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Exhibit 10.1    
    

 
 

SHAREHOLDERS AGREEMENT    
    
    among    
    
    EDWARD P. FITTS, JR., Individually    
    
    and    
    
    EDWARD P. FITTS, JR., VOTING TRUSTEE    
    
    and    
    

PAPERBOARD U.S. HOLDINGS, INC.    
    
    and    
    
    PAPERBOARD INDUSTRIES CORPORATION    
    
    and    
    
    PAPERBOARD INDUSTRIES INTERNATIONAL INC.    
    
    and    
    
    DOPACO,
 INC.    
    

 

THIS
AGREEMENT (this "Agreement") is made effective the 2nd day of May 1997, 

	AMONG:	EDWARD P. FITTS, JR. residing and domiciled in Chester County, Pennsylvania (referred to herein as "Fitts")
	

AND:	

EDWARD P. FITTS, JR., VOTING TRUSTEE, of a voting trust (referred hereinafter as the "Fitts VT") established by a Voting Trust Agreement, dated May 2, 1997 (the "Voting Trust Agreement")
	

AND:	

PAPERBOARD U.S. HOLDINGS, INC., a corporation duly incorporated under the laws of Delaware (referred to herein as "PHI")
	

AND:	

PAPERBOARD INDUSTRIES CORPORATION, a corporation duly incorporated under the laws of Ontario (referred to herein as "PIC")
	

AND:	

PAPERBOARD INDUSTRIES INTERNATIONAL INC., a corporation duly incorporated under the laws of Canada (referred to herein as "PII")
	

AND:	

DOPACO, INC., a corporation duly incorporated under the laws of the Commonwealth of Pennsylvania, the principal offices of which are located in Downingtown, Pennsylvania (referred to herein as the "Corporation")

        WHEREAS contemporaneous with the execution of this Agreement, PHI, a wholly-owned subsidiary of PII, and the Corporation have entered into a share subscription
agreement (the "Subscription Agreement") pursuant to which PHI has subscribed to purchase common shares of the capital stock of the Corporation representing approximately 20% of the Shares, as defined
in the Subscription Agreement at Section 1.1.28; 

        WHEREAS
Fitts and the Fitts VT collectively own common shares of the capital stock of the Corporation representing approximately 79.5% of the outstanding Shares as defined below, and
Fitts and the Fitts VT anticipate that, as a result of increased participation in the Fitts VT, Fitts and the Fitts VT will own Shares representing approximately 80% of all outstanding Shares; 

        WHEREAS
it is the intention of PHI to increase its participation in the common stock of the Corporation to 50% either directly or through PII or PIC, and Fitts and the Corporation have
agreed to grant an option which would permit such an increase to occur; 

        WHEREAS
it is a condition to the subscription of shares of the Corporation by PHI that a shareholders agreement be executed by Fitts, the Fitts VT, the Paperboard Group, as defined
below, and the Corporation in order to record their mutual understanding as to the manner in which the affairs of the Corporation shall be conducted and to provide for their respective rights and
obligations including the aforementioned option to the Paperboard Group to acquire additional shares; 

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        WHEREAS
PII and PIC hereby agree to act as guarantors and sureties of all of the obligations of the members of the Paperboard Group, as defined below, arising from this Agreement and the
Subscription Agreement; and 

        WHEREAS
the parties hereto deem it advisable to collaborate in order to establish long-term business relationships between the Corporation and PII and its Affiliates to
develop a full service packaging business for the quick service restaurant industry. 

NOW
THEREFORE IN CONSIDERATION OF THE ABOVE PREMISES AND OF THE
MUTUAL COVENANTS HEREINAFTER SET FORTH, THE PARTIES AGREE, INTENDING TO BE LEGALLY BOUND HEREBY, AS FOLLOWS: 

	1.
	INTERPRETATION

	1.1
	Definitions.    For the purposes hereof, the following words and phrases shall have respectively the following meanings,
unless the context otherwise requires:

	1.1.1
	"Affiliate":
any person or entity that directly or indirectly, through one or more intermediaries, has control of or is controlled by, or is under common control with, the person or
entity specified;

	1.1.2
	"Agreement":
this Shareholders Agreement and all instruments supplemental hereto or in amendment or confirmation hereof; "herein," "hereof," "hereto," "hereunder" and similar
expressions mean and refer to this Agreement and not to any particular Section, subsection or other subdivision; "Section" of this Agreement means and refers to the specified Section,
Subsection or other subdivision of this Agreement;

	1.1.3
	"Book
Value": in respect of the Shares, shall be the book net worth of the Corporation (on a consolidated basis with subsidiaries, if any), less the amount of the liquidation
preference of any outstanding preferred stock of the Corporation, on the last day of the last complete fiscal year divided by the number of Shares outstanding on such date, as reflected in the latest
audited Financial Statements of the Corporation;

	1.1.4
	"Business":
(a) the business of producing, selling, marketing and distributing packaging material for the quick service restaurant industry and (b) other business
which is complementary or incidental to or in furtherance of the foregoing, but excluding the manufacturing of paperboard;

	1.1.5
	"Business
Day": a day, other than a Saturday or Sunday, on which banks are open for business both in the Commonwealth of Pennsylvania (USA) and in the province of Quebec (Canada);

	1.1.6
	"Code":
the Internal Revenue Code of 1986, as amended;

	1.1.7
	"Common
Shares": outstanding shares of the sole authorized class of common stock of the Corporation; 

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	1.1.8
	"Competitor":
any person or entity engaged in the Business anywhere in the world;

	1.1.9
	"Control":
with respect to a corporation, the effective right to elect the majority of the directors of a corporation;

	1.1.10
	"Determination":
(i) a decision, judgment, decree or other order by the United States Tax Court, or any other court of competent jurisdiction, that has become final and
unappealable; (ii) a closing agreement under Code section 7121 or a comparable provision of any state, local or foreign tax law that is binding against the Internal Revenue Service or
any other taxing authority; (iii) any other final settlement with the Internal Revenue Service or any other taxing authority; or (iv) a final disposition of a claim for refund as defined
in Code section 1313(a)(3) or under a comparable provision of state, local or foreign tax law.

	1.1.11
	"Dollar,"
"dollars" and the sign "$": lawful money of the United States of America;

	1.1.12
	"EBITDA":
earnings before interest, taxes, depreciation and amortization as established in accordance with GAAP, as defined below;

	1.1.13
	"Extraordinary
Items": any material non recurring gain, loss, expense or revenue recorded in a given year which was not incurred in the ordinary course of business, such as gain or
loss on the sale of a plant, plant relocation and up to 12 months of the start-up expenses for a new plant, and premiums, in an amount not to exceed $250,000 per fiscal year of the
Corporation, paid by the
Corporation, during a period beginning on the date of this Agreement and ending on March 31, 2003, in connection with life insurance policies, the proceeds of which are payable to a trust
established by Fitts or Fitts' designated beneficiaries;

	1.1.14
	"Financial
Statements": the balance sheet, the statement of income and the statement of cash flow of the Corporation at the relevant time, as the same shall have been audited and
reported upon in accordance with GAAP, by the duly appointed auditors of the Corporation;

	1.1.15
	"Fitts
Group": collectively, Fitts, the Fitts VT, and their respective Permitted Transferees;

	1.1.16
	"Fitts
Group Shares": collectively, all outstanding Shares held by the Fitts Group;

	1.1.17
	"GAAP":
generally accepted accounting principles, as in effect in the United States of America;

	1.1.18
	"Incapacity":
the complete inability of Fitts to exercise his job functions for a period of more than 180 days due to mental or physical illness; 

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	1.1.19
	"Libor
Rate": the annual rate of interest equal to the average (rounded upwards, if necessary, to the nearest whole multiple of 1/16 of 1%) of the rates shown on the
Reuters Monitor Money Rates Service Screen (LIBO page) as being offered by the bank being the major lender of the Corporation, as of 11:00 a.m. (London, England time) the day on which the
interest is payable, for U.S. Dollars deposits for 30 days in an amount comparable to the amount payable; if such rates are not available on such date, the Libor Rate shall be equal to the rate
of interest the major lender of the Corporation would be prepared to offer to leading banks in the London (England) Interbank Market for such deposits for 30 days at 11:00 a.m. (London,
England time) on the relevant date. For purposes of this Agreement Libor Rate shall mean the Libor Rate in effect on the first day of each calendar quarter during the term of the obligation bearing
the Libor Rate;

	1.1.20
	"Net
Outstanding Debt": long-term debt, including the short-term portion, plus bank advances less cash and short-term temporary investments as
established in accordance with GAAP and as set forth on the applicable audited balance sheet(s) of the Corporation;

	1.1.21
	"Option
Shares": as defined at Section 6.1.3 hereof;

	1.1.22
	"Paperboard
Group": collectively, any and all of PII, PIC and PHI, jointly and severally; provided that the Paperboard Group shall consist of PII and PHI only, for the purposes of
any provision of this Agreement that provides for a purchase of Shares by the Paperboard Group, until such time as PIC becomes and continues to be an unsecured borrower;

	1.1.23
	"Parties"
or "Party" (with or without initial capital letter): the Shareholders and, where the context so requires, the Corporation, or any one of them;

	1.1.24
	"Permitted
Transferee": a person or entity to whom a Shareholder may transfer shares in accordance with Section 5.2;

	1.1.25
	"Person":
an individual, corporation, company, cooperative, partnership, trust, unincorporated association, government or government agency, department or instrumentality;

	1.1.26
	"Public
Offering" as defined in Section 3.6.2;

	1.1.27
	"Related
Party": any lineal descendent, sibling, lineal descendent of a sibling, in each case whether by blood or adoption, parent, spouse, spouse of a lineal descendent, lineal
descendant of a sibling, or sibling of a spouse (collectively, "family members"), or a trust for the primary benefit of one or more family members, of any Shareholder, and any personal
representatives, executors or administrators of any Shareholder and, as to each member of the Fitts Group, the other members of the Fitts Group, including the members of the Fitts VT;

	1.1.28
	"S
Corporation": the meaning set forth in Code section 1361(a)(1); 

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	1.1.29
	"S
Corporation Taxable Income": taxable income (or loss) of the Corporation from all sources during the period the Corporation was an S Corporation through and including the close
of business on the last day of the S Short Year of the Corporation;

	1.1.30
	"S
Short Year": that portion of the S Termination Year of the Corporation as defined in Code section 1362(e)(1)(A);

	1.1.31
	"S
Termination Year": the meaning set forth in Code section 1362(e)(4);

	1.1.32
	"Share"
or "Shares": any outstanding shares of Common Stock, including shares of Common Stock which are issuable upon exercise of outstanding stock options, warrants or conversion
features;

	1.1.33
	"Shareholder":
each of (a) the Fitts Group and (b) the Paperboard Group;

	1.1.34
	"Subscription
Agreement": the Subscription Agreement made as of this day between the Corporation, Fitts, the Fitts VT and PHI;

	1.1.35
	"Tax
Benefit": with respect to a taxable period of a party, any increase in the deductions, losses or credits, or decrease in the income, gains or recaptured credits, of such
party;

	1.1.36
	"Tax
Benefit Amount": with respect to any Member who realizes a Tax Benefit resulting from a
Determination, the excess of (i) the tax liability (including alternative minimum tax liability) of such Member computed without regard to such Tax Benefit over (ii) the tax liability
(including alternative minimum tax liability) of such Member computed by taking into account such Tax Benefit;

	1.1.37
	"Termination
Date": the date on which the S Corporation status of the Corporation is terminated pursuant to Code section 1362(d); and

	1.1.38
	"Termination
of Employment": Termination of Employment shall be deemed to have occurred at such time as Fitts' service to the Corporation as chief executive officer of the
Corporation has either been terminated by the Board of Directors for any reason other than cause or has been terminated by Fitts following a reduction of his duties or authority or his reassignment
outside the Delaware Valley; for the purposes of this definition "cause" shall mean (a) refusal by Fitts to perform and discharge his material duties to the Corporation, (b) misconduct
related to the Corporation which is injurious to the Corporation or (c) conviction of or plea of no contest to a felony or a misdemeanor, if such misdemeanor involves the personal dishonesty of
Fitts in a matter which directly relates to and impacts the Corporation, (in the case of a conviction, after exhaustion of all appeals relating thereto); for purposes of any determination by the Board
of Directors of the Corporation concerning the matter discussed in the immediately preceding clause, any vote by Fitts, as a director of the Corporation, and any vote by one director, who has been
selected by the Paperboard Group as one of its representatives on the Corporation's Board of Directors, shall be disregarded. 

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In
addition, all terms defined in the Subscription Agreement shall have, when used herein and unless the context specifically precludes the same, the meaning ascribed thereto in the Subscription
Agreement. 

	1.2
	Gender.    Any reference in this Agreement to any gender shall include all genders and words used herein importing the
singular only shall include the plural and vice versa.

	1.3
	Headings.    The division of this Agreement into Sections, subsections and other subdivisions and the insertion of headings
are for convenience of reference only and shall not affect or be utilized in the construction or interpretation of this Agreement.

	1.4
	Invalidity of Provisions.    If any provision of this Agreement is held invalid, such invalidity shall not affect the other
provisions hereof which can be given effect without the invalid provision, and to this end the provisions of this Agreement are intended to be and shall be deemed several;  provided, however, that if the provision or provisions so held invalid are so fundamental to the intent
of the parties hereto and the operation of this Agreement that the enforcement of the other provisions hereof, in the absence of such invalid provision or provisions, would damage irreparably the
intent of the parties in entering into this Agreement, the parties hereto shall (a) terminate this Agreement, or (b) amend or otherwise modify this Agreement so as to carry out the
intent and purposes hereof and the transactions contemplated hereby.

	1.5
	Entire Agreement.    This Agreement, together with the Subscription Agreement, and all agreements and other documents to be
delivered or required to be delivered pursuant hereto or thereto, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersede all prior agreements,
understandings, letter(s) of intent (including the Letter of Intent), negotiations, and discussions, whether oral or written, of the Parties, and there are no representations, warranties or
conditions, expressed or implied, statutory or otherwise, among the Parties in connection with the subject matter hereof, except as specifically set forth herein and therein.

	1.6
	Amendments.    No supplement, modification or waiver of this Agreement shall be binding unless otherwise expressly provided
in a writing duly executed by the Parties.

	1.7
	Waiver.    No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other
provisions (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided in a writing duly executed by the Party to be bound thereby.

	1.8
	Delays.    When calculating the period of time within which or following which any act is to be done or step taken pursuant
to this Agreement, the day which is the reference day in calculating such period shall be excluded.

	1.9
	Schedules.    The Schedules attached hereto are incorporated into this Agreement by reference and deemed to be a part hereof.

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	2.
	VOTING RIGHTS

	2.1
	Exercise of Voting Rights.    Each Shareholder shall exercise all voting rights attaching to any of its Shares in a manner
that will directly or indirectly cause this Agreement to be carried out duly, punctually and efficiently, including as provided in Sections 20 and 21. Without limitation, the Corporation shall
carry out and be bound by this Agreement to the fullest possible extent of its capacity and power.

	3.
	BY-LAWS, BOARD OF DIRECTORS, MANAGEMENT

	3.1
	By-laws.    The By-laws of the Corporation shall be in the form of By-laws annexed hereto
as Schedule 3.1.

	3.2
	Board of Directors.    Subject to Sections 3.8 and 12.2, the Board of Directors of the Corporation shall be comprised
of six directors; it being understood that:

	3.2.1
	a
Shareholder having the right to cast votes for more than 80% of the Common Shares shall have six nominees on the Board of Directors of the Corporation;

	3.2.2
	a
Shareholder having the right to cast votes for more than 65% but not more than 80% of the Common Shares shall have five nominees on the Board of Directors of the Corporation;

	3.2.3
	a
Shareholder having the right to cast votes for more than 50% but not more than 65% of the Common Shares shall have four nominees on the Board of Directors of the Corporation;

	3.2.4
	a
Shareholder having the right to cast votes for 50% of the Common Shares shall have three nominees on the Board of Directors of the Corporation;

	3.2.5
	a
Shareholder having the right to cast votes for at least 35% but less than 50% of the Common Shares shall have two nominees on the Board of Directors of the Corporation;

	3.2.6
	a
Shareholder having the right to cast votes for at least 20% but less than 35% of the Common Shares shall have one nominee on the Board of Directors of the Corporation; 

If,
in order to comply with the above provisions, a Shareholder must at any time reduce the number of its nominees on the Board of Directors, such Shareholder shall cause, upon written notice from the
other Shareholder, the resignation of such number of its nominees on the Board of Directors as are in excess of the number of nominees to which it is entitled pursuant to this Section 3.2. Upon
any such resignation, the resulting vacancy shall be filled by the Shareholders such that the Board of Directors is composed of persons nominated pursuant to this Section 3.2. 

