended March 31,
------------------------------------------------------ --------------------------------
Pro Forma Pro Forma
1994 1995 1996 1997 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes 127,246 371,229 150,182 46,104 118,968 2,509 33,396 (214,590) (16,642)
Fixed charges 38,876 39,931 44,736 35,500 34,846 167,749 8,258 8,151 41,980
------- ------- ------- ------- ------- --------- ------- ---------- ----------
Earnings (loss) 166,122 411,160 194,918 81,604 153,814 170,258 41,654 (206,439) 25,338
------- ------- ------- ------- ------- --------- ------- ---------- ----------
------- ------- ------- ------- ------- --------- ------- ---------- ----------
Combined fixed charges and
PS dividends:
Interest expense 740 1,485 5,129 3,739 2,782 159,851 741 221 39,511
Preferred stock dividends
(Note 2) 0 0 0 0 0 20,625 0 0 3,094
Interest portion of rent expense 38,136 38,446 39,607 31,761 32,064 7,898 7,517 7,930 2,319
------- ------- ------- ------- ------- --------- ------- ---------- ----------
Combined fixed charges and
preferred stock dividends 38,876 39,931 44,736 35,500 34,846 188,374 8,258 8,151 44,924
------- ------- ------- ------- ------- --------- ------- ---------- ----------
------- ------- ------- ------- ------- --------- ------- ---------- ----------
Ratio of earnings to combined fixed
charges and preferred stock
dividends 4.27 10.30 4.36 2.30 4.41 Note 1 5.04 Note 1 Note 1
------- ------- ------- ------- ------- --------- ------- ---------- ----------
------- ------- ------- ------- ------- --------- ------- ---------- ----------
</TABLE>
Note 1: Due to the net loss, earnings were insufficient to cover fixed charges
and preferred stock dividends by $214,590 and $19,586 for the three
months ended March 31, 1999, actual and pro forma, respectively. In
addition, for the pro forma year ended December 31, 1998, earnings
were insufficient to cover fixed charges and preferred stock
dividends by $18,116.
Note 2: Pro forma preferred stock dividends are grossed-up for a 40% tax effect
for the year ended December 31, 1998, but not for the three months
ended March 31, 1999 because of the net loss.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANTS
PACKAGING CORPORATION OF AMERICA
- Dahlonega Packaging Corporation
State of Incorporation: Delaware
Other trade names used: none
- Dixie Container Corporation
State of Incorporation Virginia
Other trade names used: none
- PCA Hydro, Inc.
State of Incorporation: Delaware
Other trade names used: none
- PCA Tomahawk Corporation
State of Incorporation: Delaware
Other trade names used: none
- PCA Valdosta Corporation
State of Incorporation: Delaware
Other trade names used: none
OTHER REGISTRANTS
Dahlonega Packaging Corporation, Dixie Container Corporation, PCA Hydro, Inc.,
PCA Tomahawk Corporation and PCA Valdosta Corporation do not have subsidiaries.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 28, 1999
<PAGE>
EXHIBIT 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
PACKAGING CORPORATION OF AMERICA
(Exact name of obligor as specified in its charter)
Delaware 36-4277050
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1900 West Field Court
Lake Forest, IL 60045
(Address of principal executive offices) (Zip Code)
------------------
9 5/8% Series B Senior Subordinated Notes due 2009
(Title of the indenture securities)
==============================================
<PAGE>
-2-
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, DC
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
ITEMS 3., 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 AND 15:
The Obligor currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1 of this Statement of
Eligibility.
T-1.3 -- Included in Exhibit T-1.1 of this Statement of
Eligibility.
<PAGE>
-3-
16. LIST OF EXHIBITS
(CONT'D)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of May 25, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in ITEM 2., refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering ITEM 2. in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 25th day
of May, 1999
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ John Guiliano
-----------------
John Guiliano
Vice President
<PAGE>
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1999
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 139,755
Short-Term Investments 85,326
Securities, Available for Sale 528,160
Loans 2,081,103
Less: Allowance for Credit Losses 17,114
----------
Net Loans 2,063,989
Premises and Equipment 57,765
Other Assets 125,780
----------
TOTAL ASSETS $3,000,775
----------
----------
LIABILITIES
Deposits:
Non-Interest Bearing $ 623,046
Interest Bearing 1,875,364
----------
Total Deposits 2,498,410
Short-Term Credit Facilities 184,281
Accounts Payable and Accrued Liabilities 126,652
----------
TOTAL LIABILITIES $2,809,343
----------
----------
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,759
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 1,637
----------
TOTAL STOCKHOLDER'S EQUITY 191,432
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,000,775
----------
----------
</TABLE>
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
May 18, 1999
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------------
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Ave, Suite 2700 75201
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Ave, Suite 2700
Dallas, Texas 75201
(214) 754-1200
(Name, address and telephone number of agent for service)
---------------
Packaging Corporation of America
(Exact name of obligor as specified in its charter)
Delaware 36-4277050
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1900 West Field Court
Lake Forest, IL 60045
(Address of principal executive offices) (Zip Code)
