EXHIBIT 10.1
EXECUTION COPY
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of
January 21, 2002, is by and between Temple-Inland Inc., a Delaware corporation
("Parent"), and Xxxxxxx Container Corporation, a Delaware corporation (the
"Company").
W I T N E S S E T H
WHEREAS, Parent, Temple-Inland Acquisition Corporation, a
Delaware corporation and an indirect wholly-owned subsidiary of Parent ("Merger
Subsidiary"), and the Company, concurrently with the execution and delivery of
this Agreement, will enter into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), providing for, among other things, the
acquisition of the Company by Parent by means of a cash tender offer for all of
the outstanding shares of Company Common Stock (as defined in Section 1.1) and
for the subsequent merger of Merger Subsidiary with and into the Company (the
"Merger") upon the terms and subject to the conditions set forth in the Merger
Agreement; and
WHEREAS, as a condition to the willingness of Parent and Merger
Subsidiary to enter into the Merger Agreement, Parent and Merger Subsidiary have
required that the Company agree, and in order to induce Parent and Merger
Subsidiary to enter into the Merger Agreement the Company has agreed, to grant
Parent the Option (as hereinafter defined) upon the terms and subject to the
conditions of this Agreement.
NOW THEREFORE, in consideration of the execution and delivery by
Parent and Merger Subsidiary of the Merger Agreement and the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
and intending to be legally bound hereby, Parent and the Company hereby agree as
follows:
ARTICLE I
THE OPTION
Section 1.1 Grant of Option. The Company hereby grants
to Parent an irrevocable option (the "Option") to purchase up to such
number of newly-issued shares (the "Shares") of Class A Common Stock,
par value $.0001 per share, of the Company (the "Company Common
Stock") as is equal to 19.9% of the Shares outstanding on the date of
exercise of the Option at a purchase price per share of $1.17 (the
"Exercise Price"), in the manner set forth in Sections 1.2 and 1.3 of
this Agreement. The number of Shares that may be received upon the
exercise of the Option and the Exercise Price are subject to
adjustment as herein set forth. This Agreement shall terminate, and
the Option hereby granted shall expire, on the earliest of (i) the
Effective Time (as defined in the Merger Agreement) and (ii) the
termination of the Merger Agreement.
Section 1.2 Exercise Of Option. At any time or from
time to time prior to the termination of the Option in accordance with
the terms of this Agreement, Parent (or its designee) may exercise the
Option, in whole or in part, if on or after the date hereof, Merger
Subsidiary accepts for payment pursuant to the Offer (as defined in
the Merger Agreement) shares of Company Common Stock constituting more
than 66 2/3% but less than 90% of the shares of Company Common Stock
then outstanding on a fully diluted basis and the exercise of the
Option would result in Merger Subsidiary and its affiliates holding
shares of Company Common Stock representing 90% or more of the shares
of Company Common Stock then outstanding on a fully diluted basis.
In the event that Parent wishes to exercise all or
any part of the Option, Parent shall give written notice (the "Option
Notice," with the date of the Option Notice being hereinafter called
the "Notice Date") to the Company, specifying the number of Shares it
will purchase and a place and date (not earlier than three nor later
than 20 business days from the Notice Date) for closing such purchase
(a "Closing"). Parent's obligation to purchase Shares, and the
Company's obligation to issue Shares, upon any exercise of the option
is subject (at its election) to the conditions that (i) no preliminary
or permanent injunction or other order against the purchase, issuance
or delivery of the Shares issued by any Federal, state or foreign
court of competent jurisdiction shall be in effect (and no action or
proceeding shall have been commenced or threatened for purposes of
obtaining such an injunction or order) and (ii) any applicable waiting
period under the HSR Act (as defined in the Merger Agreement) and any
foreign antitrust or
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competition laws and regulations shall have expired and (iii) there
shall have been no material breach of the representations, warranties,
covenants or agreements of the other party contained in this Agreement
or the Merger Agreement; provided, however, that any failure by Parent
to purchase Shares, or any failure by the Company to issue Shares,
upon exercise of the Option at any Closing as a result of the
nonsatisfaction of any of such conditions shall not affect or
prejudice Parent's right to purchase such Shares upon the subsequent
satisfaction of such conditions.
Section 1.3 Purchase of Shares. At any Closing, (i)
the Company will deliver to Parent the certificate or certificates
representing the number of Shares being purchased in proper form for
transfer upon exercise of the Option in the denominations designated
by Parent in the Option Notice, and, if the Option has been exercised
in part, a new Option evidencing the rights of Parent to purchase the
balance of the Shares subject thereto, and (ii) Parent shall pay the
aggregate purchase price for the Shares to be purchased by wire
transfer to a bank account designated in writing by the Company in an
amount equal to the Exercise Price times the number of shares to be
purchased.
