MERGER AGREEMENT
MEMORANDUM OF AGREEMENT made the 20th day of June, 1999.
BETWEEN:
WEYERHAEUSER COMPANY
a corporation existing under the laws of the State of
Washington
(hereinafter referred to as "Weyerhaeuser")
- and -
586476 B.C. LTD.
a company existing under the laws of the Province of
British Columbia
(hereinafter referred to as "Weysub")
- and -
MACMILLAN XXXXXXX LIMITED
a corporation existing under the laws of Canada
(hereinafter referred to as "MB")
THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants and agreements herein contained, the parties hereto covenant and
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the
following meanings respectively:
"1933 Act" means the United States Securities Act of 1933, as amended;
"Acquisition Proposal" means any bona fide proposal with respect to
any merger, amalgamation, arrangement, take-over bid, sale of assets
(excluding inventory sold in the ordinary course of business)
representing more than 25% of the book value (on a consolidated basis)
of MB's total assets (or any lease, long-term supply agreement or
other arrangement having the same economic effect as a sale), any sale
of more than 25%
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of the MB Common Shares then outstanding or similar transactions
involving MB or any Material Subsidiary, or a proposal to do so,
excluding the Arrangement;
"Affected Employees" has the meaning ascribed thereto in section 4.10;
"Affected Retirees" has the meaning ascribed thereto in section 4.10;
"affiliate" has the meaning ascribed thereto in the Securities Act,
unless otherwise expressly stated herein;
"Affiliate's Letter" means a letter, to be substantially in the form
and content of Schedule A-1 or A-2 annexed hereto, as applicable;
"Appropriate Regulatory Approvals" means those sanctions, rulings,
consents, orders, exemptions, permits and other approvals (including
the lapse, without objection, of a prescribed time under a statute or
regulation that states that a transaction may be implemented if a
prescribed time lapses following the giving of notice without an
objection being made) of Governmental Entities, regulatory agencies or
self-regulatory organizations, as set out in Schedule B hereto;
"Arrangement" means an arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in the Plan of
Arrangement, subject to any amendments or variations thereto made in
accordance with section 6.1 or Article 6 of the Plan of Arrangement or
made at the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution of the MB
Shareholders, to be substantially in the form and content of Schedule
C annexed hereto;
"Articles of Arrangement" means the articles of arrangement of MB in
respect of the Arrangement that are required by the CBCA to be sent to
the Director after the Final Order is made;
"Business Day" means any day on which commercial banks are generally
open for business in Xxxxxxx, Xxxxxxxxxx xxx Xxxxxxxxx, Xxxxxxx
Xxxxxxxx other than a Saturday, a Sunday or a day observed as a
holiday in Seattle, Washington under the laws of the State of
Washington or the federal laws of the United States of America or in
Vancouver, British Columbia under the laws of the Province of British
Columbia or the federal laws of Canada;
"CBCA" means the Canada Business Corporations Act as now in effect and
as it may be amended from time to time prior to the Effective Date;
"Circular" means the notice of the MB Meeting and accompanying
management information circular, including all schedules and exhibits
thereto, to be sent to holders of MB Common Shares and MB Options in
connection with the MB Meeting;
"Code" has the meaning ascribed thereto in section 3.1(k)(ii);
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"Confidentiality Agreement" means the confidentiality letter agreement
dated May 21, 1999 between Weyerhaeuser and MB;
"Court" means the Supreme Court of British Columbia;
"Debenture Circular" means the notice of the Debenture Meeting and
accompanying management information circular, including all exhibits
and schedules thereto, to be sent to the holders of MB Convertible
Debentures in connection with the Debenture Meeting;
"Debenture Meeting" has the meaning ascribed thereto in section
2.1(b);
"Director" means the Director appointed pursuant to section 260 of the
CBCA;
"Dissent Rights" means the rights of dissent in respect of the
Arrangement described in section 3.1 of the Plan of Arrangement;
"Dissenting Shareholder" has the meaning ascribed thereto in the Plan
of Arrangement;
"Drop Dead Date" means February 15, 2000, or such later date as may be
mutually agreed by the parties to this Agreement;
"Effective Date" means the date shown on the certificate of
arrangement to be issued by the Director under the CBCA giving effect
to the Arrangement provided that such date occurs on or prior to the
Drop Dead Date;
"Effective Time" has the meaning ascribed thereto in the Plan of
Arrangement;
"Election Deadline" means 5:00 p.m. (local time) at the place of
deposit on the date which is two Business Days prior to the date of
the MB Meeting;
"Environmental Laws" means all applicable Laws, including applicable
common law, relating to the protection of the environment and public
health and safety;
"Environmental Permits" has the meaning ascribed thereto in section
3.1(j)(ii);
"ERISA" has the meaning ascribed thereto in section 3.1(l)(i);
"Exchange Act" has the meaning ascribed thereto in section 2.6(d);
"Exchange Ratio" has the meaning ascribed thereto in the Plan of
Arrangement;
"Exchangeable Elected Share" has the meaning ascribed thereto in the
Plan of Arrangement;
"Exchangeable Shares" means the non-voting exchangeable shares in the
capital of Weysub, having substantially the rights, privileges,
restrictions and conditions set out in Appendix I to the Plan of
Arrangement;
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"Final Order" means the final order of the Court approving the
Arrangement as such order may be amended by the Court at any time
prior to the Effective Date or, if appealed, then, unless such appeal
is withdrawn or denied, as affirmed;
"Form S-3" has the meaning ascribed thereto in section 2.6(b);
"Form S-8" has the meaning ascribed thereto in section 2.6(c);
"Governmental Entity" means any (a) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, commission, board, bureau or agency, domestic or
foreign, (b) any subdivision, agent, commission, board, or authority
of any of the foregoing, or (c) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or
for the account of any of the foregoing;
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
dangerous substance or dangerous good as defined or identified in or
regulated by any Environmental Law;
"including" means including without limitation;
"Information" has the meaning ascribed thereto in section 4.7(b);
"Interim Order" means the interim order of the Court, as the same may
be amended, in respect of the Arrangement, as contemplated by section
2.3;
"Laws" means all statutes, regulations, statutory rules, orders, and
terms and conditions of any grant of approval, permission, authority
or license of any court, Governmental Entity, statutory body
(including The Toronto Stock Exchange) or self-regulatory authority,
and the term "applicable" with respect to such Laws and in the context
that refers to one or more Persons, means that such Laws apply to such
Person or Persons or its or their business, undertaking, property or
securities and emanate from a Governmental Entity having jurisdiction
over the Person or Persons or its or their business, undertaking,
property or securities;
"Letter of Transmittal and Election Form" means the letter of
transmittal and election form for use by holders of MB Common Shares,
in the form accompanying the Circular;
"Material Adverse Change", when used in connection with Weyerhaeuser
or MB, means any change, effect, event or occurrence with respect to
its condition (financial or otherwise), properties, assets,
liabilities, obligations (whether absolute, accrued conditional or
otherwise), businesses, operations or results of operations or those
of its subsidiaries that is, or would reasonably be expected to be,
material and adverse to the business, operations or financial
condition of such party and its subsidiaries taken as a whole other
than any change, effect, event or occurrence (i) relating to the
Canadian or United States' economy or securities markets in general or
(ii) affecting the Canadian or United States forest products industry
in general;
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"Material Adverse Effect" when used in connection with Weyerhaeuser or
MB, means any effect that is, or would reasonably be expected to be,
material and adverse to the business, operations or financial
condition of such party and its subsidiaries taken as a whole;
"Material Subsidiary" means each subsidiary of MB, the total assets of
which constituted more than ten percent of the consolidated assets of
MB or the total revenues of which constituted more than ten percent of
the consolidated revenues of MB, in each case as set out in the
financial statements of MB for the year ended December 31, 1998 and
including each affiliate of MB that directly or indirectly holds an
equity interest in each such subsidiary;
"MB Common Shares" means the outstanding common shares in the capital
of MB;
"MB Convertible Debentures" means the debentures of MB convertible at
the holder's option into MB Common Shares at a conversion price of
$28.625 per MB Common Share or, at MB's option, redeemable for cash at
any time or, upon maturity in 2007, for MB Common Shares;
"MB Disclosure Letter" means that certain letter dated as of even date
herewith and delivered by MB to the Weyerhaeuser Parties;
"MB Dividend Reinvestment Plan" means the plan of MB existing on the
date hereof pursuant to which holders of MB Common Shares may elect to
receive dividends in equivalent value of MB Common Shares in lieu of
cash;
"MB Documents" has the meaning ascribed thereto in section 3.1(m);
"MB Employee Share Purchase Plans" means the share purchase plan for
MB employees in Canada and the share purchase plan for MB employees in
the United States, in each case, as amended;
"MB Meeting" means the special meeting of MB Shareholders, including
any adjournment thereof, to be called and held in accordance with the
Interim Order to consider the Arrangement;
"MB Options" means the MB Common Share purchase options granted under
MB Stock Option Plan, as amended, and under separate agreements with
three senior officers of MB, and being outstanding and unexercised on
the Effective Date;
"MB Partially Owned Entity" means Trus Joist MacMillan a Limited
Partnership, a joint venture in which MB has a 49% interest;
"MB Plans" has the meaning ascribed thereto in section 3.1(l)(1);
"MB Preferred Shares" means the Class B Preferred Shares, Series 8
and Series 10, in the capital of MB;
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"MB Shareholders" means the holders of MB Common Shares, MB Options
and MB Warrants, collectively;
"MB Stock Option Plan" means MB's Senior Management Stock Option
Plan instituted February 10, 1997;
"MB Target Stock Units" means the units granted by MB to officers and
senior managers employed in the Packaging Business in the United
States pursuant to which the holders of such units may elect to
receive the difference between the issue price and the calculated
value of the units after holding them for a one-year period;
"MB Warrants" means the bearer warrants of MB exercisable for MB
Common Shares and being outstanding and unexercised on the Effective
Date;
"OSC" means the Ontario Securities Commission;
"Packaging Business" means MB's business related to containerboard,
linerboard, corrugated medium, corrugating and other packaging
products, including the assets and operations in Xxxxxxxx Falls,
Ontario, the assets and operations of MacMillan Xxxxxxx Pulp and Paper
Sales Ltd., and the assets and operations of MacMillan Xxxxxxx
Packaging Inc. and its subsidiaries including associated timberlands
