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AGREEMENT AND PLAN OF MERGER
Dated as of January 28, 2002,
Among
WEYERHAEUSER COMPANY,
COMPANY HOLDINGS, INC.
And
WILLAMETTE INDUSTRIES, INC.
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER AND MERGER
SECTION 1.01. The Offer.................................................................................2
SECTION 1.02. Company Actions...........................................................................4
SECTION 1.03. The Merger................................................................................5
SECTION 1.04. Closing...................................................................................5
SECTION 1.05. Effective Time............................................................................5
SECTION 1.06. Effects...................................................................................5
SECTION 1.07. Articles of Incorporation and By-laws.....................................................5
SECTION 1.08. Directors.................................................................................6
SECTION 1.09. Officers..................................................................................6
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock...................................................................6
SECTION 2.02. Exchange of Certificates..................................................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Standing and Power.........................................................10
SECTION 3.02. Company Subsidiaries; Equity Interests...................................................11
SECTION 3.03. Capital Structure........................................................................11
SECTION 3.04. Authority; Execution and Delivery;
Enforceability.............................................................13
SECTION 3.05. No Conflicts; Consents...................................................................14
SECTION 3.06. SEC Documents; Undisclosed Liabilities...................................................16
SECTION 3.07. Information Supplied.....................................................................16
SECTION 3.08. Absence of Certain Changes or Events.....................................................17
SECTION 3.09. Taxes....................................................................................18
SECTION 3.10. Absence of Changes in Benefit Plans......................................................20
SECTION 3.11. ERISA Compliance;
Excess Parachute Payments..................................................20
SECTION 3.12. Litigation...............................................................................22
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SECTION 3.13. Compliance with Applicable Laws..........................................................22
SECTION 3.14. Brokers; Schedule of Fees and Expenses...................................................25
SECTION 3.15. Opinion of Financial Advisor.............................................................25
SECTION 3.16. Labor Matters............................................................................25
SECTION 3.17. Contracts; Debt Instruments..............................................................26
SECTION 3.18. Intellectual Property....................................................................26
SECTION 3.19. Charitable Contributions.................................................................27
SECTION 3.20. Termination of Georgia-Pacific Discussions...............................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 4.01. Organization, Standing and Power.........................................................27
SECTION 4.02. Sub......................................................................................28
SECTION 4.03. Authority; Execution and Delivery;
Enforceability.............................................................28
SECTION 4.04. No Conflicts; Consents...................................................................28
SECTION 4.05. Information Supplied.....................................................................29
SECTION 4.06. Brokers..................................................................................30
SECTION 4.07. Financing................................................................................30
SECTION 4.08. Stock Ownership; Interested Shareholder..................................................30
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business......................................................................30
SECTION 5.02. Actions of Company Board;
Company Takeover Proposals.................................................34
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Preparation of the Proxy Statement;
Shareholders Meeting.......................................................35
SECTION 6.02. Access to Information....................................................................36
SECTION 6.03. Reasonable Best Efforts; Notification....................................................36
SECTION 6.04. Awards under the Company Stock Plans.....................................................37
SECTION 6.05. Employee Benefits........................................................................40
SECTION 6.06. Indemnification..........................................................................43
SECTION 6.07. Fees and Expenses........................................................................46
SECTION 6.08. Public Announcements.....................................................................46
SECTION 6.09. Transfer Taxes...........................................................................46
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SECTION 6.10. Directors................................................................................46
SECTION 6.11. Rights Agreement;
Consequences if Rights Triggered...........................................47
SECTION 6.12. Shareholder Litigation...................................................................48
SECTION 6.13. Charitable Giving........................................................................48
SECTION 6.14. Employment Matters.......................................................................48
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to
Effect the Merger..........................................................48
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination..............................................................................49
SECTION 8.02. Effect of Termination....................................................................51
SECTION 8.03. Amendment................................................................................51
SECTION 8.04. Extension; Waiver........................................................................51
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver........................................................51
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations
and Warranties.............................................................53
SECTION 9.02. Notices..................................................................................53
SECTION 9.03. Definitions..............................................................................54
SECTION 9.04. Interpretation; Disclosure Letter........................................................56
SECTION 9.05. Severability.............................................................................56
SECTION 9.06. Counterparts.............................................................................57
SECTION 9.07. Entire Agreement;
No Third-Party Beneficiaries...............................................57
SECTION 9.08. Governing Law............................................................................57
SECTION 9.09. Assignment...............................................................................57
SECTION 9.10. Enforcement..............................................................................57
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EXHIBIT A - Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER dated as of
January 28, 2002, among WEYERHAEUSER COMPANY, a
Washington corporation ("PARENT"), COMPANY HOLDINGS,
INC., a Washington corporation ("SUB"), and a direct
wholly owned subsidiary of Parent, and WILLAMETTE
INDUSTRIES, INC., an Oregon corporation (the
"COMPANY").
WHEREAS Sub has outstanding an offer (the "EXISTING OFFER",
and, as amended from time to time in accordance with this Agreement, the
"OFFER") to purchase all the outstanding shares of common stock, par value $0.50
per share, of the Company (the "COMPANY COMMON STOCK"), including the associated
Company Rights (as defined in Section 3.03), on the terms and subject to the
conditions set forth in the Offer to Purchase dated November 29, 2000 (as
supplemented by the Supplement to the Offer to Purchase dated May 7, 2001), and
in the related letter of transmittal;
WHEREAS the board of directors of the Company (the "COMPANY
BOARD") has approved the acquisition of the Company by Parent and resolved and
agreed to recommend that holders of Company Common Stock tender their shares of
Company Common Stock pursuant to the Offer;
WHEREAS, in furtherance of such transaction, the respective
Boards of Directors of Parent, Sub and the Company have approved the merger (the
"MERGER") of Sub into the Company on the terms and subject to the conditions set
forth in this Agreement, whereby each issued share of Company Common Stock not
owned directly by Parent, Sub or the Company (other than Dissent Shares (as
defined in Section 2.01(d))) shall be converted into the right to receive the
per share consideration paid pursuant to the Offer; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
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NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.01. THE OFFER. (a) Subject to the conditions of this
Agreement, as promptly as practicable after the date of this Agreement, Sub
shall, and Parent shall cause Sub to, amend the Existing Offer to reflect the
terms and conditions of this Agreement, including the purchase price of $55.50
per share of Company Common Stock (and associated Right), net to the seller in
cash, without interest thereon (the "OFFER PRICE"), and to set February 8, 2002
(the "INITIAL EXPIRATION DATE"), as the expiration date for the Offer. The
obligations of Sub to, and of Parent to cause Sub to, accept for payment, and
pay for, any shares of Company Common Stock tendered pursuant to the Offer are
subject only to the satisfaction or waiver by Sub of the conditions set forth in
Exhibit A. Sub expressly reserves the right to waive any condition to the Offer
or modify the terms of the Offer, except that, without the consent of the
Company, Sub shall not (i) reduce the number of shares of Company Common Stock
subject to the Offer, (ii) reduce the Offer Price, (iii) waive or change the
Minimum Tender Condition (as defined in Exhibit A), (iv) add to the conditions
set forth in Exhibit A, modify any condition set forth in Exhibit A or amend any
term of the Offer set forth in this Agreement, in each case, in any manner
adverse to the holders of Company Common Stock, (v) extend the Offer or (vi)
change the form of consideration payable in the Offer (other than by adding
consideration). Notwithstanding the foregoing, Sub (i) shall extend the Offer,
if at the scheduled expiration date of the Offer any of the conditions set forth
in Exhibit A (other than the Minimum Tender Condition or condition (c), (d) or
(g)) to Sub's obligation to purchase shares of Company Common Stock are not
satisfied, until such time as such conditions are satisfied or waived but in no
event later than March 29, 2002, and (ii) may, without the consent of the
Company, extend the Offer (x) for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer or (y) if at the scheduled
expiration date of the Offer any of the Minimum Condition or condition (c), (d)
or (g) set forth in Exhibit A to Sub's obligation to purchase shares of Company
Common Stock are not satisfied until such time as such conditions are satisfied
or waived. In addition, if, at the scheduled or extended expiration date
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3
of the Offer, all the conditions to the Offer have been satisfied or waived but
the Company Common Stock tendered and not withdrawn pursuant to the Offer
constitutes less than 90 percent of the outstanding Company Common Stock,
without the consent of the Company, Sub shall (subject to applicable law) have
the right to provide for a "subsequent offering period" (as contemplated by Rule
14d-11 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")), for up to 20 business days after Sub's acceptance for payment of the
shares of Company Common Stock then tendered and not withdrawn pursuant to the
Offer. On the terms and subject to the conditions of the Offer and this
Agreement, Sub shall, and Parent shall cause Sub to, pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer or (in the case of shares tendered
during any subsequent offering period) as soon as practicable following the
valid tender thereof.
