EXHIBIT 1.1
PACKAGING CORPORATION OF AMERICA
Common Stock
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UNDERWRITING AGREEMENT
(U.S. VERSION)
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October [ ], 1999
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Deutsche Bank Securities Inc.
X.X. Xxxxxx Securities Inc.
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Packaging Corporation of America, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 6,500,000 shares of common stock, par value $.01
per share (the "Stock"), of the Company and Tenneco Packaging Inc., a
stockholder of the Company (the "Selling Stockholder"), proposes, subject to the
terms and conditions stated herein, to sell to the Underwriters an aggregate of
27,800,000 shares and, at the election of the Underwriters, up to 5,128,192
additional shares of Stock. The aggregate of 34,300,000 shares to be sold by the
Company and the Selling Stockholder is herein called the "Firm Shares" and the
aggregate of 5,128,192 additional shares to be sold by the Selling Stockholder
is herein called the "Optional Shares". The Firm Shares and the Optional Shares
that the Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares". Tenneco Inc., a Delaware corporation (the
"Parent"), owns 100% of the capital stock of the Selling Stockholder.
It is understood and agreed to by all parties that the Company, the
Parent and the Selling Stockholder are concurrently entering into an agreement
(the "International Underwriting Agreement") providing for the sale by the
Company and the Selling Stockholder of up to a total of 9,857,048 shares of
Stock (the "International Shares"), including the overallot-
ment option thereunder, through arrangements with certain underwriters outside
the United States (the "International Underwriters"), for whom Xxxxxxx Xxxxx
International, Xxxxxx Xxxxxxx & Co. International Limited, Salomon Brothers
International Limited, Deutsche Bank AG London and X.X. Xxxxxx Securities Ltd.
are acting as lead managers. Anything herein or therein to the contrary
notwithstanding, the respective closings under this Agreement and the
International Underwriting Agreement are hereby expressly made conditional on
one another. The Underwriters hereunder and the International Underwriters are
simultaneously entering into an Agreement between U.S. and International
Underwriting Syndicates (the "Agreement between Syndicates") which provides,
among other things, for the transfer of shares of Stock between the two
syndicates. Two forms of prospectus are to be used in connection with the
offering and sale of shares of Stock contemplated by the foregoing, one relating
to the Shares hereunder and the other relating to the International Shares. The
latter form of prospectus will be identical to the former except for certain
substitute or additional pages. Except as used in Sections 2, 3, 4, 9 and 11
herein, and except as the context may otherwise require, references hereinafter
to the Shares shall include all the shares of Stock which may be sold pursuant
to either this Agreement or the International Underwriting Agreement, and
references herein to any prospectus whether in preliminary or final form, and
whether as amended or supplemented, shall include both the U.S. and the
international versions thereof.
1. (a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:
(i) A registration statement on Form S-1 (File No.
333-86963) as amended by any pre-effective amendments filed prior to the
execution and delivery of this Agreement by each of the Underwriters
(the "Initial Registration Statement") in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission");
the Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and, excluding
exhibits thereto, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule
462(b) Registration Statement, if any, has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including
all exhibits thereto and including the information contained in the form
of final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial Registration
Statement at the time it was declared effective, as amended at the time
such part of the Initial Registration Statement became effective or such
part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effec-
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tive, are hereinafter collectively called the "Registration Statement";
and such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus");
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, 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 furnished in writing to the Company by an Underwriter
through Xxxxxxx, Sachs & Co. expressly for use therein or by the Selling
Stockholder expressly for use therein;
(iii) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; PROVIDED, HOWEVER, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Xxxxxxx,
Sachs & Co. expressly for use therein or by the Selling Stockholder
expressly for use therein;
(iv) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Prospectus; and, since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock (other than pursuant to the grant
or exercise of options under plans described in the Prospectus) or
increase in the long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general
affairs, 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 Prospectus;
(v) 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
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except such as are described in the Prospectus or such as would not 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");
and any real property and buildings held under lease or cutting rights
by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases or other agreements with such
exceptions as would not, singly or in the aggregate, have a Material
Adverse Effect;