In
the event that a vacancy occurs on the Board of Directors of the Corporation, other than a vacancy occurring as a result of a change in shareholding pursuant to the above paragraph, then the
Parties agree to cast their votes in a manner such that such vacancy shall be filled by a 

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nominee
of the Shareholder who originally nominated the Director who previously occupied the vacant position. 

The
Board of Directors shall appoint annually the Chairman of the Board, the President, the Treasurer, the Secretary and such other officers of the Corporation as it shall deem advisable. 

Subject
to the terms of Sections 3.8, 12.2 and 20.1 the Paperboard Group shall have the right to select: (i) at such time as the Paperboard Group owns between 35% and 49% of the Shares,
one representative to serve on the Compensation Committee of the Board of Directors of the Corporation; and (ii) as to all other committees of the Board of Directors, and as to the Compensation
Committee commencing at such time as the Paperboard Group owns 50% of the Shares, a number of representatives to serve on each such committee that represents the same percentage of the entire
committee as the number of Paperboard Group directors represents to the entire Board of Directors, but in any event the Paperboard Group shall be entitled to at least one representative at any time
that the Paperboard Group has at least one representative on the Board of Directors. Any action by the Executive
Committee in connection with a matter listed in Section 3.5 shall require the approval of a majority of the members of the Executive Committee. Any action by the Executive Committee in
connection with a matter listed in Section 3.6 shall require the unanimous approval of the Executive Committee. 

	3.3
	Quorum.    Subject to Sections 3.8 and 12.2 the By-laws shall provide that the quorum at any meeting of
the Board of Directors shall be a majority of the directors; provided, however, that no quorum shall be
deemed to exist unless there is in attendance at any meeting at least one director nominated by each Shareholder holding, at the time of such meeting, at least 20% of the Common Shares. Subject as
stated below, the By-laws shall also provide that, in the event that there is not a quorum present at a duly-called meeting, the Chairman of the Board or, in his absence, the
Secretary of the Corporation, will have the authority to reconvene the meeting, by written notice to such effect given to all the directors, at a place and time (not less than three days and not more
than 20 days after the date thereof) to be specified in such notice, and the directors present at such meeting, whatever their number, shall constitute a quorum. 

Any
other provision of this Agreement notwithstanding, in no event shall a Shareholder be deemed to be a less than 20% Shareholder for the purposes of Section 3.2 and this Section 3.3 if
the Shareholder ceases to be the owner of at least 20% of the outstanding Shares as a result of the issuance(s) of Shares pursuant to the Employee Stock Option Plans, as defined below in
Section 3.6.2. 

	3.4
	Meeting of Directors.    Unless and until otherwise agreed by the Shareholders, there shall be a meeting of the Board of
Directors of the Corporation at least once every three months, and all such meetings shall be held at the principal office of the Corporation or at such other place as the Directors may agree
upon.

	3.5
	Certain Matters Subject to Majority Approval of the Board of Directors or Shareholders.    Any other provision of this
Agreement notwithstanding, but subject to Sections 3.8, 12.2 and 21.1, any resolution regarding the following matters will require the approval of (a) a 

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majority
of the Board of Directors or (b) where shareholder action is required by law, shareholders holding more than 50% of the Common Shares: 

	3.5.1
	any
sale or lease of assets or the granting of any option to lease or sell assets valued at $3,000,000 or more;

	3.5.2
	the
creation of a subsidiary of the Corporation;

	3.5.3
	any
individual acquisition of capital property, including without restriction real estate or equipment, in excess of $3,000,000, which is significantly different from what was
planned in the Capital Budget;

	3.5.4
	the
investment of funds, generated by the Corporation, outside the ordinary course of business of the Corporation, other than the investment with a financial institution having at
least an "A" rating with Standard & Poors in debt securities having a maturity of less than one year;

	3.5.5
	any
material change to any retirement plan, pension plan or similar plan of the Corporation, except in response to or required by applicable law;

	3.5.6
	any
non-arm's length transactions with a Shareholder, an Affiliate or a Related Party other than the renewal or continuation of arrangements existing on the date hereof;

	3.5.7
	any
material transaction outside the ordinary course of business;

	3.5.8
	the
annual Operating, Marketing and Capital Budgets;

	3.5.9
	any
material change in the Corporation's policy for the hiring of senior management and their remuneration;

	3.5.10
	any
declaration or payment of dividends by the Corporation except for: (i) the payment of any and all dividends which were approved by the Board of Directors prior to or on
the date hereof and of which PHI and/or its representatives have been apprised prior to the date hereof shall not require any further approval; and (ii) the payment of dividends in connection
with the dividend policy adopted by the Board of Directors on April 9, 1997; and

	3.5.11
	any
contract in connection with the purchase or sale of goods or services, excluding any contract for the purchase of equipment, that represents a commitment in excess of
$5,000,000 which has a duration in excess of one year.

	3.6
	Certain Matters Subject to Unanimous Approval of the Board of Directors or Shareholders.    Any other provision of this
Agreement notwithstanding, but subject to Sections 3.8, 12.2 and 21.1, any resolution regarding the following matters will require the unanimous approval of (a) the Board of Directors or
(b) where shareholder action is required by law, the Shareholders: 

10

  

	3.6.1
	any
reduction or distribution of capital by the Corporation except as a result of dividends declared by the Board of Directors in accordance with Sections 3.5.10 or 3.6.8;

	3.6.2
	any
issuance or redemption of Shares by the Corporation, or any issuance of options or securities convertible into Shares, except any of the following: issuances pursuant to the
Option; issuances of stock and options in connection with employee stock options (current employee stock options are listed on Schedule 3.6.2)
pursuant to the Corporation's existing employee stock option and grant program which was authorized by a resolution of the Board of Directors of the Corporation on November 12, 1991, a copy of
the minutes of the November 12, 1991 Board of Directors meeting is attached hereto as Schedule 3.6.2 (the "Employee Stock Option Plans");
redemptions of Shares held of record by the Fitts VT, the current beneficiaries of which are listed on Schedule 3.6.2; redemptions of Shares
issued in connection with the Employee Stock Option Plans; issuances and redemptions which are specifically provided for in this Agreement, issuances by the Corporation implementing a stock dividend,
stock split or similar action affecting all of the Corporation's shareholders pro rata and issuances in connection with a sale to the public of securities issued by the Corporation subject to the
Corporation's compliance with the terms of Section 3.7 (a "Public Offering");

	3.6.3
	the
issuance of debt or guarantees secured by the fixed property of the Corporation in an amount in excess of $25,000,000;

	3.6.4
	any
fundamental change to the nature of the Business of the Corporation;

	3.6.5
	the
sale of a subsidiary of the Corporation;

	3.6.6
	any
material amendment to the Articles or By-laws of the Corporation;

	3.6.7
	the
liquidation, dissolution or merger of the Corporation or of any material subsidiary of the Corporation; and

	3.6.8
	any
declaration or payment of dividends that is in excess of the amount determined pursuant to Section 3.5.10.

	3.7
	Majority Consent of the Board of Directors for a Public Offering; Covenants in Event of Public Offering.

	3.7.1
	Any
other provision of this Agreement notwithstanding, any resolution regarding a Public Offering may be approved by a majority of the Board of Directors if the following conditions
are met:

	3.7.1.1
	a
majority of the Board of Directors, in the reasonable business judgment of such majority, determines that the Corporation requires funds (the "Funds") for specific corporate
purposes, which may include working capital, and that a Public Offering is, in the reasonable business 

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	judgment
of a majority of the Board of Directors, the most appropriate alternative for raising such funds;

	3.7.1.2
	prior
to any filing by the Corporation with the Securities and Exchange Commission of a registration statement in connection with a Public Offering, the Paperboard Group is
provided the opportunity by notice given to it by the Corporation to exercise (on an accelerated basis) the Option provided to it in Section 6.1 on a date not less than 60 days after
receipt of notice from the Corporation (by purchase from the Corporation or, if Fitts so elects, as provided in Section 6.1, from Fitts or the Fitts Group), to increase the Paperboard Group's
percentage ownership of Shares up to 50% of the then outstanding Shares (but no less than the 5% of the then outstanding shares unless such exercise is in lieu of the last scheduled Option exercise
pursuant to the term of Section 6.1) as it may elect, and either (a) the Paperboard Group elects not to accelerate the exercise of the Option or (b) the Paperboard Group elects to
accelerate the Option and, immediately following such Option exercise, the Corporation (whether or not because Fitts elects to sell Shares owned by him to the Paperboard Group upon its exercise of the
Option) continues to require the Funds.

	3.7.2
	Notwithstanding
anything in Section 3.7.1 to the contrary, in the event of any Public Offering, other than pursuant to the terms of Section 8, the parties agree as
follows:

	(a)
	immediately
following any Public Offering, Fitts and the Paperboard Group will hold Shares which, in the aggregate, represent at least 50.1% of the Common Shares except as otherwise
permitted under (b), (c) and (d), below;

	(b)
	if
the Corporation has made an initial Public Offering and Fitts or the Paperboard Group desire to sell Shares in the public market or otherwise, after the sixth anniversary of the
date of this Agreement, Fitts or the Paperboard Group may do so, notwithstanding the terms of Section 3.7.2(a), provided that Fitts or the Paperboard Group first provides the other party with
an opportunity to purchase such Shares. If Fitts or the Paperboard Group is required to provide such right to purchase to the other party, he or it shall provide written notice to the other party at
least 30 days prior to any proposed sale of Shares, which notice shall provide that the other party has the right to purchase all such Shares during such 30-day period, for cash to
be paid at a closing held on or before the expiration of the 30-day period, at a purchase price based on the Average Share Price, as defined below. For the purposes hereof, "Average Share
Price" shall be based on a per Share value equal to the per Share closing price as reported on the New York Stock Exchange, the American Stock Exchange, the Nasdaq National 

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	Market
or the Nasdaq SmallCap Market, as the case may be, for a 20 consecutive trading day period ending with the third trading day prior to the closing
date for the purchase and sale of such Shares;

	(c)
	if
a party does not purchase the Shares offered to it by the offering party pursuant to the terms of subparagraph (b), above, Fitts shall have the right to require the Corporation to
register Shares held by Fitts which Fitts desires to sell and the Paperboard Group shall have the right to require the Corporation to register Shares held by the Paperboard Group which the Paperboard
Group desires to sell, pursuant to the terms of a Registration Rights Agreement which is attached hereto as Schedule 3.7.2(c) (the "Registration
Rights Agreement");

	(d)
	immediately
after closing of the Corporation's initial Public Offering anything to the contrary contained in this Agreement notwithstanding, the following provisions of this Agreement
shall no longer be in effect: Sections 3 (except Sections 3.7.2 and 3.7.3); 7; 8; 9; 10; 11; 12; 16; 18; 20; and 21;

	(e)
	subject
to the terms of Sections 3.8 and 12.2 immediately after closing of the Corporation's initial Public Offering, the operative terms of the Contingent Voting Agreement
which will be executed and delivered by Fitts and the Paperboard Group on the date hereof (the "Contingent Voting Agreement") shall become effective; and

	(f)
	the
record ownership of Shares held in the Fitts VT may be transferred to the beneficial owner of such Shares if the beneficial owner desires to sell such Shares in a Public Offering,
such transfer shall take place immediately prior to the sale of such Shares and, if for any reason such Shares are not sold in the Public Offering, record ownership of such Shares shall remain with
the beneficial owner.

	

	If
the above conditions are not met, subject to Sections 3.8, 12.2 and 21.1 and any other provisions of this Agreement inconsistent with the
provisions of this sentence and except as provided in Section 8.2, the consent of the Board of Directors provided in Section 3.6 will be required prior to the issuance of any of
securities of the Corporation in connection with a public offering.

	3.7.3
	If,
as a result of a Public Offering, the Paperboard Group would own less than 20% of the Common Shares immediately after the Public Offering, provided and so long as the Paperboard
Group is in compliance with the terms of this Agreement, for a period of five years from the date of this Agreement, the Paperboard Group shall have the option to acquire additional Shares,
contemporaneously with the closing of the Public Offering, for the purpose of maintaining a minimum ownership of 20% of the Common Shares, which 

13

 

	

	Common
Shares, may be purchased from the Corporation by the Paperboard Group, or, at the option of Fitts, may be purchased from Fitts by the Paperboard
Group, at a purchase price per Share that is equal to the lesser of a purchase price per Share determined in accordance with the terms of Section 6.1 or the applicable Public Offering price.
The purchase price to be paid in connection with any purchase by the Paperboard Group pursuant to the terms of this Section shall be paid in full in cash at the closing for the purchase of the
Shares, which shall be held contemporaneously with the closing of the Public Offering.

	3.8
	Effect of Expiration of Option Term: Failure to Exercise Option Installments. Any other provision of this Agreement notwithstanding, if
the Option provided for in Section 6.1 is not exercised either (a) in full at the end of the Option term, or (b) with respect to any two option exercises provided for in
Section 6.1.2, on or before the date of the expiration of the 30-day period allowed under Section 6.1.2 for the exercise of the second such option exercise, then,
(i) the Option automatically terminates; (ii) any resolution regarding any matter set forth in Section 3.6 thereafter shall require the approval of only a majority of the Board of
Directors or a majority of all of the Shareholders, as the case may be, and (iii) Sections 3.2, 3.5 and 3.7 shall no longer be in effect.

	3.9
	Governance of Subsidiaries.    Subject to Sections 3.8, 12.2 and 21.1 and any other provisions of this Agreement
inconsistent with the provisions of this sentence, the corporate governance provisions set forth in Sections 3.5, 3.6 and 3.7, and the right to representation on the board of directors in proportion
to the Shareholder's equity ownership interest in the Corporation shall apply mutatis mutandis to any wholly-owned subsidiaries of the Corporation.

	4.
	ACCESS TO BOOKS, RECORDS AND OTHER DOCUMENTS

	4.1
	Access for Shareholders.    Shareholders shall have the right to examine, through their duly authorized officers, all books
and records of the Corporation, provided that such examination is conducted after reasonable notice and in a manner so as to not unduly disrupt the business of the Corporation. The Shareholders agree
that all information obtained by the exercise of the aforementioned right shall be kept strictly confidential and that the Shareholders will not disclose any such information in any manner whatsoever
except to the extent that such information becomes a matter of public record and that, at the request of the Corporation, the Shareholders further agree to have their respective authorized officers or
chartered or certified public accountant or solicitor who exercise the aforementioned right on behalf of the Shareholder execute a confidentiality agreement acknowledging that they are bound by the
obligations of confidentiality herein provided.

	5.
	RESTRICTIONS ON TRANSFER

	5.1
	No Transfer.    None of the Shareholders may transfer, cede, sell, assign, pledge, encumber or otherwise dispose of any
Shares, directly or indirectly, except as provided in this Agreement, the Voting Agreement, or the Escrow Agreement required under Section 23. 

14

 
	5.2
	Transfers to Permitted Transferee.    Any Shareholder, other than PHI, PIC or PII, may sell or transfer (including transfers
by will or by operation of law) any of its Shares to an Affiliate or a Related Party (either or both, a "Permitted Transferee"), provided that:

	5.2.1
	the
Permitted Transferee has executed prior to such sale or transfer a counterpart of this Agreement and any other document required; and

	5.2.2
	in
the case of a sale or transfer to a Permitted Transferee which is a corporate Affiliate, the selling or transferring Shareholder has agreed prior to such sale or transfer, in
form and substance reasonably satisfactory to the legal counsel of the Corporation, that as long as the Permitted Transferee holds such Shares, the Shareholder shall not transfer to any Person the
legal and/or beneficial ownership of any issued and outstanding shares or other equity securities of the Permitted Transferee or otherwise transfer the control of the Permitted Transferee by any
mechanism whatsoever, it will continue to be bound by this Agreement as if it continued to be a Shareholder, and guarantees to the Corporation and the other Shareholders the timely performance and
fulfillment by the Permitted Transferee of its obligations and covenants under this Agreement.

	5.3
	Transfers by PHI, PIC and PII.    PHI may only sell or transfer (including transfers by operation of law) Shares owned by it
to PII or, subject to PIC's being a member of the Paperboard Group pursuant to the terms of Section 1.1.20, to PIC. PIC may only sell or transfer (including transfers by operation of law)
Shares owned by it to PHI or PII. PII may only sell or transfer (including transfers by operation of law) Shares owned by it to PHI or, subject to PIC's being a member of the Paperboard Group pursuant
to the terms of Section 1.1.20, to PIC.

	5.4
	No Dissolution of PHI.    In no event will PHI, PIC or PII or any other member of the Paperboard Group consent to, approve
of, participate in, cooperate with or allow any voluntary or involuntary dissolution of PHI or the liquidation of any of its assets, and each of them will take any and all actions reasonable and
necessary to prevent any such dissolution or liquidation. In furtherance of the foregoing covenant of PHI and the other members of the Paperboard Group, PHI will, and the other members of the
Paperboard Group will cause PHI to, refrain from: (i) incurring any debt; (ii) acting as a guarantor of the obligations of any other entity or any individual other than acting as a
guarantor for PIC in connection with PIC's institutional debt; or (iii) granting an interest in any of its assets or pledging or otherwise offering as security for the obligations of any other
entity or any individual any of its stock or its assets other than in connection with a purchase of Shares pursuant to the terms hereof. Additionally, if PII or PIC owns Shares: (a) in no event
will PII or PIC effect a voluntary dissolution; and (b) each of PII and PIC will take all actions reasonable and necessary to prevent its involuntary dissolution.