Section 1.4 Adjustments Upon Share Issuances, Changes
in Capitalization, etc. (a) In the event of any change in Company
Common Stock or in the number of outstanding shares of Company Common
Stock by reason of a stock dividend, split-up, recapitalization,
combination, exchange of shares or similar transaction or any other
change in the corporate or capital structure of the Company
(including, without limitation, the declaration or payment of a
dividend of cash, securities or other property), the type and number
of the Shares to be issued by the Company upon exercise of the Option
shall be adjusted appropriately, and proper provision shall be made in
the agreements governing such transaction, so that Parent shall
receive upon exercise of the Option the number and class of shares or
other securities or property that Parent would have received with
respect to the Company Common Stock if the Option had been exercised
immediately prior to such event or the record date therefor, as
applicable, and such Company Common Stock had elected to the fullest
extent it would have been permitted to elect, to receive such
securities, cash or other property.
(b) In the event that the Company shall enter into an
agreement (i) to consolidate with or merge into any person, other than
Parent or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit
any person, other than Parent or one of its subsidiaries, to merge
into the Company and the Company shall be the continuing or surviving
corporation, but, in
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connection with such merger, the then outstanding shares of Company
Common Stock shall be changed into or exchanged for stock or other
securities of the Company or any other person or cash or any other
property, or the then outstanding shares of Company Common Stock shall
after such merger represent less than 50% of the outstanding shares
and share equivalents of the surviving corporation or (iii) to sell or
otherwise transfer all or substantially all of its assets to any
person, other than Parent or one of its subsidiaries, then, and in
each such case, proper provision shall be made in the agreements
governing such transaction so that Parent shall receive upon exercise
of the Option the number and class of shares or other securities or
property that Parent would have received with respect to Company
Common Stock if the Option had been exercised immediately prior to
such transaction or the record date therefor, as applicable, and such
Company Common Stock had elected to the fullest extent it would have
been permitted to elect, to receive such securities, cash or other
property.
(c) The rights of Parent under this Section 1.4 shall
be in addition to, and shall in no way limit, its rights against the
Company for any breach of the Merger Agreement.
(d) The provisions of this Agreement shall apply with
appropriate adjustments to any securities for which the Option becomes
exercisable pursuant to this Section 1.4.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent
as follows:
Section 2.1 Authority Relative to this Agreement. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has all
requisite power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of the Company, and no other corporate
proceeding on the part of the Company is necessary to authorize this
Agreement or for the Company to consummate such transactions. This
Agreement has been duly and validly executed and delivered by the
Company and,
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assuming this Agreement constitutes the legal, valid and binding
obligation of Parent, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws, now or hereafter in
effect, relating to or affecting creditors' rights and remedies and to
general principles of equity.
Section 2.2 No Conflict; Required Filings and
Consents. The execution and delivery of this Agreement by the Company
do not, and the consummation of the transactions contemplated by and
compliance with the provisions of this Agreement will not, (i)
conflict with or violate the Certificate of Incorporation or By-laws
of the Company, in each case as amended to the date of this Agreement,
(ii) conflict with or violate any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or by
which the Company is bound or affected, (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance of any kind on any of the Shares
pursuant to, any agreement, contract, indenture, notice or instrument
to which the Company is a party or by which the Company is bound or
affected, or (iv) except for applicable requirements, if any, of the
HSR Act, the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"), require any filing by the Company with, or any
permit, authorization, consent or approval of, any governmental or
regulatory authority, domestic or foreign.
Section 2.3 Option Shares. The Company has taken all
necessary corporate action to authorize and reserve for issuance such
number of Shares as may be issuable upon exercise of the Option, and
the Shares, when issued and delivered by the Company to Parent upon
exercise of the Option, will be duly authorized, validly issued, fully
paid and nonassessable shares of Company Common Stock, and will be
free and clear of any preemptive rights, security interests, liens,
claims, pledges, charges or encumbrances of any kind.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company
as follows:
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Section 3.1 Authority Relative to this Agreement.
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Parent has all
requisite power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of Parent, and no other corporate proceeding on the part of
Parent is necessary to authorize this Agreement or for Parent to
consummate such transactions. This Agreement has been duly executed
and delivered by Parent and, assuming this Agreement constitutes the
legal, valid and binding obligation of the Company, constitutes a
legal, valid and binding obligation of Parent, enforceable against
Parent in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws, now or
hereafter in effect, relating to or affecting creditors' rights and
remedies and to general principles of equity.
