EXHIBIT 2.2
TENNECO PACKAGING INC.
0000 XXXXX XXXXX
XXXX XXXXXX, XXXXXXXX 00000
April 12, 1999
PCA Holdings, LLC
c/o Madison Dearborn Partners, Inc.
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Re: CONTRIBUTION AGREEMENT
Gentlemen:
Reference is made to that certain Contribution Agreement, dated as
of January 25, 1999 ( the "CONTRIBUTION AGREEMENT"), among Tenneco Packaging
Inc. ("TPI"), PCA Holdings LLC ("PCA"), and Packaging Corporation of America
("NEWCO"). Capitalized terms used in this letter agreement not defined
herein shall have the meanings set forth in the Contribution Agreement.
The purpose of this letter agreement is to correct certain errors
or ambiguities that were included in the Contribution Agreement, and to
reflect the parties' agreements with respect to certain other matters, to the
extent those agreements differ form the terms of the Contribution Agreement
1. The definition of "ASSUMED INDEBTEDNESS" in the Contribution
Agreement refers to the definition set forth in the Preliminary Statements.
The definition of "Assumed Indebtedness" in the Preliminary Statements of
the Contribution Agreement was inadvertently deleted in preparing the
Contribution Agreement. The parties agree that, as used in the
Contribution Agreement, the term "ASSUMED INDEBTEDNESS" shall mean (i) the
$1.21 billion borrowed by TPI under the Term Loan Facilities and (ii) the
$550 million promissory note issued by TPI to X.X. Xxxxxx Securities, Inc.
(the "XXXXXX INTERIM NOTE"), each of which will be assigned to and assumed
by Newco at Closing.
2. TPI, PCA, and Newco each hereby agree that the amount of the
Term Loan Facilities and the Senior Subordinated Notes, and the terms of
the Deferred-Pay Financing shall be on the terms set forth in the Offering
Memorandum dated March 30, 1999, notwithstanding that such amounts and
terms differ from those set forth in the Contribution Agreement.
3. TPI agrees that the Term Loan Facilities, pursuant to which TPI
will initially borrow $1.21 billion and which indebtedness will be assigned
to and assumed by Newco as part of the Assumed Indebtedness, may, until the
time of such assignment and assumption, be secured by certain depositary
accounts and timberland assets of TPI, on terms satisfactory to TPI,
notwithstanding that the Contribution Agreement provides for such loan to
be unsecured as to TPI and that such security interest shall be released
contemporaneously with the assignment and assumption by Newco.
4. The parties agree that the Senior Subordinated Notes will not
be issued by TPI, but that TPI will instead borrow $550 million pursuant to
the Xxxxxx Interim Note that will be assigned to and assumed by Newco as
part of the Assumed Indebtedness, and which indebtedness will be repaid by
Newco at the Closing.
5. PCA hereby waives its right to elect, pursuant to Section 5.16 of
the Contribution Agreement, to instruct TPI to retain the Xxxxxxxx Road
Property, and agrees that the Xxxxxxxx Road Property will, for purposes of
the Contribution Agreement, constitute Owned Real Property and will be
conveyed to Newco at Closing.
6. Newco agrees that for a period of one year following the Closing
Date TPI may (a) continue to use the PCA Marks on Corrugated Products
purchased by TPI or its Affiliates from Newco pursuant to the Supply
Agreements, until changes can be made to plates, molds, and similar items
so as to allow Newco to produce such materials for TPI and such Affiliates
without such PCA Marks, and (b) use the PCA marks on Corrugated Products
that are in existence as of the Closing Date. Subject to the preceding
sentence, TPI shall cease using the PCA Marks as soon as possible after
Closing during such one year period and, following such one year period,
TPI shall cease all use of any PCA Marks.
7. PCA waives the condition to Closing set forth in Section 6.2(g)
of the Contribution Agreement, to the extent such closing condition would
require PCA and Xx. Xxxxxx to enter into any agreement beyond the letter
agreement referred to therein, as such letter agreement may be modified.
8. TPI hereby agrees and acknowledges that it has not delivered a
Dilution Notice pursuant to Paragraph E of the Preliminary Statements of
the Contribution Agreement. PCA and TPI hereby agree that, notwithstanding
anything in the Contribution Agreement to the contrary, upon issuance of
Management Stock during the 120-day period following the Closing, Newco
shall simultaneously redeem or purchase from PCA and TPI an aggregate
number of Common Stock shares equal to the aggregate number of shares of
Management Stock purchased during such 120-day period in a ratio of 55
shares from PCA to 45 shares from TPI at a price per share equal to the
price per share paid by the Persons purchasing such Management Stock
(provided such price per share is equal to the price per share paid for
Common Stock purchased by PCA at Closing).
9. The following changes are made to the definition of "Retained
Liabilities": (A) paragraph (ix) is amended by adding the words "subject to
paragraph (xiv) of this definition" after the word "Agreement" in clause
(ii) thereof; and (B) a new paragraph (xiv) is added, a follows: "(xiv) all
liability to make severance payments to seven named individuals who will be
transferred to PCA and who have been identified to Newco and TPI in an
aggregate amount of up to $385,000."
10. TPI has provided the Michigan Department of Natural Resources
with a letter of credit in connection with certain operations at the
Filer City Mill. TPI agrees to leave such letter of credit in place for
30 days after Closing or until Newco provides the Michigan Department of
Natural Resources with a replacement letter of credit. Newco agrees to
obtain and post such a replacement letter of credit within such 30-day
period. Newco shall reimburse TPI for any draws made under TPI's letter
of credit from and after Closing.