and xxxxx;
"Person" includes any individual, firm, partnership, joint venture,
venture capital fund, limited liability company, unlimited liability
company, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement substantially in
the form and content of Schedule D annexed hereto and any amendments
or variations thereto made in accordance with section 6.1 or Article 6
of the Plan of Arrangement or made at the direction of the Court in
the Final Order;
"Pre-Effective Date Period" shall mean the period from and including
the date hereof to and including the Effective Time on the Effective
Date;
"Publicly Disclosed by MB" means disclosed by MB in a public filing
made by it with the OSC from January 1, 1997 to and including March
31, 1999;
"Publicly Disclosed by Weyerhaeuser" means disclosed by Weyerhaeuser
in a public filing made by it with the SEC from January 1, 1997 to and
including March 31, 1999;
"Replacement Option" has the meaning ascribed thereto in section
2.4(c);
"Representatives" has the meaning ascribed thereto in section 4.7(a);
"SEC" means the United States Securities and Exchange Commission;
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"Securities Act" means the Securities Act (Ontario) and the rules,
regulations and policies made thereunder, as now in effect and as they
may be amended from time to time prior to the Effective Date;
"Special Voting Share" means the share of Weyerhaeuser Special Voting
Preferred Stock having substantially the rights, privileges,
restrictions and conditions described in the Voting and Exchange Trust
Agreement;
"Specified Weyerhaeuser Event" means the occurrence of a Material
Adverse Change with respect to Weyerhaeuser, or a breach by a
Weyerhaeuser Party of its obligations hereunder, if by reason thereof,
and taking into account section 5.4, MB would be entitled to rely on
the failure of a condition set forth in sections 5.3(a), 5.3(b) or
5.3(c) as a reason not to complete the Arrangement;
"subsidiary" means, with respect to a specified body corporate, any
body corporate of which more than 50% of the outstanding shares
ordinarily entitled to elect a majority of the board of directors
thereof (whether or not shares of any other class or classes shall or
might be entitled to vote upon the happening of any event or
contingency) are at the time owned directly or indirectly by such
specified body corporate and shall include any body corporate,
partnership, joint venture or other entity over which it exercises
direction or control or which is in a like relation to a subsidiary;
"Superior Proposal" means any bona fide proposal by a third party
directly or indirectly, to acquire assets representing more than 50%
of the book value (on a consolidated basis) of MB's total assets or
more than 50% of the outstanding MB Common Shares, whether by way of
merger, amalgamation, arrangement, take-over bid, sale of assets or
otherwise, and that in the good faith determination of the Board of
Directors of MB after consultation with financial advisors and outside
counsel (a) is reasonably capable of being completed, taking into
account all legal, financial, regulatory and other aspects of such
proposal and the party making such proposal, and (b) would, if
consummated in accordance with its terms, result in a transaction (x)
more favourable to MB's Shareholders than the transaction contemplated
by this Agreement and (y) having a blended value per MB Common Share
greater than the per share value attributable thereto under the
transaction contemplated by this Agreement;
"Support Agreement" means an agreement to be made between
Weyerhaeuser, Weyerhaeuser Newco and Weysub substantially in the form
and content of Schedule E annexed hereto, with such changes thereto as
the parties hereto, acting reasonably, may agree;
"Tax" and "Taxes" have the respective meanings ascribed thereto in
section 3.1(k) (iii);
"Tax Returns" means all returns, declarations, reports, information
returns and statements required to be filed with any taxing authority
relating to Taxes;
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"Trustee" means the trustee to be chosen by Weyerhaeuser and MB,
acting reasonably, to act as trustee under the Voting and Exchange
Trust Agreement, being a corporation organized and existing under the
laws of Canada and authorized to carry on the business of a trust
company in all the provinces of Canada, and any successor trustee
appointed under the Voting and Exchange Trust Agreement;
"Voting and Exchange Trust Agreement" means an agreement to be made
between Weyerhaeuser, Weysub and the Trustee in connection with the
Plan of Arrangement substantially in the form and content of Schedule
F annexed hereto, with such changes thereto as the parties hereto,
acting reasonably, may agree.
"Weyerhaeuser Common Shares" means the shares of common stock in the
capital of Weyerhaeuser;
"Weyerhaeuser Elected Share" has the meaning ascribed thereto in the
Plan of Arrangement;
"Weyerhaeuser Material Subsidiary" means each subsidiary of
Weyerhaeuser, the total assets of which constituted more than ten
percent of the consolidated assets of Weyerhaeuser or the total
revenues of which constituted more than ten percent of the
consolidated revenues of Weyerhaeuser, in each case as set out in the
financial statements of Weyerhaeuser for the year ended December 27,
1998 and including each affiliate of Weyerhaeuser that directly or
indirectly holds an equity interest in each such subsidiary;
"Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under
the laws of the Province of British Columbia and being a wholly-owned
subsidiary of Weyerhaeuser;
"Weyerhaeuser Parties" means Weyerhaeuser and Weysub; and
"Year 2000 Compliant" has the meaning ascribed thereto in section
3.1(w)(ii).
1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, sections and other
portions and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation hereof. Unless
otherwise indicated, all references to an "Article" or "section" followed
by a number and/or a letter refer to the specified Article or section of
this Agreement. The terms "this Agreement", "hereof", "herein" and
"hereunder" and similar expressions refer to this Agreement (including the
Schedules hereto) and not to any particular Article, section or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Currency
Unless otherwise specifically indicated, all sums of money referred to
in this Agreement are expressed in lawful money of Canada.
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1.4 Number, etc.
Unless the context otherwise requires, words importing the singular
shall include the plural and vice versa and words importing any gender
shall include all genders.
1.5 Date For Any Action
In the event that any date on which any action is required to be
taken hereunder by any of the parties hereto is not a Business Day, such
action shall be required to be taken on the next succeeding day which is a
Business Day.
1.6 Entire Agreement
This Agreement and the agreements and other documents herein referred
to constitute the entire agreement between the parties hereto pertaining to
the terms of the Arrangement and supersede all other prior agreements,
understandings, negotiations and discussions, whether oral or written,
between the parties hereto with respect to the terms of the Arrangement.
1.7 Schedules
The following Schedules are annexed to this Agreement and are hereby
incorporated by reference into this Agreement and form part hereof:
Schedule A - Affiliate's Letter (A-1 and A-2)
Schedule B - Appropriate Regulatory Approvals
Schedule C - Arrangement Resolution
Schedule D - Plan of Arrangement
Schedule E - Support Agreement
Schedule F - Voting and Exchange Trust Agreement
1.8 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement
in respect of MB shall have the meanings attributable thereto under
Canadian generally accepted accounting principles and all determinations of
an accounting nature in respect of MB required to be made shall be made in
a manner consistent with Canadian generally accepted accounting principles
and past practice. Unless otherwise stated, all accounting terms used in
this Agreement in respect of Weyerhaeuser shall have the meanings
attributable thereto under United States generally accepted accounting
principles and all determinations of an accounting nature required to be
made in respect of Weyerhaeuser shall be made in a manner consistent with
United States generally accepted accounting principles and past practice.
1.9 Knowledge
Each reference herein to the knowledge of a party means, unless
otherwise specified, the existing knowledge of such party without inquiry.
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ARTICLE 2
THE ARRANGEMENT
2.1 Implementation Steps by MB
MB covenants in favour of the Weyerhaeuser Parties that MB shall:
(a) subject to section 2.5, as soon as reasonably practicable, apply in a
manner acceptable to the Weyerhaeuser Parties, acting reasonably,
under section 192 of the CBCA for an order approving the Arrangement
and for the Interim Order, and thereafter proceed with and diligently
seek the Interim Order;
(b) subject to 2.5(b), convene and hold a meeting (the "Debenture
Meeting") of holders of MB Convertible Debentures to consider and vote
on a proposal to amend the trust indenture governing the MB
Convertible Debentures to provide that from and after the Effective
Time each $1,000 principal amount of MB Convertible Debentures may be
converted by the holder thereof only into that number of Exchangeable
Shares that such holder would have received if its MB Convertible
Debentures had been validly converted into MB Common Shares
immediately prior to the Effective Time, together with all necessary
or desirable amendments arising as a result thereof;
(c) subject to section 2.5(a), convene and hold the MB Meeting for the
purpose of considering the Arrangement Resolution (and for any other
proper purpose as may be set out in the notice for such meeting);
(d) subject to obtaining the approvals as are required by the Interim
Order, proceed with and diligently pursue the application to the Court
for the Final Order; and
(e) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in favour of each party, send to
the Director, for endorsement and filing by the Director, the Articles
of Arrangement and such other documents as may be required in
connection therewith under the CBCA to give effect to the Arrangement.
2.2 Implementation Steps by Weyerhaeuser Parties
The Weyerhaeuser Parties covenant in favour of MB that, on or prior to
the Effective Date and subject to the satisfaction or waiver of the other
conditions herein contained in favour of each such party:
(a) Weyerhaeuser, Weyerhaeuser Newco and Weysub shall execute and deliver
the Support Agreement;
(b) Weyerhaeuser and Weysub shall execute and deliver the Voting and
Exchange Trust Agreement; and
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(c) Weyerhaeuser shall issue to the Trustee the Special Voting Share.
2.3 Interim Order
The notice of motion for the application referred to in section 2.1
(a) shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in respect
of the Arrangement and the MB Meeting and for the manner in which such
notice is to be provided;
(b) that the requisite approval for the Arrangement Resolution shall be 66
2/3% of the votes cast on the Arrangement Resolution by MB
Shareholders present in person or by proxy at the MB Meeting (such
that each holder of MB Common Shares is entitled to one vote for each
MB Common Share held, each holder of MB Options is entitled to one
vote for each MB Common Share such holder would have received on a
valid exercise of MB Options and each holder of MB Warrants is
entitled to one vote for each MB Common Share such holder would have
received on a valid exercise of MB Warrants);
(c) that, in all other respects, the terms, restrictions and conditions of
the by-laws and articles of MB, including quorum requirements and all
other matters, shall apply in respect of the MB Meeting; and
(d) for the grant of the Dissent Rights.