(b) As promptly as practicable after the date of this
Agreement, Parent and Sub shall amend the Tender Offer Statement on Schedule TO
(the "SCHEDULE TO") with respect to the Offer that was originally filed on
November 29, 2000, and file such amendment (the "SCHEDULE TO AMENDMENT") with
the SEC. The Schedule TO Amendment shall contain a supplement to the Offer to
Purchase dated November 29, 2000 (as supplemented by the Supplement to the Offer
to Purchase dated May 7, 2001), and a revised form of the letter of transmittal
and summary advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"). Parent and Sub shall mail the
supplement to the Offer to Purchase and revised letter of transmittal to holders
of shares of Company Common Stock. Each of Parent, Sub and the Company shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that such information shall have become false or misleading
in any material respect, and each of Parent and Sub shall take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable federal securities laws. Parent and Sub shall provide the
Company and its counsel in writing with any comments Parent, Sub or their
counsel may receive after the date of this Agreement from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such comments.
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(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to purchase any shares of Company Common Stock
that Sub becomes obligated to purchase pursuant to the Offer.
SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves
of and consents to the Offer, the Merger and the other transactions contemplated
by this Agreement (collectively, the "TRANSACTIONS").
(b) On the date the Schedule TO Amendment is filed with the
SEC, the Company shall file with the SEC an amendment (the "SCHEDULE 14D-9
AMENDMENT") to its Solicitation/Recommendation Statement on Schedule 14D-9
originally filed on December 5, 2000 with respect to the Offer, including an
Information Statement (as defined in Section 3.05(b)) (such Schedule 14D-9, as
amended from time to time, the "SCHEDULE 14D-9"), and shall mail the Schedule
14D-9 Amendment (including the Information Statement) to the holders of Company
Common Stock. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 (including the
Information Statement) if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall take
all steps necessary to amend or supplement the Schedule 14D-9 (including the
Information Statement) and to cause the Schedule 14D-9 (including the
Information Statement) as so amended or supplemented to be filed with the SEC
and disseminated to the Company's shareholders, in each case as and to the
extent required by applicable federal securities laws. The Company shall provide
Parent and its counsel in writing with any comments the Company or its counsel
may receive after the date of this Agreement from the SEC or its staff with
respect to the Schedule 14D-9 or the Information Statement promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of shareholders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall furnish to
Sub such information and assistance (including updated lists of shareholders,
security position listings and computer files) as Parent may reasonably request
in communicating the Offer to the Company's shareholders.
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5
SECTION 1.03. THE MERGER. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Oregon
Revised Statutes (the "ORS") and the Revised Code of Washington ("RCW"), Sub
shall be merged with and into the Company at the Effective Time (as defined in
Section 1.05). At the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION"). At the election of Parent, any direct wholly owned
subsidiary of Parent may be substituted for Sub as a constituent corporation in
the Merger. In such event, the parties shall execute an appropriate amendment to
this Agreement in order to reflect the foregoing.
SECTION 1.04. CLOSING. The closing (the "CLOSING") of the
Merger shall take place at the offices of Cravath, Swaine & Moore, 825 Eighth
Avenue, New York, New York 10019 at 10:00 a.m. on the second business day
following the satisfaction (or, to the extent permitted by applicable Law (as
defined in Section 3.05), waiver by all parties) of the conditions set forth in
Section 7.01, or at such other place, time and date as shall be agreed in
writing between Parent and the Company. The date on which the Closing occurs is
referred to in this Agreement as the "CLOSING DATE".
SECTION 1.05. EFFECTIVE TIME. Subject to the provisions of
this Agreement, the parties shall file with the Secretary of State of the State
of Oregon and the Secretary of State of the State of Washington, articles of
merger or other appropriate documents (in each such case, "ARTICLES OF MERGER")
executed in accordance with the relevant provisions of the ORS and the RCW, as
the case may be, and shall make all other filings or recordings required under
the ORS and the RCW. The Merger shall become effective at such time as the
applicable Articles of Merger are duly filed with the Secretary of State of the
State of Oregon and the Secretary of State of the State of Washington, or at
such other time as Parent and the Company shall agree and specify in the
Articles of Merger (the time the Merger becomes effective being the "EFFECTIVE
TIME").
SECTION 1.06. EFFECTS. The Merger shall have the effects set
forth in Section 60.497 of the ORS and Section 23B.11.060 of the RCW.
SECTION 1.07. ARTICLES OF INCORPORATION AND BY- LAWS. (a) The
Articles of Incorporation of the Company at the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable Law.
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(b) The By-laws of the Company as in effect immediately prior
to the Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.08. DIRECTORS. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.09. OFFICERS. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified, as the case
may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.50 per share, of the Surviving
Corporation.
(b) CANCELLATION OF COMPANY-OWNED STOCK AND PARENT-OWNED
STOCK. Each share of Company Common Stock that is held by the Company, Parent or
Sub shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered or
deliverable in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Sections
2.01(b) and 2.01(d), each issued and outstanding share of Company Common Stock
shall be converted into the right to receive the Offer Price in cash. The cash
payable upon the conversion of shares of Company Common Stock pursuant to this
Section 2.01(c) is referred to collectively as the "MERGER CONSIDERATION". As of
the Effective Time, all such shares of Company Common Stock shall no longer be
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outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive Merger Consideration upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) DISSENT RIGHTS. Notwithstanding anything in this Agreement
to the contrary, shares ("DISSENT SHARES") of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by any
person who is entitled to demand and properly demands payment of the fair value
of such Dissent Shares pursuant to, and who complies in all respects with,
Section 60.551 et seq. of the ORS shall not be converted into Merger
Consideration as provided in Section 2.01(c), but rather the holders of Dissent
Shares shall be entitled to payment of the fair value of such Dissent Shares in
accordance with Section 60.551 et seq. of the ORS; PROVIDED, HOWEVER, that if
any such holder shall fail to perfect or otherwise shall waive, withdraw or lose
the right to receive payment of fair value under Section 60.551 et seq. of the
ORS, then the right of such holder to be paid the fair value of such holder's
Dissent Shares shall cease and such Dissent Shares shall be deemed to have been
converted as of the Effective Time into, and to have become exchangeable solely
for the right to receive, Merger Consideration as provided in Section 2.01(c).
The Company shall serve prompt notice to Parent of any demands received by the
Company for payment of fair value in respect of any shares of Company Common
Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT.
Mellon Investor Services LLC shall act as paying agent (the "PAYING AGENT") for
the payment of the Merger Consideration upon surrender of certificates repre
senting Company Common Stock. Parent shall take all steps necessary to enable
and cause the Surviving Corporation to provide to the Paying Agent on a timely
basis, as and when needed after the Effective Time, cash necessary to pay for
the shares of Company Common Stock converted into the right to receive cash
pursuant to Section 2.01(c) (such cash being hereinafter referred to as the
"EXCHANGE FUND").
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(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates (the "CERTIFICATES") that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive Merger Consideration pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender Merger
Consideration as contemplated by this Section 2.02.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Company
Common Stock, SUBJECT, HOWEVER, to the Surviving Corporation's obligation to pay
any dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by the Company on such shares
of Company Common Stock in accordance
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with the terms of this Agreement or prior to the date of this Agreement and
which remain unpaid at the Effective Time, and after the Effective Time there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
certificates formerly representing shares of Company Common Stock are presented
to the Surviving Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Stock for
twelve months after the Effective Time shall be delivered to Parent, upon
demand, and any holder of Company Common Stock who has not theretofore complied
with this Article II shall thereafter look only to Parent for payment of its
claim for Merger Consideration.
(e) NO LIABILITY. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.05(b)), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily basis;
PROVIDED, HOWEVER, that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any interest and other income resulting from such investments
shall be paid to Parent.
