M E M O R A N D U M

TO: William C. Young

FROM: Bruce S. Kahn
Marguerite M. Donahue
RE: Plastipak Holdings, Inc. Shareholders greement
!""ect o" #rans"ers $% &oldman o" Plastipak Holdings, Inc. Stock
!'planation o" Drag long (ights
DATE: ugust )*, +,)-
Background
Plastipak Holdings, Inc. and its shareholders are parties to a Shareholders greement
dated ugust ., +,)+ /the 0Shareholders Agreement12. #he Shareholders greement sets "orth
the 3a%s that shareholders Pol%mer Holdings, 4.P. and &S Capital Partners 5I Parallel 4. P.,
a""iliates o" &oldman Sachs 6 Co. /collecti7el%, 0Goldman12, ma% sell and trans"er their
Plastipak shares, including8 /)2 to another person or entit% "ollo3ing a Ke% Man !7ent9 /+2 to
another person or entit% a"ter ugust ., +,)* /"ollo3ing a re:ection o" the right o" "irst o""er2, i"
Plastipak has not $een sold or has not gone pu$lic $% then9 /-2 "ollo3ing an IP;9 /<2 in
connection 3ith the sale o" Plastipak as an enterprise9 /=2 $% e'ercising the &oldman put option9
/>2 to a Permitted #rans"eree /i.e., a &oldman a""iliate29 and /*2 as part o" a 4egal or (egulator%
#rans"er.
You ha7e asked us a$out 3hether &oldman?s trans"erees 3ould ha7e the same rights as
&oldman currentl% has under the Shareholders greement upon a sale or trans"er o" &oldman?s
Plastipak shares. #his memo addresses the rights that &oldman?s trans"erees 3ould ha7e under
the Shareholders greement, depending upon ho3 the Plastipak shares are trans"erred. s %ou
re@uested, it also contains a $rie" discussion o" ho3 the dragAalong rights in the Shareholders
greement 3ork.
Discussion
Transfers by Goldman of Plastipak Sares
Purchasers and trans"erees o" &oldman?s Plastipak shares generall% do not ac@uire the
7arious rights that &oldman had $e"ore the purchase or trans"er under the Shareholders
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page +
greement. Section C.,)/$2 o" the Shareholders greement sets "orth the general rule that
neither the Shareholders greement nor an% right, remed%, o$ligation or lia$ilit% arising under
the Shareholders greement is assigna$le in connection 3ith the trans"er o" Plastipak shares.
#his general rule is su$:ect to t3o primar% e'ceptions, ho3e7er. First, &oldman is a$le to assign
all o" its rights under the Shareholders greement 3hen it sells or trans"ers its Plastipak shares to
a 0Permitted #rans"eree,1 a term that generall% means entities, $ut not indi7iduals, that are
a""iliated 3ith &oldman Sachs 6 Co. or &S Capital Partners 5I Parallel, 4.P. Second, as
descri$ed $elo3, &oldman is a$le to assign su$stantiall% all o" its rights under the Shareholders
greement 3hen it sells or trans"ers its Plastipak shares in connection 3ith certain 4egal or
(egulator% #rans"ers. #he e""ects o" each t%pe o" sale or trans"er o" &oldman?s Plastipak shares
are discussed in more detail $elo3.
(1) Transfer Following a Key Man Event
I" a Ke% Man !7ent occurs /i.e., %our 7oluntar% termination o" emplo%ment, death or
disa$ilit%2, &oldman ma% sell its shares to a third part% a"ter gi7ing the Young Shareholders and
Plastipak a right o" "irst o""er. I" neither the Young Shareholders nor Plastipak e'ercises the
right o" "irst o""er, &oldman is permitted to sell the shares to a third part%. #he third part%
purchaser 3ould $e re@uired to sign the Shareholders greement, $ut 3ould not succeed to
&oldman?s special rights under the Shareholders greement /"or e'ample, right to consent to ke%
corporate actions, right to appoint a director, right to appoint a $oard o$ser7er, and right to
initiate a sale o" Plastipak a"ter the "i"th anni7ersar% o" the in7estment i" Plastipak has not gone
pu$lic or $een sold $% then2.