2.4 Articles of Arrangement
The Articles of Arrangement shall, with such other matters as are
necessary to effect the Arrangement, and all as subject to the provisions
of the Plan of Arrangement, provide substantially as follows:
(a) each outstanding MB Common Share that is not held by a holder who has
exercised its Dissent Rights and is ultimately entitled to be paid the
fair value of the MB Common Shares (other than MB Common Shares held
by Weyerhaeuser or any subsidiary or affiliate thereof), will be
transferred by the holder thereof to Weysub in exchange for, at the
holder's election, that number of fully paid and non-assessable
Weyerhaeuser Common Shares or Exchangeable Shares, as the case may be,
equal to the Exchange Ratio, and the name of each such holder of MB
Common Shares will be removed from the register of holders of MB
Common Shares and added to the register of holders of Weyerhaeuser
Common Shares or Exchangeable Shares, as the case may be, and Weysub
will be recorded as the registered holder of such MB Common Shares so
exchanged and will be deemed to be the legal and beneficial owner
thereof; provided that, notwithstanding the foregoing, holders of MB
Common Shares, who are not residents of Canada for the purposes of the
Income Tax Act (Canada) will not be entitled to elect to receive
Exchangeable Shares, and any such election otherwise
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made by any such holder shall be and be deemed to be an election to
receive Weyerhaeuser Common Shares;
(b) each MB Common Share in respect of which no election has been made by
the holder thereof, or in respect of which an effective election has
not been made (other than (i) MB Common Shares held by Dissenting
Shareholders who are ultimately entitled to be paid the fair value of
the MB Common Shares held by them and (ii) MB Common Shares held by
Weyerhaeuser or any subsidiary or affiliate thereof which shall not be
exchanged under the Arrangement and shall remain outstanding as MB
Common Shares held by Weyerhaeuser or any subsidiary or affiliate
thereof) and each MB Warrant, as the case may be, will be deemed to be
an Exchangeable Elected Share and will be transferred by the holder
thereof, without any act or formality on its part, to Weysub in
exchange for that number of fully paid and non-assessable Exchangeable
Shares equal to the Exchange Ratio, and the name of each such holder
of MB Common Shares will be removed from the register of holders of MB
Common Shares and added to the register of holders of Exchangeable
Shares and Weysub will be recorded as the registered holder of such MB
Common Shares so exchanged and will be deemed to be the legal and
beneficial owner of such MB Common Shares and MB Warrants; provided
that, notwithstanding the foregoing, each MB Common Share in respect
of which no election has been made, or in respect of which an
effective election has not been made, held by a holder who is not (and
in the case of each MB Warrant, each holder thereof shall be deemed to
be not) a resident of Canada for the purposes of the Income Tax Act
(Canada), as amended (other than (i) MB Common Shares held by
Dissenting Shareholders who are ultimately entitled to be paid the
fair value of the MB Common Shares held by them and (ii) MB Common
Shares held by Weyerhaeuser or any subsidiary or affiliate thereof
which shall not be exchanged under the Arrangement and shall remain
outstanding as MB Common Shares held by Weyerhaeuser or any subsidiary
or affiliate thereof) will be deemed to be a Weyerhaeuser Elected
Share and will be transferred by the holder thereof, without any act
or formality on his part, to Weysub in exchange for that number of
fully paid and non-assessable Weyerhaeuser Common Shares equal to the
Exchange Ratio, and the name of each such holder of MB Common Shares
will be removed from the register of holders of MB Common Shares and
added to the register of holders of Weyerhaeuser Common Shares and
Weysub will be recorded as the registered holder of such MB Common
Shares so exchanged and will be deemed to be the legal and beneficial
owner thereof; and
(c) each MB Option shall be exchanged for an option (a "Replacement
Option") to purchase that number of Weyerhaeuser Common Shares equal
to the number of MB Common Shares subject to such MB Option multiplied
by the Exchange Ratio.
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2.5 MB Circulars
(a) As promptly as practicable after the execution and delivery of this
Agreement, Weyerhaeuser and MB shall prepare the Circular together with any
other documents required by the Securities Act or other applicable Laws in
connection with the Arrangement, and as promptly as practicable after the
execution and delivery of this Agreement, and in any event, before
September 30, 1999, MB shall cause the Circular and other documentation
required in connection with the MB Meeting to be sent to each holder of MB
Common Shares and MB Options and filed as required by the Interim Order and
applicable Laws.
(b) As promptly as practicable after the execution and delivery of this
Agreement, Weyerhaeuser and MB shall prepare the Debenture Circular
together with any documents required by the trust indenture governing the
MB Convertible Debentures, the Securities Act or other applicable Laws in
connection with the Debenture Meeting and, unless otherwise agreed by the
parties, MB shall, concurrently with the sending of the Circular to the
holders of MB Common Shares and MB Options, cause the Debenture Circular
and other documentation required in connection with the Debenture Meeting
to be sent to each holder of MB Convertible Debentures and filed as
required by the trust indenture governing the MB Convertible Debentures and
applicable Laws.
2.6 Securities Compliance
(a) Weyerhaeuser shall use all reasonable efforts to obtain all orders
required from the applicable Canadian securities authorities to permit
the issuance and first resale of (a) the Exchangeable Shares and
Weyerhaeuser Common Shares issued pursuant to the Arrangement, (b) the
Weyerhaeuser Common Shares issued upon exchange of the Exchangeable
Shares from time to time and (c) the Weyerhaeuser Common Shares issued
from time to time upon the exercise of the Replacement Options, in
each case without qualification with or approval of or the filing of
any prospectus or similar document, or the taking of any proceeding
with, or the obtaining of any further order, ruling or consent from,
any Governmental Entity or regulatory authority under any Canadian
federal, provincial or territorial securities or other Laws or
pursuant to the rules and regulations of any regulatory authority
administering such Laws, or the fulfillment of any other legal
requirement in any such jurisdiction (other than, with respect to such
first resales, any restrictions on transfer by reason of, among other
things, a holder being a "control person" of Weyerhaeuser or MB for
purposes of Canadian federal, provincial or territorial securities
Laws).
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(b) As promptly as practicable after the date hereof, Weyerhaeuser shall
file a registration statement on Form S-3 (or other applicable form)
(the "Form S-3") in order to register under the 1933 Act the
Weyerhaeuser Common Shares to be issued from time to time after the
Effective Time upon exchange of the Exchangeable Shares and shall use
its reasonable efforts to cause the Form S-3 to become effective and
to maintain the effectiveness of such registration for the period that
such Exchangeable Shares remain outstanding.
(c) As promptly as practicable after the Effective Date, Weyerhaeuser
shall file a registration statement on Form S-8 (or other applicable
form) ( the "Form S-8") in order to register under the 1933 Act those
Weyerhaeuser Common Shares to be issued from time to time after the
Effective Time upon the exercise of the Replacement Options.
(d) MB and Weyerhaeuser shall take all such steps as may be required to
cause the transactions contemplated by Article 2 and any other
dispositions of MB equity securities and/or acquisitions of
Weyerhaeuser equity securities (including, in each case derivative
securities) in connection with this Agreement or the transactions
contemplated hereby by any individual who is a director or officer of
MB, to be exempt under Rule 16b-3 promulgated under the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(e) The provisions of this section 2.6 shall apply, mutatis mutandis, in
respect of the Debenture Circular and the matters referred to therein.
2.7 Preparation of Filings
(a) Weyerhaeuser and MB shall cooperate in:
(i) the preparation of any application for the orders and the
preparation of any required registration statements and any
other documents reasonably deemed by Weyerhaeuser or MB to be
necessary to discharge their respective obligations under
United States and Canadian federal, provincial, territorial or
state securities Laws in connection with the Arrangement and
the other transactions contemplated hereby;
(ii) the taking of all such action as may be required under any
applicable United States and Canadian federal, provincial,
territorial or state securities Laws (including "blue sky
laws") in connection with the issuance of the Exchangeable
Shares and the Weyerhaeuser Common Shares in connection with
the Arrangement or the exercise of the Replacement Options;
provided, however, that with respect to the United States "blue
sky" and Canadian provincial qualifications neither
Weyerhaeuser nor MB shall be required to register or qualify as
a foreign corporation or to take any action that would subject
it to service of process in any jurisdiction where such entity
is not now so subject, except as to
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matters and transactions arising solely from the offer and sale
of the Exchangeable Shares and the Weyerhaeuser Common Shares;
and
(iii) the taking of all such action as may be required under the CBCA
in connection with the transactions contemplated by this Agreement
and the Plan of Arrangement.
(b) Each of Weyerhaeuser and MB shall furnish to the other all such
information concerning it and its shareholders as may be required
(and, in the case of its shareholders, available to it) for the
effectuation of the actions described in sections 2.5 and 2.6 and the
foregoing provisions of this section 2.7, and each covenants that no
information furnished by it (to its knowledge in the case of
information concerning its shareholders) in connection with such
actions or otherwise in connection with the consummation of the
Arrangement and the other transactions contemplated by this Agreement
will contain any untrue statement of a material fact or omit to state
a material fact required to be stated in any such document or
necessary in order to make any information so furnished for use in any
such document not misleading in the light of the circumstances in
which it is furnished.
(c) Weyerhaeuser and MB shall each promptly notify the other if at any
time before or after the Effective Time it becomes aware that the
Circular or an application for an order or a registration statement
described in section 2.6 contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading
in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Circular or such
application or registration statement. In any such event, Weyerhaeuser
and MB shall cooperate in the preparation of a supplement or amendment
to the Circular or such other document, as required and as the case
may be, and, if required, shall cause the same to be distributed to
shareholders of Weyerhaeuser or MB and/or filed with the relevant
securities regulatory authorities.
(d) MB shall ensure that the Circular complies with all applicable Laws
and, without limiting the generality of the foregoing, that the
Circular does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in
light of the circumstances in which they are made (other than with
respect to any information relating to and provided by the
Weyerhaeuser Parties or any third party that is not an affiliate of
MB). Without limiting the generality of the foregoing, MB shall ensure
that the Circular provides holders of MB Common Shares with
information in sufficient detail to permit them to form a reasoned
judgment concerning the matters to be placed before them at the MB
Meeting and Weyerhaeuser shall provide all information regarding it
necessary to do so.
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(e) Weyerhaeuser shall ensure that the Form S-3 and Form S-8 comply with
all applicable Laws and, without limiting the generality of the
foregoing, that such documents do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made (other
than with respect to any information relating to and provided by MB or
any third party that is not an affiliate of Weyerhaeuser) and MB shall
provide all information regarding it necessary to do so.