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, 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; and each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing 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 Prospectus, 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;
(vii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly authorized and are validly issued, fully
paid and non-assessable and conform to the description of the Stock
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly authorized,
validly issued, fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, 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 as described in the Prospectus;
(viii) The unissued Firm Shares to be issued and sold by the
Company to the Underwriters hereunder and under the International
Underwriting Agreement have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein and
therein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus;
(ix) This Agreement and the International Underwriting
Agreement have each been duly authorized, executed and delivered by the
Company. The issue and sale of the Shares to be sold by the Company
hereunder and under the International Underwriting Agreement and the
compliance by the Company with all of the provi-
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sions of this Agreement and the International Underwriting Agreement and
the consummation of the transactions herein and therein contemplated
will not (a) violate the certificate or articles of incorporation or
by-laws of the Company or any of its subsidiaries, (b) constitute a
violation by the Company or any of its subsidiaries of any applicable
provision of any law, statute or regulation, except for violations which
would not, singly or in the aggregate, have a Material Adverse Effect,
or (c) 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, singly or in the aggregate, 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 Shares or the consummation by
the Company of the transactions contemplated by this Agreement and the
International Underwriting Agreement, except the registration under the
Act of the Shares and such consents, approvals, authorizations, orders,
licenses, registrations or qualifications (i) as may be required under
state or foreign securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters and the
International Underwriters, (ii) as have been obtained or (iii) the
failure to obtain of which would not, singly or in the aggregate, have a
Material Adverse Effect;
(x) 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 or articles 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, singly or in the aggregate,
have a Material Adverse Effect;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock, and under the caption
"U.S. Federal Tax Consequences for Non-United States Holders of Common
Stock", insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate and complete in all
material respects;
(xii) Other than as set forth in the Prospectus, 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,
singly or in the aggregate, reasonably be expected to have Material
Adverse Effect; and, to the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others; and 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;
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(xiii) 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 each Time of Delivery (as defined in Section 4 hereof),
in each case except as disclosed in the Prospectus or except where such
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 Prospectus or except as would not, singly or in the
aggregate, 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 each Time of
Delivery, except as disclosed in the Prospectus or except where the
failure to comply would not, singly or in the aggregate, have a Material
Adverse Effect;
(xiv) 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 other approval, except as disclosed in the Prospectus or except where
such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failures to comply with the
terms and conditions of such permits, licenses or other approvals would
not, singly or in the aggregate, have a Material Adverse Effect;
(xv) 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 Prospectus, such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect;
(xvi) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company", as
such term is defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
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(xvii) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;
(xviii) Xxxxxx Xxxxxxxx LLP, who has certified certain
historical financial information of the containerboard and corrugated
packaging products group of the Selling Stockholder and its
subsidiaries, and Ernst & Young LLP, who has certified certain
historical financial information of the Company and its subsidiaries,
are each, to the Company's knowledge, independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder; and
(xix) The Company has reviewed its operations and that of its
subsidiaries and any vendors and suppliers with which the Company or any
of its subsidiaries has a material relationship to evaluate the extent
to which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. As a result of
such review, except as disclosed in the Prospectus, the Company has no
reason to believe, and does not believe, that the Year 2000 Problem will
have a Material Adverse Effect or result in any material loss or
interference with the Company's business or operations. The "Year 2000
Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of
data or in the operation of mechanical or electrical systems of any kind
will not, in the case of dates or time periods occurring after December
31, 1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000.