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(g) WITHHOLDING RIGHTS. Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to any holder of Company Common Stock pursuant to this Agreement such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Code (as defined in Section 3.09), or under any
provision of state, local or foreign tax Law. To the extent that amounts are so
withheld by Parent or the Surviving Corporation and paid over to the appropriate
taxing authority, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of Company Common Stock in respect
of which such deduction and withholding was paid by Parent or the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. Each of the
Company and each of its subsidiaries (the "COMPANY SUBSIDIARIES") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, except for
failures which, individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect on the Company or a
material adverse effect on the ability of the Company to consummate the Merger
and the other Transactions (together, a "COMPANY MATERIAL ADVERSE EFFECT"). The
Company and each Company Subsidiary is duly qualified or licensed to do business
in each jurisdiction where the nature of its business or its ownership or
leasing of its properties make such qualification or licensing necessary or the
failure to so qualify or be licensed has had or would reasonably be expected to
have a Company Material Adverse Effect. The Company has delivered to Parent true
and complete copies of the restated articles of incorporation of the Company, as
amended to the date of this Agreement (as so amended, the "COMPANY CHARTER"),
and the By-laws of the Company, as amended to the date of this Agreement (as so
amended, the "COMPANY BY-LAWS"), and the comparable charter and
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organizational documents of each Company Subsidiary, in each case as amended
through the date of this Agreement.
SECTION 3.02. COMPANY SUBSIDIARIES; EQUITY INTERESTS. (a) The
letter, dated as of the date of this Agreement, from the Company to Parent and
Sub (the "COMPANY DISCLOSURE LETTER") lists each Company Subsidiary and its
jurisdiction of organization. All the outstanding shares of capital stock of
each Company Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in the Company Disclosure Letter, are
owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges, liens, charges,
mortgages, encumbrances and security interests of any kind or nature whatsoever
(collectively, "LIENS"), except for such Liens as have not had and would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Except for its interests in the Company Subsidiaries and
except for the ownership interests set forth in the Company Disclosure Letter,
the Company does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any person other than any such capital stock or other interests with a
current book value, in the aggregate, not in excess of $1,000,000.
SECTION 3.03. CAPITAL STRUCTURE. The authorized capital stock
of the Company consists of 150,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $0.50 per share ("COMPANY
PREFERRED STOCK" and, together with the Company Common Stock, the "COMPANY
CAPITAL STOCK"). At the close of business on January 23, 2002, (i) 110,171,443
shares of Company Common Stock were issued and outstanding, (ii) 3,986,801
shares of Company Common Stock were subject to outstanding Company Employee
Stock Options (as defined in Section 6.04(e)), (iii) 1,842,942 additional shares
of Company Common Stock were reserved for issuance pursuant to the Company Stock
Plans (as defined in Section 6.04(e)), (iv) 5,000,000 shares of Company
Preferred Stock were reserved for issuance in connection with the rights (the
"COMPANY RIGHTS") issued pursuant to the Rights Agreement dated as of February
25, 2000 (as amended from time to time, the "COMPANY RIGHTS AGREEMENT"), between
the Company and Mellon Investor Services LLC (formerly known as ChaseMellon
Shareholder Services, L.L.C.), as Rights Agent, and (v) 76,910 stock
appreciation rights linked to the price of Company Common Stock and granted
under a Company Stock Plan, but not in tandem with any Company Employee Stock
Option (each, a
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"COMPANY NON-TANDEM SAR"), were outstanding. Except as set forth above, at the
close of business on January 23, 2002, no restricted shares or other shares of
capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. Except as set forth in the Company Disclosure
Letter, between January 23, 2002 and the date of this Agreement, the Company has
not issued any shares of Company Capital Stock (other than shares of Company
Common Stock issued upon exercise of Company Employee Stock Options) or granted
or agreed to grant any options to purchase Company Common Stock. All outstanding
shares of Company Capital Stock are, and all such shares that may be issued
prior to the Effective Time will be when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the ORS, the
Company Charter, the Company By-laws or any Contract (as defined in Section
3.05(a)) to which the Company is a party or otherwise bound. There are not any
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of Company Common Stock may vote
("VOTING COMPANY DEBT"). Except as set forth above, as of the date of this
Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, "phantom" stock, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (i) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt (or to make any payment based on
the value of any equity interest in the Company or in any Company Subsidiary) or
(ii) obligating the Company or any Company Subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any Company Subsidiary. The Company has delivered to
Parent a complete and correct copy of the Company Rights Agreement, as amended
to the date of this Agreement.
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SECTION 3.04. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. (a) The Company has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the Transactions. The
execution and delivery by the Company of this Agreement and the consummation by
the Company of the Transactions have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the Merger,
to receipt of the Company Shareholder Approval (as defined in Section 3.04(c)).
The Company has duly executed and delivered this Agreement, and, assuming the
due authorization, execution and delivery hereof by Parent and Sub, this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(b) The Company Board, at a meeting duly called and held duly
and unanimously adopted resolutions (i) approving this Agreement, the Offer, the
Merger and the other Transactions, (ii) determining that the terms of the Offer,
the Merger and the other Transactions are fair to and in the best interests of
the Company and its shareholders, (iii) recommending that the holders of Company
Common Stock accept the Offer and tender their shares of Company Common Stock
pursuant to the Offer (the "COMPANY RECOMMENDATION"), (iv) recommending that the
Company's shareholders approve this Agreement, (v) adopting a plan of merger
relating to the Merger as required by the ORS and (vi) directing that such plan
of merger be submitted for approval by the Company's shareholders. In addition,
the Company Board has taken all action necessary to render (x) (i) Sections
60.801 to 60.816 of the ORS and (ii) if applicable, Article VI of the Company
Charter inapplicable (A) to Parent and Sub and (B) to the Offer, the Merger and
the other Transactions and (y) Sections 60.825 to 60.845 of the ORS inapplicable
to the Offer, the Merger and the other Transactions. To the Company's knowledge,
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Company with respect to this Agreement, the Offer, the
Merger or any other Transaction. Unless otherwise required by its fiduciary
duties (as determined in good faith by a majority of its members after
consultation with outside legal counsel to the Company) the Company Board shall
not amend, modify, withdraw, condition or qualify the Company Recommendation in
a manner adverse to Parent or Sub.
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14
(c) Unless the Merger can be effected pursuant to Section
60.491 of the ORS (in which case no approval of holders of any class or series
of Company Capital Stock is required), the only vote of holders of any class or
series of Company Capital Stock necessary to approve and adopt this Agreement
and the Merger is the approval of this Agreement by the holders of shares of
Company Common Stock representing a majority of all the votes entitled to be
cast thereon (the "COMPANY SHAREHOLDER APPROVAL"). The affirmative vote of the
holders of Company Capital Stock, or any of them, is not necessary to consummate
any Transaction (including the Offer) other than the Merger.
(d) The members of the Company Board have advised the Company
that they intend to tender all shares of Company Common Stock owned by them into
the Offer, except for (i) the tender of shares of Company Common Stock that
would subject a member of the Company Board to liability under Section 16(b)
under the Exchange Act and (ii) shares of Company Common Stock which, or with
respect to which, any such member of the Company Board acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender.
SECTION 3.05. NO CONFLICTS; CONSENTS. (a) The execution and
delivery by the Company of this Agreement do not, and the consummation of the
Offer, the Merger and the other Transactions and compliance with the terms
hereof will not, conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any material obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-laws or the comparable
charter or organizational documents of any Company Subsidiary, (ii) any
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (a "CONTRACT") to which the Company or any Company
Subsidiary is a party or by which any of their respective properties or assets
is bound or (iii) subject to the filings and other matters referred to in
Section 3.05(b), any judgment, order or decree ("JUDGMENT") or statute, law,
ordinance, rule or regulation ("LAW") applicable to the Company or any Company
Subsidiary or their respective properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
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15
(b) No consent, approval, license, permit, order or
authorization ("CONSENT") of, or registration, declaration or filing with, or
permit from, any federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "GOVERNMENTAL
ENTITY"), is necessary for the execution, delivery and performance of this
Agreement or the consummation of the Transactions by the Company or any Company
Subsidiary, other than (i) the filing with the SEC of (A) the Schedule 14D-9
Amendment, (B) a proxy or information statement relating to the approval of this
Agreement by the Company's shareholders (the "PROXY STATEMENT"), (C) any
information statement (the "INFORMATION STATEMENT") required to be filed in
connection with the Offer pursuant to Rule 14f-1 of the Exchange Act, and (D)
such reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement, the Offer, the Merger and the other
Transactions, (ii) the filing of Articles of Merger with the Secretary of State
of the State of Oregon and the Secretary of State of the State of Washington and
appropriate documents with the relevant authorities of the other jurisdictions
in which the Company is qualified to do business, (iii) compliance with and such
filings as may be required under applicable Environmental Laws (as defined in
Section 3.13(d)), (iv) such filings as may be required in connection with the
taxes described in Section 6.09, (v) compliance with the rules and regulations
of the New York Stock Exchange and (vi) such other items (A) that may be
required under the applicable Law of any foreign country, (B) required solely by
reason of the participation of Parent or Sub (as opposed to any third party) in
the Transactions, (C) that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect or
(D) as are set forth in the Company Disclosure Letter.