---------------
12 3/8% Subordinated Exchange Debentures due 2010
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE>
GENERAL
1. GENERAL INFORMATION.
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Dallas (11th District), Dallas, Texas
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Dallas, Texas
The Office of the Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an affiliate of the
Trustee, describe each such affiliation.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting securities of
the Trustee:
As of May 25, 1999
- --------------------------------------------------------------------------------
Col A. Col B.
- --------------------------------------------------------------------------------
Title of Class Amount Outstanding
- --------------------------------------------------------------------------------
Capital Stock - par value $100 per share 5,000 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
Not Applicable
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
Not Applicable
<PAGE>
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Not Applicable
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS.
Not Applicable
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Not Applicable
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
Not Applicable
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
Not Applicable
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING
50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
Not Applicable
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Not Applicable
13. DEFAULTS BY THE OBLIGOR.
Not Applicable
14. AFFILIATIONS WITH THE UNDERWRITERS.
Not Applicable
15. FOREIGN TRUSTEE.
Not Applicable
16. LIST OF EXHIBITS.
T-1.1 - A copy of the Articles of Association of U.S. Trust Company of
Texas, N.A.; incorporated herein by reference to Exhibit T-1.1
filed with Form T-1 Statement, Registration No. 22-21897.
<PAGE>
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee to
commence business; incorporated herein by reference to Exhibit
T-1.2 filed with Form T-1 Statement, Registration No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise
corporate trust powers; incorporated herein by reference to
Exhibit T-1.3 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas, N.A.,
as amended to date; incorporated herein by reference to
Exhibit T-1.4 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.6 - The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
T-1.7 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of May 25, 1999, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp. As of May 25, 1999, U.S. T.L.P.O.
Corp. had 35 shares of Capital Stock outstanding, all of which are owned by
U.S. Trust Corporation. U.S. Trust Corporation had outstanding 18,597,534
shares of $1 par value Common Stock as of May 25, 1999.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
In as much as this Form T-1 is filed prior to the ascertainment by the Trustee
of all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9,
10 and 11, the answers to said Items are based upon incomplete information.
Items 2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless
amended by an amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the Trustee
disclaims responsibility for the accuracy or completeness of such information.
---------------
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
U.S Trust Company of Texas, N.A., a national banking association organized under
the laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 25th day of May, 1999.
U.S. Trust Company
of Texas, N.A., Trustee
By: /s/John Guiliano
----------------
Authorized Officer
<PAGE>
Exhibit T-1.6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of R & B Falcon
Corporation, Senior Notes, we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefore.
U.S. Trust Company of Texas, N.A.
By: /s/John Guiliano
----------------
Authorized Officer
<PAGE>
EXHIBIT T-1.7
Board of Governors of the Federal
Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-005
Office of the Comptroller of the
Currency
Federal Financial Institutions OMB Number: 1557-0081
Examination Council Expires March 31, 2001
- --------------------------------------------------------------------------------
- --------
(1)
Please Refer to Page I,
(LOGO) Table of Contents, for
the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
- --------
CONSOLIDATED REPORTS OF CONDITION
AND INCOME FOR A BANK WITH
DOMESTIC OFFICES ONLY AND TOTAL
ASSETS OF LESS THAN $100 MILLION (19990331)
OR MORE BUT LESS THAN $300 ----------
MILLION - - FFIEC 033 (RCRI 9999)
REPORT AT THE CLOSE OF BUSINESS This report form is to be filed by banks
MARCH 31, 1999 with domestic offices only. Banks with
branches and consolidated subsidiaries
This report is required by law: in U.S. territories and possessions,
12 U.S.C. Section Section 324 Edge or Agreement subsidiaries, foreign
(State member banks); 12 U.S.C. branches, consolidated foreign
Section Section 1817 (State subsidiaries, or International Banking
nonmember banks); and 12 U.S.C. Facilities must file FFIEC 031.
Section Section 161 (National
banks).