(b) The Selling Stockholder and the Parent, jointly and severally,
represent and warrant to, and agree with, each of the Underwriters and the
Company that:
(i) The Selling Stockholder has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the State of Delaware;
(ii) All consents, approvals, authorizations and orders
necessary for the execution and delivery by the Selling Stockholder of
this Agreement and the International Underwriting Agreement, and for the
sale and delivery of the Shares to be sold by the Selling Stockholder
hereunder and under the International Underwriting Agreement, have been
obtained; and the Selling Stockholder has full right, power and
authority (a) to enter into this Agreement and the International
Underwriting Agreement and each such agreement has been duly executed
and delivered by the Selling Stockholder and (b) to sell, assign,
transfer and deliver the Shares to be sold by the Selling Stockholder
hereunder and under the International Underwriting Agreement;
(iii) The sale of the Shares to be sold by the Selling
Stockholder hereunder and under the International Underwriting Agreement
and the compliance by the Selling Stockholder with all of the provisions
of this Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated will
not (a) violate the certificate of incorporation or by-laws of the
Selling Stockholder, (b) constitute a violation by the Selling
Stockholder of any applicable
7
provision of any law, statute or regulation, except for violations which
would not affect the ability of the Selling Stockholder to deliver the
Shares or otherwise consummate the transactions pursuant to and in
accordance with this Agreement and the International Underwriting
Agreement, or (c) breach, or result in a default under, any agreement
known to the Selling Stockholder's executive officers to be material to
the Selling Stockholder, except for conflicts or breaches which would
not affect the ability of the Selling Stockholder to deliver the Shares
or otherwise consummate the transactions pursuant to and in accordance
with this Agreement and the International Underwriting Agreement);
(iv) The Selling Stockholder has, and immediately prior to
each Time of Delivery (as defined in Section 4 hereof) the Selling
Stockholder will have, good and valid title to the Shares to be sold by
the Selling Stockholder hereunder and under the International
Underwriting Agreement, free and clear of all liens, encumbrances,
equities or claims (other than the restrictions on transfer specifically
set forth in the Stockholders Agreement dated as of April 12, 1999 by
and among the Selling Stockholder, the Company and PCA Holdings LLC,
which restrictions will cease to be effective at the Time of Delivery in
respect of Shares delivered and paid for pursuant hereto and thereto);
and, upon delivery of such Shares and payment therefor pursuant hereto
and thereto, good and valid title to such Shares, free and clear of all
liens, encumbrances, security interests and claims, will pass to the
several Underwriters or the International Underwriters, as the case may
be;
(v) During the period beginning on the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, hedge, contract to sell, hedge or
otherwise dispose of, except as provided hereunder or under the
International Underwriting Agreement, any securities of the Company that
are substantially similar to the Shares (it being understood that such
securities do not include the Company's 12 3/8% Senior Exchangeable
Preferred Stock due 2010), including but not limited to any securities
that are convertible into or exchangeable for, or that represent the
right to receive, Stock or any such substantially similar securities
(other than pursuant to employee stock option plans existing on, or upon
the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement), without your prior
written consent, except that the Selling Stockholder may transfer such
securities to Parent or to any Affiliate of Parent who agrees in a
writing in form and substance satisfactory to the Representatives to be
bound by the terms and conditions of this Agreement;
(vi) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vii) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by the
Selling Stockholder expressly for use therein,
8
such Preliminary Prospectus and the Registration Statement did, and the
Prospectus and any further amendments or supplements to the Registration
Statement and the Prospectus, when they become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(viii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, the Selling Stockholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department
regulations in lieu thereof); and
(ix) The Shares are subject to the interests of the
Underwriters hereunder and the International Underwriters under the
International Underwriting Agreement; the obligations of the Selling
Stockholder hereunder shall not be terminated by operation of law,
whether by the dissolution of the Selling Stockholder, or by the
occurrence of any other event; and if the Selling Stockholder should be
dissolved, or if any other such event should occur, before the delivery
of the Shares hereunder, certificates representing the Shares shall be
delivered by or on behalf of the Selling Stockholder in accordance with
the terms and conditions of this Agreement and of the International
Underwriting Agreement.
(c) The Parent represents and warrants to, and agrees with, each of
the Underwriters and the Company that:
(i) The Parent has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, and all of the issued shares of capital stock of the
Selling Stockholder have been duly and validly issued and are fully paid
and non-assessable;
(ii) All consents, approvals, authorizations and orders
necessary for the execution and delivery by the Parent of this Agreement
and the International Underwriting Agreement have been obtained; and the
Parent has full right, power and authority to enter into this Agreement
and the International Underwriting Agreement and each such agreement has
been duly executed and delivered by the Parent;
(iii) The compliance by the Parent with all of the provisions
of this Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated will
not (a) violate the certificate of incorporation or by-laws of the