(c) The Company and the Company Board have taken all action
necessary to (i) render the Company Rights inapplicable to this Agreement, the
Offer, the Merger and the other Transactions and (ii) ensure that (A) neither
Parent nor any of its affiliates or associates is or will become an "Acquiring
Person" (as defined in the Company Rights Agreement) by reason of this
Agreement, the Offer, the Merger or any other Transaction, (B) a "Distribution
Date" or a "Shares Acquisition Date" (each as defined in the Company Rights
Agreement) shall not occur by reason of this Agreement, the Offer, the Merger or
any other Transaction and (C) the Company Rights shall expire immediately prior
to the Effective Time.
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SECTION 3.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company with the SEC since January 1, 2000 (the
"COMPANY SEC DOCUMENTS"). As of its respective date, each Company SEC Document
complied in all material respects with the applicable requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "SECURITIES ACT"),
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Document, each as in effect on the
date so filed, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information contained
in any Company SEC Document has been revised or superseded by a later filed
Company SEC Document, none of the Company SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable account ing requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as
otherwise stated in such financial statements) and fairly present the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
Filed Company SEC Documents (as defined in Section 3.08), neither the Company
nor any Company Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto and that, individually or in the aggregate,
would reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.07. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company expressly for inclusion or
incorporation by reference in (i) the Offer Documents, the Schedule 14D-9 or the
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Information Statement will, at the time such document is filed with the SEC, at
any time it is amended or supplemented or at the time it is first published,
sent or given to the Company's shareholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) the Proxy
Statement will, at the date it is first mailed to the Company's shareholders or
at the time of the Company Shareholders Meeting (as defined in Section 6.01(b)),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub for inclusion or incorporation by reference therein.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Documents filed pursuant to Section 13(a) of the
Exchange Act and publicly available prior to the date of this Agreement (the
"FILED COMPANY SEC DOCUMENTS") or in the Company Disclosure Letter, from the
date of the most recent audited financial statements included in the Filed
Company SEC Documents to the date of this Agreement, the Company has conducted
its business only in the ordinary course, and during such period there has not
been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any Company Capital Stock, other than regular quarterly cash
dividends not in excess of $0.23 per share on Company Common Stock,
with usual declaration, record and payment dates and in accordance with
the Company's past dividend policy;
(iii) any repurchase for value by the Company of any
Company Capital Stock;
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(iv) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of Company Capital Stock, except for issuances of Company Common
Stock (and associated Company Rights) upon the exercise of Company
Employee Stock Options awarded prior to the date hereof in accordance
with their present terms or issued in compliance with Section 5.01(a);
(v) (A) any granting by the Company or any Company Subsidiary
to any director or executive officer of the Company or any Company
Subsidiary of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC
Documents or (B) any granting by the Company or any Company Subsidiary
to any such director or executive officer of any increase in severance
or termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of the
most recent audited financial statements included in the Filed Company
SEC Documents;
(vi) any change in accounting methods, principles or practices
by the Company or any Company Subsidiary materially affecting the
consolidated assets, liabilities or results of operations of the
Company, except insofar as may have been required by a change in GAAP;
or
(vii) any material elections with respect to Taxes (as defined
in Section 3.09(f)) by the Company or any Company Subsidiary or
settlement or compromise by the Company or any Company Subsidiary of
any material Tax liability or refund.
SECTION 3.09. TAXES. (a) Each of the Company and each Company
Subsidiary has timely filed, or has caused to be timely filed on its behalf, all
Tax Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate, except to the extent any failure to file or any
inaccuracies in any filed Tax Returns, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse
Effect. All material Taxes shown to be due on such Tax Returns, or otherwise
owed, have been, or will be, timely paid.
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(b) The most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve for all Taxes payable by
the Company and the Company Subsidiaries (in addition to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
items) for all Taxable periods and portions thereof through the date of such
financial statements. No deficiency with respect to any Taxes has been proposed,
asserted or assessed against the Company or any Company Subsidiary, and no
requests for waivers of the time to assess any such Taxes are pending, except to
the extent any such deficiencies or requests for waiver, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(c) The Federal income Tax Returns of the Company and each
Company Subsidiary consolidated in such Tax Returns have been examined by and
settled with the United States Internal Revenue Service or have closed by virtue
of the applicable statute of limitations for all years through 1991.
(d) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company or any
Company Subsidiary. Neither the Company nor any Company Subsidiary is bound by
any Tax sharing or material Tax indemnification agreement other than the
Agreement Allocating Federal Tax Liability, dated May 11, 1972, a copy of which
has been provided to Parent.
(e) Neither the Company nor any Company Subsidiary has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Internal
Revenue Code of 1986, as amended (the "CODE")) in conjunction with the Merger.
(f) For purposes of this Agreement:
"TAXES" includes all (i) forms of taxation, whenever created
or imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, federal or other
Governmental Entity, or in connection with any agreement with respect to Taxes,
including all interest, penalties and additions imposed with respect to such
amounts,
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20
(ii) liability for the payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated, consolidated, combined or
unitary group and (iii) liability for any Tax sharing agreement or as a result
of any express or implied obligation to indemnify any other person with respect
to the payment of any amounts of the type described in clause (i) or (ii).
"TAX RETURN" means all federal, state, local, provincial and
foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
SECTION 3.10. ABSENCE OF CHANGES IN BENEFIT PLANS. Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, from the date of the most recent audited financial statements included
in the Filed Company SEC Documents to the date of this Agreement, there has not
been any adoption or amendment in any material respect by the Company or any
Company Subsidiary of any Company Benefit Plan (as defined in Section 3.11).
Except as disclosed in the Filed Company SEC Documents or in the Company
Disclosure Letter, (i) as of the date of this Agreement there are not any
employment, consulting, indemnification, personal service, change in control,
severance or termination agreements or arrangements between the Company or any
Company Subsidiary and any current or former employee, officer or director of,
or independent contractor with respect to, the Company or any Company
Subsidiary, nor does the Company or any Company Subsidiary have any general
severance plan or policy and (ii) from the date of the most recent audited
financial statements included in the Filed Company SEC Documents, none of such
agreements or arrangements have been amended.
SECTION 3.11. ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS. (a)
The Company Disclosure Letter contains a list of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "COMPANY
PENSION PLANS"), all "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) and any severance, change in control, deferred compensation, or
employment plan, program or agreement, and vacation, incentive, bonus, stock
option, stock purchase and restricted stock plan, program, agreement,
arrangement or policy entered into, maintained, or contributed to, by the
Company or any Company Subsidiary for the benefit of any current or former
employees, officers or directors of, or independent contractor with respect to,
the Company or any Company Subsidiary (or under which the Company or any
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21
Company Subsidiary has any current potential liabilities or obligations)
(together with the Company Pension Plans, the "COMPANY BENEFIT PLANS"). The
Company has delivered or made available to Parent complete and correct copies of
(i) each Company Benefit Plan (or, in the case of any unwritten Company Benefit
Plan, a description thereof), (ii) the most recent annual report on Form 5500
filed with the Internal Revenue Service or the U.S. Department of Labor with
respect to each Company Benefit Plan (if any such report was required), (iii)
the most recent summary plan description for each Company Benefit Plan for which
such summary plan description is required and (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan. The Company, each
Company Subsidiary, and each Company Benefit Plan and, to the knowledge of the
Company, each officer of the Company or a Company Subsidiary is in substantial
compliance in all material respects with all applicable provisions of any
applicable collective bargaining or other labor agreement, and ERISA, the Code
and all other applicable U.S. and non-U.S. laws, rules and regulations relating
to any benefits, compensation or employment matters, except where the failure to
comply would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. No Company Benefit Plan is an employee
Stock Purchase Plan which is intended to comply with the requirements of Section
423 of the Code.