I" a Ke% Man !7ent occurs and &oldman instead trans"ers its shares to a 0Permitted
#rans"eree1 /i.e., an entit% that is a""iliated 3ith &oldman Sachs 6 Co. or &S Capital Partners 5I
Parallel, 4.P.2, then the Permitted #rans"eree 3ould succeed to &oldman?s rights under the
Shareholders greement. #his is e'plained in more detail under item />2 $elo3.
(2) Transfer to Another Person or Entity After August 9, 201 Following !e"e#tion of
the !ight of First $ffer
ssuming that &oldman is still a shareholder a"ter the "i"th anni7ersar% o" its in7estment
/i.e., ugust ., +,)*2 and there has $een no IP; or other e7ent pursuant to 3hich &oldman has
di7ested its e@uit% interest in Plastipak, &oldman 3ould ha7e to gi7e the Young Shareholders
and Plastipak a right o" "irst o""er $e"ore selling or trans"erring its Plastipak shares to a third
part% purchaser. I" the Young Shareholders and Plastipak do not e'ercise the right o" "irst o""er,
then a third part% purchaser purchasing &oldman?s Plastipak shares 3ould $e re@uired to sign the
Shareholders greement and $ecome a shareholder under the agreement. Ho3e7er, the third
part% purchaser 3ould not succeed to &oldman?s special rights under the Shareholders
greement.
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page -
(%) Transfers Pursuant to an &P$ or $ther Pu'li# $ffering
n% person or entit% 3ho purchases &oldman?s shares through an IP; or su$se@uent
pu$lic o""ering does not succeed to &oldman?s rights under the Shareholders greement.
Guali"ied Pu$lic ;""ering 3ill eliminate &oldman?s rights under the Shareholders
greement to initiate a sale o" Plastipak as an enterprise, to e'ercise a put option "or the purchase
o" &oldman?s shares $% Plastipak, and to e'ercise tag along and drag along rights. #hese rights
are contained in rticle = o" the Shareholders greement, and the% e'pire "ollo3ing a Guali"ied
Pu$lic ;""ering.
lso, it is important to note that certain reductions in &oldman?s e@uit% interest in
Plastipak /"ollo3ing sales o" shares in the market a"ter an IP;, or other3ise2 3ill diminish its
rights under the Shareholders greement. I" &oldman sells or trans"ers more than =,H o" its
initial o3nership o" Plastipak shares, then its rights to consent to certain ke% corporate actions
change, as "ollo3s8
Consent right "or asset sales changes "rom transaction siIe o" J), million to J+,
million9
Consent right "or asset purchases and ac@uisitions changes "rom transaction siIe
o" J=, million to J),, million9
Consent right "or :oint 7entures and partnerships in :urisdictions in 3hich
Plastipak currentl% does $usiness changes "rom transaction siIe o" J=, million to
J),, million /:oint 7entures and partnerships in ne3 :urisdictions 3ill re@uire
appro7al regardless o" transaction siIe i" &oldman continues to o3n at least +=H
o" its initial o3nership o" shares29
Consent right "or changes in material ta' and accounting principles o" Plastipak
and its su$sidiaries terminates9
Consent right "or appointment or remo7al o" independent auditor terminates9
Consent right "or institution, termination or settlement o" material litigation
terminates9
Consent right "or capital e'penditures terminates9
Consent right "or entr% into, termination and amendment o" material contracts
/including customer contracts2 terminates.
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page <
In addition, Plastipak?s right to appoint a second director, i" applica$le, terminates once Plastipak
has sold or trans"erred at least =,H o" its initial o3nership o" Plastipak stock.