(f) The provisions of this section 2.7 shall apply, mutatis mutandis, in
respect of the Debenture Meeting and the Debenture Circular.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of MB
MB represents and warrants to and in favour of the Weyerhaeuser
Parties as follows and acknowledges that the Weyerhaeuser Parties are
relying upon such representations and warranties in connection with the
matters contemplated by this Agreement:
(a) Organization.
(i) Each of MB and the Material Subsidiaries has been duly
incorporated or formed under all applicable Laws, is validly
subsisting and has full corporate or legal power and authority
to own its properties and conduct its businesses as currently
owned and conducted. All of the outstanding shares and other
ownership interests of the Material Subsidiaries which are held
directly or indirectly by MB are validly issued, fully paid and
non-assessable and all such shares and other ownership
interests are owned directly or indirectly by MB, free and
clear of all material liens, claims or encumbrances, except as
set forth in the MB Disclosure Letter or pursuant to
restrictions on transfers contained in constating documents,
and except as aforesaid there are no outstanding options,
rights, entitlements, understandings or commitments (contingent
or otherwise) regarding the right to acquire any such shares or
other ownership interests in any of the Material Subsidiaries.
MB has disclosed in the MB Disclosure Letter the names and
jurisdictions of incorporation of each of the Material
Subsidiaries.
(ii) Other than MB's interest in the MB Partially Owned Entity,
neither MB nor any Material Subsidiary has any minority
interest in any other corporation or entity, which minority
interest is material in relation to the consolidated financial
position of MB.
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(b) Capitalization. The authorized capital of MB consists of an unlimited
number of Class B preferred shares, issuable in series, and an
unlimited number of MB Common Shares. As of June 11, 1999 there were
972,369 Class B preferred shares, Series 8, issued and outstanding,
1,554,200 Class B preferred shares, Series 10, issued and outstanding
and 120,296,710 MB Common Shares issued and outstanding, and 7,700,000
MB Common Shares were reserved, in the aggregate, for issuance in
respect of the MB Options. As of June 11, 1999, MB had outstanding
$149,943,000 in principal amount of MB Convertible Debentures. As of
June 11, 1999, MB had outstanding MB Warrants entitling the holders
thereof to acquire for no consideration 552 MB Common Shares in the
aggregate. As of June 11, 1999, MB had outstanding options under the
MB Stock Option Plan permitting the holders thereof to purchase
5,448,138 MB Common Shares in the aggregate. As of June 11, 1999, MB
had granted phantom stock options representing the functional
equivalent of 2,023,731 MB Common Shares in the aggregate. As of June
11, 1999, MB had granted MB Target Stock Units representing the
functional equivalent of 1,664,191 MB Common Shares in the aggregate.
From time to time MB Common Shares are issued in accordance with the
MB Dividend Reinvestment Plan. Except as described in the preceding
sentences of this section 3.1(b) and in section 3.1(a)(i), there are
no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments (pre-emptive, contingent or
otherwise) obligating MB or any Material Subsidiary to issue or sell
any shares of MB or any of the Material Subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any
shares of MB, any Material Subsidiary or any other Person, nor is
there outstanding any stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the
book value, income or any other attribute of MB or any subsidiary.
Except as set forth in the MB Disclosure Letter, there have been no MB
Common Shares issued or purchased for cancellation since December 31,
1998. All outstanding MB Common Shares have been duly authorized and
are validly issued and outstanding as fully paid and non-assessable
shares, free of pre-emptive rights. Except as described in the
preceding sentences of this section 3.1(b), there are no outstanding
bonds, debentures or other evidences of indebtedness of MB or any
subsidiary having the right to vote (or that are convertible for or
exercisable into securities having the right to vote) with the holders
of the MB Common Shares on any matter. Except as set forth in the MB
Disclosure Letter, there are no outstanding contractual obligations of
MB or any of the Material Subsidiaries to repurchase, redeem or
otherwise acquire any of its outstanding securities or with respect to
the voting or disposition of any outstanding securities of any of the
Material Subsidiaries.
(c) Authority and No Violation.
(i) MB has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by MB and the
consummation by MB of the
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transactions contemplated by this Agreement have been duly
authorized by its Board of Directors and no other corporate
proceedings on its part are necessary to authorize this
Agreement, or the transactions contemplated hereby other than:
(A) with respect to the Circular, the Debenture Circular and
other matters relating solely thereto, including the
implementation of the Arrangement, the approval of the
Board of Directors of MB;
(B) with respect to the completion of the Arrangement, the
approval of the holders of the MB Common Shares; and
(C) with respect to the amendments to the trust indenture
governing the MB Convertible Debentures, the approval of
the holders of MB Convertible Debentures.
(ii) This Agreement has been duly executed and delivered by MB and
constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, and to general principles of
equity and to the fact that the Currency Act (Canada) precludes
a court in Canada from giving judgment in any currency other
than Canadian currency.
(iii) The Board of Directors of MB has (A) determined unanimously
that the Arrangement is fair to the holders of the MB Common
Shares and is in the best interests of MB, (B) received
separate opinions from RBC Dominion Securities Inc., X.X.
Xxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. to the
effect that, as of the date of this Agreement, the Exchange
Ratio or the Arrangement is fair from a financial point of view
to the holders of the MB Common Shares and (C) determined
unanimously to recommend that the holders of the MB Common
Shares vote in favour of the Arrangement. MB is not subject to
a shareholder rights plan or "poison pill" or similar plan.
(iv) The approval of this Agreement, the execution and delivery by
MB of this Agreement and the performance by it of its
obligations hereunder and the completion of the Arrangement and
the transactions contemplated thereby, will not, except as
disclosed in the MB Disclosure Letter:
(A) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination, purchase or
sale rights or payment obligation under any provision of:
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(I) its or any Material Subsidiary's certificate of
incorporation, articles, by-laws or other charter
documents, including any unanimous shareholder
agreement or any other agreement or understanding
relating to ownership of shares or other interests
or to corporate governance with any party holding an
ownership interest in any Material Subsidiary;
(II) subject to obtaining the Appropriate Regulatory
Approvals relating to MB, any Laws, judgment or
decree except to the extent that the violation or
breach of, or failure to obtain any consent under,
any Laws, judgment or decree would not, individually
or in the aggregate, have a Material Adverse Effect
on MB ; or
(III) subject to obtaining the Appropriate Regulatory
Approvals relating to MB and except as would not,
individually or in the aggregate, have a Material
Adverse Effect on MB, any material contract,
agreement, license, franchise or permit to which MB
or any Material Subsidiary is party or by which it
is bound or subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of MB or any subsidiary, or cause any such
indebtedness to come due before its stated maturity or
cause any available credit of MB or any subsidiary to cease
to be available other than as would not, individually or in
the aggregate, have a Material Adverse Effect on MB;
(C) except as would not, individually or in the aggregate, have
a Material Adverse Effect on MB, result in the imposition
of any encumbrance, charge or lien upon any of its assets
or the assets of any Material Subsidiary, or restrict,
hinder, impair or limit the ability of MB or any Material
Subsidiary to carry on the business of MB or any Material
Subsidiary as and where it is now being carried on; or
(D) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming
due to any director or employee of MB or any subsidiary or
increase any benefits otherwise payable under any MB Plan or
result in the acceleration of time of payment or vesting of
any such benefits, including the time of exercise of stock
options.
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No consent, approval, order or authorization of, or
declaration or filing with, any Governmental Entity is
required to be obtained by MB and its subsidiaries in
connection with the execution and delivery of this
Agreement or the consummation by MB of the transactions
contemplated hereby other than (A) any approvals required
by the Interim Order, (B) the Final Order, (C) filings with
the Director under the CBCA, (D) the Appropriate Regulatory
Approvals relating to MB and (E) any other consents,
approvals, orders, authorizations, declarations or filings
of or with a Governmental Entity which, if not obtained,
would not, individually or in the aggregate, have a
Material Adverse Effect on MB.
(d) No Defaults. Subject to obtaining the Appropriate Regulatory Approvals
relating to MB and except as disclosed in the MB Disclosure Letter,
neither MB nor any of its subsidiaries is in default under, and there
exists no event, condition or occurrence which, after notice or lapse
of time or both, would constitute such a default under, any contract,
agreement, license or franchise to which it is a party which would, if
terminated due to such default, cause a Material Adverse Effect.
(e) Absence of Certain Changes or Events. Except as disclosed in the MB
Disclosure Letter or Publicly Disclosed by MB, from December 31, 1998
through to the date hereof each of MB and the Material Subsidiaries
has conducted its business only in the ordinary and regular course of
business consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to MB;
(ii) any damage, destruction or loss, whether covered by insurance
or not, that could reasonably be expected to have a Material
Adverse Effect on MB;
(iii) any redemption, repurchase or other acquisition of MB Common
Shares or MB Preferred Shares by MB or any declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to MB Common
Shares or MB Preferred Shares, other than dividends and
repurchases required by the terms of the MB Preferred Shares
and other than regular quarterly dividends on the MB Common
Shares and open market purchases of MB Common Shares under the
MB Employee Share Purchase Plans, in each case, in the
ordinary and regular course of business consistent with past
practice;
(iv) any material increase in or modification of the compensation
payable or to become payable by it to any of its directors or
officers, or any grant to any such director or officer of any
increase in severance or termination pay;
(v) any increase in or modification of any bonus, pension,
insurance or benefit arrangement (including the granting of
stock options, restricted stock awards or stock appreciation
rights) made to, for or with any of its directors or officers;
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(vi) any acquisition or sale of its property or assets aggregating
10% or more of MB's total consolidated property and assets as
at December 31, 1998 other than in the ordinary and regular
course of business consistent with past practice;
(vii) any entering into, amendment of, relinquishment, termination
or non-renewal by it of any material contract, agreement,
license, franchise, lease transaction, commitment or other
right or obligation, other than in the ordinary and regular
course of business consistent with past practice;
(viii) any resolution to approve a split, combination or
reclassification of any of its outstanding shares;
(ix) any change in its accounting methods, principles or practices;
or
(x) any agreement or arrangement to take any action which, if
taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement
materially untrue or incorrect as of the date when made.