	5.5
	Termination of Restrictions on Transfer.    The terms of this Section shall cease to apply to the Shareholders on
April 1, 2003 if the Corporation has engaged in a Public Offering of Shares prior to April 1, 2003. If the Corporation engages in Public Offering after April 1, 

15

 
	

	2003,
the terms of this Section 5 shall cease to apply to the Shareholders on the date of the closing of the Public Offering.

	6.
	OPTION IN FAVOR OF THE PAPERBOARD GROUP

	6.1
	Option Rights.    The Paperboard Group shall have the non-assignable right ("Option") to increase their aggregate
shareholdings in the Corporation to a total of 50% of the Shares by purchase of Shares from the Corporation, Fitts or the Fitts Group (as determined in accordance with Section 6.1.5), provided
that it is in compliance with all of the material terms hereof, subject to the following provisions (except as otherwise provided in Sections 3.7.1.2 and 8.1):

	6.1.1
	The
Option is for a term of six years commencing on the date hereof and expiring on a date that is 30 days after the receipt by the Board of Directors of the
Corporation of the Financial Statement for the Corporation's fiscal year ended on or about March 31, 2003;

	6.1.2
	Each
exercise of the Option may be exercised once a year by giving the notice described in Section 6.1.5 within the 30 days following the receipt by the Board of
Directors of the Corporation of the Financial Statements for each of the Corporation's fiscal years beginning with the annual Financial Statements for the fiscal year ending on March 29,
1998;

	6.1.3
	Each
exercise of the Option may only be exercised for a number of Common Shares ("Option Shares") that is equal to at least 5% of all of the Common Shares and no more than 7.5% of
all of the Common Shares provided that the Option may be exercised for a number of Common Shares representing more than 7.5% of the Common Shares: (i) upon the prior approval of a majority of
the entire Board of Directors of the Corporation; (ii) if the Option exercise is the last Option exercise available to the Paperboard Group prior to the expiration of the Option term; or
(iii) if the Option is exercised pursuant to Section 3.7.1.2 or 8.1. Fitts, or if Fitts so elects, the Fitts Group, shall have the right, in lieu of the Corporation, to sell from Common
Shares owned by them all or a portion of the Common Shares that are necessary to satisfy any Option exercise, as further provided in Sections 6.1.4 and 6.1.5;

	6.1.4
	The
price per share of any Option Shares purchased from Fitts or the Fitts Group shall be seven times the average EBITDA of the Corporation, adjusted to exclude Extraordinary Items,
for the preceding two fiscal years less Net Outstanding Debt at the end of the immediately preceding fiscal year divided by the number of Common Shares on the date of the Corporation's audited
Financial Statements for that fiscal year; for all purposes of these calculations (including, without limitation, Extraordinary Items and Net Outstanding Debt), if a long-term investment
has been accounted for by the Corporation using the equity method, then such investment shall be accounted for using the proportionate consolidation method; if some or all of the Option Shares
acquired come from the capital stock of the Corporation, the Option price for such Option 

16

 

	

	Shares
will be calculated in accordance with the terms set forth on Schedule 6.1.4 attached hereto;

	6.1.5
	PHI
shall give notice to the Corporation and Fitts of its intention or of the intention of PIC or PII to exercise the option; within 30 days from receipt of such notice Fitts
shall elect whether Fitts or the Fitts Group will: (i) sell to PHI, PIC or PII, as the case may be, all of the Shares to be purchased in connection with such exercise; (ii) sell some,
but not all, of the Shares to be purchased in connection with such exercise; or (iii) refrain from selling any of the Shares to be purchased in connection with such exercise, and to the extent
necessary the Corporation will issue to PHI, PIC or PII, as the case may be, the number of its Common Shares required to ensure that the purchaser acquires the appropriate number of Option Shares;

	6.1.6
	Anything
to the contrary in Section 6 notwithstanding, if there has not been a Public Offering prior to the date of the Option exercise which will result in the Paperboard
Group's obtaining ownership of 50% of the Shares, the number of Option Shares subject to such exercise shall be based on a percentage of Shares, as defined in Section 1.1.32
(i.e., on a fully diluted basis);

	6.1.7
	Anything
to the contrary in this Section 6 notwithstanding, if the Option is exercised after a Public Offering, any applicable references in this Section 6 to
percentages of Shares shall be deemed to mean percentages of the aggregate number of Shares owned of record by the Paperboard Group and Fitts;

	6.1.8
	The
closing with respect to each Option exercise shall be held within seven days following receipt by the Corporation of the notice from Fitts given under
Section 6.1.5 (or if no notice is given, upon expiration of the 30 day period for Fitts to give such notice), and, on the date of the closing, the purchase price for the Option Shares
shall be paid in cash to the Corporation or Fitts, on his own behalf or on behalf of himself and the other members of the Fitts Group. Pursuant to the terms of Section 23.1, the Corporation
shall deliver the Corporation's stock certificate representing the Option Shares to the Escrow Agent to be held in escrow pursuant to the terms of Section 23 and the terms of the Escrow
Agreement, as defined in Section 23.1 hereof; and

	6.1.9
	Anything
to the contrary in this Section 6 notwithstanding, if the Option is accelerated pursuant to Section 3.7.1.2 or 8.2.3, the provisions of 6.1.2, 6.1.3 and 6.1.5
shall not be applicable.

	6.2
	Signature of PIC and PII.    In the event PIC or PII exercises its rights under the Option, PIC or PII, as the case may be,
shall, by having executed this Agreement at its inception for whatever other purpose, be bound by this Agreement as a Shareholder together with PHI. 

17

 
	7.
	OPTIONS IN FAVOR OF FITTS OR THE CORPORATION

	7.1
	Options in Event of Certain Failures to Exercise "Option".

	

	In
the event the Option provided for in Section 6.1 is not exercised (a) in full at the end of the Option term or (b) with respect to
two or more annual installments during the Option term, then, in either event, the Corporation or Fitts, in accordance with the terms of Section 7.3, shall have the right to repurchase all, but
not less than all, of the Shares held by the Paperboard Group or any of its Permitted Transferees at a purchase price to be determined by the appraisal procedure set forth in Section 14 less a
10% discount on such purchase price.

	7.2
	Change of Control of a Member of the Paperboard Group.

	

	If
(a) Control of PIC, PII or PHI, is no longer held directly or indirectly by Bernard, Laurent or Alain Lemaire or their Related Party or Related
Parties or the Foundation referred to in the letter delivered by Cascades Inc. to Fitts, as Chairman of the Board of the Corporation on the date hereof(a "Paperboard Control Change") or
(b) the principal business of PIC, PII or PHI changes through reorganization, recapitalization, spin-off, split-up or other means or the principal assets or operations
of any such entities are transferred (a "Paperboard Business Sale") then the following provisions shall apply:

	7.2.1
	prior
to the time that the Paperboard Group owns an aggregate of 50% of the Corporation's outstanding Shares if there is a Paperboard Control Change or a Paperboard Business Sale to
(i) a Competitor of the Corporation, (ii) a creditor of PIC, PII or PHI or (iii) any person or entity that Fitts determines, in his reasonable discretion, or if Fitts is no longer
a shareholder of the Corporation that the Board of Directors of the Corporation determines, in its reasonable business judgment, would likely result in a significant negative impact on the Business of
the Corporation, the Corporation and/or the Fitts Group shall have an option, to be exercised in accordance with the terms of Section 7.3, to purchase all, but not less than all, of the Shares
held by Paperboard Group at a purchase price to be determined by the appraisal procedure set forth in Section 14 and to be paid in accordance with the terms of Section 7.3; and

	7.2.2
	at
any time during the term of this Agreement if there is a Paperboard Control Change or a Paperboard Business Sale to (i) a Competitor of the Corporation, (ii) a
creditor of PIC, PII or PHI or (iii) any person or entity that Fitts determines, in his reasonable discretion, or if Fitts is no longer a shareholder of the Corporation that the majority of the
members of the Board of Directors of the Corporation, excluding the members selected by the Paperboard Group, determines, in its reasonable business judgment, would likely result in a significant
negative impact on the Business of the Corporation, the Fitts Group shall have the option, to be exercised in accordance with the terms of Section 7.3, to require that the Paperboard Group
acquire all, but not less than all, of the Fitts Group Shares at a purchase price to be determined in accordance with the 

18

 

	

	appraisal
procedure set forth in Section 14 and to be paid in accordance with the terms of Section 7.3.

	7.3
	Procedure for Exercise of Options; Payment of Purchase Price.

	7.3.1
	The
right to repurchase all of the Shares of the Paperboard Group and its Permitted Transferees as set forth in Sections 7.1 and 7.2.1, shall be exercisable by the
Corporation upon notice given by the Corporation to the Paperboard Group within 45 days after (i) the end of the Option term as set forth in Section 6.1.1, or (ii) the last
day of the 30-day period set forth in Section 6.1.2 within which the second installment referred to in Section 7.1 was to have been exercised, or (iii) the
Corporation's and the Fitts Group's actual knowledge of a change of Control event as discussed in Section 7.2 as applicable. In the event there is no exercise by the Corporation pursuant to the
foregoing procedure the Fitts Group shall have the right to exercise the right to purchase by notice given within an additional 30 days after the notice period set forth above.

	7.3.2
	The
right to require the Paperboard Group to purchase all of the Fitts Group Shares as set forth in Section 7.2.2, shall be exercisable by the Fitts Group upon notice given
by the Fitts Group to the Paperboard Group within 30 days after the Corporation's and the Fitts Group's actual knowledge of a change of Control event as discussed in Section 7.3.1.

	7.3.3
	The
closing on a purchase and sale of Shares pursuant to Sections 7.1 or 7.2, shall occur on or before the 30th day after delivery of the aforementioned appraisal to the
parties involved. The Option provided for in Section 6.1 shall automatically terminate upon any such closing. The purchase price to be paid in connection with any such closing shall bear
interest at an annual rate equal to the Libor rate plus 1% and shall be payable in five equal consecutive annual installments, commencing on the first anniversary, of such closing.

	7.3.4
	If
there is a change of Control of PII, PIC or PHI and the Corporation or Fitts desires to exercise its rights under Section 7.2, any member of the Board of Directors of the
Corporation which was selected by the Paperboard Group or any successors-in-interest to PII, PIC or PHI shall not be entitled to vote on any matters coming before the Board of
Director's which in any manner relate to the exercise by the Corporation, Fitts or the Fitts Group of their rights pursuant to Section 7.2. In the event that there is a conflict between a
provision of this Section 7 and a provision of Section 12, the provision of Section 12 shall govern.

	8.
	OPTIONS IN EVENT OF DEATH OR INCAPACITY OR TERMINATION OF EMPLOYMENT OF FITTS

	8.1
	Purchase by Paperboard Group.    Upon Fitts' death, Incapacity or Termination of Employment, Fitts or the Fitts estate, as
the case may be, shall have the right to require that the Paperboard Group fully exercise the Option provided to it in Section 6.1 and 

19

 
	

	purchase
all of the Shares which have not previously been purchased under the Option, on an accelerated basis, directly from Fitts or the Fitts estate or if
Fitts or his personal representative so elect, the Fitts Group, upon the giving of notice by Fitts or the Fitts estate to the Paperboard Group. The closing of such transaction shall be held on the
60th day following the date of delivery of such notice. The purchase price shall be paid (a) if the foregoing option is exercised as a result of Fitts' death, in the form of a cash down payment
at closing in an amount equal to 55% of the said purchase price, and the balance in four equal consecutive annual installments, commencing on the first anniversary of such closing with interest on the
purchase price at an annual rate equal to the Libor rate plus 1% or (b) if the foregoing option is exercised as a result of Fitts' Incapacity or Termination of Employment, in five equal
consecutive annual installments, commencing on the first anniversary of such closing with interest on the purchase price at an annual rate equal to the Libor rate plus 1%. Notwithstanding the
foregoing sentence, if the sum of the highest federal estate and state death tax rates applicable to Fitts' estate is higher or lower than 55%, then the percentage of the said purchase price payable
at the closing referred to in clause (a) shall be increased or decreased, as the case may be, by an amount by which the said sum differs from 55%. Furthermore, in the event of Fitts'
death subsequent to his Incapacity or Termination of Employment, but before he has received the three installment payments referred to in clause (b) above, within thirty days of
his death, the balance due on any of the first three installments shall be paid to Fitts' estate, and the remaining two installments shall be paid when due.

	8.2
	Registration Rights for Fitts Estate.    Upon the death of Fitts, the Fitts estate shall have the right to require that the
Corporation register its Shares under federal and state securities laws pursuant to the terms of the Registration Rights Agreement in order that it may sell its Shares in the public market, subject to
the following conditions:

	8.2.1
	at
the time of Fitts' death, the Fitts Group owns a 50% equity interest in the Corporation and the members of the Paperboard Group own a 50% equity interest in the Corporation;

	8.2.2
	the
Fitts estate requires, in the reasonable determination of the personal representatives, executors or administrators of the Fitts estate, funds to pay death taxes, estate and
gift taxes and interest or penalties thereon or funds to administer the estate, and can demonstrate its financial need to the Corporation's reasonable satisfaction;

	8.2.3
	the
Fitts estate offers, in writing, to sell to the Paperboard Group, for a cash purchase price to be determined in accordance with Section 14 and to be paid by the
Paperboard Group at a closing to be held within 60 days of the date of the Fitts estate's offer to the Paperboard Group a number of Shares held by it, that will result in the Fitts estate's
receiving sufficient proceeds from the sale of such Shares to meet the Fitts estate's requirement for cash to fund its tax obligations and administration expenses, in which event the Paperboard Group
shall have the option to purchase either the number of Shares so offered by the Fitts estate or all of the Shares owned by the Fitts estate; and 

20

  

	8.2.4
	the
Paperboard Group declines the offer or fails to close on the purchase of the Fitts estate's Shares within the 60-day period provided in Section 8.2.3.

	8.3
	Effect of Exercise of Registration Rights.    If there is a registration of some, but not all, of the Shares owned by the
Fitts estate pursuant to the terms of this Section 8 and it is the first registration of the Corporation's Shares, immediately after closing of the Fitts estate's Public Offering, anything to
the contrary contained in this Agreement notwithstanding, the following provisions of this Agreement shall no longer be in effect: Sections 3, 7, 8, 9, 10, 11, 12, 16, 18, 20 and 21.

	9.
	OPTIONS IN EVENT OF SHAREHOLDINGS OF LESS THAN 20%; OPTION TO MAINTAIN TARGET PERCENTAGES

	9.1
	Option to Purchase in the Event Shareholdings are Below 20%. At any time after a Shareholder ceases to be the holder of at least 20% of
the Common Shares of the Corporation (the "Below Threshold Shareholder"), the other Shareholder shall have the option to require such Below Threshold Shareholder to sell its Shares to such other
Shareholder for a purchase price to be determined by the appraisal procedure set forth in Section 14. The purchase price shall bear interest at an annual rate equal to the Libor rate plus 1%
and shall be payable in five equal consecutive annual installments, commencing on the first anniversary of the closing on the purchase in accordance with the terms of this Section. Such right shall be
exercisable by written notice stating that the Below Threshold Shareholder has ceased to be the holder of 20% or more of the Common Shares and that the other Shareholder intends to purchase the Below
Threshold Shareholder's Shares pursuant to the provisions of this Section 9.1; the Below Threshold Shareholder so notified shall, forthwith upon receipt of such notice, become obligated to sell
its Shares to the other Shareholder. The Closing of such purchase and sale shall be held on or before the 30th day after the date of delivery of such appraisal to the parties involved. In the event
that the Below Threshold Shareholder is the Paperboard Group, the Option provided pursuant to Section 6.1, if still outstanding, shall automatically terminate at such closing.

	

	Any
other provision of this Agreement notwithstanding, in no event shall a Shareholder be deemed to be a Below Threshold Shareholder for the purposes of
this Section 9.1 if the Shareholder ceases to be the owner of at least 20% of the Common Shares solely as a result of the issuance(s) of Common Shares pursuant to the Employee Stock Option
Plans.

	9.2
	Option for Paperboard Group to Maintain Target Percentage Ownership. If at any time prior to its attaining ownership of 50% of the
Shares, the Paperboard Group suffers dilution of its percentage ownership as a result of the issuance of Common Shares pursuant to the Employee Stock Option Plans and the Paperboard Group is in
compliance with the terms of this Agreement, it shall have the right to purchase Common Shares ("Deficiency Shares") pursuant to the terms of this Section 9.2 to maintain the percentage level
of ownership it held immediately prior thereto. 