Section 3.2 No Conflict, Required Filing and
Consents. The execution and delivery of this Agreement by Parent do
not, and the consummation of the transactions contemplated by and
compliance with the provisions of this Agreement will not, (i)
conflict with or violate the Certificate of Incorporation or By-laws
of Parent, in each case as amended to the date of this Agreement, (ii)
conflict with or violate any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or by which Parent
is bound or affected, (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, contract,
indenture, note or instrument to which Parent is a party or by which
it is bound or affected or (iv) except for applicable requirements, if
any, of the HSR Act, the Exchange Act, and the Securities Act, require
any filing by Parent with, or any permit, authorization, consent or
approval of, any governmental or regulatory authority, domestic or
foreign, except in the case of each of the foregoing clauses (i)
through (iv) for any such conflicts, violations, breaches, defaults,
failures to file or obtain the consent or approval of, or other
occurrences that would not cause or create a material risk of
non-performance or delayed performance by Parent of its obligations
under this Agreement.
Section 3.3 Investment Intent. The purchase of Shares
pursuant to this Agreement is for the account of Parent for the
purpose of investment and not with a view to or for sale in connection
with any distribution thereof within the meaning of the Securities Act
and the rules and regulations promulgated thereunder.
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ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1 Transfer of Shares; Restrictive Legend.
Parent agrees to the placement on the certificate(s) representing the
Shares of the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
It is understood and agreed that the reference to restrictions arising
under the Securities Act in the above legend will be removed by
delivery of substitute certificate(s) without such reference if such
Shares have been sold in compliance with the registration and
prospectus delivery requirements of the Securities Act or Parent has
delivered to the Company a copy of a letter from the staff of the
Securities and Exchange Commission, or an opinion of counsel in form
and substance reasonably satisfactory to the Company and its counsel,
to the effect that such legend is not required for purposes of the
Securities Act.
Section 4.2 Reasonable Best Efforts. Subject to the
terms and conditions of this Agreement, Parent and the Company shall
each use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement. Each party shall promptly consult with the other and
provide any necessary information and material with respect to all
filings made by such party with any governmental or regulatory
authority in connection with this Agreement or the transactions
contemplated hereby.
Section 4.3 Further Assurances. The Company shall
perform such further acts and execute such further documents and
instruments as may reasonably be required to vest in Parent the power
to carry out the provisions of this Agreement. If Parent shall
exercise the Option, or any portion thereof, in accordance with the
terms of this Agreement, the Company shall, without additional
consideration, execute and deliver all such further documents and
instruments and take all such further action as Parent may reasonably
request for the purpose of effectively carrying out the transactions
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contemplated by this Agreement.
Section 4.4 Survival. All of the representations,
warranties and covenants contained herein shall survive a Closing and
shall be deemed to have been made as of the date hereof and as of the
date of each Closing.
ARTICLE V
MISCELLANEOUS
Section 5.1 Amendment. This Agreement may not be
amended except by an instrument in writing signed by the parties
hereto and specifically referencing this Agreement.
Section 5.2 Notices. All notices, requests and other
communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) or by telecopy (with copies by overnight
courier) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, to
Temple-Inland Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: M. Xxxxxxx Xxxxxx, Esq.
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
(b) if to the Company, to
Xxxxxxx Container Corporation
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000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, P.C.
Xxxx X. Xxxxxxxxxx
Fax: 000-000-0000
Section 5.3 Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to
the other parties.
Section 5.4 Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the Merger Agreement (including the
documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect
to the subject matter hereof, and (b) are not intended to confer upon
any person other than the parties hereto any rights or remedies
hereunder.
Section 5.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the principles of conflicts of law
thereof.
Section 5.6 Assignment. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall
be assigned, in whole or in part, by operation of law or otherwise by
any of the parties without the prior written consent of the other
parties; any instrument purporting to make such assignment shall be
void. Notwithstanding the foregoing, the rights and obligations of
Parent hereunder may, upon written notice to the Company prior to or
promptly following such action, be assigned by Parent to any of its
corporate affiliates so long as such party remains an affiliate of
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Parent, but no such transfer shall relieve Parent of its obligations
hereunder if such transferee does not perform such obligations.
Subject to the first sentence of this Section 5.6, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 5.7 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located
in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court located in
the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring
any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal or
state court sitting in the State of Delaware.
Section 5.8 Severability. Any term or provision of
this Agreement that is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any
term or provision hereof is invalid, void or unenforceable, the
parties agree that the court making such determination shall have the
power to reduce the scope, duration, area or applicability of the term
or provision, to delete specific words or phrases, or to replace any
invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision.
[Signature pages follow]
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IN WITNESS WHEREOF, each of Parent and the Company have
caused this Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
TEMPLE-INLAND INC.
By:
--------------------------------
Name:
Title:
XXXXXXX CONTAINER CORPORATION
By:
--------------------------------
Name:
Title:
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