CORPORATE GOVERNANCE AGREEMENT
THIS CORPORATE GOVERNANCE AGREEMENT is made as of February 6, 2004, among JSG Packaging Limited, a private limited company incorporated under the laws of Ireland (the "Company"), each of the MDCP Co-Investors, Dr. Michael W.J. Smurfit ("MWJS"), Gary McGann ("GMcG"), Anthony Smurfit ("APJS"), Ian Curley ("IJC"), and each of the Persons listed on the Schedule of Other Investors attached hereto (each, an "Other Investor" and collectively, the "Other Investors"). MWJS, GMcG, APJS and IJC are collectively referred to herein as the "Management Investors" and individually as a "Management Investor". The Other Investors and the Management Investors are collectively referred to herein as "Minority Investors" and in the singular as a "Minority Investor." The MDCP Co-Investors and the Minority Investors are collectively referred to herein as the "Investors" and in the singular as an "Investor". Except as otherwise indicated herein, capitalized terms used herein are defined in Section 3 hereof.
WHEREAS, Jefferson Smurfit Group Limited (formerly MDCP Acquisitions Limited) (the "Prior Parent") and the Investors are parties to that certain Amended and Restated Corporate Governance Agreement, dated as of September 5, 2002 (the "Existing Agreement");
WHEREAS, on or about the date hereof, holders of Ordinary Shares of Prior Parent, nominal value 0.001 per share (the "Prior Parent Ordinary Share") are exchanging each such Prior Parent Ordinary Share for one Ordinary Share of the Company (the "Exchange"); and
WHEREAS, the Investors propose to enter into this Agreement in order to establish certain governance provisions relating to the Company and its Subsidiaries.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Voting. From and after the date hereof and until the provisions of this Section 1 cease to be effective, each Investor shall vote all of his Ordinary Shares and any other voting securities of the Company over which such Investor has voting control and shall take all other reasonably necessary or desirable actions within his control in his capacity as a stockholder of the Company only (including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all reasonably necessary or desirable actions within its control (including, without limitation, calling special board and stockholder meetings), so that:
1A. Authorized Number. The authorized number of directors on the Company's Board of Directors (the "Board") shall initially be established at nine (9) directors;
1B. Board Composition. The following individuals shall be elected to the Board:
(i) four representatives designated by MDCP IV Global Investments LP (the "MDCP IV Global Directors");
(ii) MWJS;
(iii) GMcG;
(iv) APJS;
(v) IJC; and
(vi) one representative designated by MDCP III Global Investments LP (the "MDCP III Global Director").
1C. Subsidiary Boards. At the election of the MDCP Co-Investor Majority exercised at any time, the composition of the board of directors of all or any of the Company's Subsidiaries (a "Subsidiary Board") shall be the same as, or as close to proportionately equivalent as possible to, that of the Board; provided that, without limiting the generality of the foregoing, but subject to any limitations
under applicable law, at the request of any Management Investor, such Management Investor shall be appointed to the board of directors of JSG or any principal operating company of the Company.
1D. Committees. Any committees of the Board or a Subsidiary Board shall be created only upon the approval of a majority of the members of the Board; provided that any committee that is responsible for administration of the Management Equity Plan shall not make any determinations with respect thereto prior to consulting with GMcG, and if GMcG no longer serves on the Board, the Company's chief executive officer.
1E. Removal.
(i) Until the rights of MDCP IV Global Investments LP to elect a director pursuant to this Section 1 are terminated or unless a representative becomes ineligible to serve as a director as a matter of law, the removal from the Board or a Subsidiary Board (with or without cause) of any MDCP IV Global Director shall be at the written request of MDCP IV Global Investments LP, but only upon such written request and under no other circumstances. Until the rights of MDCP IV Global Investments LP to elect a director pursuant to this Section 1 are terminated or unless a representative becomes ineligible to serve as a director as a matter of law, in the event that any MDCP IV Global Director ceases to serve as a member of the Board, a Subsidiary Board or any committee during his term of office, the resulting vacancy on the Board, the Subsidiary Board or such committee shall be filled by a representative designated by MDCP IV Global Investments LP as provided hereunder.