21

 
	

	Each
year during the Option term, within 30 days following the receipt by the Board of Directors of the Corporation of the Financial Statements for
the Corporation's fiscal year, the Paperboard Group shall have the right, upon written notice given by the Paperboard Group to the Corporation, to purchase from the Corporation the Deficiency Shares
which purchase may at the Paperboard Group's election be accomplished immediately prior to the purchase of Common Shares by the Paperboard Group pursuant to the terms of Section 6.1. The
purchase price for such Deficiency Shares shall be paid in cash at the closing (to be held in accordance with Section 6.1 but immediately prior to any other closing pursuant to such Section)
and shall be in an amount determined by multiplying the number of Deficiency Shares to be purchased by the Paperboard Group by the Option price per Share as established under Section 6.1.4;  provided, however, that in any instance in which the dilution event causes or would cause the Paperboard
Group's interest in the Corporation to fall below 20%, the Corporation will provide the Paperboard Group with the opportunity to purchase the Deficiency Shares contemporaneously with the dilution
event.

	10.
	THIRD PARTY OFFER

	10.1
	Bona Fide Offer to Purchase Shares.    At any time after a date that is six years from the date hereof, if any
Shareholder shall at any time during the term of this Agreement desire to sell all or any of such Shareholder's Shares, such Shareholder (hereinafter sometimes called the "Offering Shareholder") shall
first obtain a bona fide written offer that such Offering Shareholder desires to accept (hereinafter called the "First Offer") to purchase all, but not less than all, of the Offering Shareholder's
Shares for cash at the closing thereof. Within seven days after the receipt of the First Offer, the Offering Shareholder shall offer to sell (the "Second Offer") such Shares (the "Offered
Shares") to the other Shareholder (the "Notified Shareholder") on terms and conditions identical to those contained in the First Offer.

	10.2
	Second Offer.    The Second Offer shall be accompanied by a true copy of the First Offer and an affidavit of the Offering
Shareholder attesting (a) that the Offering Shareholder desires to accept the First Offer, (b) that the First Offer contains all the terms and conditions entered into between the Person
having made such First Offer and the Offering Shareholder concerning the sale of the Shares, and (c) that there is no commission or similar fee that may be or may become due and payable to any
broker, agent or other intermediary in connection therewith, or, to the extent that there is such a commission or similar fee payable, the full particulars thereof. The Second Offer shall be sent to
the Notified Shareholder and shall be open for acceptance for 30 days (the "Offer Period") from the date of receipt of the First Offer by the Offering Shareholder. The Notified Shareholder may,
by written notice to the Offering Shareholder during the Offer Period, at its sole option, either accept or reject the Second Offer. If such Notified Shareholder does not accept or reject the Second
Offer in the manner or within the period set forth above, then the Notified Shareholder shall be conclusively deemed to have rejected the Second Offer.

	10.3
	Acceptance of Offer.    If the Notified Shareholder rejects or is deemed to have rejected the Second Offer, then, within
30 days of the rejection or deemed rejection of the Second 

22

 
	

	Offer,
the Offering Party may accept and close the transaction contemplated by the Terms of the First Offer. In the event that such transaction is not
completed within such terms, then the Offering Shareholder may not complete the First Offer or any other offer without first complying with the provisions of this Section 10.

	10.4
	Acceptance of Second Offer.    If the Notified Shareholder elects to accept the Second Offer, the closing shall be held on
the 30th day following the acceptance of the Second Offer.

	10.5
	"Tag Along".    Notwithstanding the above provisions, in the event that a Notified Shareholder elects not to accept a Second
Offer, it will have the option, but not the obligation, to require the Offering Shareholder by notice to the Offering Shareholder given within the time period for acceptance or rejection of such
Second Offer provided in Section 10.1 to obtain from the Person having made the First Offer, an offer to purchase all, but not less than all, of the Shares owned by the Notified Shareholder
upon terms and conditions identical to those set forth in the First Offer, at the closing of the purchase of the Shares of the Offering Shareholder pursuant to the First Offer. If the Offering
Shareholder is unable to obtain such offer for the benefit of the Notified Shareholder within 30 days of being so requested, then the Offering Shareholder shall not be entitled to complete the
sale of Shares contemplated by the First Offer.

	11.
	SHOT GUN PROVISION

	11.1
	Shot Gun.    Commencing on the sixth anniversary of the signing of this Agreement, either the Fitts Group or the Paperboard
Group may purchase the other party's Shares as follows:

	11.1.1
	The
party (the "Offering Party") desiring to purchase the Shares of the other party (the "Receiving Party") may purchase all, but not less than all, of the Shares owned by the
other party. The Offering Party must give notice to the Receiving Party of its intention to acquire such Shares (the "Shot Gun Offer") and the Shot Gun Offer must, in order to be valid under this
Agreement, have the following provisions:

	11.1.1.1
	it
must be made with respect to all of the Shares held by the Receiving Party and describe such Shares;

	11.1.1.2
	it
must state the price per Share for which the Offering Party desires to acquire the Shares; and

	11.1.1.3
	it
must state the terms and conditions of payment of such price.

	11.1.2
	The
Receiving Party will have 60 days from the receipt of the Shot Gun Offer to respond to the Offering Party with notice of its intention to either:

	11.1.2.1
	accept
the Shot Gun Offer and sell its Shares according to the terms and conditions specified in the Shot Gun Offer; or 

23

 

	11.1.2.2
	except
as otherwise provided Section 11.1.4, acquire the Shares held by the Offering Party upon terms and conditions to those provided for in the Shot Gun Offer.

	11.1.3
	The
failure by the Receiving Party to respond as provided in Section 11.1.2 within the 60-day period set forth therein shall automatically constitute an
acceptance of the Shot Gun Offer.

	11.1.4
	The
closing of any sale made under this Section 11.1 shall be held on the 30th day following the earlier to occur of (a) the last day of the 60-day period
set forth in Section 11.1.2 and (b) the date of the response, if any, given pursuant to Section 11.1.2. Any other provision of this Section 11.1 notwithstanding, if the
Offering Party is the purchaser, the Offering Party shall pay the purchase price for the Shares acquired by it in full in cash at the closing, and if the Receiving Party is the purchaser, the
Receiving Party shall have the right to pay the purchase price for the Shares acquired by it on payment terms that are no less favorable to the Offering Party than the following payment terms: the
purchase price for the Shares shall be payable in five equal consecutive annual installments, commencing on the first anniversary of the closing of the purchase in accordance with the terms of this
Section and the purchase price shall bear interest at an annual rate equal to the Libor rate. At the time of closing, a party selling its Shares shall cause the persons nominated by it as
directors of the Corporation to tender their resignations to take effect at any time designated by the party purchasing the Shares in the Corporation. In the event the selling Shareholder is the
Paperboard Group, the Option provided pursuant to Section 6.1, if still outstanding, shall automatically terminate at such closing.

	12.
	OPTION IN CASE OF DEFAULT

	12.1
	"Trigger Events".    In the event (a) a court of competent jurisdiction enters an order or decree under any U.S. or
Canadian federal, state or provincial bankruptcy law (i) for relief against PII, PIC, PHI or the other Shareholder in an involuntary case or proceeding, (ii) appointing a receiver,
trustee, liquidator or similar official for PII, PIC, PHI or the other Shareholder or for all or substantially all of the property of PII, PIC, PHI or the other Shareholder, or (iii) ordering
the liquidation of PII, PIC, PHI or the other Shareholder and the order or decree remains unstayed and in effect for 60 days or (b) if the assets of PII, PIC, PHI or the other
Shareholder are transferred to a trustee or other like official acting for or on behalf or for the protection of the creditors of PII, PIC, PHI or the other Shareholder or (c) PII, PIC, PHI or
the other Shareholder shall have been declared in default under any covenant or agreement in any material contract, note, debenture, bond, indenture, loan agreement, note agreement, mortgage, security
agreement, or other instrument evidencing or related to indebtedness of PII, PIC, PHI or the other Shareholder, such default shall not have been waived (or otherwise timely remedied within any
applicable cure period), and such default shall have resulted in the creditor or creditors taking any action in connection with the creditor's or creditors' right to accelerate the payment terms of
material indebtedness (each such event is a "Trigger Event" and the date upon which the Shareholder not affected by the Trigger Event 

24

 
	

	becomes
aware thereof is the "Trigger Date"), the Paperboard Group Shareholder if PII, PIC, PHI is affected by the Trigger Event or the other Shareholder if
the other Shareholder is affected by the Trigger Event or his or its assigns or legal representatives, as the case may be, (the "Offeror") shall be deemed to have unconditionally offered (the "Forced
Offer") for sale to the non-affected Shareholder all of the Offeror's Shares (the "Offered Shares") and such non-affected Shareholder, shall have the option to purchase same or
all of such Offered Shares for cash at the price equal to the Book Value of the Shares.

	

	The
Offeror or his assigns or legal representatives shall give notice to the Corporation of any Trigger Event within five (5) business days of
the date upon which the Offeror first learns of the Trigger Event. If the non-affected Shareholder elects to accept the Forced Offer, the closing of the purchase of the affected
Shareholder's Shares shall occur on the 90th day after the non-affected Shareholder receives notice of, or otherwise conclusively learns of, the Trigger Event.

	12.2
	If
PII, PIC or PHI is affected by the Trigger Event, (i) the provisions set forth in Section 3.2, 3.3, 3.5, 3.6, 3.7 and 6.1 hereof shall automatically terminate, and
(ii) any members of the Board of Directors of the Corporation which were selected by the Paperboard Group or any successors-in-interest to PII, PIC or PHI shall not be
entitled to vote on any matters coming before the Board of Directors which relate to a purchase by the Corporation, Fitts or the Fitts Group of Shares owned by PII, PIC or PHI or their respective
successors-in-interest. Further, if PII, PIC or PHI is affected by a Trigger Event described in clauses (a) or (b) of Section 12.1, the provisions of
Section 19 shall immediately terminate.

	13.
	ARBITRATION

	13.1
	Arbitration.    At any time during the term of this Agreement, any and all controversies, disagreements, disputes, claims or
arguments arising out of or relating to this Agreement, its performance or breach thereof shall be submitted to arbitration as herein provided by one Shareholder giving notice to the other
Shareholder. The notice so given by the Shareholder submitting the dispute or question to arbitration shall appoint an arbitrator on behalf of such Shareholder and the other Shareholder shall also
appoint an arbitrator within 15 days of receipt of the said notice. The arbitrators so appointed shall then appoint a third arbitrator and determine the question or dispute at issue. In the
event that the Shareholder to whom notice is given fails to appoint an arbitrator, the arbitrator that has been appointed shall appoint another arbitrator within a further period of 30 days,
failing which, the Shareholder having given notice may apply to a court to appoint such arbitrator. The arbitrators shall decide by way of a majority decision; the decision of the arbitrators shall be
rendered within 30 days following their nomination and their decision shall be final and conclusive and binding upon the parties hereto. All questions of procedure shall be resolved by the
arbitrators. The costs of the arbitration shall be shared equally amongst the Shareholders. 

25

 
	14.
	APPRAISAL PROCEDURE

	14.1
	Appraisal.    Wherever in this Agreement reference is made to an appraisal procedure, the particular parties to the
transaction shall seek in good faith to agree upon the Fair Value of the Shares to be acquired promptly following the delivery of notice that triggers the need for an appraisal. As used herein, the
"Fair Value" of the Shares shall mean the fair value of the Shares, as of the date of delivery of the notice referred to above (the "Notice Delivery Date"), on a going concern or liquidation basis,
whichever method would yield the higher valuation but excluding control premiums or minority discounts. The Fair Value of the Shares on a going concern basis shall take into account such
considerations as would customarily affect the price at which a willing seller would sell and a willing buyer would buy the Shares as a going concern in an arm's-length transaction in which such buyer
purchases all of the Shares. The Fair Value of the Shares on a liquidation basis shall take into account tax liabilities that would be incurred on a liquidation assuming the most tax efficient and
practical plan of liquidation. If such parties are unable to agree upon Fair Value within 30 days following the Notice Delivery Due, then such amount shall be determined pursuant to the
appraisal process described below. In such event such parties shall, within seven days after the expiration of such 30-day period, each retain, at their own expense, a Qualified
Independent Appraiser (as hereinafter defined) to determine Fair Value. Each such Qualified Independent Appraiser shall submit its written appraisal to each of such parties no later than
75 days after the Notice Delivery Date. If the amount of the higher of the two appraisals is greater than 110% of the amount determined by the lower appraisal, then a third Qualified
Independent Appraiser designated by the first two Qualified Independent Appraisers shall be retained promptly by the parties (at their joint expense) and shall deliver its written appraisal within
30 days after the date of such retention. In connection with its retention, such third Qualified Independent Appraiser shall be instructed that such appraisal shall not be less than the amount
determined by the lower of the first two appraisals nor more than the amount determined by the higher of the first two appraisals. The valuation resulting from such appraisal process shall be the
average of the first two appraisals, if only two appraisals are required, or if three appraisals are required, the average of the two appraisals closest in value (or if there are not two closest
appraisals, the average of all three such appraisals).

	14.2
	Qualified Independent Appraiser.    A Qualified Independent Appraiser shall be defined as a nationally recognized investment
banking firm, with substantial experience in evaluating companies in the Business, that is not directly or indirectly affiliated with, and has not performed any substantial services during the
previous two years for, the party proposing such investment banking firm or such party's Affiliates and that has no interest (other than the receipt of customary fees) in any of the
transactions contemplated by this Agreement.

	15.
	CLOSING

	15.1
	Time, Place, Terms and Conditions.    Any closing of a purchase and sale or issuance of Shares in accordance with the
provisions hereof, shall be held at the main offices of the 

26

 
	

	Corporation
(or at such other place as the Shareholders may agree) on the relevant date of closing, in accordance with the following terms and conditions:

	15.1.1
	At
closing, the selling Shareholder (the "Seller") shall deliver or cause to be delivered to the purchasing Shareholder (the "Purchaser") certificates representing the Shares (or
other equity securities) being transferred and/or issued; which certificates shall, in the case of a sale, be accompanied by a duly executed assignment of the Shares to the Purchaser;

	15.1.2
	Except
where otherwise specifically provided, payment for Shares (or other securities) shall be made in full in cash at closing by way of or electronic fund transfer to the
Seller's designated bank account in United States;

	15.1.3
	At
closing, the Seller shall deliver to the Purchaser good and marketable title to the Shares (or other equity securities) being transferred, free and clear of all claims, liens
and other encumbrances whatsoever, other than such as are created and exist under this Agreement;

	15.1.4
	If
the Seller is bound by a guarantee given by such Seller whereby such Seller has guaranteed the payment of any debt or liability of the Corporation, then the Purchaser shall use
all reasonable efforts to cause such guarantee to be released and canceled at closing, failing which the Purchaser shall agree to indemnify and hold the Seller harmless from all claims, costs, demands
and actions suffered or incurred after the closing resulting from, arising out of, or relating to such guarantee;

	15.1.5
	At
closing, all necessary and proper corporate proceedings reasonably required by counsel for the Purchaser shall be taken for the issuance of, transfer of, the Shares (or equity
securities) being sold;

	15.1.6
	If
the purchase price for the Shares purchased at closing will not be paid in full on the date of the closing, the Purchaser will deliver to the Seller a promissory note, in the
form of the note attached hereto as Schedule 15.1.6A, representing the amount owed by the Purchaser to the Seller, which note shall reflect the
relevant payment and interest terms set forth in this Agreement; all obligations of the Purchaser to the Seller under any such note shall be secured by the Purchaser's pledge to the Seller of the
Shares purchased by the Purchaser from the Seller; the terms of any such pledge shall be set forth in a pledge agreement, in the form of the pledge agreement attached hereto as  Schedule 15.1.6B, to
be executed by the Purchaser and delivered by the Purchaser to the Seller, together with the Corporation's stock certificate
representing the Shares purchased by the Purchaser from the Seller, and a stock power relating to such certificate, duly endorsed by the Purchaser in favor of the Seller.

	15.1.7
	At
closing, if required pursuant to this Agreement, the Seller shall deliver to the Corporation signed resignations of the Seller's nominees, as directors, officers, employees and
from all other offices of the Corporation; and 

27

 

	15.1.8
	Any
closing date which does not fall on a Business Day shall be held on the next Business Day following such date.

	

	The
conditions set forth in this Section 15, excluding the conditions set forth in Section 15.1.6, are each made for the exclusive benefit of
the Purchaser and may be waived by it and are supplemental to any other condition which may have been agreed to by the Purchaser and the Seller.

	15.2
	Assignment to the Corporation.    In any circumstances where either party, or any of its constituents, has the right or
becomes obligated to purchase all of the Shares held by the other party, then it may assign its rights and obligations with respect thereto to the Corporation, provided that the purchaser shall remain
jointly and severally liable with the Corporation for the performance of its obligations with respect thereto and provided also that the other party does not suffer adverse income tax consequences as
a result of such assignment.