- --------------------------------------------------------------------------------
- --------
NOTE: The Reports of Condition and The Reports of Condition and Income are
Income must be signed by an to be prepared in accordance with
authorized officer and the Report of Federal regulatory authority
Condition must be attested to by not instructions. NOTE: these instructions
less than two directors (trustees) may in some cases differ from generally
for State nonmember banks and three accepted accounting principles.
directors for State member and
National Banks.
I, Alfred B. Childs, Managing Director
--------------------------------------
Name and Title of Officer
Authorized to Sign Report
of the named bank do hereby declare We, the undersigned directors
that these Reports of Condition and (trustees), attest to the correctness of
Income (including the supporting this Report of Condition (including the
schedules) have been prepared in supporting schedules) and declare that
conformance with the instructions it has been examined by us and to the
issued by the appropriate Federal best of our knowledge and belief has
regulatory authority and are true to been prepared in conformance with the
the best of my knowledge and belief. instructions issued by the appropriate
Federal regulatory authority and is true
and correct.
/s/ Alfred B. Childs /s/ Stuart M. Pearman
- -------------------------------- --------------------------
Signature of Officer Authorized to Director (Trustee)
Sign Report
/s/. J. T. More, Jr.
April 21, 1999 --------------------------
- -------------------------------- Director (Trustee)
Date of Signature
/s/. Arthur White
--------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
- --------
<PAGE>
SUBMISSION OF REPORTS
Each bank must prepare its Reports of For electronic filing assistance,
Condition and Income either: contact EDS Call Report Services, 2150
(a) in electronic form and then file North Prospect Avenue, Milwaukee, WI
the computer data file directly 53202, telephone (800) 255-1571.
with the banking agencies'
collection agent, Electronic Data To fulfill the signature and attestation
Systems Corporation (EDS), by requirement for the Reports of Condition
modem or on computer diskette; or and Income for this report date, attach
(b) in hard-copy (paper) form and this signature page to the hard-copy
arrange for another party to record of the completed report that the
convert the paper report to bank places in its files.
electronic form. That party (if
other than EDS) must transmit the
bank's computer data file to EDS.
- ---------------------------------------------------------------------------
- --------
FDIC Certificate Number 33217 US TRUST COMPANY OF TEXAS, NATIONAL
----------- ASSOCIATION
(RCRI 9050) -----------------------------------
Legal Title of Bank (TEXT 9010)
DALLAS
-----------------------------------
City (TEXT 9130)
TX 75201
-----------------------------------
State Abbrev. Zip Code.
(TEXT 9200) (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
<TABLE>
<S> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 3/31/1999 State #: 48-6797 FFIEC 033
2001 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 RC-1
DALLAS, TX 75201 Transit #: 11101765
--------------
9
--------------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
<TABLE>
<CAPTION>
C200
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions: RCON
---- ----------
a. Noninterest-bearing balances and currency and coin (1,2)_________________ ______ _______ 0081 1,297 1.a
----------
b. Interest bearing balances (3)____________________________________________ ______ _______ 0071 696 1.b
----------
2. Securities:
----------
a. Held-to-maturity securities (from Schedule RC-B, column A)_______________ ______ _______ 1754 0 2.a
----------
b. Available-for-sale securities (from Schedule RC-B, column D)_____________ ______ _______ 1773 131,683 2.b
----------
3. Federal funds sold (4) and securities purchased under agreements to resell: 1350 6,000 3
----------
4. Loans and lease financing receivables: RCON
---- ---------
a. Loans and leases, net of unearned income (from Schedule RC-C)____________ 2122 22,709 4.a
---------
b. LESS: Allowance for loan and lease losses_______________________________ 3123 260 4.b
---------
c. LESS: Allocated transfer risk reserve___________________________________ 3128 0 4.c
---------
d. Loans and leases, net of unearned income, allowance, and reserve RCON
---- ----------
(item 4.a minus 4.b and 4.c)____________________________________________ ______ _______ 2125 22,249 4.d
----------
5. Trading assets_______________________________________________________________ ______ _______ 3545 0 5.
----------
6. Premises and fixed assets (including capitalized leases)_____________________ ______ _______ 2145 917 6.
----------
7. Other real estate owned (from Schedule RC-M)_________________________________ ______ _______ 2150 0 7.
----------
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)_________________________________________________________ ______ _______ 2130 0 8.