(f) Employment Matters.
(i) Except as set forth in the management information circular
prepared in connection with the Annual Meeting of MB held on
April 21, 1999 or the MB Disclosure Letter, neither MB nor any
Material Subsidiary is a party to any written or oral policy,
agreement, obligation or understanding providing for severance
or termination payments to, or any employment agreement with,
any director or officer.
(ii) Except as set forth in the MB Disclosure Letter, neither MB
nor any Material Subsidiary is a party to any collective
bargaining agreement nor subject to any application for
certification or, to the knowledge of MB, threatened or
apparent union-organizing campaigns for employees not covered
under a collective bargaining agreement nor are there any
current, pending or, to the knowledge of MB, threatened
strikes or lockouts at MB or any Material Subsidiary that
would, individually or in the aggregate, have a Material
Adverse Effect on MB.
(iii) Neither MB nor any Material Subsidiary is subject to any claim
for wrongful dismissal, constructive dismissal or any other
tort claim, actual or, to the knowledge of MB, threatened, or
any litigation, actual or, to the knowledge of MB, threatened,
relating to employment or termination of employment of
employees or independent contractors, other than those claims
or such litigation as would, individually or in the aggregate,
not have a Material Adverse Effect on MB.
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(iv) MB and all Material Subsidiaries have operated in accordance with all
applicable Laws with respect to employment and labour, including,
but not limited to, employment and labour standards, occupational
health and safety, employment equity, pay equity, workers'
compensation, human rights and labour relations and there are no
current, pending or, to the knowledge of MB, threatened proceedings
before any board or tribunal with respect to any of the above areas,
other than where the failure to so operate or such proceedings
which, individually or in the aggregate, would not have a
Material Adverse Effect on MB.
(g) Financial Statements. The audited consolidated financial statements
for MB as at and for each of the 12-month periods ended December 31, 1998,
1997 and 1996 and the unaudited consolidated financial statements for the
3-month period ended March 31, 1999 have been prepared in accordance with
Canadian generally accepted accounting principles (subject, in the case of
such unaudited financial statements, to the absence of notes and to year-
end adjustments), the requirements of applicable Governmental Entities and
applicable securities Laws; such financial statements present fairly, in
all material respects, the consolidated financial position and results of
operations of MB and its subsidiaries as of the respective dates thereof
and for the respective periods covered thereby, subject, in the case of
such unaudited financial statements, to year-end adjustments.
(h) Books and Records. The books, records and accounts of MB and its
subsidiaries, in all material respects, (i) have been maintained in
accordance with good business practices on a basis consistent with prior
years, (ii) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of MB and its
subsidiaries and (iii) accurately and fairly reflect the basis for the MB
consolidated financial statements. MB has devised and maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; and (ii) transactions are recorded as necessary
(A) to permit preparation of financial statements in conformity with
Canadian generally accepted accounting principles or any other criteria
applicable to such statements and (B) to maintain accountability for
assets.
(i) Litigation, Etc. Except as set forth in the MB Disclosure Letter or
Publicly Disclosed by MB, there is no claim, action, proceeding or
investigation (including any native land claims) pending or, to the
knowledge of MB, threatened against MB or any Material Subsidiary
before any court or Governmental Entity that, if adversely determined,
would reasonably be expected to have a Material Adverse Effect on MB,
or prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Arrangement. Neither MB nor any
Material Subsidiary, nor their respective assets and properties, is
subject to any outstanding judgment, order, writ, injunction or decree
that has had or is reasonably likely to have a Material Adverse Effect
on MB or that would prevent
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or materially delay consummation of the transactions contemplated by
this Agreement or the Arrangement.
(j) Environmental. Except for any matters that, individually or in the
aggregate, would not have a Material Adverse Effect on MB:
(i) all operations of MB and its Material Subsidiaries have been
conducted, and are now, in compliance with all Environmental
Laws;
(ii) MB and its Material Subsidiaries are in possession of, and in
compliance with, all permits, authorizations, certificates,
registrations, approvals and consents necessary under
Environmental Laws to own, lease and operate their properties
and to conduct their respective businesses as they are now
being conducted or as proposed to be conducted (collectively
the "Environmental Permits"); and
(iii) except as set forth in the MB Disclosure Letter, neither MB
nor any Material Subsidiary is aware of, or is subject to:
(A) any Environmental Laws which requires or may require any
work, repairs, construction, change in business practices
or operations, or expenditures, including capital
expenditures for facility upgrades, environmental
investigation and remediation expenditures, or any other
such expenditures;
(B) any written demand or written notice with respect to the
breach of or liability under any Environmental Laws
applicable to MB or any subsidiary, including any
regulations respecting the use, storage, treatment,
transportation or disposition (including disposal or
arranging for disposal) of Hazardous Substances;
(C) any written demand or written notice with respect to
liability, by contract or operation of applicable Laws,
under Environmental Laws applicable to MB or any current or
former subsidiary or any of their respective predecessor
entities, divisions or any formerly owned, leased or
operated properties or assets of the foregoing, including
liability with respect to the presence, release or
discharge of Hazardous Substances; or
(D) any changes in the terms or conditions of any Environmental
Permits or any renewal, modification, revocation,
reissuance, alteration, transfer or amendment of such
Environmental Permits, or any review by, or approval of,
any Governmental Entity of such Environmental Permits that
are required in connection with the execution or delivery
of this Agreement, the consummation of the
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transactions contemplated hereby or the continuation of
business of MB or any subsidiaries following such
consummation.
(k) Tax Matters. Except as set forth in the MB Disclosure Letter:
(i) MB and each of its subsidiaries have filed, or caused to be
filed, all material Tax Returns required to be filed by them
(all of which returns were correct and complete in all
material respects) and have paid, or caused to be paid, all
material amounts of Taxes shown to be due and payable thereon,
and MB's most recently published financial statements contain
an adequate provision in accordance with generally accepted
accounting principles for all material amounts of Taxes
payable in respect of each period covered by such financial
statements and all prior periods to the extent such Taxes have
not been paid, whether or not due and whether or not shown as
being due on any Tax Returns. MB and each of its subsidiaries
have made adequate provision in accordance with generally
accepted accounting principles in their books and records for
any material amounts of Taxes accruing in respect of any
accounting period which has ended subsequent to the period
covered by such financial statements.
(ii) Neither MB nor any subsidiary has received any written notification
that any issues involving a material amount of Taxes have been
raised (and are currently pending) by Revenue Canada, the United
States Internal Revenue Service or any other taxing authority,
including, without limitation, any sales tax authority, in
connection with any of the Tax Returns referred to above and no
waivers of statutes of limitations have been given or requested
with respect to MB or any Material Subsidiary. All liability of
MB and the Material Subsidiaries for income taxes has been
assessed for all fiscal years up to and including the fiscal year
ended December 31, 1993. To the best of the knowledge of MB,
there are no proposed in writing (but unassessed) additional Taxes
involving a material amount of Taxes and none has been asserted in
writing. No Tax liens have been filed for material amounts of Taxes
other than for Taxes not yet due and payable. Neither MB nor any
of its subsidiaries (i) has made an election to be treated as a
"consenting corporation" under Section 341(f) of the United States
Internal Revenue Code (the "Code") or (ii) is a party to any Tax
sharing or other similar agreement or arrangement of any nature
with any other person (other than MB or any of its subsidiaries)
pursuant to which MB or any of its subsidiaries has or could have
any material liabilities in respect of Taxes, other than any
liability arising under an agreement providing for the sale or
other disposition of property by MB or any of its subsidiaries.
MB has not made an election under Section 897(i) of the Code to be
treated as a domestic corporation for purposes of Sections 897,
1445 and 6039C of the Code. With respect to the immediately
preceding five-year period, MB has neither received nor
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prepared any written reports analyzing the status of MacMillan
Xxxxxxx (U.S.A.) Inc. as a United States real property holding
corporation within the meaning of Section 897 of the Code.
With respect to the immediately preceding fiveyear period, MB
has not undertaken a substantive analysis of MacMillan Xxxxxxx
(U.S.A.) Inc.'s status as a United States real property
holding corporation within the meaning of Section 897 of the
Code.
(iii) "Tax" and "Taxes" means, with respect to any entity, all
income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits
or selected items of income, earnings or profits) and all
capital taxes, gross receipts taxes, environmental taxes,
sales taxes, use taxes, ad valorem taxes, value added taxes,
transfer taxes, franchise taxes, license taxes, withholding
taxes, payroll taxes, employment taxes, Canada or Quebec
Pension Plan premiums, excise, severance, social security
premiums, workers' compensation premiums, unemployment
insurance or compensation premiums, stamp taxes, occupation
taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax,
customs duties or other taxes, fees, imports, assessments or
charges of any kind whatsoever, together with any interest and
any penalties or additional amounts imposed by any taxing
authority (domestic or foreign) on such entity, and any
interest, penalties, additional taxes and additions to tax
imposed with respect to the foregoing. For purposes of this
section 3.1(k), the term "material amount of Taxes" shall mean
an amount of Taxes that is material to MB and its subsidiaries
taken as a whole.
(l) Pension and Employee Benefits.
(i) MB has made available to Weyerhaeuser a list of all employee
benefit, health, welfare, supplemental unemployment benefit,
bonus, pension, profit sharing, deferred compensation, stock
compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability and similar
plans or arrangements or practices, whether written or oral,
which are maintained by MB and/or a Material Subsidiary
(collectively referred to as the "MB Plans"). The MB
Disclosure Letter states which of the MB Plans constitute
"employee pension benefit plans" (as defined in section 3(2)
of the United States Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) or "employee welfare benefit
plans" (as defined in section 3(1) of ERISA).
(ii) No step has been taken, no event has occurred and no condition
or circumstance exists that has resulted in or could
reasonably be expected to result in any MB Plan being ordered
or required to be terminated or wound up in whole or in part
or having its registration under applicable Laws refused or
revoked, or being placed under the administration of any
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trustee or receiver or regulatory authority or being required
to pay any material Taxes, fees, penalties or levies under
applicable Laws. There are no actions, suits, claims (other
than routine claims for payment of benefits in the ordinary
course), trials, demands, investigations, arbitrations or
other proceedings which are pending or threatened in respect
of any of the MB Plans or their assets which individually or
in the aggregate would have a Material Adverse Effect on MB.