	16.
	SHARE CERTIFICATES

	16.1
	Legended Certificates; Stock Certificates to Be Marked with Legend.    All certificates representing Shares now outstanding
or hereafter issued by the Corporation shall be marked with the following legend for so long as the holders of the Shares are subject to any provision of this Agreement: 

"This
certificate and the shares represented hereby are held subject to the terms, covenants and conditions of an agreement dated May 2, 1997 by and among this Corporation and its shareholders,
as it may be amended from time to time, and neither this certificate, the shares represented hereby, nor any interest in this certificate or in such shares may be transferred, pledged or disposed of
voluntarily, by operation of law or otherwise, except in accordance with the terms and provisions thereof. A copy of said agreement and all amendments thereto is on file and may be inspected at the
principal executive offices of this Corporation." 

The
Corporation shall issue replacement stock certificates without the foregoing legend to any Shareholder upon request following termination of this Agreement. 

	17.
	NO PARTNERSHIP OR JOINT VENTURE

	17.1
	Effect of Agreement.    Neither this Agreement nor any transaction contemplated by this Agreement shall be deemed to create
or constitute a partnership, joint venture or business organization of any kind or nature whatsoever among or between any of the Parties.

	18.
	FUTURE BUSINESS OPPORTUNITIES

	18.1
	Agreement of Paperboard Group and Fitts.    Each of the Paperboard Group and Fitts, hereby covenants and agrees that during
the term of this Agreement, the Paperboard Group or Fitts, as the case may be, will cause all future acquisition opportunities that are 

28

 
	

	made
available to the Paperboard Group or Fitts, as the case may be, and, to the extent applicable, all future expansion opportunities that arise within
their respective organizations, which involve the same Business, as defined in Section 1.1.4, as the Corporation, or which would serve the objectives described in the last Whereas clause in the
preamble to this Agreement, anywhere in the world, to be directed and presented initially to the Corporation for determination as to whether the opportunities should be pursued by the Corporation. In
the event the Corporation, acting through its Board of Directors (with the Paperboard Group's Board nominees abstaining from voting and/or Fitts, as the case may be), determines not to pursue any such
opportunity or fails to take any action within 60 days (or such shorter time as is inherent in the proposal), the Paperboard Group or Fitts, as the case may be shall be free to pursue such
opportunity.

	19.
	SUPPLY ARRANGEMENTS

	19.1
	Right of PIC and PII to Supply the Corporation.    Each of PIC and PII shall have a right of first refusal to supply the
Corporation, at the most favored prices then available to those of their customers for purchases of similar quantities of such product, products manufactured by operations owned or operated by PII,
PIC or any of their subsidiaries, provided such products are acceptable to the Corporation but in no event at prices that are not competitive with prices that the Corporation can obtain elsewhere for
similar quantities on an on-going basis. This Section 19.1 shall not apply to "spot" purchases from parties other than PII and PIC provided that the total spot purchases for each
product line do not exceed 10% of the yearly requirement for that product line.

	19.2
	Purchase of PII and PIC Products by the Corporation.    The Corporation shall have a right of first refusal in respect of
the purchase by it of products manufactured by operations owned or operated by PII, PIC or any of their subsidiaries, at the most favored prices then available to their customers which purchase
similar quantities of such product, subject to agreements or commitments existing (and disclosed to the Corporation) prior to the exercise of this right.

	19.3
	PIC and PII Best Efforts Concerning Cascades Products.    PIC and PII will use their best efforts to ensure that the
Corporation has priority access to products manufactured by operations owned or operated by Cascades Inc., or any of its Affiliates, at the most favored prices then available to their customers
which purchase similar quantities of such product.

	19.4
	Corporation's Purchase of Cascades Products.    The Corporation will use its best efforts to purchase on a priority basis,
when needed, products manufactured by operations owned or operated by Cascades Inc., or any of its Affiliates, so long as such products are made available at the most favored prices then
available to Cascades Inc.'s customers which purchase similar quantities of such product but in no event at prices that are not competitive with prices that the Corporation can obtain elsewhere
for similar quantities on an on-going basis. This Section 19.4 shall not apply to "spot" purchases from parties other than Cascades Inc. provided that the total spot
purchases for each product line do not exceed 10% of the yearly requirement for that product line. 

29

 
	20.
	CERTAIN ADDITIONAL AGREEMENTS CONCERNING VOTING RIGHTS

	20.1
	Effect of Options and Other Instruments on Voting.    The Paperboard Group agrees, and hereby instructs the Corporation's
Secretary to implement, that if and when it acquires a 50% interest in the Corporation's Shares, it will withhold from any vote of shareholders of the Corporation on any matter, and will not vote (or
seek statutory appraisal rights with respect thereto) that number of Common Shares which it owns which (because of the inability of holders of options, warrants or convertible securities to vote
underlying Shares, or because of repurchases by the Corporation of minority interests held by Fitts VT certificate holders pursuant to outstanding agreements or otherwise) would cause it to be able to
vote more than 50% of the votes to be cast with respect to such matter.

	21.
	CERTAIN COVENANTS IN EVENT OF FAILURE TO EXERCISE OPTION COMPLETELY

	21.1
	In
the event of a termination of the Option pursuant to Section 3.8, the Paperboard Group hereby agrees that, thenceforth and for a period of 10 years thereafter, they:
(a) will not in any manner purchase or otherwise acquire, or enter into any agreement, arrangement or understanding to purchase or otherwise acquire, or seek to or make any, proposal to acquire
(whether by merger or otherwise), any securities or property of the Corporation, (b) will not take any action either alone or with any other person to control or influence the management, Board
of Directors, or policies of the Corporation, including making, or in any way participating in, any "solicitation" of "proxies" (as such terms are used in the proxy rules of the U.S. Securities and
Exchange Commission) to vote, or seeking to advise or influence any person with respect to the voting of, securities of the Corporation and (c) will cast all of their votes on any proposals
submitted to all shareholders of the Corporation in the same proportion (for, against or abstain) as all other votes have been cast by all other shareholders of the Corporation.

	22.
	NO RESALE OF SHARES

	22.1
	Any
Shares acquired by a member of the Paperboard Group hereunder are for the account of such member and not with a view to resale or distribution of the Shares to others. As
provided in Section 5.1, the Paperboard Group may transfer, pledge, escrow, assign, resell or distribute, or to enter into any contract, undertaking, agreement or arrangement for the transfer,
assignment, pledge, escrow, resale or distribution of any or all of the Shares acquired by it hereunder only in accordance with the terms of this Agreement and it has no present plans to do so. Any
Share certificate(s) issued to a member of the Paperboard Group by the Corporation will bear an appropriate legend restricting transfer of such Shares in violation of law or this Agreement.

	23.
	ESCROW OF SHARES

	23.1
	Escrow of Shares.    Contemporaneous with PHI's, PIC's or PII's receipt of any Shares: (i) pursuant to the terms of
the Share Subscription Agreement; (ii) pursuant to the terms of the Option; (iii) in connection with the Corporation's issuing stock as dividends to its Shareholders; (iv) as a
result of a stock split or reverse stock split of the Corporation's 

30

  

	

	common
stock; or (v) pursuant to the terms of Section 9.2, PHI, PIC and/or PII shall deposit certificates representing all such Shares with
the escrow agent (the "Escrow Agent") named in the escrow agreement which is attached hereto as Schedule 23.1 (the "Escrow Agreement"), to be
held in escrow pursuant to the terms of this Section 23.1 and the Escrow Agreement.

	23.2
	Release of Shares to PHI, PIC or PII.    All Shares, and the Corporation's stock certificates which represent such Shares,
which are held in escrow pursuant to the terms of this Section 23 shall be discharged from escrow and returned to PHI, PIC or PII, as the case may be, at such time as: (i) each of PHI,
PIC and PII becomes an unsecured borrower, and is released from all obligations to its lenders to provide security for its loans, so that no Shares owned by PHI, PIC or PII are either directly or
indirectly collateral for any indebtedness or other liability or obligation of any Paperboard Group company; (ii) the Paperboard Group has the right to participate in a Public Offering pursuant
to the terms of Section 3.7.2 and has entered into a firm commitment to sell Shares in the Public Offering; (iii) a Public Offering as defined in Section 3.6.2 has occurred and
Sections 3 (except 3.7.2 and 3.7.3), 7, 8, 9, 10, 11, 12, 16, 18, 20 and 21 have been terminated; (iv) the Paperboard Group purchases all of the Fitts Group's Shares pursuant to
Sections 7.2.1, 8.1, 9.1, 10, 11 or 12.2; (v) PHI, PIC and/or PII has the right, pursuant to the terms of Section 10, to sell all Shares owned by the Paperboard Group to a third
party and sells such Shares; or (vi) this Agreement is terminated.

	23.3
	Release of Shares to Fitts, the Fitts Group or the Corporation. All Shares, and the Corporation's stock certificates which represent
such Shares, which are held in escrow pursuant to the terms of this Section 23 shall be discharged from escrow and delivered to the Corporation, Fitts or the Fitts Group, as the case may be, at
such time as the Corporation, Fitts or the Fitts Group purchases such Shares from PHI, PIC and/or PII pursuant to the terms of Sections 7.1, 9.1, 10, 11 or 12.1.

	23.4
	Power of Attorney.    Each of PHI, PIC and PII does hereby make, constitute and appoint any officer of the Corporation as
its true and lawful attorney-in-fact with full power to endorse its name on any stock certificate representing Shares issued to it which then are subject to deposit in escrow
pursuant to the terms of this Section 23 or document relating to any such stock certificate solely for the purpose of effecting the deposit of such Shares with the Escrow Agent to be held
pursuant to the terms of this Section 23 and the Escrow Agreement, granting said attorney full power to do any and all things necessary to deposit such Shares with the Escrow Agent. The
foregoing power of attorney is coupled with an interest and is irrevocable. Each of PHI, PIC and PII hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue of this
Section 23.4. Each of PHI, PIC and PII hereby knowingly and intentionally waives any right that it has or may have to object to any action contemplated by this Section 23 which is taken
by the Corporation or any officer, director, employee or agent of the Corporation pursuant to the terms of this Section 23.

	23.5
	Any
reference in this Agreement to the word Shares which at such time are subject to the Escrow Agreement shall be deemed to refer to interests in such Shares. 

31

 
	24.
	COVENANTS, REPRESENTATIONS AND WARRANTIES RESPECTING PII, PIC AND PHI

        Each
of PII, PIC and PHI hereby covenants, represents and warrants as follows and acknowledges that the Corporation, Fitts and the Fitts Group are relying upon such covenants,
representations and warranties in connection with their entering into this Agreement and carrying-out the transactions contemplated hereby, and that they would not have entered into this
Agreement without the benefit of such covenants, representations and warranties: 

	24.1
	Organization and Good Standing.    Each of PII, PIC and PHI has been duly incorporated and/or organized and is validly
subsisting and in good standing under the laws of its jurisdiction of incorporation and/or organization and it has all necessary corporate power, authority and capacity to own, lease or operate its
property and assets and to carry on its business.

	24.2
	Authorized and Issued Capital.    All of the authorized and issued capital of PHI is owned by PIC and all of the authorized
and issued capital of PIC is owned by PII.

	24.3
	Corporate Actions.    All necessary corporate action of each of PII, PIC and PHI to authorize the execution, delivery and
performance of this Agreement and the Share Subscription Agreement has been taken and the Share Subscription Agreement has been duly executed and delivered by PIC and PHI and each of such agreements
constitutes a legal, valid and binding obligation of PIC and PHI enforceable against it in accordance with its terms; except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditor's rights generally. The enforceability of PII's, PIC's and PHI's obligations hereunder and
thereunder is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

	24.4
	Consents.    All consents, approvals, orders and authorizations of any Person or governmental authority in the United States
of America or Canada (or registrations, declarations, filings or recordings with such authority) required to be obtained or made by any member of the Paperboard Group, in connection with the
completion of any transaction contemplated by this Agreement or the Share Subscription Agreement, the execution of this Agreement or the Share Subscription Agreement, and the performance of any of the
terms and conditions of this Agreement or the Share Subscription Agreement, have been or shall have been obtained or made by such member of the Paperboard Group on or before the date of this
Agreement.

	24.5
	Compliance with Corporate Instruments and Agreements.    The entering into of this Agreement and the Share Subscription
Agreement and the consummation of the transactions contemplated by such agreements will not result in a breach of any term or provision of or constitute a default under the organizational documents,
by-laws or resolutions of any member of the Paperboard Group or except as indicated on the attached Schedule 24.5, of any material
indenture, agreement, instrument, license or permit to which any member of the Paperboard Group is a party or by which it is bound. 

32

 
	24.6
	Non-Contravention.    The entering into of this Agreement and the Share Subscription Agreement and the
consummation of the transactions contemplated by such agreements will not contravene any applicable orders, judgments, injunctions, awards and decrees of any Governmental Body. As used in this
Agreement, "Governmental Body" shall mean any domestic or foreign national, state or municipal or other local or multi-national body, or any subdivision, agency, commission or authority thereof, or
any quasi-governmental or private body exercising any regulatory or taxing authority thereunder.

	25.
	COVENANTS, REPRESENTATIONS AND WARRANTIES RESPECTING THE CORPORATION

        The
Corporation hereby covenants, represents and warrants as follows and acknowledges that PHI, PIC and PII are relying upon such covenants, representations and warranties in connection
with their entering into this Agreement and carrying-out the transactions contemplated hereby, and that they would not have entered into this Agreement without the benefit of such
covenants, representations and warranties: 

	25.1
	Organization and Good Standing.    The Corporation has been duly incorporated and/or organized and is validly subsisting and
in good standing under the laws of its jurisdiction of incorporation and/or organization and it has all necessary corporate power, authority and capacity to own, lease or operate its property and
assets and to carry on its business;

	25.2
	Corporate Actions.    All necessary corporate action of the Corporation to authorize the execution, delivery and performance
of this Agreement and the Share Subscription Agreement has been taken and the Share Subscription Agreement has been duly executed and delivered by the Corporation and each of such agreements
constitutes a legal, valid and binding obligation of the Corporation enforceable against it in accordance with its terms; except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditor's rights generally. The enforceability of the Corporation's obligations hereunder and thereunder is
subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

	25.3
	Consents.    All consents, approvals, orders and authorizations of any Person or governmental authority in the United States
of America or Canada (or registrations, declarations, filings or recordings with such authority) required to be obtained or made by the Corporation, in connection with the completion of any
transaction contemplated by this Agreement or the Share Subscription Agreement, the execution of this Agreement or the Share Subscription Agreement, and the performance of any of the terms and
conditions of this Agreement or the Share Subscription Agreement, have been or shall have been obtained or made by the Corporation on or before the date of this Agreement.

	25.4
	Compliance with Corporate Instruments and Agreements.    The entering into of this Agreement and the Share Subscription
Agreement and the consummation of the transactions contemplated by such agreements will not result in a breach of any term or provision of or constitute a default under the organizational documents,
by-laws or resolutions of the Corporation or, except as indicated on the attached Schedule 25.4, of 

33

 
	

	any
material indenture, agreement, instrument, license or permit to which the Corporation is a party or by which it is bound.

	25.5
	Indemnification for Tax Liabilities. 
	25.5.1
	The Corporation.    The Corporation shall indemnify and hold each member of the Fitts Group (a "Member") harmless from,
against and in respect of any federal, state, local or foreign income tax liability (including interest and penalties) incurred by such Member as the result of a Determination, by reason of an amended
return, claim for refund, audit or otherwise, that causes an increase in the federal, state, local or foreign, as the case may be, taxable income (or decrease in tax loss or credits) of such Member
with respect to such Member's allocable share of S Corporation Taxable Income, as well as any federal, state, local or foreign income tax liability (including interest and penalties) incurred by such
Member as a result of the payment of any indemnification amount hereunder.

	25.5.2
	Shareholders' Indemnification for Tax Liabilities.    Each Member, jointly and severally, shall indemnify and hold the
Corporation harmless from, against and in respect of any federal, state, local or foreign income tax liability (including interest and penalties) incurred by the Corporation as the result of a
Determination, by reason of an amended return, claim for refund, audit or otherwise, that causes a Tax Benefit to such Member for a taxable period ending on or before the Termination Date and a
corresponding increase in the federal, state, local or foreign, as the case may be, taxable income (or decrease in tax loss or credits) of the Corporation. In addition, any refunds of taxes actually
realized by a Member attributable to the Corporation's S Corporation Taxable Income shall be promptly paid over to the Corporation, provided,  however, that
the payments made by any such Member pursuant to this Section 25.5.2 shall not exceed the Tax Benefit Amount actually realized by
such Member as a result of such Determination or the amount of such refund, as the case may be.

	25.6
	Non-Contravention.    The entering into of this Agreement and the Share Subscription Agreement and the
consummation of the transactions contemplated by such agreements will not contravene any applicable orders, judgments, injunctions, awards and decrees of any Governmental Body.