Parent, (b) constitute a violation by the Parent of any applicable
provision of any law, statute or regulation, except for violations which
would not affect the ability of the Parent to deliver the Shares or
otherwise consummate the transactions pursuant to and in accordance with
this Agreement and the International
9
Underwriting Agreement, or (c) breach, or result in a default under, any
agreement known to the Parent's executive officers to be material to the
Parent, except for conflicts or breaches which would not affect the
ability of the Parent to deliver the Shares or otherwise consummate the
transactions pursuant to and in accordance with this Agreement and the
International Underwriting Agreement; and
(iv) The Parent has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
2. Subject to the terms and conditions herein set forth, (a) the
Company and the Selling Stockholder agree, severally and not jointly, to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholder, at a purchase
price per share of $ , the number of Firm Shares (to be adjusted by you
so as to eliminate fractional shares) determined by multiplying the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholder as
set forth opposite their respective names in Schedule II hereto by a fraction,
the numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
I hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all of the Underwriters from the Company and the Selling
Stockholder hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Selling Stockholder agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Selling Stockholder, at the purchase price per share set forth in clause (a) of
this Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Selling Stockholder hereby grants to the Underwriters the right to
purchase at their election up to 5,128,192 Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering sales of shares in excess of the number of Firm Shares. Any such
election to purchase Optional Shares may be exercised only by written notice
from you to the Selling Stockholder, given within a period of 30 calendar days
after the date of this Agreement and setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, as determined by you but in no event earlier than the First
Time of Delivery (as defined in Section 4 hereof) or, unless you and the Selling
Stockholder otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
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4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholder shall be delivered by or on
behalf of the Company and the Selling Stockholder to Xxxxxxx, Sachs & Co.,
through the facilities of The Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
respective accounts specified by the Company and the Selling Stockholder to
Xxxxxxx, Xxxxx & Co. at least forty-eight hours in advance. The Company and the
Selling Stockholder will cause the certificates representing the Shares to be
made available for checking and packaging at least twenty-four hours prior to
each Time of Delivery (as defined below) with respect thereto at the office of
DTC or its designated custodian (the "Designated Office"). The time and date of
such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m.,
New York City time, on ............., 1999 or such other time and date as
Xxxxxxx, Sachs & Co., the Company and the Selling Stockholder may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., New York City
time, on the date specified by Xxxxxxx, Xxxxx & Co. in the written notice given
by Xxxxxxx, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Xxxxxxx, Xxxxx & Co. and the Selling
Stockholder may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices
of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at each Time of Delivery. A meeting will be held at the Closing Location at
..............p.m., New York City time, on the New York Business Day next
preceding each Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and
to file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of Delivery
which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration
11
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you
copies thereof; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event
of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you
may reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 11:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to
time, to furnish the Underwriters with copies of the Prospectus in New
York City in such quantities as you may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration
of nine months after the time of issue of the Prospectus in connection
with the offering or sale of the Shares and if at such time any events
shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you
and upon your request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with
12
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning on the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, hedge, contract to sell, hedge or
otherwise dispose of, except as provided hereunder and under the
International Underwriting Agreement, any securities of the Company that
are substantially similar to the Shares (it being understood that such
securities do not include the Company's 12 3/8% Senior Exchangeable
Preferred Stock due 2010), including but not limited to any securities
that are convertible into or exchangeable for, or that represent the
right to receive, Stock or any such substantially similar securities
(other than pursuant to employee stock option plans existing on, or upon
the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement), without your prior
written consent;
(f) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
to make available to its stockholders consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail;
(g) During a period of three years from the effective date
of the Registration Statement, to furnish to you copies of all reports
or other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of
the Firm Shares pursuant to this Agreement and the International
Underwriting Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange (the "Exchange");
and
(j) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the
13
Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the Act.