11. PCA and Newco hereby waive the closing condition set forth in
Section 5.14(ii) of the Contribution Agreement, and TPI agrees at its
sole expense to implement the steps set forth in Xxxx Xxxx'x memorandum
dated April 7, 1999, entitled "Form S-4 Exchange Option and Quarterly
Filings," relating to the preparation of the quarterly financial
statements referred to in Section 5.14(ii) of the Contribution Agreement
provided that TPI hereby covenants it will deliver to PCA the financial
statements referred to in Section 5.14(ii) of the Contribution Agreement
(a) for the quarter ended March 31, 1998, no later than May 10, 1999 and
(b) for each of the other quarters of 1998, no later than May 31, 1999.
Newco agrees that it will cause its appropriate financial officers and
employees to provide reasonable assistance to TPI in its preparation of
the financial statements referenced in this paragraph 11.
12. TPI hereby certifies that during the period from and including
January 25, 1999 and the Closing, TPI has complied in all material
respects with and not breached Section 5.2 of the Contribution Agreement.
13. TPI agrees to obtain, at its expense, for Newco commencing no
later than the end of the term of the Technology, Financial and
Administrative Transition Services Agreement (the "TRANSITION EXPIRATION
DATE"), licenses to use the following software, which licenses shall be
substantially commensurate with the licenses to such software held by
TPI or its Affiliates and used for the Containerboard Business prior to
Closing (including, without limitation, as to scope and term as
described in such existing licenses):
VENDOR NAME OF SOFTWARE
------ ----------------
Xxxx, Xxx & Xxxxx VPS and DRS
GEAC Financial Applications (GL, AR, AP, FA)
Comshare System W
Hyperion Hyperion (NT)
XRT Treasury Workstation (Netware)
14. TPI agrees to obtain, for Newco commencing no later than the
Transition Expiration Date, licenses to use the following software,
which licenses shall be substantially commensurate with the licenses to
such software held by TPI or its Affiliates and used for the
Containerboard Business prior to Closing (including, without limitation,
as to scope and term as described in such existing licenses):
VENDOR NAME OF SOFTWARE
------ ----------------
TSI Keymaster
Information Builders Focus
TPI shall pay 50% of the costs of obtaining such licenses and Newco shall
pay 50% of the costs of obtaining such licenses.
15. TPI's sole obligation pursuant to paragraphs 13 and 14 above
shall be to purchase the licenses described in such paragraphs in the
name of Newco, and shall not extend to any other fees, maintenance,
costs, expenses or other payments required to be made pursuant to such
licenses in respect of periods commencing after the Transition
Expiration Date. The parties hereto hereby agree that neither TPI nor
any of its Affiliates shall be required pursuant to the Contribution
Agreement or any Ancillary Agreement to pay for any other license to use
software that is not Related to the Containerboard Business but is used
by TPI or its Affiliates to provide the services to Newco under the
Transition Services Agreement, other than those licenses expressly
described in paragraphs 13 or 14.
16. TPI , PCA and Newco hereby stipulate that the definition of
"RETAINED LIABILITIES" shall include all liabilities arising from,
related to or incurred in connection with any state of facts or
conditions or transactions (or series of facts, conditions or
transactions) related, under or otherwise in connection with (i) IFC
CREDIT CORPORATION V. TENNECO PACKAGING, INC. filed in the Circuit Court
of Xxxx County, Illinois 99CH4738 (the "LAWSUIT")
or (ii) the Master Lease Agreement between IFC Credit Corporation and
TPI (f/k/a/ Packaging Corporation of America) that is the subject of the
Lawsuit, in each case other than liabilities to the extent arising from,
related to or incurred in connection with any breach by Newco of its
obligations under this paragraph 16. Newco agrees to cease using the
equipment that is the subject of the Lawsuit (the "EQUIPMENT") and
return the Equipment where directed by TPI as soon as reasonably
practical, and in no event will Newco use the Equipment after (and it
will return the Equipment by) June 30, 1999. Newco shall use its
reasonable efforts consistent with TPI's past practice to maintain the
Equipment in the operating condition and state of repair that it is in
as of the date hereof, ordinary wear and tear excepted.
17. The parties hereby acknowledge that following the date of the
Contribution Agreement and prior to the date hereof, approximately
5,963 acres of timberland located in Xxxxxxxx, Xxxxx and Xxxxxx Counties,
Florida that were subject to the Existing Financing Arrangements have
been sold (the "FLORIDA PROPERTY TRANSFER"). The parties hereby agree
that (i) no PCA Indemnified Party shall have, assert or be entitled to
assert any claim (and each of PCA and Newco agrees that it shall not
assert or permit to be asserted any claim) against TPI or any of its
Subsidiaries or Affiliates arising out of, in connection with or related
to the Florida Property Transfer, whether pursuant to the Contribution
Agreement or otherwise and (ii) Newco assumes no liability with respect
to the Florida Property Transfer.
Please acknowledge your agreement to the foregoing by signing below.
Sincerely,
TENNECO PACKAGING INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Its: Vice President
Agreed to:
PCA HOLDINGS LLC
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
Managing Director
PACKAGING CORPORATION OF AMERICA
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Its: Secretary
Date: April 12, 1999