	26.
	MISCELLANEOUS

	26.1
	Notices.    All offers, acceptances of offers, notices, request or other communications hereunder shall be in writing and
may be given by registered mail, telex or telecopier or by personal delivery addressed to the respective parties at their addresses set forth in this Section 26.1, or to such other address as
may be designated by any party to the others. Any communication delivered by registered mail shall be deemed to have been received on the fifth day after the date of mailing thereof and any
communication delivered by telex or by personal delivery shall be deemed to have been delivered on the date of delivery thereof. All notices or other writings which exercise rights contained in this 

34

 
	

	Agreement
relating to the sale or purchase of Shares shall be irrevocable except as provided in Section 26.5. 

To
the Paperboard Group: 

Paperboard
Industries International Inc.

772 Sherbrooke West

Suite 300

Montréal (Quebec) H3A 1G1

To the attention of the Vice-President and CFO

Telecopier: (514) 284-9826 

To
the Corporation, Fitts or the Fitts Group: 

Dopaco, Inc.

241 Woodbine Road

Downingtown, PA 19355

To the attention of Fitts

Telecopier: (610) 269-2635 

	26.2
	Successors and Assigns.    This Agreement shall be binding upon each of the parties hereto and upon all their respective
heirs, executors, successors and permitted assigns.

	26.3
	Term.    This Agreement shall remain in force as long as there are at least two Shareholders provided that this Agreement
may be terminated if the Shareholders agree in writing to terminate this Agreement or may be terminated by a non-breaching Shareholder if a Shareholder is in material breach of this
Agreement and either such breach is incapable of being cured or such breach is not cured by the breaching Shareholder within thirty (30) days of notice by the non-breaching
Shareholder of such breach to the breaching Shareholder.

	26.4
	Parties Hereto.    Without restriction, no Person shall become a Shareholder unless such Person shall become a party to this
Agreement and agrees to be bound by the terms of this Agreement to the same effect as if originally named in and a party to this Agreement as the party from whom it acquired its Shares.

	26.5
	Precedence.    Except as otherwise expressly provided in this Section, once a Shareholder initiates the procedure to
exercise the Shareholder's rights under Section 7, 8, 9, 10, 11 or 12, the other Shareholder may not initiate the procedure to exercise such other Shareholder's rights under Sections 6,
7, 9, 10, 11 or 12; and further, once Fitts and/or the Corporation initiates rights under Section 7 any procedure initiated by the other Shareholder under Section 6 or 9 that has yet to
be consummated shall terminate. Anything to the contrary contained herein notwithstanding, any action initiated by Fitts or the Fitts Group to exercise rights under Section 7, 8, 9, 10, 11 or
12 (including any offer made by Fitts or the Fitts Group to the Paperboard Group) may be terminated at the election of Fitts estate or upon Fitts' death, provided that Fitts estate provides notice to
the Paperboard Group of its election to so terminate within 30 days of the date of Fitts' death. 

35

 
	26.6
	Further Assurances.    Each of the parties hereto shall from time to time at the other's request, without further
consideration, provide, execute or deliver such other instruments, transfers, conveyances and assignments and take or cause to be taken all other actions as may be reasonably necessary or desirable to
more effectively complete any matter provided for herein, whether before or after the Closing.

	26.7
	Proper Law of Contract.    This Agreement shall be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the laws of the Commonwealth of Pennsylvania (without regard to principles or rules relating to conflicts of law or choice of law). Subject to the terms of Section 13, any
and all proceedings relating to the subject matter hereof shall be maintained in the Courts of Common Pleas of Chester County, Pennsylvania or the federal courts in and for the Eastern District of
Pennsylvania, which courts shall have exclusive jurisdiction for such purpose. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such suit, action or proceeding brought in such court.

	

	Each
of the parties to this Agreement hereby consent to process being served in any suit, action or proceeding of the nature referred to in the foregoing
paragraph by the mailing of a copy thereof in accordance with the notice provisions set forth herein. Nothing in this Section 26.7 shall affect the right of any party to serve process in any
manner permitted by law or affect the right of any party to bring proceedings against any other party.

	26.8
	Preamble.    The preamble to this Agreement shall form an integral part of this Agreement as if recited herein at length.

	26.9
	Assignment.    Except as expressly provided herein neither this Agreement nor any rights or obligations hereunder shall be
assignable by any party without the prior written consent of each of the other parties hereto.

	26.10
	Counteparts.    This Agreement may be executed in two or more counterparts, each of which when so executed, shall be deemed
an original, and such counterparts together shall constitute one and the same instrument. 

[Signature Page Follows]

36

        IN
WITNESS WHEREOF the parties hereto have executed this Agreement on the date first above written. 

	 	 	/s/ Edward P. Fitts, Jr.
 EDWARD P. FITTS, JR.
	

 	
 	

/s/ Edward P. Fitts, Jr.
 EDWARD P. FITTS, JR. Voting Trustee
	

 	
 	

PAPERBOARD U.S. HOLDINGS, INC.
	

 	
 	

By:	

/s/ Jacques Mallette

	 	 	Name:	JACQUES MALLETTE

	 	 	Title:	VP Finance & Treasurer

	

 	
 	

PAPERBOARD INDUSTRIES CORPORATION
	

 	
 	

By:	

/s/ Jacques Mallette

	 	 	Name	JACQUES MALLETTE

	 	 	Title:	VP Finance & Treasurer

	

 	
 	

PAPERBOARD INDUSTRIES INTERNATIONAL INC.
	

 	
 	

By:	

/s/ Jacques Mallette

	 	 	Name:	JACQUES MALLETTE

	 	 	Title:	VP, CFO & Treasurer

	

 	
 	

DOPACO, INC.
	

 	
 	

 	

By:	

/s/ Edward P. Fitts, Jr.

	 	 	 	Name:	Edward P. Fitts
	 	 	 	Title:	Chief Executive Officer

Paperboard

Industries International

Cascades Group 

Jacques
Mallette 

December
8, 2000 

BY TELECOPIER AND ORIGINAL BY MAIL

Mr. Edward
P. Fitts, Jr.

Chairman and Chief Executive Officer

DOPACO, Inc.

100 Arrandale Boulevard

Exton, PA 19341

U.S.A. 

	Re:
	Amendments to the Option  

Dear Ed: 

        Pursuant
to our conversations of November 28, 2000, this letter is to confirm that notwithstanding those provisions contained in Section 6 et al. of the Shareholders'
Agreement among Edward P. Fitts, Jr., Edward P. Fitts Voting Trustee, Paperboard U.S. Holdings, Inc., Paperboard Industries Corporation, Paperboard Industries International Inc. and
Dopaco, Inc., dated May 2, 1997 (the "Agreement"), you have agreed to: (i) relieve the Paperboard Group (as this term is defined in the Agreement) of its obligation to exercise
its Option (as this term is defined in the Agreement) for the fiscal year ended March 31, 2000 without affecting any of the Paperboard Group's rights under the Agreement; and (ii) amend
the number of Common Shares over which the Option may be exercised to: (a) at least 7.5% of all Common Shares and no more than 10% of all of the Common Shares for the fiscal years ending
March 31, 2002; and (b) at least 5% of all Common Shares and no more than 10% of all the Common Shares for the fiscal year ending March 31, 2003, provided that the Option may be
exercised for a
number of Common Shares representing more than 10% of the Common Shares upon the conditions contained in Section 6.1.3. 

        Consequently,
the following amendments are made to the Agreement: 

	(1)
	the
addition of the following paragraph:

	

	"6.1.3(A) Notwithstanding
Section 6.1.3, each exercise of the Option may only be exercised for a number of Common Shares ("Option Shares")
that: (a) for the fiscal years ending March 31, 2001 and 2002 is equal to at least 7.5% of all of the Common Shares and no more than 10% of all of the Common Shares; and
(b) for the fiscal year ending March 31, 2003 is equal to at least 5% of all of the Common Shares and no more than 10% of all of the Common Shares, provided that the Option may be
exercised for a number of Common Shares representing more than 10% of the Common Shares: (i) upon the prior approval of a majority of the entire Board of Directors of the Corporation;
(ii) if the Option exercise is the last Option exercise available to the Paperboard Group prior to the expiration of the Option term; or (iii) if the Option is exercised pursuant to
Section 3.7.1.2 or 8.1 Fitts, or if Fitts so elects, the Fitts Group, shall have the right, in lieu of the 

	

	Corporation,
to sell from Common Shares owned by them all or a portion of the Common Shares that are necessary to satisfy any Option exercise, as further
provided in Sections 6.1.4 and 6.1.5;"

	(2)
	Section 7.1(b) is
amended and replaced as follows:

	

	"(b) with
respect to three or more annual installments during the Option term, ..."

	(3)
	Section 3.8(b) is
amended and replaced as follows:

	

	(b)
with respect to any three option exercises provided for in Section 6.1.2 on or before the date of the expiration of the 30-day period
allowed under Section 6.1.2 for the exercise of the third such option exercise, then, ... 

        In
return for the amendments to the Option, we agree to add back to the EBITDA calculation for the fiscal year ended March 31, 2000, the $8.2 million Ameriserve loss even
though we consider that this debt has been incurred in the ordinary course of business and is not an extraordinary item. Please note that the accounting treatment of this loss for the determination of
the option price is not to be considered as a precedent in the event of similar occurrences in the future. 

        In
recognition of the changes in the ownership of Paperboard, we have reissued the side letter of May 2, 1997 as attached. 

        We
trust that the foregoing reflects our understanding and would ask that you confirm your agreement by signing in the space provided below. 

        We
thank you for your kind co-operation and assistance in this matter. 

	 	 	 	Yours truly,
	

 	

 	
 	
PAPERBOARD U.S. HOLDINGS, INC.

PAPERBOARD INDUSTRIES CORPORATION

PAPERBOARD INDUSTRIES INTERNATIONAL INC.
	

 	

 	
 	

/s/ Jacques Mallette
 Jacques Mallette

President
	

The undersigned hereby agrees to the terms of this letter.
	

Date:	

12/12/00
	
 	

 
	

/s/ Edward P. Fitts, Jr.
Edward P. Fitts, Jr.	
 	

/s/ Edward P. Fitts, Jr.
Edward P. Fitts, Jr.,

Voting Trustee
	
DOPACO, INC.	
 	

 
	

Per:	

/s/ Edward P. Fitts, Jr.
 Edward P. Fitts, Jr.

Chairman and Chief Executive Officer	
 	

 

 
 

AMENDMENT TO SHAREHOLDERS AGREEMENT
  AMONG
  DOPACO, INC. AND
  EDWARD P. FITTS, JR., Individually AND
  EDWARD P. FITTS, JR., VOTING TRUSTEE AND
  PAPERBOARD U.S. HOLDINGS, INC. AND

PAPERBOARD INDUSTRIES CORPORATION AND
  PAPERBOARD INDUSTRIES INTERNATIONAL INC.

        THIS
AMENDMENT (the "Amendment") made as of the 10th day of July, 2002 

	AMONG	DOPACO, INC., a corporation duly incorporated under the laws of the Commonwealth of Pennsylvania, the principal offices of which are located in Dowingtown, Pennsylvania (the "Corporation")
	

AND	

EDWARD P. FITTS, JR., residing and domiciled in Chester County, Pennsylvania ("Fitts")
	

AND	

EDWARD P. FITTS, JR., VOTING TRUSTEE, of a voting trust (the "Fitts VT") established by a Voting Trust Agreement, dated May 2, 1997 (the "Voting Trust Agreement")
	

AND	

CASCADES BOXBOARD U.S. HOLDINGS, INC. (formerly known as PAPERBOARD U.S. HOLDINGS, INC.), a corporation duly incorporated under the laws of Delaware ("PHI")
	

AND	

CASCADES BOXBOARD INC. (formerly known as PAPERBOARD INDUSTRIES CORPORATION), a corporation duly incorporated under the laws of Ontario ("PIC")
	

AND	

CASCADES BOXBOARD GROUP INC. (formerly known as PAPERBOARD INDUSTRIES INTERNATIONAL INC.), a corporation duly incorporated under the laws of Canada ("PII") (PHI, PIC, and PII collectively referred to as the "Paperboard Group")

        WHEREAS, the parties entered into that certain Shareholders Agreement dated May 2, 1997 (the "Shareholders Agreement") whereby the parties recorded their
mutual understanding as to the manner in which the affairs of the Corporation shall be conducted and provided for their respective rights and obligations; and, 

        WHEREAS,
pursuant to the terms of Section 26.4 of the Shareholders Agreement, Cascades SPG Holding Inc. ("Cascades"), a subsidiary of Cascades Inc., PII's parent
company, must become a party to the Shareholders Agreement in order to become a Shareholder of the Corporation's stock; and, 

 

        WHEREAS,
Cascades holds one hundred four thousand four hundred eighty four (104,484) Common Shares of Dopaco; and 

        WHEREAS,
pursuant to the terms of Section 1.6 of the Agreement, the parties' desire to amend the Shareholders Agreement so that certain Affiliates (as that term is defined in the
Shareholders Agreement) of any member of the Paperboard Group will be considered a party to the Shareholders Agreement and bound by the terms of such Shareholders Agreement; and 

        WHEREAS,
the parties' desire that the grants of employee stock awards or stock options be subject to unanimous approval of the Board of Directors or where shareholder action is required
by law, the Shareholders, and 

        WHEREAS,
pursuant to the terms of Section 1.6 of the Agreement, the parties' desire to amend the Shareholders Agreement so that the grants of employee stock awards or stock
options be subject to unanimous approval of the Board of Directors or where the shareholder action is required by law, the Shareholders 

        NOW
THEREFORE, in consideration of the mutual covenants and promises contained herein, and with the foregoing recitals incorporated by reference and intending to be legally bound hereby,
the parties hereto promise, covenant and agree as follows: 

	1.
	Section 1.1.22
of the Shareholders Agreement shall be amended to read a follows:

	1.1.22
	"Paperboard
Group" collectively, any and all of PII, PIC and PHI, and any other subsidiary of Cascades Inc. (hereinafter referred to as "Cascades Subsidiary"), including
Cascades SPG Holding Inc., jointly and severally, who will purchase Shares, provided that the Paperboard Group shall consist of PII, PIC and PHI only, for the purposes of Section 18 of
this Agreement.

	2.
	Section 3.6.2
of the Shareholders Agreement shall be amended to read as follows:

	3.6.2
	any
issuance or redemption of Shares by the Corporation, or any issuance of options or securities convertible into Shares, except any of the following: issuances pursuant to the
Option; redemptions of Shares held of record by the Fitts VT, the current beneficiaries of which are listed on Schedule 3.6.2, redemptions of Shares issued in connection with the Employee Stock
Option Plans; issuances and redemptions which are specifically provided for in this Agreement, issuances by the Corporation implementing a stock dividend, stock split or similar action affecting all
of the Corporation's shareholders pro rata and issuances in connection with a sale to the public securities issued by the Corporation subject to the Corporation's compliance with the terms of
Section 3.7 (a "Public Offering"), 

2

 

	3.
	Section 6.1.5
of the Shareholders Agreement shall be amended to read as follows:

	6.1.5
	PHI
shall give notice to the Corporation and Fitts of its intention or of the intention of PIC, PII or Cascades Subsidiary to exercise the option, within 30 days from receipt
of such notice Fitts shall elect whether Fitts or the Fitts Group will: (i) sell to PHI, PIC or PII or Cascades Subsidiary, as the case may be, all of the Shares to be purchased in connection
with such exercise; (ii) sell some, but not all, of the Shares to be purchased in connection with such exercise; or (iii) refrain from selling any of the Shares to be purchased in
connection with such exercise, and to the extent necessary the Corporation will issue to PHI, PIC, PII or Cascades Subsidiary, as the case may be, the number of its Common Shares required to ensure
that the purchase acquires the appropriate number of Option Shares.

	4.
	Notwithstanding
the date of execution, this Amendment shall have an effective date of November 8, 2001.

	5.
	Except
as expressly amended by this Amendment, the Shareholders Agreement shall continue to be, and shall remain, in full force and effect and the terms thereof are hereby ratified and
reconfirmed in all respects. All references in the Shareholders Agreement to "this Agreement," "hereof," "hereto" and "hereunder" shall be deemed to be references to the Shareholders Agreement as
amended hereby, and all references in any supplemental documents executed by the parties shall be deemed to be to the Shareholders Agreement as amended hereby. 

        IN
WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first above written. 

	 	 	DOPACO, INC.
	

 	
 	

By:	

/s/ Edward P. Fitts, Jr.
 EDWARD P. FITTS, JR,

CHIEF EXECUTIVE OFFICER
	

 	
 	

/s/ Edward P. Fitts, Jr.
 EDWARD P. FITTS, JR
	

 	
 	

/s/ Edward P. Fitts, Jr.
 EDWARD P. FITTS, JR, Voting Trustee

3

 

	 	 	CASCADES BOXBOARD U.S. HOLDINGS, INC.
	