6. The Company and the Selling Stockholder, jointly and severally,
covenant and agree with one another and with the several Underwriters that (a)
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants; (ii) the
fees, disbursements and expenses of one firm selected as counsel for the Selling
Stockholder in connection with the registration of the Shares; (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 Shares; (v) all expenses in connection with the
qualification of the Shares for offering and sale under state securities laws,
including the fees, disbursements and expenses of counsel for the underwriters
in connection with such qualification and in connection with 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 Shares; (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 Shares on any securities exchange or automated interdealer
quotation system and the rating of such Shares; and (x) other out-of-pocket
expenses of the Selling Stockholder with respect to participating in such
registration to the extent the Company is contractually obligated to pay such
expenses; and (b) the Selling Stockholder will pay or cause to be paid all
expenses and taxes incident to the sale and delivery of the Shares to be sold by
the Selling Stockholder to the Underwriters hereunder. Notwithstanding the
foregoing, the Selling Stockholder and the Company shall each be responsible for
its own internal administrative and similar costs. In connection with clause (b)
of the preceding sentence, Xxxxxxx, Sachs & Co. agrees to pay New York State
stock transfer tax, and the Selling Stockholder agrees to reimburse Xxxxxxx,
Xxxxx & Co. for associated carrying costs if such tax payment is not rebated on
the day of payment and for any portion of such tax payment not rebated. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses connected with any offers they
may make. Notwithstanding any other provision in this Agreement to the contrary,
the Company and the Selling Shareholder agree that, as between them, the
responsibility for expenses, including the expenses described in this Section 6,
shall be determined as set forth in the Registration Rights Agreement dated
April 12, 1999 among the Company, the Selling Shareholder and PCA Holdings LLC,
and, further, that if a party is required under this Agreement to pay an amount
for which the other party is responsible under such Registration Rights
Agreement, the responsible party shall, upon demand, reimburse the other party.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all rep-
14
resentations and warranties and other statements of the Company, of the Parent
and of the Selling Stockholder herein are, at and as of such Time of Delivery,
true and correct, the condition that the Company, the Parent and the Selling
Stockholder shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become
effective by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by
the Commission; and all requests for additional information on the part
of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Underwriters,
shall have furnished to you such written opinion or opinions (a draft of
each such opinion is attached as Annex II(a) hereto), dated such Time of
Delivery, with respect to such matters as you may reasonably request,
and such counsel shall have received such papers and information as they
may reasonably request to enable them to pass upon such matters;
(c) Xxxxxxxx & Xxxxx, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated under the
General Corporation Law of the State of Delaware;
(ii) 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, such counsel being
entitled to rely exclusively upon the certificates issued by the
governmental authorities in the State of Delaware);
(iii) As of the date of such Time of Delivery, the
authorized capital stock of the Company consists of
(A) 300,000,000 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 (including
the Shares being delivered at such Time of Delivery) has been
duly authorized and is validly issued, fully paid and
non-assessable;
15
(iv) The issuance of the Shares to be sold by the
Company has been duly authorized and, when appropriate
certificates representing such Shares are duly countersigned by
the Company's transfer agent and registrar and delivered against
payment of the agreed consideration therefor in accordance with
the terms of this Agreement and the International Underwriting
Agreement, will be validly issued, fully paid and
non-assessable, and nothing has come to the attention of such
counsel that has caused such counsel to conclude that the
issuance of such Shares will be subject to any preemptive or
similar rights;
(v) Each of Dahlonega Packaging Corporation, PCA
Hydro, Inc., PCA Tomahawk Corporation and PCA Valdosta
Corporation is existing and in good standing under the General
Corporation Law of the State of Delaware; Xxxxx Container
Corporation is existing and in good standing under the Virginia
Stock Corporation Act (for purposes of the opinions in this
paragraph, such counsel being entitled to rely exclusively upon
the certificates issued by the governmental authorities in the
required jurisdictions);
(vi) As of the date of such Time of Delivery, based
solely upon review of the stock ledgers of each of the
subsidiaries of the Company, the Company is the record holder of
all of the outstanding shares of capital stock of each of its
subsidiaries;
(vii) The Company has the corporate power to enter
into and perform its obligations under this Agreement and the
International Underwriting Agreements and to issue, sell and
deliver the Firm Shares as contemplated by this Agreement and
the International Underwriting Agreement; the Company has the
corporate power to own and lease its properties and to conduct
its business as described in the Prospectus;
(viii) The Board of Directors of the Company has
adopted by requisite vote the resolutions necessary to authorize