I" Plastipak sells or trans"ers at least *=H o" its initial o3nership o" Plastipak shares, its
right to designate an% directors or o$ser7ers on Plastipak?s $oard or on the $oard o" an% o" its
su$sidiaries 3ill terminate. lso, i" &oldman sells or trans"ers more than *=H o" its initial
o3nership o" Plastipak shares, then its right to consent to the "ollo3ing additional ke% corporate
actions changes, as "ollo3s8
Consent right "or charter and $%la3 amendments is eliminated9
Consent right "or incurrence o" additional inde$tedness is eliminated9
Consent right "or the issuance o" e@uit% $% Plastipak and its su$sidiaries is
eliminated9
Consent right "or the declaration o" di7idends is eliminated9
Consent right "or the ac@uisition or disposition o" assets is eliminated9
Consent right "or :oint 7entures and partnerships is eliminated9
Consent right "or mergers, $usiness com$inations, recapitaliIations and spinAo""s
is eliminated9
Consent right "or adoption o" an% $usiness plan or annual $udget is eliminated9
Consent right "or material changes in the nature and scope o" Plastipak?s $usiness
is eliminated9
Consent right "or a""iliate transactions is eliminated9
Consent right "or the appointment and remo7al o" Chie" Financial ;""icer, Chie"
ccounting ;""icer, President o" Korth merican ;perations or President or
Manager o" an% glo$al region is eliminated /as is the consent right to material
changes in their compensation and $ene"its29 and
Consent to $ankruptc% and insol7enc% proceedings is eliminated.
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page =
(() Transfers in )onne#tion *ith the +ale of Plasti,a- as an Enter,rise
I" all or su$stantiall% all o" Plastipak?s assets or stock is sold in a sale o" Plastipak as an
enterprise, an% purchaser o" the &oldman shares 3ill not succeed to its rights under the
Shareholders greement. Moreo7er, it is likel% that an% purchaser 3ho purchases Plastipak as
an enterprise 3ill re@uire the termination o" the Shareholders greement as a condition to the
closing o" the transaction.
(.) Transfers 'y the E/er#ise of the Put $,tion
&oldman ma% re@uest that Plastipak redeem its shares a"ter the earlier o" a Ke% Man
!7ent or the "i"th anni7ersar% o" its in7estment /i.e., ugust ., +,)*2, i" Plastipak has not $een
sold or has not gone pu$lic $% then. I" Plastipak redeems &oldman?s shares, the shares 3ill $e
cancelled such that no other shareholder 3ill succeed to &oldman?s rights under the
Shareholders greement.
I" Plastipak chooses not to redeem &oldman?s shares a"ter recei7ing &oldman?s put
notice, then &oldman 3ould $e entitled to initiate a sale o" Plastipak as an enterprise and drag all
o" the other shareholders along in that sale transaction. See item /<2 a$o7e on the rights a
purchaser o" &oldman?s shares 3ould ac@uire i" the purchase 3as made as part o" the sale o"
Plastipak as an enterprise.
(0) Transfer or +ale to a Per1itte2 Transferee or Transferees
Section <.,- o" the Shareholders greement permits &oldman to trans"er its Plastipak
shares to one or more 0Permitted #rans"erees1 at an% time 3ithout Plastipak?s consent or the
consent o" an% other Plastipak shareholder. In general, a 0Permitted #rans"eree1 is an entit%, as
opposed to an indi7idual, that is a""iliated 3ith &oldman Sachs 6 Co. or &S Capital Partners 5I
Parallel, 4.P. lthough &oldman?s trans"er o" its Plastipak stock to a Permitted #rans"eree does
not re@uire Plastipak?s consent, the Permitted #rans"eree must satis"% three conditions in
connection 3ith the stock trans"er AA /)2 the trans"eree must agree to $e $ound $% the
Shareholders greement, /+2 the trans"er must made in accordance 3ith applica$le securities
la3s, and /-2 the Permitted #rans"eree must agree to trans"er the shares $ack to &oldman or
another o" its Permitted #rans"erees i" it ceases to meet the de"inition o" a 0Permitted #rans"eree1
under the Shareholders greement.
I" &oldman trans"ers an% or all o" its shares to one or more Permitted #rans"erees, the
Permitted #rans"erees 3ill succeed to all o" the rights that the trans"erring &oldman shareholder
had under the Shareholders greement.