 	
 	

By:	

/s/ Patrice Gervais

	 	 	 	Name:	Patrice Gervais

	 	 	 	Title:	VP Finance

	

 	
 	

CASCADES BOXBOARD INC.
	

 	
 	

By:	

/s/ Patrice Gervais

	 	 	 	Name:	Patrice Gervais

	 	 	 	Title:	VP Finance

	

 	
 	

CASCADES BOXBOARD GROUP INC.
	 	 	By:	/s/ Patrice Gervais

	 	 	 	Name:	Patrice Gervais

	 	 	 	Title:	VP Finance and CFO

4

QuickLinks

Exhibit 10.1

SHAREHOLDERS AGREEMENT among EDWARD P. FITTS, JR., Individually and EDWARD P. FITTS, JR., VOTING TRUSTEE and PAPERBOARD U.S. HOLDINGS, INC. and PAPERBOARD INDUSTRIES CORPORATION and PAPERBOARD INDUSTRIES
INTERNATIONAL INC. and DOPACO, INC.

AMENDMENT TO SHAREHOLDERS AGREEMENT AMONG DOPACO, INC. AND EDWARD P. FITTS, JR., Individually AND EDWARD P. FITTS, JR., VOTING TRUSTEE AND PAPERBOARD U.S. HOLDINGS, INC. AND PAPERBOARD INDUSTRIES CORPORATION AND
PAPERBOARD INDUSTRIES INTERNATIONAL INC.QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.5    
    

AMENDED AND RESTATED SHAREHOLDERS AGREEMENT  

        Entered into as of the 1st day of May, 1998 at the City of Montreal, Province of Quebec, Canada, by and between:

	BETWEEN:	 	SONOCO PRODUCTS COMPANY, a corporation incorporated under the laws of the State of South Carolina,
	

AND:	
 	
WlSENBERG U.S., INC., a corporation incorporated under the laws of the State of South Carolina,
	

 	
 	
(hereinafter collectively called "Sonoco")
	

AND:	
 	
GROUPE CONVERSION CASCADES INC., a corporation incorporated under the laws of Canada,
	

 	
 	
(hereinafter called "Cascades" or "Group Cascades")
	

AND:	
 	
CASCADES INC., a corporation incorporated under the laws of Québec,
	

 	
 	
OF THE FIRST PART
	

AND:	
 	
CASCADES SONOCO, INC., a corporation incorporated under the laws of the State of South Carolina,
	

AND:	
 	
CASCADES CONVERSION INC., a corporation incorporated under the laws of Québec,
	

 	
 	
(hereinafter individually referred to as a "Corporation" or collectively called the "Corporations")
	

 	
 	
OF THE SECOND PART

        WHEREAS the Corporations are the result of certain transactions to merge the header business previously carried out in Canada and in the
United States by Cascades Conversion Inc., Finipap Services Inc. and Socono Products Company; 

        WHEREAS the parties, either in their own names or through associated or affiliated corporations, own all of the issued and outstanding
shares of the Corporations; 

        WHEREAS the parties previously entered into shareholders agreements for each of the Corporations dated February 13, 1992 and desire
to amend and restate such agreements in their entirely to reflect changes in ownership of the Corporations and to consolidate to a single agreement and in order to record their mutual understanding as
to the manner in which the affairs of the Corporation shall be conducted and to provide for their respective rights and obligations; 

 

        NOW, THEREFORE, in consideration of the premises, the mutual covenants hereinafter set forth, the parties hereby agree as follows: 

	1.	DEFINITIONS AND INTERPRETATION
	

1.1	

In this Agreement, the recitals and the schedules hereto, unless the context or subject matter otherwise requires:
	

 	

1.1.1	

"Affiliate" shall have the meaning ascribed to such term under the CBCA;
	

 	

1.1.2	

"Audited Statements" has the meaning attributed thereto in Section 4.2;
	

 	

1.1.3	

"Auditors" means the auditors of the Corporations appointed in conformity with the provisions of this Agreement;
	

 	

1.1.4	

"Associate" shall have the meaning ascribed to such term under the CBCA;
	

 	

1.1.5	

"Budget" means the annual budget submitted by the Officers to the Board of Directors pursuant the Section 3.2.1 including any revisions
thereto;
	

 	

1.1.6	

"Business" means the business of manufacturing and selling i) headers (including substitutes for headers including corrugated heads) for the pulp and paper industry in Canada and the United States;
and ii) coated paper and laminate including roll and ream wrap used in Canada and the United States to package pulp and paper products that require protection;
	

 	

1.1.7	

"Cascades" means Groupe Conversion Cascades Inc., the party of the First Part;
	

 	

1.1.8	

"Cascades Directors" means the directors appointed pursuant to the provisions of Sections 3.1.2 and 3.1.4
hereof;
	

 	

1.1.9	

"CBCA" means the Canada Business Corporation Act as amended from time to time;
	

 	

1.1.10	

"Charters" means the Certificates of Incorporation of the Corporations and any amendments thereto;
	

 	

1.1.11	

"Change of Control" means a transaction resulting in a transfer of control (as this term is described in the CBCA);
	

 	

1.1.12	

"Corporation" means either Cascades Conversion Inc. and Cascades Sonoco, Inc. and Corporations means collectively Cascades Conversion Inc. and Cascades Sonoco, Inc.;
	

 	

1.1.13	

"Event of Default" means a change of control as described in Section 6.1; or ii) an Event of Insolvency;
	

 	

1.1.14	

"Event of Insolvency", when used in relation to a person, means that:
	 	 	 	 

2

 

	

 	

 	

a.	

such person makes an assignment for the benefit of its creditors; or
	

 	

 	

b.	

such person becomes bankrupt or, as an insolvent debtor, takes the benefit of any act now or hereafter in force for bankrupt or insolvent debtors, or
	

 	

 	

c.	

a receiver or other officer with like powers is appointed for such person for a substantial part of the assets of such person unless the appointment of such receiver or other officer with like powers is being disputed in good faith and such
proceedings affect the postponement of the enforcement of such appointment; or
	

 	

 	

d.	

a resolution is passed or an order is made or a petition is filed for the winding-up, liquidation, revocation or cancellation of incorporation of such person, unless such action is being disputed in good faith by appropriate, proceedings and such
proceedings effectively postpone enforcement of the resolution, order or petition;
	

 	

1.1.15	

"Fair Market Value" means the price determined in an open and unrestricted market between informed and prudent parties, acting at arm's length (as that term is defined in the Income Tax Act (Canada)) and under no compulsion to act, expressed in terms of money or money's worth;
	

 	

1.1.16	

"Fiscal Year" shall have the meaning ascribed to such terms in Section 3.2.2 hereof;
	

 	

1.1.17	

"Generally Accepted Accounting Principles" or "GAAP" means the current accounting principles recommended by the Canadian Institute of Chartered Accountants
in the "CICA Handbook" in the case of Cascades Conversion Inc. or by the American Institute of Certified Public Accountants in the case of Cascades Sonoco, Inc. at the relevant time, or in the event that the matter is not covered in such
recommendations, principles having general acceptance among accounting professionals at the particular time. Accounting principles as the exist as of the date of this Agreement shall be consistently applied over the term of this
Agreement;
	

 	

1.1.18	

"Sonoco" means Sonoco Products Corporation;
	

 	

1.1.19	

"Sonoco Directors" means the directors appointed pursuant to the provision of Sections 3.1.1 and 3.1.4
hereof;
	

 	

1.1.20	

"Interest" means the Shares of either Sonoco or Cascades, as the case may be;
	

 	

1.1.21	

"Proportionate Share" of a Shareholder at any time means the proportion which the number of fully-participating shares of the Corporation then beneficially owned by such Shareholder bears to the total
number of fully-participating shares of the Corporation then held by all the Shareholders;
	 	 	 	 

3

 

	

 	

1.1.22	

"Shareholders" means Sonoco and Cascades, so long as they beneficially own Shares in the capital of the Corporation and others to become parties to this Agreement who hold shares;
	

 	

1.1.23	

"Shares" shall mean all shares of every class in the capital stock of both Corporations owned by any of the Shareholders;
	

1.2	

The preamble is true and correct and forms part of this Agreement as if herein recited at length.
	

1.3	

Unless otherwise provided for herein, all payments contemplated herein shall be paid in Canadian funds with respect to Cascades Conversion Inc. and U.S. funds with respect to Cascades Sonoco, Inc., in cash or by certified check.
	

1.4	

The division of this Agreement into articles and sections is for convenience of reference only and shall not affect the interpretation or construction of this Agreement.
	

1.5	

Except as to matters of corporate law relating to Cascades Sonoco Inc., which shall be governed by the South Carolina Business Corporation Act, this Agreement shall be governed by and construed in accordance with the laws of the Province of
Quebec and the federal laws of Canada applicable therein.
	

1.6	

In this Agreement, the use of the singular number shall include the plural and vice versa, the use of gender shall include the masculine, feminine and neuter genders and the word "person" shall include an individual, a trust, a partnership, a body
corporate or public, an association or other corporated or unincorporated organization or entity.
	

1.7	

When calculating the period of time within which or following which any act is to be done or step taken pursuant to this Agreement, the date which is the reference date in calculating such period shall be excluded. If the last day of such period is a
non-business day, the period in question shall end on the next business day.
	

1.8	

Any references herein to any law, by-law, rule, regulation, order or act of any government, governmental body or other regulatory body shall be construed as a reference thereto as amended or re-enacted from time to time or as a reference to any
successor thereto.
	

1.9	

To the extent that this Agreement specifies that any matters may only be or shall be dealt with or approved by or shall require action by the Shareholders, the discretion and powers of the directors of the Corporation to manage and supervise the
management of the business and affairs of the Corporation with respect to such matters are correspondingly restricted.
	

1.10	

Any reference to a share of a Corporation means shares in the capital of such Corporation, as such shares exist at the close of business on the date of execution and delivery of this Agreement; provided that in the event of a subdivision, redivision,
reduction, combination or consolidation, then a reference to shares of a Corporation shall
	 	 	 	 

4

 

	

 	

thereafter mean the shares resulting from such subdivision, redivision, reduction, combination or consolidation.
	

1.11	

Should any provision or condition of this Agreement be or become illegal or non-enforceable, it or they shall be considered separate and severable from the Agreement and the remaining provisions and conditions of this Agreement shall remain in force
and be binding upon the parties hereto as through the said provisions or conditions had never been included.
	
2.	
CORPORATE AFFAIRS GENERALLY
	

2.1	

The Shareholders shall each vote all shares in each Corporation from time to time beneficially held by them and otherwise exercise their rights as shareholders, and to the extent permitted by applicable law, cause their respective nominees to the
Boards of Directors to act so that at all times the conditions, restrictions, limitations and prohibitions on the Business and corporate affairs of the Corporations set forth in this Agreement shall apply and be given full effect.
	

2.2	

In the event of conflict between the provisions of this Agreement and the provisions of the Charter, by-laws or resolutions of the Boards of Directors or Shareholders, each Shareholder shall vote his shares of each Corporation so as to cause the
Charters, by-laws or resolutions to be amended to resolve any such conflict in favor of the provisions of this Agreement.
	
3.	
PROVISIONS FOR CONTROL
	

3.1	
Board of Directors
	

 	

The Board of Directors of each of the Corporations shall consist of 4 directors respectively who shall be nominated and elected as follows:
	

 	

3.1.1	

Sonoco shall be entitled to nominate and have elected 2 directors (the "Sonoco Directors"), so long as such Shareholder is a shareholder of the Corporation; and
	

 	

3.1.2	

Cascades shall be entitled to nominate and have elected 2 directors (the "Cascades Directors"), so long as such Shareholder is a shareholder of the Corporation; and
	

 	

3.1.3	

In the event of a vacancy during the term of office of a Sonoco director, such vacancy shall be filled by a nominee of Sonoco; in the event of a vacancy during the term of office of a Cascades director, such vacancy shall be filled by a nominee of
Cascades.
	

 	

3.1.4	

The parties shall vote at all meetings of shareholders and otherwise exercise their rights to ensure that directors are elected or appointed and maintained in office and vacancies on the Boards of Directors are filled in conformity with the
provisions of Sections 3.1.1 and 3.1.2 hereof.
	 	 	 	 

5

 

	

 	

3.1.5	

Notwithstanding any statutory rule or rule of procedure to the contrary, the Presidents or Chairman, at any meeting of the Boards of Directors or at any meeting of the shareholders of the Corporation shall not be entitled to a second extra or casting
vote in the case of a tie vote at any such meeting.
	

 	

3.1.6	

A quorum at meetings of each of the Board of Directors shall consist of 2 directors, provided that at least 1 representative of each of the shareholders is present at such meetings. At meetings of the Boards of Directors, decisions shall be approved
by unanimous vote of the directors present and voting. A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.
	

3.2	
Management
	

 	

3.2.1	

Budgets, Reporting Obligations and Management of Funds
	

 	

 	

a.	
Annual Budgets:    Each Corporation shall, not less than fifteen (15) days and not more than sixty (60) days prior to the commencement of the next Fiscal Year
prepare and submit to the Shareholders for their approval: i) an annual operating budget for the Corporation for such Fiscal Year on a monthly basis which shall set forth anticipated revenues and expenses and which shall be on an accrual basis;
and ii) an annual capital expenditure budget for the Corporation for such Fiscal Year.
	

 	

 	

 	

(the "Budget") and thereafter, shall prepare and submit to the Shareholders as appropriate, revisions of such Budget.
	

 	

 	

b.	
Monthly Report:    Each Corporation shall deliver to the Shareholders monthly reports including details of revenues and expenses, fixed and variable, for each calendar
month of the Fiscal Year within twenty-five (25) days of the end of each month of the Fiscal Year.
	

 	

3.2.2	
Fiscal Year
	

 	

 	

The Fiscal year end of each Corporation shall be the 31st day of December each year (the "Fiscal Year").
	

 	

3.2.3	
Financial Reporting and Inspection
	

 	

 	

Each Corporation shall deliver to the Shareholders its audited financial statements for the Fiscal Year last ended, consisting of the statements mentioned in Section 4.2 hereof with the auditors'
report thereon, within one hundred and twenty (120) days after the end of each Fiscal Year.
	 	 	 	 

6

 

	
4.	
OPERATION, FINANCING AND PROFITS
	

4.1	
Books and Records
	

 	

Proper books of account shall be kept by each Corporation and entries shall be made therein of all matters, terms, transactions and things as are usually written and entered into books of account in accordance with GAAP and each of the Shareholders
shall at all times furnish to the others correct information, accounts and statements of and concerning all transactions pertaining to each Corporation without any concealment or suppression. The Shareholders, or their agents, representatives and
employees, shall be entitled to have access to and inspect all books and records of the Corporations during normal business hours upon giving reasonable notice. They shall also be entitled, at their own expense, to obtain copies of such books and
records.
	

4.2	
Auditors and Audited Statements
	

 	

The external auditors of the Corporations shall be Coopers & Lybrand or such other firm of chartered and or certified public accountants as may be appointed by the Shareholders' from time to time and such auditors shall, at the Fiscal Year
end of the corporation, make an audit of the books and records of each Corporation and shall prepare audited financial statements for each Corporation (the "Audited Statements") for such Fiscal Year in accordance with GAAP, which Audited Statements
shall consist of a balance sheet, a statement of earnings (or income) and retained earnings or shareholder's equity and a statement of source and application of funds (or changes of cash flows), together with the auditor's comments thereon. For the
foregoing purposes, such auditors shall have access to all books of account, records and all vouchers, checks, papers and documents of or which may relate to each Corporation, including those of the Shareholders to the extent to which such books,
records, vouchers, checks, papers and documents relate to the Corporation.
	

4.3	
Bank Accounts
	

 	

Each Corporation shall maintain a bank account or bank accounts at such bank or trust company as may be approved by the Boards of Directors from time to time. All bank accounts shall be kept in the name of the Corporations. All monies received from
time to time for the account of the Corporations shall be paid immediately into those bank accounts for the time being in operation, in the same drafts, checks, bills or cash in which they are received and all disbursements on account of the
Corporations shall be made by check on such bank or trust company.
	

4.4	
Profits
	

 	

Unless the Boards of Directors determines otherwise, each Corporation shall distribute to each Shareholder, subject to any obligations of each Corporation toward its lenders by way of distribution of profits by dividend or otherwise, an amount equal
to Seventy-Five Percent (75%) of the net after tax profits as reflected in the audited statements of each Corporation for each Fiscal Year in an amount equal to such Shareholder's Proportionate Share of such profits. It is the intention of the
parties hereto that each Shareholder shall
	 	 	 	 

7

 

	

 	

receive the full amount it is entitled no later than Thirty (30) days following the issuance of the audited statements by the auditors. The parties will use their reasonable best effort to cause any restriction imposed on the payment of dividend
by any lender to be waived.
	