the execution, delivery and performance of this Agreement and
the International Underwriting Agreement; no approval by the
stockholders of the Company is required, except as shall have
been obtained;
(ix) The Company has duly executed and delivered this
Agreement and the International Underwriting Agreement;
(x) To such counsel's actual knowledge, no legal or
governmental investigations or proceedings are pending or
overtly threatened to which the Company or any of its
subsidiaries is a party or to which the property or assets of
the Company or any of its subsidiaries 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 that are not described in
the Prospectus or (ii) which seeks to restrain, enjoin or
prevent the consum-
16
mation of or otherwise challenge the issuance or sale of the
Shares or the consummation of the other transactions
contemplated by this Agreement or the International Underwriting
Agreement;
(xi) The issue and sale of the Shares to be sold by
the Company in accordance with the provisions of this Agreement
and the International Underwriting Agreement and the
consummation by the Company of the transactions herein and
therein contemplated will not (a) violate the certificate or
articles of incorporation or by-laws of the Company or any of
its subsidiaries, (b) constitute a violation by the Company or
any of its subsidiaries of any applicable provision of any law,
statute or regulation (except 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 this Agreement or
the International Underwriting Agreement would be permitted, as
to which such counsel need express no opinion) or (c) breach, or
result in a default under, any existing obligation of the
Company and its subsidiaries under any of its Other Specified
Agreement (a list of which is attached to such counsel's
opinion);
(xii) To such counsel's knowledge, no consent,
approval, authorization, order, registration or qualification of
or with any court or governmental agency or body is required for
the issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement and
the International Underwriting Agreement, except the
registration under the Act and the Securities Exchange Act of
1934, as amended, of the Shares, and such consents, approvals,
authorizations, orders, registrations or qualifications (a) as
may be required under state or foreign securities or Blue Sky
laws in connection with the purchase and distribution of the
Shares by the Underwriters and the International Underwriters,
(b) as have been obtained or (c) the failure to obtain which
would not have, singly or in the aggregate, a Material Adverse
Effect;
(xiii) The statements set forth in the Prospectus under
the caption "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Stock, are
correct in all material respects;
(xiv) The Company is not an "investment company", as
such term is defined in the Investment Company Act; and
(xv) Based upon such counsel's participation in
conferences and its document review, its understanding of
applicable law and the experience it has gained in its practice
thereunder and relying as to matters of fact upon the statements
of officers and other representatives of the Company, such
counsel can advise that nothing has come to its attention that
has caused it to conclude that (i) the Registration Statement or
any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than financial statements
and related notes and other financial and accounting data
17
included in the Registration Statement, as to which no advice
need be given) at its effective date contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Prospectus or any
further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than financial statements
and related notes and other financial and accounting data
included in the Prospectus, as to which no advice need be given)
at the date it bears or on the date of this letter contained an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading or (iii) as of the effective date, either the
Registration Statement or the Prospectus (other than financial
statements and related notes and other financial and accounting
data included in the Registration Statement, as to which no
advice need be given) appeared on its face not to be responsive
in all material respects to the requirements of Form S-1.
In rendering such opinion, such counsel may state that they
express no opinion as to any laws other than the internal laws of the
State of New York, the General Corporation Law of the State of Delaware
and the federal law of the United States;
(d) Xxxx X. Xxxxx, Corporate Counsel of the Company, shall
have furnished to you his written opinion, dated such Time of Delivery,
in form and substance satisfactory to you, to the effect that the
Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction other than Delaware 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 (such counsel
being entitled to rely in respect of the opinion in this clause upon
certificates issued by governmental authorities in the required
jurisdictions and upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company);
(e) Jenner & Block, counsel for the Parent and the Selling
Stockholder, shall have furnished to you its written opinion (a draft of
such opinion is attached as Annex II(c) hereto), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) This Agreement and the International
Underwriting Agreement have been duly executed and delivered by
or on behalf of the Selling Stockholder and the Parent; and the
sale of the Shares to be sold by the Selling Stockholder
hereunder and thereunder and the compliance by the Parent and
the Selling Stockholder with all of the provisions of this
Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated
will not (a) violate the certificate of incorporation or by-laws
of the Parent or the Selling Stockholder, (b) constitute a