(b) Each U.S. Company Pension Plan is qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, except where the failure to be so qualified or exempt would, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. The Company has delivered or made available to Parent a complete and
correct copy of each determination letter from the Internal Revenue Service to
the effect that each such Company Pension Plan is qualified and no such
determination letter has been revoked nor, to the knowledge of the Company, has
revocation been threatened. Each non-U.S. Company Pension Plan that is capable
of formal approval or qualification by the appropriate local tax authorities has
obtained such approval or qualification and, to the knowledge of the Company and
the Company Subsidiaries, nothing has been done or omitted to be done, and there
are no circumstances, which would reasonably be expected to result in the loss
of such approval or qualification, except where the failure to obtain, or the
loss of, such approval or qualification would not individually or in the
aggregate reasonably be expected to have a Company Material Adverse Effect.
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(c) None of the Company Pension Plans has an "accumulated
funding deficiency" (as such term is defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, except where such deficiency would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. There has not been any "reportable event" (as that term
is defined in Section 4043 of ERISA) with respect to any Company Benefit Plan
during the last five years that would result in a liability that would have a
Company Material Adverse Effect. Neither the Company nor any Company Subsidiary
has incurred a "complete withdrawal" or a "partial withdrawal" (as such terms
are defined in Sections 4203 and 4205, respectively, of ERISA) since the
effective date of such Sections 4203 and 4205 with respect to any Company
Pension Plan that is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA that would result in liability that would have a Company
Material Adverse Effect.
(d) Set forth in the Company Disclosure Letter is the
Company's most recent calculation of the estimated maximum amount that could be
paid to each of the persons listed in the Company Disclosure Letter (including
all of the employees who are party to an individual agreement with the Company
containing change-in-control provisions) as a result of the Merger and the other
Transactions under all employment, severance and termination agreements, other
compensation arrangements and Company Benefit Plans currently in effect.
SECTION 3.12. LITIGATION. Except as disclosed in the Filed
Company SEC Documents or in the Company Disclosure Letter, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any Company Subsidiary that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect, nor is there any Judgment outstanding against the Company or any
Company Subsidiary that has had or would reasonably be expected to have a
Company Material Adverse Effect; PROVIDED, HOWEVER, that the Company makes no
representation or warranty as to suits, actions or proceedings commenced or
first threatened after the date of this Agreement and challenging the Offer, the
Merger or any other Transaction.
SECTION 3.13. COMPLIANCE WITH APPLICABLE LAWS. (a) Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, the Company and Company Subsidiaries are in compliance with all
applicable Laws, except for instances of noncompliance that, individually and in
the aggregate, have not had and would not reasonably be
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23
expected to have a Company Material Adverse Effect. As of the date of this
Agreement, except as set forth in the Filed Company SEC Documents or in the
Company Disclosure Letter, neither the Company nor any Company Subsidiary has
received any written communication during the past two years from a Governmental
Entity that alleges that the Company or a Company Subsidiary is not in
compliance in any material respect with any applicable Law, except for such
instances of noncompliance that have not had and would not reasonably be
expected to have a Company Material Adverse Effect. This Section 3.13(a) does
not relate to matters with respect to Taxes, which are the subject of Section
3.09, or to matters involving Environmental Laws, which are the subject of
Sections 3.13(b) through 3.13(d).
(b) Except as disclosed in the Filed Company SEC Documents or
the Company Disclosure Letter,
(i) the Company and each of the Company Subsidiaries are in
compliance with all applicable Environmental Laws, except for instances
of noncompliance that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse
Effect, and the Company and each of the Company Subsidiaries hold, and
are in compliance with, all permits, licenses and other authorizations
required to conduct their respective businesses under Environmental
Laws, except for the failure to hold or comply with such permits,
licenses and other authorizations that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect;
(ii) neither the Company nor any of the Company Subsidiaries
has (A) placed, held, located, released, transported or disposed of any
Hazardous Substances on, under, from or at any of the Company's or any
of the Company Subsidiaries' currently or formerly owned, leased or
operated properties or any other properties, other than in a manner
that has not had and would not reasonably be expected to have, in all
such cases taken individually or in the aggregate, a Company Material
Adverse Effect, or (B) any knowledge of the presence of any Hazardous
Substances on, under or at any of the Company's or any of the Company
Subsidiaries' currently or formerly owned, leased or operated
properties or any other property arising from the Company's or any of
the Company Subsidiaries' currently or formerly owned, leased or
operated properties, other than in a manner that has not had and would
not reasonably be expected
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to have, in all such cases taken individually or in the aggregate, a
Company Material Adverse Effect;
(iii) there are no notices of violation or any other
enforcement proceedings, investigations, actions, suits or claims under
Environmental Laws that have been asserted, or are pending or, to the
knowledge of the Company and the Company Subsidiaries, threatened, that
would reasonably be expected to result in (A) fines or penalties, (B)
any obligation on the part of the Company to undertake supplemental
environmental projects or comparable mitigative environmental measures,
(C) any obligation on the part of the Company to install emission or
pollution control devices, (D) any restrictions on operations or
production at any of the facilities owned, leased or operated by the
Company or any of the Company Subsidiaries, including the temporary or
permanent shutdown of any such facility, or (E) the placement of a Lien
upon any of the Company's or the Company Subsidiaries' properties, in
any such case that would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect; and
(iv) there are no restrictions, limitations or controls in
effect, pending, or, to the knowledge of the Company and the Company
Subsidiaries, threatened or contemplated under Environmental Laws on
the Company's or any Company Subsidiary's operations relating to
harvesting forest products, whether such restrictions, limitations or
controls are voluntary or have been imposed by any Governmental Entity,
except for such restrictions, limitations or controls that,
individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect.
(c) Except as disclosed in the Filed SEC Documents or in the
Company Disclosure Letter, and except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, no
Environmental Law imposes any obligation upon the Company or the Company
Subsidiaries arising out of or as a condition to any Transaction, including any
requirement to modify or transfer any permit or license, file any notice or
other submission with any Governmental Entity, place any notice, acknowledgment
or covenant in any land records, or modify or provide notice under any
agreement, consent order or consent decree.
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(d) For purposes of this Agreement, (i) "ENVIRONMENTAL LAWS"
means any applicable Federal, state, local or foreign law, regulation, order,
decree, permit, authorization, common law or legally enforceable requirement of
any Governmental Entity in effect as of the Closing Date relating to: (A)
protection or restoration of the environment, human health (to the extent
relating to the environment or exposure to Hazardous Substances) or protection
of or damage to natural resources and endangered species, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, indoor air, employee exposure to Hazardous Substances,
pollution, contamination or any injury or threat of injury to persons or
property relating to any Hazardous Substance; and (ii) "HAZARDOUS SUBSTANCE"
means (A) any hazardous, toxic, radioactive, explosive or flammable material,
chemical, waste or substance or (B) any petroleum product or by-product,
asbestos containing material or any other material, chemical, waste or substance
that is harmful to human health or the environment.
SECTION 3.14. BROKERS; SCHEDULE OF FEES AND EXPENSES. No
broker, investment banker, financial advisor or other person, other than
Goldman, Sachs & Co., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer, the Merger and the other
Transactions based upon arrangements made by or on behalf of the Company. The
estimated fees and expenses incurred and to be incurred by the Company in
connection with the Offer, the Merger, the other Transactions and any proposed
GP Transaction (as defined in Section 3.20) (including the fees of Goldman,
Sachs & Co. and the fees of the Company's legal counsel) are set forth in the
Company Disclosure Letter. All arrangements between the Company and Goldman,
Sachs & Co. relating to the Offer, the Merger and the other Transactions have
been disclosed to Parent prior to the date hereof.
SECTION 3.15. OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of Goldman, Sachs & Co., to the effect that, as of the date
hereof, the consideration to be received in the Offer and the Merger by the
holders of Company Common Stock is fair to such holders from a financial point
of view.