(iii) MB has made available to Weyerhaeuser true, correct and
complete copies of all of the MB Plans as amended (or, in the
case of any unwritten MB Plan, a description thereof) together
with all related documentation including, without limitation,
funding agreements, actuarial reports, funding and financial
information returns and statements with respect to each MB
Plan, and current plan summaries, booklets and personnel
manuals. MB has made available to Weyerhaeuser a true and
complete copy of the most recent annual report on Form 5500
filed with the United States Internal Revenue Service with
respect to each MB Plan in respect of which such a report was
required.
(iv) Other than as disclosed in the MB Disclosure Letter, all of
the MB Plans are and have been established, registered,
qualified, invested and administered, in all material
respects, in accordance with all applicable Laws, and in
accordance with their terms and the terms of agreements
between MB and/or a subsidiary, as the case may be, and their
respective employees. To the knowledge of MB, no fact or
circumstance exists that could adversely affect the existing
tax status of a MB Plan.
(v) All obligations of MB or a Material Subsidiary regarding the
MB Plans have been satisfied in all material respects. All
contributions or premiums required to be made by MB and/or a
Material Subsidiary, as the case may be, under the terms of
each MB Plan or by applicable Laws have been made in a timely
fashion in accordance with applicable Laws and the terms of
the MB Plans.
(vi) Other than as set forth in the MB Disclosure Letter or
Publicly Disclosed by MB, each MB Plan is fully insured or
fully funded and in good standing with such regulatory
authorities as may be applicable and, as of the date hereof,
no notice of underfunding, noncompliance, failure to be in
good standing or otherwise has been received by MB or its
subsidiaries from any such regulatory authority.
(vii) There have been no improper withdrawals, applications or
transfers of assets from any MB Plan or the trusts or other
funding media relating thereto that remain outstanding and
unremedied, and neither MB, nor any Material Subsidiary, nor
any of their respective agents has been in breach
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of any fiduciary obligation with respect to the administration
of the MB Plans or the trusts or other funding media relating
thereto.
(viii) No insurance policy or any other contract or agreement
affecting any MB Plan requires or permits a retroactive
increase in premiums or payments due thereunder.
(ix) All MB Plans intended to be tax-qualified in the United States
have been the subject of determination letters from the United
States Internal Revenue Service to the effect that such MB
Plans are qualified and exempt from United States Federal
income taxes under sections 401(a) and 501(a), respectively,
of the Code, and no such determination letter has been revoked
nor, to the knowledge of MB, has revocation been threatened,
nor has any such MB Plan been amended since the date of its
most recent determination letter or application therefor in
any respect that would adversely affect its qualification or
materially increase its costs and, to the knowledge of MB,
nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such
plan.
(x) Except as set forth in the MB Disclosure Letter, no amount
that could be received (whether in cash or property or the
vesting of property) as a result of the transactions
contemplated by this Agreement or the Arrangement by any
employee, officer or director of MB or any of its affiliates
who is a "disqualified individual" (as such term is defined in
proposed United States Treasury Regulation Section 1.280G-1)
under any employment, severance or termination agreement,
other compensation arrangement or MB Plan currently in effect
will fail to be deductible for United States federal income
tax purposes by virtue of Section 280G of the Code.
(xi) Except as set forth in the MB Disclosure Letter, none of the
MB Plans is a "multiemployer plan" within the meaning of
section 4001(a)(3) of ERISA, nor has MB or any Material
Subsidiary been obligated to contribute to any such
multiemployer plan at any time within the past five years.
(xii) Except as set forth in the MB Disclosure Letter, none of the
MB Plans provides for payment of a benefit, the increase of a
benefit amount, the payment of a contingent benefit or the
acceleration of the payment or vesting of a benefit by reason
of the execution of or the consummation of the transactions
contemplated by this Agreement or the Arrangement.
(m) Reports. MB has filed with the OSC and the SEC true and complete
copies of all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 1997 (such
forms, reports, schedules, statements and other documents, including
any financial statements or other documents, including any schedules
included therein, are referred to as the "MB Documents"). The MB
Documents at the time filed (i) did not contain any misrepresentation
(as defined
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in the Securities Act) and (ii) complied in all material respects with
the requirements of applicable securities Laws. MB has not filed any
confidential material change report with the OSC or any other
securities authority or regulator or any stock exchange or other
self-regulatory authority which at the date hereof remains
confidential.
(n) Compliance with Laws. Except as disclosed in the MB Disclosure Letter
or Publicly Disclosed by MB, MB and the Material Subsidiaries have
complied with and are not in violation of any applicable Laws, orders,
judgments and decrees other than non-compliance or violations which
would not, individually or in the aggregate, have a Material Adverse
Effect on MB. Without limiting the generality of the foregoing, all
securities of MB (including, all options, rights or other convertible
or exchangeable securities) have been issued in compliance, in all
material respects, with all applicable securities Laws and all
securities to be issued upon exercise of any such options, rights and
other convertible or exchangeable securities will be issued in
compliance with all applicable securities Laws.
(o) Restrictions on Business Activities. Except as set forth in the MB
Disclosure Letter or Publicly Disclosed by MB, there is no agreement,
judgment, injunction, order or decree binding upon MB or any Material
Subsidiary that has or could reasonably be expected to have the effect
of prohibiting, restricting or materially impairing any business
practice of MB or any Material Subsidiary, any acquisition of property
by MB or any Material Subsidiary or the conduct of business by MB or
any Material Subsidiary as currently conducted other than such
agreements, judgments, injunctions, orders or decrees which would not,
individually or in the aggregate, have a Material Adverse Effect on
MB.
(p) Material Customers. There is no single customer of MB or its
subsidiaries, the loss of which would have a Material Adverse Effect
on MB.
(q) Intellectual Property. Except as set forth in the MB Disclosure
Letter, MB and its subsidiaries own, or are validly licensed or
otherwise have the right to use, all patents, patent rights, trade-
marks, trade names, service marks, copyrights, know how and other
proprietary intellectual property rights that are material to the
conduct of the business, as presently conducted, of MB and its
subsidiaries taken as a whole.
(r) Insurance. MB has policies of insurance in force as of the date
hereof naming MB as an insured which, having regard to the nature of
such risk and the relative cost of obtaining insurance, MB believes
are reasonable.
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(s) Property. Except as disclosed in the MB Disclosure Letter, MB and
each Material Subsidiary have good and sufficient title to the real
property interests including, fee simple estate of and in real
property, leases, easements, rights of way, permits or licences from
land owners or authorities permitting the use of land by MB or such
Material Subsidiary, necessary to permit the operation of its
businesses as presently owned and conducted except for such failure of
title that would individually or in the aggregate not have a Material
Adverse Effect on MB.
(t) Licences, Etc. Except as disclosed in the MB Disclosure Letter, MB
and each Material Subsidiary owns, possesses, or has obtained and is
in compliance with, all licences, permits, certificates, orders,
grants and other authorizations of or from any Governmental Entity
necessary to conduct its businesses as now conducted or as proposed to
be conducted except for such failure that would individually or in the
aggregate not have a Material Adverse Effect on MB.
(u) Registration Rights. No holder of securities issued by MB has any
right to compel MB to register or otherwise qualify such securities
for public sale in Canada or the United States.
(v) Pooling. As at the date hereof, neither MB nor, to its knowledge, any
of its "affiliates" (as defined in SEC Accounting Series Release 130
and 135 - Risk Sharing in Business Combinations Accounted for as
Pooling of Interests (as codified in Financial Reporting Policy 201
and SEC Staff Accounting Bulletins 65 and 76)) has taken or agreed to
take any action that would prevent Weyerhaeuser from accounting for
the business combination to be effected by the Plan of Arrangement as
a pooling-ofinterests under United States generally accepted
accounting principles.
(w) Year 2000 Compliance.
(i) Except as set forth in the MB Disclosure Letter, MB expects
the computer systems of MB and each of its Material
Subsidiaries to be Year 2000 Compliant (as defined below) by
July 1, 1999. The best current estimates of MB of required
direct capital expenditures (not including internal costs and
employee time and resources) to be Year 2000 Compliant are an
amount not to exceed $15 million. To the knowledge of MB, any
failure on the part of the customers of and suppliers to MB
and the Material Subsidiaries to be Year 2000 Compliant by
December 31, 1999, will not, individually or in the aggregate,
have a Material Adverse Effect on MB.
(ii) The term "Year 2000 Compliant", with respect to a computer
system or software program, means that such computer system or
program: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-
related data for dates earlier and later than January 1, 2000;
(ii) has the ability to provide date recognition for any data
element without limitation; (iii) has the ability to function
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automatically into and beyond the year 2000 without human
intervention and without any change in operations associated
with the advent of the year 2000; (iv) has the ability to
interpret data, dates and time correctly into and beyond the
year 2000; (v) has the ability not to produce noncompliance in
existing data, nor otherwise corrupt such data, into and
beyond the year 2000; (vi) has the ability to process
correctly after January 1, 2000, data containing dates before
that date; and (vii) has the ability to recognize all "leap
year" dates, including February 29, 2000.
3.2 Representations and Warranties of the Weyerhaeuser Parties
The Weyerhaeuser Parties jointly and severally represent and warrant
to and in favour of MB as follows and acknowledge that MB is relying upon
such representations and warranties in connection with the matters
contemplated by this Agreement:
(a) Organization. Each of the Weyerhaeuser Parties and the Weyerhaeuser
Material Subsidiaries has been duly incorporated or formed under all
applicable Laws, is validly subsisting and has full corporate or legal
power and authority to own its properties and conduct its businesses
as currently owned and conducted. All of the outstanding shares of
capital stock and other ownership interests of Weyerhaeuser's
subsidiaries which are held directly or indirectly by Weyerhaeuser are
validly issued, fully paid and non-assessable and all such shares and
other ownership interests are owned directly or indirectly by
Weyerhaeuser, free and clear of all material liens, claims or
encumbrances except as disclosed by Weyerhaeuser to MB or pursuant to
restrictions on transfer contained in constating documents, and there
are no outstanding options, rights, entitlements, understandings or
commitments (pre-emptive, contingent or otherwise) regarding the right
to acquire any such shares of capital stock or other ownership
interests in any of its subsidiaries.