violation by the Parent or the Selling Stockholder of any
applicable provision of any
18
law, statute or regulation known to such counsel, except for
violations which would not affect the ability of the Selling
Stockholder or the Parent to deliver the Shares or otherwise
consummate the transactions pursuant to and in accordance with
this Agreement and the International Underwriting Agreement, or
(c) breach, or result in a default under, any agreement known to
such counsel and the executive officers of the Parent or the
Selling Stockholder to be material to the Parent or the Selling
Stockholder, except for conflicts or breaches which would not
affect the ability of the Selling Stockholder or the Parent to
deliver the Shares or otherwise consummate the transactions
pursuant to and in accordance with this Agreement and the
International Underwriting Agreement;
(ii) No consent, approval, authorization, order,
license, registration or qualification of or with any court or
governmental agency or body is required for the consummation by
the Parent and the Selling Stockholder of the transactions
contemplated by this Agreement and the International
Underwriting Agreement to be performed by them in connection
with the Shares to be sold by the Selling Stockholder hereunder
or thereunder, except such as have been obtained under the Act
and such as may be required under state or foreign securities or
Blue Sky laws in connection with the purchase and distribution
of such Shares by the Underwriters or the International
Underwriters;
(iii) Immediately prior to such Time of Delivery the
Selling Stockholder had good and valid title to the Shares to be
sold at such Time of Delivery by the Selling Stockholder under
this Agreement and the International Underwriting Agreement,
free and clear of all liens, encumbrances, security interests
and claims, and full right, power and authority to sell, assign,
transfer and deliver the Shares to be sold by the Selling
Stockholder hereunder and thereunder; and
(iv) Good and valid title to such Shares, free and
clear of all liens, encumbrances, security interests and claims,
has been transferred to each of the several Underwriters or
International Underwriters, as the case may be, who have
purchased such Shares in good faith and without notice of any
such lien, encumbrance, equity or claim or any other adverse
claim within the meaning of the Uniform Commercial Code.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction outside the United
States and such counsel may rely upon a certificate of the Selling
Stockholder in respect of matters of fact (including as to ownership of,
and liens, encumbrances, security interests and claims on, the Shares
sold by the Selling Stockholder), provided that such counsel shall state
that they believe that both you and they are justified in relying upon
such certificate;
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date
19
of this Agreement and also at each Time of Delivery, each of Xxxxxx
Xxxxxxxx LLP and Ernst & Young LLP shall have furnished to you a letter
or letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex I hereto
(the executed copy of the letter delivered prior to the execution of
this Agreement is attached as Annex I(a) hereto and a draft of the form
of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery
is attached as Annex I(b) hereto);
(g) (i) Neither the Company nor any of its subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock (other than pursuant to the grant or
exercise of options under plans described in the Prospectus) or increase
in the long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or
affecting the general affairs, 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 Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's debt securities or
preferred stock by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the
Company's debt securities or preferred stock;
(i) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the New York Stock Exchange; (ii)
a suspension or material limitation in trading in the Company's
securities on the New York Stock Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
20
(j) The Shares to be sold by the Company and the Selling
Stockholder at such Time of Delivery shall have been duly listed,
subject to notice of issuance, on the Exchange;
(k) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from the persons named in
Schedule III hereto to the effect set forth in Subsection 1(b)(v) hereof
in form and substance satisfactory to you;
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(m) The Company, the Parent and the Selling Stockholder
shall have furnished or caused to be furnished to you at such Time of
Delivery certificates of officers of the Company, of the Parent and of
the Selling Stockholder, respectively, satisfactory to you as to the
accuracy of the representations and warranties of the Company, the
Parent and the Selling Stockholder, respectively, herein at and as of
such Time of Delivery, as to the performance by the Company, the Parent
and the Selling Stockholder of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as
to such other matters as you may reasonably request, and the Company
shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section, and as to
such other matters as you may reasonably request.
8. (a) The Company and the Selling Stockholder, jointly and
severally, will indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that the
Company and the Selling Stockholder shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Xxxxx & Co. expressly for use therein; PROVIDED, FURTHER, that
the liability of the Selling Stockholder pursuant to this subsection (a) shall
not exceed the product of the number of Shares sold by the Selling Stockholder,
including any Optional Shares, and the initial public offering price of the
Shares as set forth in the Prospectus.