SECTION 3.16. LABOR MATTERS. The Company Disclosure Letter
sets forth each collective bargaining or other labor union contract to which the
Company or any of its subsidiaries is a party applicable to persons employed by
the Company or any Company Subsidiary and no collective
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bargaining agreement is currently being negotiated by the Company or any Company
Subsidiary. Except as set forth in the Company Disclosure Letter, as of the date
of this Agreement, there is no labor dispute, strike or work stoppage against
the Company or any of the Company Subsidiaries pending or, to the knowledge of
the Company, threatened, which may interfere with the respective business
activities of the Company or any of the Company Subsidiaries, except where such
dispute, strike or work stoppage, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in the Company Disclosure Letter, as of the date of this Agreement, there
is no charge or complaint against the Company or any of the Company Subsidiaries
by the National Labor Relations Board or any comparable governmental agency
pending or, to the knowledge of the Company, threatened.
SECTION 3.17. CONTRACTS; DEBT INSTRUMENTS. As of the date of
this Agreement, there are no Contracts that are required to be filed as part of
the Company SEC Documents and are not so filed. To the knowledge of the Company,
neither the Company nor any of the Company Subsidiaries is in violation of or in
default under (nor does there exist any condition which upon the passage of time
or the giving of notice would cause such a violation of or default under) any
Contract to which it is a party or by which it or any of its properties or
assets is bound that, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.18. INTELLECTUAL PROPERTY. The Company and the
Company Subsidiaries own, or are validly licensed or otherwise have the right to
use, all patents, trademarks, trade names, service marks, copyrights, computer
programs and other intellectual property rights (collectively, "INTELLECTUAL
PROPERTY RIGHTS") that are material to the conduct of the business of the
Company and the Company Subsidiaries taken as a whole. Except as set forth in
the Company Disclosure Letter, no claims are pending or, to the knowledge of the
Company, threatened, that the Company or any of the Company Subsidiaries is
infringing or otherwise adversely affecting the rights of any person with regard
to any Intellectual Property Right, except for such claims that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. To the knowledge of the Company, no person is
infringing the rights of the Company or any of the Company Subsidiaries with
respect to any Intellectual Property Rights, except for such infringements that,
individually or in the aggregate, have
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not had and would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 3.19. CHARITABLE CONTRIBUTIONS. The Company Disclosure
Letter sets forth (i) the individual and aggregate monetary contributions made
by the Company to charitable organizations in Oregon during the year ended
December 31, 2001, and (ii) all outstanding pledges to charitable organizations
(wherever located) as of the date of this Agreement (the charitable
organizations in Oregon to which the Company has made or pledged to make
charitable donations in the year ended December 31, 2001 being referred to
herein as the "OREGON CHARITIES").
SECTION 3.20. TERMINATION OF GEORGIA-PACIFIC DISCUSSIONS. The
Company and its representatives have terminated all discussions and negotiations
with Georgia- Pacific Corp. ("GP") and its representatives regarding any
proposed (i) acquisition by the Company of any portion of the business of GP,
including the building products business thereof, or (ii) combination of any
portion of the business of GP, including without limitation, the building
products business thereof, with all or any portion of the business of the
Company (any such acquisition or combination being referred to herein as a "GP
TRANSACTION"). In connection with the termination of such discussions and
negotiations, the Company has paid to GP the amount set forth in the Company
Disclosure Letter, and, except as set forth in the Company Disclosure Letter,
such payment has discharged in full all obligations of the Company to GP in
respect of such discussions and negotiations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant
to the Company as follows:
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Each of Parent
and Sub is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to conduct its businesses as presently
conducted, except for failures which, individually or in the aggregate, have not
had and would not reasonably be expected to have a material adverse effect on
Parent or on the ability of
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Parent or Sub to consummate the Offer, the Merger and the other Transactions (a
"PARENT MATERIAL ADVERSE EFFECT").
SECTION 4.02. SUB. (a) Since the date of its incorporation,
Sub has not carried on any business or conducted any operations other than the
execution of this Agreement, the performance of its obligations hereunder and
matters ancillary thereto (including, matters ancillary to the Existing Offer
prior to the date of this Agreement).
(b) The authorized capital stock of Sub consists of 1,000
shares of common stock, par value $1.00 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Parent free
and clear of any Lien.
SECTION 4.03. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. Each of Parent and Sub has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. The execution and delivery by each of Parent and Sub of this
Agreement and the consummation by it of the Transactions have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
Parent, as sole shareholder of Sub, has approved the Offer, the Merger, this
Agreement and the Transactions. Each of Parent and Sub has duly executed and
delivered this Agreement, and, assuming the due authorization, execution and
delivery hereof by the Company, this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 4.04. NO CONFLICTS; CONSENTS. (a) The execution and
delivery by each of Parent and Sub of this Agreement, do not, and the
consummation of the Offer, the Merger and the other Transactions and compliance
with the terms hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent or Sub under, any
provision of (i) the charter or organizational documents of Parent or Sub, (ii)
any Contract to which Parent or Sub is a party or by which any of their
respective properties or assets is bound or
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(iii) subject to the filings and other matters referred to in Section 4.04(b),
any Judgment or Law applicable to Parent or Sub or their respective properties
or assets, other than, in the case of clauses (ii) and (iii) above, any such
items that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing
with, or permit from, any Governmental Entity is necessary for the execution,
delivery and performance of this Agreement or the consummation of the
Transactions by Parent or Sub, other than (i) the filing with the SEC of (A) the
Offer Documents and (B) such reports under Section 13 and 16 of the Exchange Act
as may be required in connection with this Agreement, the Offer, the Merger and
the other Transactions, (ii) the filing of Articles of Merger with the Secretary
of State of the State of Oregon and the Secretary of State of the State of
Washington, (iii) compliance with and such filings as may be required under
applicable Environmental Laws, (iv) such filings as may be required in
connection with the taxes described in Section 6.09, (v) compliance with the
rules and regulations of the New York Stock Exchange and (vi) such other items
(A) that may be required under the applicable Law of any foreign country, (B)
required solely by reason of the participation of the Company (as opposed to any
third party) in the Transactions or (C) that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Parent Material
Adverse Effect.
SECTION 4.05. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Parent or Sub expressly for inclusion or
incorporation by reference in (i) the Offer Documents, the Schedule 14D-9
Amendment or the Information Statement will, at the time such document is filed
with the SEC, at any time it is amended or supplemented or at the time it is
first published, sent or given to the Company's shareholders, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) the Proxy Statement will, at the date it is first mailed to the Company's
shareholders or at the time of the Company Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Offer
Documents will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and
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regulations thereunder, and the Offer shall comply in all material respects with
the Exchange Act and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, no representation or warranty is made by Parent
or Sub with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference therein.
SECTION 4.06. BROKERS. No broker, investment banker, financial
advisor or other person, other than Morgan Stanley & Co. Incorporated, the fees
and expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Offer, the Merger and the other Transactions based upon arrangements
made by or on behalf of Parent or Sub.
SECTION 4.07. FINANCING. At the expiration of the Offer and
the Effective Time, Parent and Sub will have available all of the funds
necessary for the acquisition of shares of Company Common Stock to be purchased
pursuant to the Offer, to perform their respective obligations under this
Agreement and to pay all fees and expenses related to the Transactions payable
by them.