(b) Capitalization. The authorized capital of Weyerhaeuser consists of
7,000,000 shares of undesignated preferred stock, U.S.$1.00 par value
per share, issuable in series, of which none were issued and
outstanding at December 27, 1998, 40,000,000 shares of undesignated
preference stock, U.S.$1.00 par value per share, issuable in series,
of which none were issued and outstanding at December 27, 1998, and
400,000,000 Weyerhaeuser Common Shares. As of April 30, 1999, there
were 200,605,977 Weyerhaeuser Common Shares issued and outstanding.
Except for employee stock options pursuant to employee compensation
plans, there are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments (contingent or
otherwise) obligating Weyerhaeuser to issue or sell any shares or
securities or obligations of any kind convertible into or exchangeable
for any shares. All outstanding Weyerhaeuser Common Shares have been
duly authorized and are validly issued and outstanding as fully paid
and non-assessable shares, free of preemptive rights. There are no
outstanding bonds, debentures or other evidences of indebtedness of
Weyerhaeuser having the right to vote (or that are convertible for or
exercisable into securities having the right to
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vote) with the holders of the Weyerhaeuser Common Shares on any
matter. Other than under employee stock option plans, there are no
outstanding contractual obligations of Weyerhaeuser to repurchase,
redeem or otherwise acquire any of its outstanding securities or with
respect to the voting or disposition of any outstanding securities of
any of its subsidiaries.
(c) Authority and No Violation.
(i) Each of the Weyerhaeuser Parties has the requisite corporate
power and authority to enter into this Agreement, the Support
Agreement and the Voting and Exchange Trust Agreement and to
perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Support
Agreement and the Voting and Exchange Trust Agreement by each
of the Weyerhaeuser Parties and the consummation by each of
the Weyerhaeuser Parties of the transactions contemplated by
this Agreement, the Support Agreement and the Voting and
Exchange Trust Agreement have been duly authorized by its
respective Board of Directors and no other corporate
proceedings on its part are necessary to authorize this
Agreement, the Support Agreement and the Voting and Exchange
Trust Agreement or the transactions contemplated hereby or
thereby.
(ii) This Agreement has been duly executed and delivered by each of
the Weyerhaeuser Parties and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency and other
applicable Laws affecting creditors' rights generally, and to
general principles of equity. Each of the Support Agreement
and the Voting and Exchange Trust Agreement will be duly
executed and delivered by each of the Weyerhaeuser Parties
party thereto and, when so executed and delivered, will
constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, and to general principles of
equity.
(iii) The approval of this Agreement, the Support Agreement and the
Voting and Exchange Trust Agreement, the execution and
delivery by each of the Weyerhaeuser Parties of this
Agreement, the Support Agreement and the Voting and Exchange
Trust Agreement and the performance by it of its obligations
hereunder and thereunder and the completion of the Arrangement
and the transactions contemplated thereby, will not:
(A) result in a violation or breach of, require any consent to
be obtained under or give rise to any termination, purchase
or sale rights or payment obligation under any provision
of:
(I) its or any Weyerhaeuser Material Subsidiary's
certificate of incorporation, articles, by-laws or
other charter
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documents, including any unanimous
shareholder agreement or any other agreement or
understanding relating to ownership of shares or
other interests or to corporate governance with any
party holding an ownership interest in any
Weyerhaeuser Material Subsidiary;
(II) subject to obtaining the Appropriate Regulatory
Approvals relating to the Weyerhaeuser Parties, any
Laws, judgment or decree except to the extent that
the violation or breach of, or failure to obtain any
consent under, any Laws, judgment or decree would
not, individually or in the aggregate, have a
Material Adverse Effect on Weyerhaeuser; or
(III) subject to obtaining the Appropriate Regulatory
Approvals relating to the Weyerhaeuser Parties and
except as would not, individually or in the
aggregate, have a Material Adverse Effect on
Weyerhaeuser, any material contract, agreement,
license, franchise or permit to which it is party or
by which it is bound or is subject or is the
beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of any Weyerhaeuser Party or any Weyerhaeuser
Material Subsidiary, or cause such indebtedness to come due
before its stated maturity or cause any available credit of
any Weyerhaeuser Party or any Weyerhaeuser Material
Subsidiary to cease to be available; or
(C) except as would not, individually or in the aggregate, have
a Material Adverse Effect on Weyerhaeuser, result in the
imposition of any encumbrance, charge or lien upon any of
its assets, or restrict, hinder, impair or limit its
ability to carry on its business as and where it is now
being carried on.
No consent, approval, order or authorization of, or declaration or filing
with, any Governmental Entity is required to be obtained by any of the
Weyerhaeuser Parties or the Weyerhaeuser Material Subsidiaries in
connection with the execution and delivery of this Agreement, the Support
Agreement and the Voting and Exchange Trust Agreement or the consummation
by any of the Weyerhaeuser Parties of the transactions contemplated hereby
or thereby other than (A) the Appropriate Regulatory Approvals relating to
the Weyerhaeuser Parties, (B) any filings required in connection with the
creation and issue of the Special Voting Share, (C) any approval required
in connection with the amendment of the articles of Weysub to create the
Exchangeable Shares and (D) any other consents,
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approvals, orders, authorizations, declarations or filings of or with a
Governmental Entity which, if not obtained, would not, individually or in
the aggregate, have a Material Adverse Effect on Weyerhaeuser.
(d) Absence of Certain Changes or Events. Except as Publicly Disclosed by
Weyerhaeuser, since December 31, 1998 through to the date hereof each
of the Weyerhaeuser Parties and each Weyerhaeuser Material Subsidiary
has conducted its business only in the ordinary and regular course of
business consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to Weyerhaeuser;
(ii) any agreement or arrangement to take any action which, if
taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement
materially untrue or incorrect as of the date when made;
(iii) any resolution to approve a split, combination or
reclassification of the Weyerhaeuser Common Shares; or
(iv) any material change in its accounting methods, principles or
practices.
(e) Financial Statements. The audited consolidated financial statements
for Weyerhaeuser as at and for each of the 12-month periods ended on
the last Sunday of December 1998, 1997 and 1996 and the unaudited
consolidated financial statements for the thirteen weeks ended March
28, 1999 have been prepared in accordance with United States generally
accepted accounting principles, the requirements of applicable
Governmental Entities and applicable securities Laws; such financial
statements present fairly, in all material respects, the consolidated
financial position and results of operations of Weyerhaeuser and its
subsidiaries as of the respective dates thereof and for the respective
periods covered thereby.
(f) Reports. Weyerhaeuser has filed with the SEC true and complete copies
of all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1997, and such documents,
at the time filed, (i) did not contain any misrepresentation (as
defined in the 0000 Xxx) and (ii) complied in all material respects
with the requirements of applicable securities Laws. Weyerhaeuser has
not filed any confidential material change report with the SEC or any
other securities authority or regulator or any stock exchange or other
selfregulatory authority which at the date hereof remains
confidential.
(g) Pooling. As of the date hereof, none of the Weyerhaeuser Parties nor,
to their respective knowledge, any of their respective "affiliates"
(as defined in SEC Accounting Series Release 130 and 135 - Risk
Sharing in Business Combinations Accounted for as Pooling of Interests
(as codified in Financial Reporting Policy 201 and SEC Staff
Accounting Bulletins 65 and 76)) has taken or agreed to take
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any action that would prevent Weyerhaeuser from accounting for the
business combination to be effected by the Plan of Arrangement as a
pooling-of-interests under United States generally accepted accounting
principles.
(h) Exchangeable Shares. The Exchangeable Shares to be issued in
connection with the Arrangement will be duly and validly issued by
Weysub on the Effective Date as fully paid and nonassessable shares.
(i) Weyerhaeuser Common Shares. The Weyerhaeuser Common Shares to be
issued pursuant to the Arrangement or upon the exchange from time to
time of the Exchangeable Shares or upon the exercise from time to time
of the Replacement Options will, in all cases, be duly and validly
issued by Weyerhaeuser on their respective dates of issue as fully
paid and nonassessable shares.
(j) Compliance with Laws. Except as disclosed in writing by Weyerhaeuser
to MB or Publicly Disclosed by Weyerhaeuser, Weyerhaeuser and the
Weyerhaeuser Material Subsidiaries have complied with and are not in
violation of any applicable Laws, orders, judgments and decrees other
than non-compliance or violations which would not, individually or in
the aggregate, have a Material Adverse Effect on Weyerhaeuser.
Without limiting the generality of the foregoing, all securities of
Weyerhaeuser (including all options, rights or other convertible or
exchangeable securities) have been issued in compliance in all
material respects with all applicable securities Laws and all
securities to be issued upon exercise of any such options, rights and
other convertible or exchangeable securities will be issued in
compliance with all applicable securities Laws.
(k) Litigation, Etc. Except as disclosed in writing by Weyerhaeuser to MB
or Publicly Disclosed by Weyerhaeuser, there is no claim, action,
proceeding or investigation (including any native land claims) pending
or, to the knowledge of Weyerhaeuser, threatened against Weyerhaeuser
or any Weyerhaeuser Material Subsidiary before any court or
Governmental Entity that, if adversely determined, would reasonably be
expected to have a Material Adverse Effect on Weyerhaeuser, or prevent
or materially delay consummation of the transactions contemplated by
this Agreement or the Arrangement. Neither Weyerhaeuser nor any
Weyerhaeuser Material Subsidiary, nor their respective assets and
properties, is subject to any outstanding judgment, order, writ,
injunction or decree that has had or is reasonably likely to have a
Material Adverse Effect on Weyerhaeuser or that would prevent or
materially delay consummation of the transactions contemplated by this
Agreement or the Arrangement.
(l) Tax Matters. Except as disclosed in writing by Weyerhaeuser to MB or
Publicly Disclosed by Weyerhaeuser:
(i) Weyerhaeuser and each of its subsidiaries have timely filed,
or caused to be filed, all material Tax Returns required to be
filed by them (all of which returns were correct and complete
in all material respects) and have paid,
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or caused to be paid, all material amounts of Taxes shown to
be due and payable thereon, and Weyerhaeuser's most recently
published financial statements contain an adequate provision
in accordance with generally accepted accounting principles
for all material amounts of Taxes payable in respect of each
period covered by such financial statements and all prior
periods to the extent such Taxes have not been paid, whether
or not due and whether or not shown as being due on any Tax
Returns. Weyerhaeuser and each of its subsidiaries have made
adequate provision in accordance with generally accepted
accounting principles in their respective books and records
for any Taxes accruing in respect of any accounting period
which has ended subsequent to the period covered by such
financial statements.