----------
9. Customers' liability to this bank on acceptances outstanding_________________ ______ _______ 2155 0 9.
----------
10. Intangible assets (from Schedule RC-M)_______________________________________ ______ _______ 2143 1,950 10.
----------
11. Other assets (from Schedule RC-F)____________________________________________ ______ _______ 2160 2,527 11.
----------
12. Total assets (sum of items 1 through 11)_____________________________________ ______ _______ 2170 167,519 12.
----------
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Included time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<S> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 03/31/1999 State #: 48-6797 FFIEC 033
2001 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 RC-2
DALLAS, TX 75201 Transit #: 11101765
--------------
10
--------------
</TABLE>
SCHEDULE RC - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of RCON
---- ----------
columns A and C from Schedule RC-E)_____________________________________ RCON 2200 141,618 13.a
---- ---------- ----------
(1) Noninterest-bearing (1)____________________________________________ 6631 8,794 13.a.1
----------
(2) Interest-bearing __________________________________________________ 6636 132,824 13.a.2
----------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing_______________________________________________
(2) Interest-bearing__________________________________________________
----------
14. Federal funds purchased(2) and securities sold under agreements to RCON 0 14
----
repurchase: 2800
----------
15. a. Demand notes issued to the U.S. Treasury_________________________________ ______ _______ 2840 0 15.a
----------
b. Trading liabilities______________________________________________________ ______ _______ 3548 0 15.b
----------
16. Other borrowed money:
----------
A. WITH A REMAINING MATURITY OF ONE YEAR OR LESS____________________________ ______ _______ 2332 0 16.a
----------
B. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR THROUGH THREE YEARS_______ ______ _______ A547 2,000 16.b
----------
C. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS________________________ ______ _______ A548 1,000 16.c
----------
17. Not applicable
----------
18. Bank's liability on acceptances executed and outstanding_____________________ ______ _______ 2920 0 18.
----------
19. Subordinated notes and debentures____________________________________________ ______ _______ 3200 0 19.
----------
20. Other liabilities (from Schedule RC-G)_______________________________________ ______ _______ 2930 2,317 20.
----------
21. Total liabilities (sum of items 13 through 20)_______________________________ ______ _______ 2948 146,935 21.
22. Not applicable
----------
EQUITY CAPITAL
----------
RCON
----
23. Perpetual preferred stock and related surplus________________________________ ______ ______ 3838 7,000 23.
----------
24. Common stock_________________________________________________________________ ______ ______ 3230 500 24.
----------
25. Surplus (exclude all surplus related to preferred stock)_____________________ ______ ______ 3839 8,384 25.
----------
26. a. Undivided profits and capital reserves___________________________________ ______ ______ 3632 4,406 26.a
----------
b. Net unrealized holding gains (losses) on available-for-sale securities___ ______ ______ 8434 294 26.b
----------
27. Cumulative foreign currency translation adjustments__________________________
----------
28. Total equity capital (sum of items 23 through 27)____________________________ ______ ______ 3210 20,584 28.
----------
29. Total liabilities and equity capital (sum of items 21 and 28)________________ ______ ______ 2257 167,519 29.
----------
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
NUMBER
1. Indicate in the box at the right the number of the statement below that best describes the ----------
most comprehensive level of auditing work performed for the bank by independent external
auditors as of any date during 1998____________________________________________________ 6724 1 M.1
----------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
<PAGE>
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CIK>0000075677
<NAME>PACKAGING CORPORATION OF AMERICA
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 1 1
<SECURITIES> 0 0
<RECEIVABLES> 56,971 79,658
<ALLOWANCES> 5,220 4,997
<INVENTORY> 150,719 151,583
<CURRENT-ASSETS> 243,563 254,423
<PP&E> 1,677,105 1,754,504
<DEPRECIATION> 735,749 756,326
<TOTAL-ASSETS> 1,367,403 1,372,523
<CURRENT-LIABILITIES> 164,152 417,842
<BONDS> 17,552 466
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 908,392 666,438
<TOTAL-LIABILITY-AND-EQUITY> 1,367,403 1,372,523
<SALES> 1,571,019 391,279
<TOTAL-REVENUES> 1,571,019 391,279
<CGS> 1,289,644 332,117
<TOTAL-COSTS> 1,289,644 332,117
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 2,710 575
<INTEREST-EXPENSE> 2,782 221
<INCOME-PRETAX> 118,968 (214,590)
<INCOME-TAX> 47,529 (88,362)
<INCOME-CONTINUING> 71,439 (126,228)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (6,327)
<CHANGES> 0 0
<NET-INCOME> 71,439 (132,555)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