SECTION 4.08. STOCK OWNERSHIP; INTERESTED SHAREHOLDER. As of
the date hereof, except for (i) 500 shares of Company Common Stock owned by Sub,
(ii) 500 shares of Company Common Stock owned by Parent and (iii) an aggregate
of 56,324 shares of Company Common Stock owned by members of the board of
directors of Parent, none of Parent, Sub or any of their respective affiliates
beneficially owns any Company Capital Stock and none of Parent, Sub or any of
their respective affiliates is an "Interested Shareholder", as such term is
defined in Section 60.825 of the ORS.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
THE COMPANY. Except for matters set forth in the Company Disclosure Letter or
expressly contemplated by this Agreement, from the date of this Agreement to the
Effective Time the Company shall, and shall cause each Company Subsidiary to,
conduct its business in the usual, regular and ordinary course in substantially
the same manner as previously conducted and, to the extent consistent therewith,
use all reasonable efforts to (i) preserve intact its current business
organization, (ii) keep available the
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services of its current officers and employees and (iii) keep its relationships
with customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. In addition, and without limiting the
generality of the foregoing, except for matters set forth in the Company
Disclosure Letter or otherwise expressly permitted by this Agreement, from the
date of this Agreement to the Effective Time, the Company shall not, and shall
not permit any Company Subsidiary to, do any of the following without the prior
written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distri butions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or author ize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its
capital stock, (B) any Voting Company Debt or other voting securities,
(C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, Voting Company
Debt, voting securities or convertible or exchangeable securities or
(D) any "phantom" stock, "phantom" stock rights, stock appreciation
rights or stock-based performance units, or any similar stock, rights
or units, other than the issuance of Company Common Stock (and
associated Company Rights) upon the exercise of Company Employee Stock
Options outstanding on the date of this Agreement and in accordance
with their present terms;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents (other than any
amendment to the Company By-laws to exempt the acquisition of shares of
Company Capital Stock from the applicability of Sections 60.801 to
60.816 of the ORS);
(iv) (A) enter into any discussions, negotiations or
agreements with respect to a GP Transaction or
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(B) acquire or agree to acquire (1) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any
other manner, any equity interest in or business or any corporation,
partnership, joint venture, association or other business organization
or division thereof or (2) any assets that are material, individually
or in the aggregate, to the Company and the Company Subsidiaries, taken
as a whole, except purchases of inventory in the ordinary course of
business consistent with past practice;
(v) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in compensation, except in the ordinary
course of business consistent with prior practice or to the extent
required under employment agreements in effect as of the date of the
most recent audited financial statements included in the Filed Company
SEC Documents, (B) grant to any employee, officer or director of the
Company or any Company Subsidiary any increase in severance or
termination pay, except to the extent required under any agreement in
effect as of the date of the most recent audited financial statements
included in the Filed Company SEC Documents, (C) enter into, amend or
terminate any employment, consulting, indemnification, severance or
termination agreement with any such employee, officer or director, (D)
establish, adopt, enter into or amend in any material respect any
collective bargaining agreement or other union agreement or Company
Benefit Plan, except as required by applicable Law or (E) take any
action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent with
prior practice, under any collective bargaining agreement or Company
Benefit Plan;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of
or subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
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(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (B) make
any loans, advances or capital contributions to, or investments in, any
other person, other than to or in the Company or any direct or indirect
wholly owned subsidiary of the Company;
(ix) make or agree to make any new capital expenditures that
in the aggregate are in excess of $5.0 million over the amount budgeted
for capital expenditures on the date hereof (as reflected on the
capital expenditure budgets included in the Company Disclosure Letter),
other than as required by law;
(x) make any material Tax election or settle or compromise any
material Tax liability or refund other than in the ordinary course of
business consistent with past practice;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Filed
Company SEC Documents or incurred in the ordinary course of business
consistent with past practice, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value, (C) waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which
the Company or any Company Subsidiary is a party or (D) other than in
the ordinary course of business consistent with past practice, enter
into any interest rate, currency or commodity swaps, hedges or other
similar financial instruments; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
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(b) OTHER ACTIONS. The Company and Parent shall not, and shall
not permit any of their respective subsidi aries to, take any action that would,
or that would reason ably be expected to, result in (i) any of the representa
tions and warranties of such party set forth in this Agreement that is qualified
as to materiality becoming untrue, (ii) any of such representations and
warranties that is not so qualified becoming untrue in any material respect or
(iii) subject to Section 8.01(f), any condition to the Offer set forth in
Exhibit A or any condition to the Merger set forth in Article VII not being
satisfied.
(c) ADVICE OF CHANGES. The Company shall promptly advise
Parent orally and in writing of any change or event that has or would reasonably
be expected to have a Company Material Adverse Effect.
SECTION 5.02. ACTIONS OF COMPANY BOARD; COMPANY TAKEOVER
PROPOSALS. (a) Subject to Section 8.01(f), neither the Company Board nor any
committee thereof shall (i) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating to any Company
Takeover Proposal, (ii) approve or recommend, or propose to approve or
recommend, any Company Takeover Proposal, (iii) take any action that would
result in the holders of the Company Capital Stock no longer being legally
capable under the ORS of validly approving the Merger or this Agreement or (iv)
adopt any amendment to the Company Charter or Company By-Laws or any resolution
or take any other action that would have the effect of rescinding the actions
taken to render (A) Sections 60.801 to 60.816 of the ORS, (B) Article VI of the
Company Charter inapplicable to Parent and Sub and to the Offer, the Merger and
the other Transactions or (C) Sections 60.825 to 60.845 of the ORS inapplicable
to the Offer, the Merger and the other Transactions.
(b) The Company promptly shall advise Parent orally and in
writing of any Company Takeover Proposal and the identity of the person making
any such Company Takeover Proposal. The Company shall keep Parent fully informed
of the status, including any change to the material terms of, any such Company
Takeover Proposal.
(c) For purposes of this Agreement:
"COMPANY TAKEOVER PROPOSAL" means (i) any proposal or offer
for a merger, consolidation, dissolution, recapitalization or other
business combination involving the Company, (ii) any proposal for the
issuance by the Company of over 10% of its equity
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securities as consideration for the assets or securities of another
person or (iii) any proposal or offer to acquire in any manner,
directly or indirectly, over 10% of the equity securities or
consolidated total assets of the Company, in each case other than the
Transactions.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PREPARATION OF THE PROXY STATEMENT; SHAREHOLDERS
MEETING. (a) If the approval of this Agreement by the Company's shareholders is
required by Law, as soon as reasonably practicable following the expiration of
the Offer, the Company and Parent shall, at Parent's request, prepare and file
with the SEC the Proxy Statement in preliminary form, and each of the Company
and Parent shall use its reasonable best efforts to respond as promptly as
reasonably practicable to any comments of the SEC with respect thereto. The
Company shall notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and shall
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement. If at any time prior to receipt of
the Company Shareholder Approval there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall as
promptly as reasonably practicable prepare and mail to its shareholders such an
amendment or supplement. The Company shall not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects. Subject to
the foregoing, the Company shall use its reasonable best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders as promptly as
reasonably practicable after filing with the SEC.
(b) If the approval of this Agreement by the Company's
shareholders is required by Law, at Parent's request, as soon as reasonably
practicable following the expiration of the Offer, the Company shall duly call,
give notice of, convene and hold a meeting of its shareholders (the "COMPANY
SHAREHOLDERS MEETING") for the purpose of seeking the Company Shareholder
Approval. Without limiting the generality of the foregoing, the Company agrees
that its obligations pursuant to the first sentence of this
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Section 6.01(b) shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any Company Takeover
Proposal or (ii) the withdrawal or modification by the Company Board of its
approval or recommendation of this Agreement or the Merger. Notwithstanding the
foregoing, if Sub or any other subsidiary of Parent shall acquire at least 90%
of the outstanding shares of each series of Company Capital Stock, the parties
shall, at the request of Parent, take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after the
expiration of the Offer without a shareholders meeting in accordance with
Section 60.491 of the ORS.
(c) Parent shall cause all shares of Company Common Stock
purchased pursuant to the Offer and all other shares of Company Common Stock
owned by Parent, Sub or any other subsidiary of Parent to be voted in favor of
this Agreement and the transactions contemplated hereby.
SECTION 6.02. ACCESS TO INFORMATION. Subject to applicable
Law, upon reasonable prior notice, the Company shall, and shall cause each
Company Subsidiary to, afford to Parent and to the officers, employees,
accountants, counsel, financial advisors and other representatives of Parent,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each Company Subsidiary to, furnish promptly to the Parent (a) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Without limiting the
generality of the foregoing, the Company shall, within two business days of
request therefor, provide to Parent the information described in Rule 14a-
7(a)(2)(ii) under the Exchange Act and any information to which a holder of
Company Common Stock would be entitled under Section 60.774 of the ORS (assuming
such holder met the requirements of such Section). No information or knowledge
obtained pursuant to this Section 6.02 shall affect or be deemed to modify any
representation or warranty made by the Company hereunder.