5.	
TRANSFER OR DISPOSITION OF SHARES
	

5.1	

Except as expressly provided in this Agreement, the Shareholders shall not sell, transfer, assign, require the Corporations to redeem their shares or otherwise dispose of their shares or mortgage, hypothecate, pledge, encumber, grant rights with
respect to or otherwise charge any of their shares except with the unanimous consent of the Shareholder.
	
6.	
CHANGE OF CONTROL
	

6.1	

Any transaction which changes Cascades Inc.'s control of Group Cascades or Sonoco's control of Sonoco Limited or Wisenberg U.S., Inc. shall be deemed to be a prohibited transfer or disposition of shares under this Agreement ("Event of
Default") and the Shareholder undergoing such change or modification (the "Vendor") shall be bound to offer the shares held by it in both Corporations (the "Purchased Shares") to the other Shareholder (the "Purchaser") upon notice ("Notice of
Default") and upon receipt of the Notice of Default, the Vendor shall sell and the Purchaser shall, at its sole option, purchase the Purchased Shares at a price equal to the Fair Market Value thereof (determined in accordance with Article 7 hereof).
	

 	

6.1.1	

The Purchase Price for the Purchased Shares shall be paid in full at the time of Closing, by cash or certified check.
	

 	

6.1.2	

The Closing of the transaction of purchase and sale contemplated in Section 6.1 shall take place at 10:00 a.m. Montreal Time at the registered office of Cascades on the date (the "Date of
Closing") which is Thirty (30) days after the final determination of the Purchase Price for the Purchased Shares in accordance with Article 7, on such other date, time and place as may be
agreed upon by the parties involved.
	

6.2	

Notwithstanding the provisions of Sections 5.1 and 6.1 hereof, and any other provisions of this Agreement which impose restrictions upon the disposition of
any issued shares of either Corporation, each Shareholder shall have the right, without the approval of the other Shareholder, to dispose of all or any of its shares of either Corporation to a wholly-owned subsidiary of such Shareholder. No such
disposition shall, however, be permitted or be valid or effective until written notice thereof shall have been given by such Shareholder to the other parties hereto and until the acquiror of the shares in question shall have entered into an agreement
with the other parties hereto consenting to the terms hereof and agreeing to assume and be bound by all of the obligations of the disposing Shareholder, as though such acquiror were the disposing shareholder, in which event such acquiror shall be
entitled to all of the rights and be subject to all of the obligations on the part of the disposing Shareholder herein, mutatis mutandis.
	 	 	 	 

8

 

	

6.3	

Notwithstanding a disposition under Section 6.2 as between the disposing Shareholder and the other parties hereto, the disposing Shareholder shall remain jointly and severally liable as principal
debtor under all covenants contained herein and the disposing Shareholder agrees to unconditionally guarantee jointly and severally to the other parties hereto the due performance by the acquiror of all obligations imposed upon him hereunder waiving
the benefits of division and discussion. The disposing Shareholder hereby authorizes the other parties hereto to renew, compromise, extend, accelerate or otherwise change the time for payment or any term relating to the performance of any such
obligations and hereby waives presentment, protest, notice of protest, notice of dishonour, demand for performance and notice of acceptance of this guarantee by the other parties hereto.
	
7.	
DETERMINATION OF FAIR MARKET VALUE
	

7.1	

For the purpose of Articles 6 and 8, the Fair Market Value of the Shares shall be determined on the basis of the market value of the Corporations calculated
on a consolidated basis as an "on-going concern" without taking into account any minority or majority Shareholder discount or premium or any other premium or discount based on a change of control of such Corporation, the whole as determined by the
Auditors and in conformity with the provisions of this Article 7.
	

7.2	

Forthwith upon receipt of a Notice of Default contemplated in Section 6.1, the Auditors shall proceed to determine the Fair Market Value of the Purchased Shares as at the end of the month ending
immediately prior to the date of receipt of the Notice of Default and prepare a written report setting forth their determination and details of the basis of their determination (the "Valuation"), which Valuation shall be delivered to the Vendor and
the Purchaser ("Notice of Valuation") within thirty (30) days of receipt by the Auditors of the Notice of Default and shall be final and binding upon the parties.
	

7.3	

The costs of preparation of the Valuation shall be borne by the Corporations.
	
8.	
EVENT OF DEFAULT
	

8.1	

Upon the occurrence of an Event of Default with respect to any Shareholder (the "Vendor"), the other Shareholder (the "Purchaser") shall have the right, (but not the obligation) to deliver to the Vendor a notice in writing (the "Purchase Notice")
requiring the Vendor to sell all of its shares in the capital of both of the Corporations (the "Purchased Shares") to the Purchaser and upon receipt of the Purchase Notice, the Vendor shall sell and the Purchaser shall purchase the Purchased Shares,
upon and subject to the terms and conditions hereinafter set forth.
	

8.2	

The Purchase Price for the Purchased Shares shall be the Fair Market value thereof (determined in accordance with Article 7 hereof).
	

 	

The Purchase Price for the Purchased Shares shall be paid in full at the Time of Closing, by cash or certified cheque,
	 	 	 	 

9

 

	

8.3	

The closing of the transaction of purchase and sale contemplated in this Article under Section 8.1 shall take place at 10:00 a.m. Montreal Time at the registered office of Cascades on the date
(the "Date of Closing") which is thirty (30) days after the determination of the Purchase Price for the Purchased Shares in accordance with Article 7 or such other date, time and place as may
be agreed upon by the parties involved.
	
9.	
SHOT GUN PROVISION
	

9.1	

Any one of the parties hereto may purchase the other party's Shares as follows:
	

 	

9.1.1	

The party (the "Offering Party") desiring to purchase the Shares of the other party (the "Receiving Party") may purchase all, but not less than all, of the Shares of both Corporations owned by the other party. The Offering Party must give notice to
the Receiving Party of its intention to acquire such Shares (the "Shot Gun Offer") and the Shot Gun Offer must, in order to be valid under this Agreement, have the following provisions:
	

 	

 	

a.	

it must be made with respect to all of the Shares of both Corporations (the "Purchased Shares") held by the Receiving Party and describe such Shares;
	

 	

 	

b.	

it must state the price per Share for which the Offering Party desires to acquire the Shares; and
	

 	

 	

c.	

the purchase price of the Purchased Shares must be payable in full at the Closing.
	

 	

9.1.2	

The Receiving Party will have sixty (60) days from the receipt of the Shot Gun Offer to respond to the Offering Party with notice of its intention to either:
	

 	

 	

a.	

accept the Shot Gun Offer and sell its shares according to the terms and conditions specified in the Shot Gun Offer; and
	

 	

 	

b.	

except as otherwise provided Section 9.1.4 acquire the Shares held by the Offering Party upon terms and conditions equivalent to those provided for in the Shot Gun Offer.
	

 	

9.1.3	

The failure by the Receiving Party to respond as provided in Section 9.1.2 within the 60-day period set forth therein shall automatically constitute an acceptance of the Shot Gun Offer.
	

 	

9.1.4	

The Closing of any sale made under this Section 9.1 shall be held on the 5th day following the earlier to occur of i) the last day of the 60-day period set forth in Section 9.1.2 and ii) the date of the response, if any, given pursuant to Section 9.1.2.
	 	 	 	 

10

 

	

9.2	

If Cascades shall be the purchaser of all of the Shares of Sonoco, the parties agree that Roll Packaging Technologies Inc. shall continue to act as sales agent for the Corporation in accordance with the terms of the Marketing and Sales Agreement,
 dated as of May 1st, 1998 and made among Cascades Conversion Inc., Cascades Sonoco, Inc. and Roll Packaging Technologies Inc., which Agreement shall continue in full force and effect, save and except that the term of the
Marketing and Sales Agreement shall be for a period of two (2) years following the date of such purchase.
	

9.3	

If Sonoco shall be the purchaser of all the Shares of Cascades in accordance with the provisions of this Article, Cascades shall cause Cascades Inc. and/or its subsidiaries and associates to continue to lease the leased premises to the
Corporation (as this term is defined into the Lease Agreement dated February 13, 1992 and the renewal Agreement dated February 12, 1997 among the Corporation and Cascades Conversion Inc.) on the same terms and conditions. The term of
this Lease shall be two (2) years from the date of such purchase.
	

9.4	

The parties acknowledge and agree that they have agreed to the buy/sell provisions contained in this Article in reliance upon and on the basis of the covenants of the parties contained in Sections 9.2
and 9.3.
	
10.	
USE OF THE "CASCADES" NAME
	

10.1	

Sonoco hereby acknowledges, that "Cascades" is a registered trademark and tradename owned by Cascades Inc., and the parties hereby undertake and agree to take all steps necessary to protect Cascades' right, title and interest thereto. Sonoco
hereby, acknowledge and agree that they do not have any right, title or interest whatsoever in and to the "Cascades" trademark and tradename or the use thereof and they undertake and agree not to use the "Cascades" trademark or tradename in
connection with their respective businesses and operations in any manner whatsoever, provided however that Cascades Inc. hereby grants the Corporations a license to use the name "Cascades" and logo as part of their Corporate names and in the
course of its business and the Corporations hereby undertake to execute at the request of Cascades Inc. a registered user agreement in connection with its use of the name.
	

10.2	

The Corporations and Sonoco undertake and agree that forthwith upon Cascades ceasing to be Shareholder, the Corporations shall change their name to delete any reference to "Cascades" and shall cease making any reference to or use of the "Cascades"
name in its business and operations and in any of its activities whatsoever.
	
11.	
USE OF THE "SONOCO" NAME
	

11.1	

Cascades Inc. hereby acknowledges that "Sonoco" and "Sonoco Products Company" are registered trademarks and tradename owned by Sonoco Products Company or one of it wholly-owned subsidiaries and the parties hereby undertake and agree to take all
steps necessary to protect Sonoco's right, title and interest thereto. Cascades and Cascades Inc. hereby acknowledge and agree that they do not have any right, title or interest whatsoever in and to the "Sonoco" trademark and tradename or the
use thereof and they undertake
	 	 	 	 

11

 

	

 	

and agree not to use the "Sonoco" trademark or tradename in connection with their respective businesses and operations in any manner whatsoever, provided however that Sonoco Products Company hereby grants the Corporations a license to use the name
"Sonoco" and log as part of their Corporate names and in the course of its business and the Corporations hereby undertake to execute at the request of Sonoco Products Company a registered user agreement in connection with its use of the
name.
	

11.2	

The Corporations and Cascades undertake and agree that forthwith upon Sonoco Products Company ceasing to be a Shareholder the Corporations shall change their name to delete any reference to "Sonoco" and shall cease making any reference to or use of
the "Sonoco" name in its business and operations and in any of its activities whatsoever.
	
12.	
NON COMPETITION UNDERTAKING
	

12.1	

Each of Cascades Inc. and Sonoco agree that while they own directly or indirectly Shares in the Corporations and for a period of two (2) years thereafter, they will not, without the written consent of the other, which may be withheld in
their absolute discretion, directly or indirectly, in any manner whatsoever including, without limitation, either individually or in partnership or jointly or in conjunction with any other person or persons, firm, association, syndicate, company or
corporation, as principal, agent, shareholder, employee or in any other manner whatsoever, carry on or be engaged in the Business within Canada or the United States, or be concerned with or interested in or lend money to, guarantee the debts or
obligations of or permit its name or any part thereof to be used by any person, persons, firm, association, syndicate, company or corporation engaged or concerned with or interested in the Business within Canada or the United States.
	

12.2	

In the event of any violation of any terms and provisions of Section 12.1 hereof by a Cascades Inc. or Sonoco, as the case may be (the "Defaulting Shareholder"), the Corporations or the other
party hereto shall have the right, in addition to all other rights provided by law or by this Agreement, to obtain a provisional injunction, interlocutory injunction and permanent injunction to prevent the Defaulting Shareholder or persons acting on
its behalf, from violating the provisions of Section 12.1 hereof. In such case, the Defaulting Shareholder renounces to any defense based on the availability to the Corporations and the other party
hereto of other recourses, hereby acknowledging that any violation by it of the provisions hereof shall cause irreparable damage to the Corporations and the other party hereto. The Defaulting Shareholder agrees that all restrictions contained in
Section 12.1 hereof are reasonable.
	
13.	
GENERAL CONTRACT PROVISIONS
	

13.1	

All share certificates of the Corporations shall have the legend endorsed thereon forthwith after the execution of this Agreement and from time to time hereafter substantially in the following form:
	

 	

 	

"The transfer of shares represented by this certificate is subject to an Agreement dated as of May 1st, 1998, made among Cascades Inc., Sonoco Products Company, Groupe Conversion Cascades Inc. and Cascades Sonoco,
 Inc.".

12

  

	13.2
	All
notices, requests, demands or other communications (collectively "Notices") by the terms hereof required or permitted shall be given in writing by personal delivery or by
registered mail, postage prepaid, or by facsimile transmission to such other party as follows:

	13.2.1
	To
Sonoco Products Company at: 

North
Second St.

Hartsville, South Carolina

29550, United States

Attention:
The President

Fax number: (803) 339-6078 

	13.2.2
	To
Groupe Conversion Cascades Inc. 

404,
Marie-Victorin St.

Kingsey Falls, Quebec

J0A 1 B0 

Attention:
The President

Fax number: (819) 363-5166 

	13.2.3
	To
Cascades Inc. 

404,
Marie-Victorin St.

Kingsey Falls, Quebec

J0A 1 B0 

Attention:
The President

Fax number: (819) 363-5166 

	13.2.4
	To
the Corporations at: 

457,
Marie-Victorin St.

Kingsey Falls, Quebec

J0A 1 BO 

Attention:
The President

Fax number: (819) 363-5455 

or
at such other address as may be given by such person to the other parties hereto in writing from time to time. If any party bound hereby or any permitted transferee of shares hereunder shall not
have given the parties hereto notice setting forth an address for the giving of Notices, the Notice for such person shall be deemed to have been properly given if given in accordance with the terms
hereof as if given to the transferor(s) of such shares. 

13

 

All
such Notices shall be deemed to have been received when delivered or transmitted, or, if mailed, forty-eight (48) hours after 12:01 a.m. on the day following the day of the mailing
thereof. If any Notice shall have been mailed and if regular mail service shall be interrupted by strikes or other irregularities, such Notice shall be deemed to have been received forty-eight
(48) hours after 12:01 a.m. on the day following the resumption of normal mail service, provided that during the period that regular mail service shall be interrupted all Notices shall
be given by personal delivery or facsimile transmission. 

	13.3
	The
parties shall sign such further and other documents, cause such meetings to be held, resolutions passed and by-laws enacted, exercise their vote and influence, do and
perform and cause to be done and performed such further and other acts and things as may be necessary or desirable in order to give full effect to this Agreement and every part hereof.

	13.4
	Time
shall be of the essence of this Agreement and of every part hereof and no extension or variation of this Agreement shall operate as a waiver of this provision.

	13.5
	This
Agreement constitutes the entire Agreement between the parties with respect to all of the matters herein and its execution has not been induced by, nor do any of the parties
rely upon or regard as material, any representations or writings whatever not incorporated herein and made a part hereof and may not be amended or modified in any respect except by written instrument
signed by the parties hereto. The Schedules referred to herein are incorporated herein by reference and form part of the Agreement.

	13.6
	Any
right or remedy of a party provided for therein is in addition to and not in substitution of any other rights or remedies of such party and all such rights and remedies of such
party hereunder or at law or in equity are cumulative and not in the alternative.

	13.7
	This
Agreement shall enure to the benefit of and be binding upon the parties and their respective heirs, executors, administrators, legal representatives and permitted assigns.

	13.8
	The
parties require that the present Agreement and the Schedules and any notice or procedure to be given or sent in virtue of this Agreement be drawn up in the English language. Les
parties exigent que la présente Convention et les annexes et tout avis ou procédure à être donnés ou
expédiés en vertu de cette Convention soient rédigés en langue anglaise. 

14

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date herein above first set forth. 

	SONOCO PRODUCTS COMPANY	 	 
	

Per:	

 	
 	

 
	 	
 Randy Kelley	 	 
	    	 	 	 
	
WlSENBERG U.S., INC.	
 	

 
	

Per:	

 	
 	

 
	 	
 Randy Kelley	 	 
	    	 	 	 
	
GROUPE CONVERSION CASCADES INC.	
 	

 
	

Per:	

 	
 	

 
	 	
 Mario Plourde	 	 
	    	 	 	 
	
CASCADES INC.	
 	

 
	

Per:	

 	
 	

 
	 	
 Robert F. Hall	 	 
	    	 	 	 
	
CASCADES CONVERSION INC.	
 	

 
	

Per:	

 	
 	

 
	 	
 Luc Langevin	 	 
	    	 	 	 
	
CASCADES SONOCO, INC.	
 	

 
	

Per:	

 	
 	

 
	 	
 Luc Langevin	 	 

15

QuickLinks

Exhibit 10.5

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