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page >
() 3egal or !egulatory Transfer
Section <.,)/h2 o" the Shareholders greement permits &oldman to trans"er its shares to
a Permitted #rans"eree or to a third part% in a 04egal or (egulator% #rans"er,1 3hich is a trans"er
3hich &oldman reasona$l% $elie7es, in good "aith, is necessar% or appropriate to $ring &oldman
or an% o" its a""iliates into compliance 3ith applica$le la3, including the Dodd Frank Wall Street
(e"orm and Consumer Protection ct /and the 5olcker (ule contained in the ct2.
)
Be"ore
trans"erring an% o" its shares to a third part% in a 4egal or (egulator% #rans"er, &oldman 3ould
$e o$ligated to gi7e the Young Shareholders and Plastipak a right o" "irst o""er.
4egal or (egulator% #rans"er A to a Permitted #rans"eree
s discussed a$o7e, i" &oldman trans"ers its shares to one or more Permitted #rans"erees
in a 4egal or (egulator% #rans"er, the Permitted #rans"eree/s2 3ill succeed to all o" the rights
that the trans"erring &oldman shareholder had.
4egal or (egulator% #rans"er A to a #hird Part%
I" &oldman trans"ers all or su$stantiall% all o" its shares to a third part% in a 4egal or
(egulator% #rans"er, then the third part% purchaser 3ill succeed to all o" &oldman?s rights 3ith
three e'ceptions i" the trans"er occurs $e"ore the earlier o" ugust ., +,)* and a Ke% Man !7ent.
#hese three e'ceptions are descri$ed in Section C.,)/$2 o" the Shareholders greement.
First, the third part% 3ill start a ne3 "i7eA%ear in7estment period that 3ill $egin on the
date o" the 4egal or (egulator% #rans"er. ccordingl%, all re"erences to the 0"i"th anni7ersar%1
o" the &oldman in7estment in the Shareholders greement 3ill $e deemed to $e the "i"th
anni7ersar% o" the third part%?s consummation o" the 4egal or (egulator% #rans"er instead.
Second, a"ter the 4egal or (egulator% #rans"er, re"erences to the 0&SCP In7estment1 in
the Shareholders greement 3ill $e deemed to $e the lesser o" &oldman?s aggregate e@uit%
in7estment or the amount the third part% paid "or &oldman?s Plastipak shares, 3hich ma% ha7e
important implications i" the third part% purchaser e7er e'ercises the 0put option1 in the
Shareholders greement. #he third part% purchaser 3ould $e a$le to re@uest that Plastipak
purchase its shares upon the earlier o" the "i"th anni7ersar% o" the trans"er or a Ke% Man !7ent /i"
Plastipak has not $een sold or has not gone pu$lic $% then2. #he 0put price1 is the greater o" /)2
) n anal%sis o" &oldman?s 0reasona$le $elie"1 that a 4egal or (egulator% #rans"er o" its shares 3as necessar% or
appropriate to $ring itsel" into compliance 3ith the la3 3ould $e $ased on "actors including, $ut not limited to, /)2
the te't o" the la3 or regulation, /+2 other alternati7es a7aila$le to &oldman, short o" disposing o" all or su$stantiall%
all o" its pri7ate e@uit% "unds /and their port"olio companies, such as the Plastipak port"olio in7estment held $% &S
Capital Partners 5I Parallel 4. P2, and /-2 in the case o" the 5olcker (ule, &oldman?s e""orts to seek the Federal
(eser7e Board?s appro7al to de"er di7estiture o" its pri7ate e@uit% "unds.
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page *
the "air market 7alue o" the shares, ;( /+2 the amount 3hich 3ould earn the third part% an I((
o" CH on the lesser o" &oldman?s aggregate e@uit% in7estment or the amount that the third part%
paid "or &oldman?s Plastipak shares.