(b) Each Underwriter will indemnify and hold harmless the Company
and the Selling Stockholder against any losses, claims, damages or liabilities
to which the Company
21
or the Selling Stockholder may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through Xxxxxxx, Sachs & Co. expressly for use therein; and will
reimburse the Company and the Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or the Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately pre-
22
ceding sentence is not permitted by applicable law or if the indemnified party
failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Stockholder on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholder on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Shares purchased under this Agreement (before deducting expenses)
received by the Company and the Selling Stockholder bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Shares purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault 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 Company or the Selling
Stockholder on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by PRO RATA allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of 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 Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Selling Stockholder under
this Section 8 shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion
23
arrange for you or another party or other parties to purchase such Shares on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then the Company
and the Selling Stockholder shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company and the Selling Stockholder that you
have so arranged for the purchase of such Shares, or the Company and the Selling
Stockholder notify you that they have so arranged for the purchase of such
Shares, you or the Company and the Selling Stockholder shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholder as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all of the Shares to be purchased at such Time of
Delivery, then the Company and the Selling Stockholder shall have the right to
require each non-defaulting Underwriter to purchase the number of Shares which
such Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholder as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholder shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Selling Stockholder to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholder, except for
the expenses to be borne by the Company and the Selling Stockholder and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Parent, the Selling
Stockholder and the several Underwriters, as set forth in this Agreement or made
by or on behalf of them, respectively, pur-
24
suant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, the Parent or the Selling Stockholder, or any officer or director or
controlling person of the Company, or any controlling person of the Parent or
the Selling Stockholder, and shall survive delivery of and payment for the
Shares. No indemnity, agreement, representation, warranty, statement or other
provision of this Agreement shall, solely as among the Company, the Parent
and/or the Selling Stockholder, amend or modify any other agreement by and among
the Company, the Parent and/or the Selling Stockholder; and each indemnity,
agreement, representation, warranty and other statement of the Company, the
Parent or the Selling Stockholder set forth herein shall not, solely as among
such parties and the several Underwriters, be affected or governed by any such
agreement.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Stockholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and/or the Selling Stockholder as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Stockholder shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; if to the Selling Stockholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for the Selling Stockholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8 (c) hereof
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholder by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, the Parent and the Selling
Stockholder and, to the extent provided in Sections 8 and 10 hereof, the
officers and directors of the Company and each person who controls the Company,
the Parent, the Selling Stockholder or any Underwriter, and
25
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence for purposes of this Agreement. As
used herein, the term "business day" shall mean any day when the Commission's
office in Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
26
If the foregoing is in accordance with your understanding, please sign
and return to us ten counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the
Company, the Parent and the Selling Stockholder. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters (U.S.
Version), the form of which shall be submitted to the Company and the Selling
Stockholder for examination upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
PACKAGING CORPORATION OF AMERICA
By:
---------------------------------
Name:
Title:
TENNECO PACKAGING INC.
By:
---------------------------------
Name:
Title:
TENNECO INC.
By:
---------------------------------
Name:
Title:
27
Accepted as of the date hereof
in New York, New York:
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Deutsche Bank Securities Inc.
X.X. Xxxxxx Securities Inc.
By:
-----------------------------
(Xxxxxxx, Sachs & Co.)
28
SCHEDULE I
Number of Optional
Shares to Be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to Be Purchased Exercised
----------- ----------------------- -----------------------
Xxxxxxx, Xxxxx & Co.......................................
Xxxxxx Xxxxxxx & Co. Incorporated.........................
Xxxxxxx Xxxxx Barney Inc..................................
Deutsche Bank Securities Inc..............................
X.X. Xxxxxx Securities Inc................................
[Names of other Underwriters].............................
----------------------- -----------------------
Total................................................ 34,300,000 5,128,192
----------------------- -----------------------
----------------------- -----------------------
SCHEDULE II
Number of Optional
Shares to Be
Total Number of Sold if
Firm Shares Maximum Option
Underwriter to Be Sold Exercised
----------- ----------------------- -----------------------
The Company............................................... 6,500,000 0
The Selling Stockholder................................... 27,800,000 5,128,192
----------------------- -----------------------
Total................................................ 34,300,000 5,128,192
----------------------- -----------------------
----------------------- -----------------------
SCHEDULE III
LOCKUP AGREEMENTS
Packaging Corporation of America
PCA Holdings LLC
Madison Dearborn Partners, LLC
Madison Dearborn Capital Partners III, L.P.
Madison Dearborn Special Equity III, L.P.
Special Advisors Fund I, LLC
X.X. Xxxxxx Capital Corporation
Sixty Wall Street Fund, L.P.
BT Capital Investors, X.X.
Xxxxxxxx Street Partners II
Tenneco Inc.
Tenneco Packaging Inc.
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxx
Xxxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx 1999 Dynastic Trust
Each of the signatories to the Management Equity Agreement Among Packaging
Corporation of America and each of the persons listed on the signature pages
thereto, dated as of June 1, 1999.
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement comply
as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have been
furnished to the representatives of the Underwriters (the
"Representatives") and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which are
attached hereto and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations, nothing came to their attention that caused them
to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial position
of the Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of
the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company and its subsidiaries responsible
for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows
included in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements
included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included
in the Prospectus and referred to in clause (B) were not
determined on a basis substantially consistent with the basis
for the audited consolidated financial statements included in
the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation
2
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in
clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in
each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company and
its subsidiaries, which appear in the Prospectus, or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by
the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
3