SECTION 6.03. REASONABLE BEST EFFORTS; NOTIFICATION. (a) Upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties shall use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and
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to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the other Transactions, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of this
Agreement. In connection with and without limiting the foregoing, the Company
and the Company Board shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to any Transaction or this Agreement and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to any Transaction or this
Agreement, take all action necessary to ensure that the Offer, the Merger and
the other Transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 6.04. AWARDS UNDER THE COMPANY STOCK PLANS. (a) As
soon as practicable following the date of this Agreement, the Company Board
shall, or shall cause the relevant committee administering the Company Stock
Plans to,
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adopt such resolutions or take such other actions as may be required to adjust
the terms of all outstanding Company Non- Tandem SARs as necessary to provide
that, as of the Effective Time, each Company Non-Tandem SAR which is then
outstanding shall be cancelled at such time with the holder thereof becoming
entitled to receive an amount of cash equal to the excess, if any, of (i) the
Offer Price over (ii) the strike price.
(b) As soon as practicable following the date of this
Agreement, the Company Board shall, or shall cause the relevant committee
administering the Company Stock Plans to, adopt such resolutions or take such
other actions as may be required to adjust the terms of all outstanding Company
Employee Stock Options, whether vested or unvested, as necessary to provide
that:
(i) each Company Employee Stock Option (and any Company SAR
related thereto) outstanding immediately prior to acceptance for
payment of shares pursuant to the Offer may be surrendered at that
time, with the holder thereof becoming entitled to receive a cash
payment from the Company one business day after the purchase of shares
of Company Common Stock pursuant to the Offer of an amount equal to (i)
the excess, if any, of (x) the Offer Price over (y) the exercise price
per share of Company Common Stock subject to such Company Employee
Stock Option, multiplied by (ii) the number of shares of Company Common
Stock for which such Company Employee Stock Option shall not
theretofore have been exercised; and each Company Employee Stock Option
(and each Company SAR related thereto) not surrendered for cash
immediately prior to the acceptance for payment of shares pursuant to
the Offer shall be treated as follows: the Company SAR shall be
terminated at the Effective Time and the Company Employee Stock Option
shall be amended and converted at the Effective Time into a vested
option to acquire, on the same terms and conditions as are applicable
under Parent's employee stock option plan, the number of shares of
common stock of Parent, par value $1.25 per share ("PARENT COMMON
STOCK"), equal to the product (rounded down to the nearest whole share)
obtained by multiplying (A) the number of shares of Company Common
Stock the holder of such Company Employee Stock Option would have been
entitled to receive had such holder exercised such Company Employee
Stock Option in full immediately prior to the Effective Time and (B)
the quotient (rounded to the nearest one-thousandth) obtained by
dividing the Offer Price by the average (rounded to the nearest one-
thousandth) of the 4:00 p.m. closing prices per share
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of Parent Common Stock on the NYSE Composite tape over the 20
consecutive trading days immediately preceding the date of the
Effective Time as reported in the Wall Street Journal, New York City
edition (such quotient, the "CONVERSION RATIO"), at an exercise price
per share of Parent Common Stock (rounded up to the nearest cent) equal
to (x) the exercise price per share set forth in such Company Employee
Stock Option divided by (y) the Conversion Ratio (each, as so adjusted,
an "ADJUSTED OPTION"); PROVIDED, HOWEVER, that any Company Employee
Stock Option which is intended to be an "incentive stock option" (as
defined in Section 422 of the Code), and which may not be adjusted in
the foregoing manner and remain an incentive stock option, shall be
adjusted in accordance with the requirements of Section 424 of the Code
(in a manner which most closely produces the economic results obtained
with respect to other Adjusted Options); and
(ii) ensure that a holder of an Adjusted Option may only
exercise such Adjusted Option in whole or in part in accordance with
its terms by delivering a properly executed notice of exercise to
Parent, together with the consideration therefor and the federal
withholding tax information, if any, required in accordance with the
related Company Stock Plan.
(c) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Adjusted Options appropriate notices setting
forth such holders' rights and specifying that such Adjusted Options shall be
assumed by Parent and shall thereafter have terms and conditions consistent in
all material respects with options granted under Parent's 1998 Long-Term
Incentive Compensation Plan, as amended and restated (a complete and correct
copy of which Parent has provided to the Company's advisors and which sets forth
the material terms which will be applicable to the Adjusted Options) (subject to
the adjustments required by Section 6.04(b)). Prior to the Effective Time,
Parent shall take all actions as may be reasonably required to cause the
acquisition of equity securities of Parent, as contemplated by this Section
6.04, by any person who is or will become a director or officer of Parent to be
eligible for exemption under Rule 16b-3(d) of the SEC. Parent shall file, no
later than 30 business days after the Closing Date, a registration statement on
Form S-8 covering the shares of Parent Common Stock issuable pursuant to
outstanding Adjusted Options, provided that such Company Employee Stock Options
qualify for registration on such Form S-8. The Company shall cause to be
delivered to Parent prior to the Closing all relevant information relating to
the outstanding
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Company Employee Stock Options which become Adjusted Options, and, in the event
such delivery is delayed, Parent's obligation to file the registration statement
on Form S-8 shall be commensurately delayed.
(d) All cash amounts payable pursuant to this Section 6.04
shall be subject to any required withholding of Taxes and shall be paid without
interest.
(e) In this Agreement:
"COMPANY EMPLOYEE STOCK OPTION" means any option to purchase
Company Common Stock granted in 2002 or under any Company Stock Plan.
"COMPANY SAR" means any stock appreciation right linked to the
price of Company Common Stock and granted under any Company Stock Plan
in tandem with a Company Employee Stock Option.
"COMPANY STOCK PLANS" means the Company's 1995 Long-Term
Compensation Incentive Program, as amended, and the Company's 1986
Stock Option and Stock Appreciation Rights Plan, as amended.
SECTION 6.05. EMPLOYEE BENEFITS. (a) For one year following
the Closing, Parent shall or shall cause the Surviving Corporation to (i)
provide each individual who is an employee of the Company immediately prior to
the Effective Time (other than those employees whose terms and conditions of
employment are subject to a collective bargaining agreement) (the "AFFECTED
EMPLOYEES") an annual salary or hourly wage rate, as applicable, that is no less
than the annual salary or hourly wage rate payable to such Affected Employees by
the Company immediately prior to the Effective Time; and (ii) provide Affected
Employees with employee benefits and coverage and other fringe benefits that are
no less favorable than the employee benefits and coverage and fringe benefits
provided to similarly situated employees of the Parent. For purposes of Section
6.05(a)(ii), "employee benefits" shall include, but shall not be limited to,
qualified and nonqualified retirement plans (I.E., 401(k) plans), severance pay
and retention plans, deferred compensation plans, retiree medical plans, health
and welfare plans, dental and vision plans, life insurance and AD&D plans, and
salary continuation, short- term and long-term disability plans; PROVIDED,
HOWEVER, that neither "employee benefits" nor "fringe benefits" shall include
any incentive compensation, bonus, stock option or other equity-related plans,
opportunities or arrangements.
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(b) At the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, maintain the Company's Management Retention Benefits
Plan and the Broad-Based Retention Benefits Plan for Salaried Employees (the
"RETENTION PLANS") in accordance with their terms for a period of not less than
24 months following a Change in Control (as defined in the Retention Plans).
Parent shall assume all liabilities and honor all obligations of the Retention
Plans. Parent is not permitted at any time to amend any provision of the
Retention Plans or terminate the Retention Plans, except as required by law.
(c) Parent agrees that the consummation of the Offer shall
constitute a "Change in Control" for all purposes under each applicable Company
Benefit Plan, including, without limitation, any change in control agreement
between the Company and any current or former employee, officer, director or
independent contractor of the Company. Parent agrees to honor all terms and
obligations of each such Company Benefit Plan, related trust or any other
severance or employment agreement set forth in the Company Disclosure Letter,
including, without limitation, any change in control agreement between the
Company and any current or former employee, officer, director or independent
contractor of the Company, and to withhold only the minimum amount required by
law in making payments thereunder. It is also generally the intention of Parent
to treat an Affected Employee who is terminated by Parent or the Surviving
Corporation as a result of the integration of the businesses of Parent and the
Company as having incurred a "position elimination" for purposes of his or her
Adjusted Options. With respect to Adjusted Options, Parent acknowledges that:
(i) any Affected Employee whose employment is terminated after the Closing by
Parent or the Surviving Corporation, other than for "Cause" (as defined in the
Company's Broad- Based Retention Benefits Plan for Salaried Employees), within
one yea