!LMP4!8 &oldman in7ests J--) million in Plastipak?s shares, $ut trans"ers its
Plastipak shares to Big Bucks Pri7ate !@uit% Firm in a 4egal or (egulator% #rans"er "or
J-*= million. Prior to the earlier o" the "i"th anni7ersar% o" the trans"er or a Ke% Man
!7ent, 3hen the "air market 7alue o" Big Buck?s Plastipak shares is J-=, million, Big
Bucks 3ants to e'ercise the put option. #he 0put price1 3ould $e the greater o" J-=,
million /"air market 7alue2 or the amount necessar% "or Big Bucks to earn an CH I(( on
an in7estment o" J--) million /i.e., &oldman?s original in7estment, and not Big Bucks?
o3n in7estment o" J-*= million2.
#hird, the third part% 3ould appoint a ne3 shareholder representati7e to consent to ke%
corporate actions.
E!planation of Dra"#Alon" Ri"ts
DragAalong rights are rights to re@uire shareholders o" a compan% to cooperate 3ith the
$oard o" directors andMor a selling shareholder in e""ecting the sale o" the compan% as an
enterprise. #%pical dragAalong pro7isions re@uire a shareholder to cooperate in a proposed sale
$%8 selling his or her shares to the purchaser on the same terms and conditions as the selling
shareholder /or on the terms and conditions negotiated 3ith the purchaser $% the $oard29 7oting
his or her shares in "a7or o" the proposed sale transaction9 and agreeing not to e'ercise an%
0dissenter?s rights1 under state la3, under 3hich the shareholder might petition a court to $e paid
the "air 7alue o" the shares instead o" participating in the sale transaction.
#here are three instances in 3hich Plastipak?s shareholders can $e 0dragged along1 in the
sale o" Plastipak as an enterprise under the Shareholders greement8
&oldman and the Young Shareholders $oth agree on the terms o" a sale o"
Plastipak as an enterprise. #he% can then e'ercise dragAalong rights and re@uire
the other Plastipak shareholders to cooperate in the sale. See Section =.,+/a2 o"
the Shareholders greement.
Plastipak and the Young Shareholders re:ect a right o" "irst o""er to purchase
&oldman?s shares /gi7en $% &oldman a"ter the "i"th anni7ersar% o" &oldman?s
in7estment /assuming no prior IP; or sale o" Plastipak2 , or upon a Ke% Man
!7ent, "or e'ample2, or the% "ail to close on the right o" "irst o""er 3ith a cash
pa%ment a"ter accepting &oldman?s right o" "irst o""er. &oldman ma% then
unilaterall% initiate a sale o" Plastipak, and re@uire the other Plastipak
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SE"#URN $AHN
ATTORNE"S % COUNSELORS
&'() 1!, 2014
William C. Young
ugust )*, +,)-
Page C
shareholders to cooperate in the sale. See Sections =.,+/a2 and =.,</d2/i72 o" the
Shareholders greement.
Plastipak does not agree to redeem &oldman?s shares "ollo3ing &oldman?s put
option re@uest, or Plastipak agrees to purchase &oldman?s shares "ollo3ing the
put re@uest $ut de"aults on pa%ment o" the put price. &oldman ma% then
unilaterall% initiate a sale o" Plastipak, and re@uire the other Plastipak
shareholders to cooperate in the sale. See Sections =.,+/a2 and =.,>/"2 o" the
Shareholders greement.
In circumstances in 3hich &oldman, or &oldman and the Young Shareholders together,
ma% e'ercise dragAalong rights, the other Plastipak shareholders are re@uired to8 7ote their
shares in "a7or o" the sale transaction9 3ai7e dissenter?s rights that ma% $e a7aila$le to them9 and
deli7er their shares to an escro3 agent pending closing o" the transaction /i" the sale transaction
is a share sale or merger2. #he other Plastipak shareholders 3ho are 0dragged along1 generall%
3ill recei7e the same "orm and amount o" consideration as the shareholders initiating the sale
/i.e. &oldman, or &oldman and the Young Shareholders2, 3ith the e'ception o" consideration "or
ser7ices, such as in7estment $anking "ees, in7estment ad7isor% "ees or nonAcompetition
agreements.
N N N
Please let us kno3 i" %ou ha7e an% @uestions a"ter reading this memorandum. We 3ould
$e happ% to pro7ide an% additional in"ormation %ou re@uest.
Cc8 (o$ert ;?Donnell
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