(ii) Neither Weyerhaeuser nor any subsidiary has received any
written notification that any issues involving a material
amount of Taxes have been raised (and are currently pending)
by Revenue Canada, the United States Internal Revenue Service
or any other taxing authority, including, without limitation,
any sales tax authority, in connection with any of the Tax
Returns referred to above and no waivers of statutes of
limitations have been given or requested with respect to
Weyerhaeuser or any subsidiary. All liability of Weyerhaeuser
and the Weyerhaeuser Material Subsidiaries for income taxes
has been assessed for all fiscal years up to and including the
fiscal year ended December 31, 1993. To the best of the
knowledge of Weyerhaeuser, there are no proposed (but
unassessed) additional Taxes involving a material amount of
Taxes and none has been asserted in writing. No Tax liens have
been filed other than for Taxes not yet due and payable.
Neither Weyerhaeuser nor any of its subsidiaries (i) has made
an election to be treated as a "consenting corporation" under
Section 341(f) of the Code or (ii) is a party to any Tax
sharing or other similar agreement or arrangement of any
nature with any other person (other than MB or any of its
subsidiaries) pursuant to which Weyerhaeuser or any of its
subsidiaries has or could have any material liabilities in
respect of Taxes. Weyerhaeuser has not made an election under
Section 897(i) of the Code to be treated as a domestic
corporation for purposes of Sections 897, 1445 and 6039C of
the Code.
(m) Environmental. Except for matters that, individually or in the
aggregate, would not have a Material Adverse Effect on Weyerhaeuser:
(i) all operations of Weyerhaeuser and the Weyerhaeuser Material
Subsidiaries have been conducted, and are now, in compliance
with all Environmental Laws; and
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(ii) Weyerhaeuser and the Weyerhaeuser Material Subsidiaries are in
possession of, and in compliance with, all permits,
authorizations, certificates, registrations, approvals and
consents necessary under Environmental Laws to own, lease and
operate their properties and conduct their respective
businesses as they are now being conducted or as proposed to
be conducted.
(n) Year 2000 Compliance. Weyerhaeuser has conducted a comprehensive
inventory to identify whether its information technology and manufacturing
systems are Year 2000 Compliant. Weyerhaeuser currently estimates that the
overall cost of making its internal systems Year 2000 Compliant, including
costs to be capitalized, will not exceed US$100 million.
3.3 Survival
For greater certainty, the representations and warranties of MB and
each Weyerhaeuser Party contained herein shall survive the execution and
delivery of this Agreement and shall terminate on the earlier of the
termination of this Agreement in accordance with its terms and the
Effective Time. Any investigation by a party hereto and its advisors shall
not mitigate, diminish or affect the representations and warranties of
another party to this Agreement.
The parties hereto acknowledge and agree that no representation or
warranty is made by MB with respect to (i) the effect of the transactions
contemplated by this Agreement or any actions or circumstances in
connection therewith on the MB Partially-Owned Entity or any existing
agreements of MB or its affiliates relating to the MB Partially-Owned
Entity or its affiliates or (ii) any actions taken or claims made by the
MB Partially-Owned Entity or its affiliates resulting from or with
respect to (x) the existence or performance of this Agreement or the
transactions contemplated hereby or (y) the actions of the parties in
connection herewith.
ARTICLE 4
COVENANTS
4.1 Retention of Goodwill
During the Pre-Effective Date Period, MB will, subject to the fact
that a transaction involving its businesses is contemplated hereby,
continue to carry on the business of MB and its subsidiaries in a manner
consistent with prior practice, working to preserve the attendant goodwill
of such entities and to contribute to retention of that goodwill to and
after the Effective Date, but subject to the following provisions of this
Article 4. The following provisions of this Article 4 are intended to be
in furtherance of this general commitment.
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4.2 Material Commitments
Subject to applicable Law and the other provisions of this Agreement,
during the Pre-Effective Date Period, MB and its subsidiaries will consult
on an ongoing basis with senior officers of Weyerhaeuser in order that the
representatives of Weyerhaeuser will become more familiar with the
philosophy and techniques of MB and its subsidiaries, as well as with their
business and financial affairs and in order to provide experience as a
basis for ongoing relationships following the Effective Date.
4.3 Covenants of MB
(a) MB covenants and agrees that, until the Effective Date or the earlier
termination of this Agreement in accordance with Article 6, except (i) with
the consent of Weyerhaeuser on behalf of the Weyerhaeuser Parties to any
deviation therefrom, which shall not be unreasonably withheld; (ii) with
respect to any matters which were disclosed in the MB Disclosure Letter; or
(iii) with respect to any matter contemplated by this Agreement or the Plan
of Arrangement, including the transactions involving the businesses of MB
and Weyerhaeuser contemplated hereby, MB will, and will cause its
subsidiaries to:
(i) carry on its business in, and only in, the ordinary and
regular course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business,
use all reasonable efforts to preserve intact its present
business organization and keep available the services of its
present officers and employees and others having business
dealings with it to the end that its goodwill and business
shall be maintained;
(ii) not commence to undertake a substantial expansion of its
business facilities or an expansion that is out of the
ordinary and regular course of business consistent with prior
practice in light of current market and economic conditions;
(iii) not split, combine or reclassify any of the outstanding shares
of MB nor declare, set aside or pay any dividends on or make
any other distributions on or in respect of the outstanding
shares of MB, other than normal and customary quarterly
dividends on the MB Common Shares and the dividends required
by the terms of the MB Preferred Shares;
(iv) not amend the articles or by-laws of MB or materially amend
the articles or by-laws of any subsidiary;
(v) not sell, pledge, encumber, allot, reserve, set aside or issue,
authorize or propose the sale, pledge, encumbrance, allotment,
reservation, setting aside or issuance of, or purchase or redeem or
propose the purchase or redemption of, any shares in its capital
stock or of any subsidiary thereof or any class of securities
convertible or exchangeable into, or rights,
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warrants or options to acquire, any such shares or other
convertible or exchangeable securities, except for (a)
transactions between two or more wholly-owned MB subsidiaries
or between a wholly-owned subsidiary of MB and MB, (b) the
issuance of MB Common Shares pursuant to fully vested MB
Options granted prior to the date hereof, (c) the issuance of
MB Common Shares pursuant to the conversion by the holders of
MB Convertible Debentures or the exercise of MB Warrants, (d)
any purchase of MB Preferred Shares as required by the terms
thereof, (e) any redemption of the MB Convertible Debentures
requested by Weyerhaeuser in accordance with the terms of this
Agreement, (f) the issuance of MB Common Shares pursuant to
the MB Dividend Reinvestment Plan and (g) the issuance of
additional options in the ordinary course of business
consistent with past practice under the MB Stock Option Plan
representing up to a maximum of 1,000,000 MB Common Shares and
the issuance of MB Common Shares in respect thereof;
(vi) not, whether through its Board of Directors or otherwise,
accelerate the vesting of any unvested MB Options or
accelerate the release of, or the expiry date of any hold
period relating to, any MB Common Shares held in the MB
Employee Share Purchase Plans, or otherwise amend, vary or
modify such Plans or the MB Stock Option Plan;
(vii) not reorganize, amalgamate or merge MB or any of its
subsidiaries with any other Person, nor acquire or agree to
acquire by amalgamating, merging or consolidating with,
purchasing substantially all of the assets of or otherwise,
any business of any corporation, partnership, association or
other business organization or division thereof, which
acquisition would be material to its business or financial
condition on a consolidated basis (other than relating to
transactions between two or more wholly-owned MB subsidiaries
or between a whollyowned subsidiary of MB and MB);
(viii) except with respect to the sale of assets of MB or any
subsidiary in the ordinary and regular course of business
consistent with past practice, not sell, pledge, encumber,
lease or otherwise dispose of any material assets (other than
relating to transactions between two or more wholly-owned MB
subsidiaries or between a wholly-owned subsidiary of MB and
MB);
(ix) not guarantee the payment of material indebtedness or incur
material indebtedness for money borrowed or issue or sell any
debt securities except in the ordinary and regular course of
business consistent with past practice;
(x) carry out the terms of the Interim Order and the Final Order
applicable to it and use its reasonable efforts to comply
promptly with all requirements which applicable Laws may
impose on MB or its subsidiaries with respect to the
transactions contemplated hereby and by the Arrangement;
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(xi) not, and cause each of its subsidiaries not:
(A) other than in the usual, ordinary and regular course of
business and consistent with past practice or pursuant to
existing employment, pension, supplemental pension,
termination, compensation arrangements or policies, enter
into or materially modify any employment, severance,
collective bargaining or similar agreements, policies or
arrangements with, or grant any material bonuses, salary
increases, stock options, pension or supplemental pension
benefits, profit sharing, retirement allowances, deferred
compensation, incentive compensation, severance or
termination pay to, or make any loan to, any officers or
directors of it; or
(B) other than in the usual, ordinary and regular course of
business and consistent with past practice or pursuant to
existing employment, pension, supplemental pension,
termination, compensation arrangements or policies, in the
case of employees who are not officers or directors, take
any action with respect to the entering into or modifying
of any material employment, severance, collective
bargaining or similar agreements, policies or arrangements
or with respect to the grant of any material bonuses,
salary increases, stock options, pension or supplemental
pension benefits, profit sharing, retirement allowances,
deferred compensation, incentive compensation, severance or
termination pay or any other form of compensation or profit
sharing or with respect to any increase of benefits
payable;
(xii) not, except in the usual, ordinary and regular course of
business and consistent with past practice: (A) satisfy or
settle any claims or liabilities prior to the same being due,
except such as have been reserved against in the financial
statements of MB and its subsidiaries or disclosed in the MB
Disclosure Letter, which are, individually or in the
aggregate, material; (B) grant any waiver, exercise any option
or relinquish any contractual rights which are, individually
or in the aggregate, material; or (C) enter into any interest
rate, currency or commodity swaps, xxxxxx or other similar
financial instruments;
(xiii) use its reasonable commercial efforts (or cause each of its
subsidiaries to use reasonable commercial efforts) to cause
its current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and reinsurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies
for substantially similar premiums are in full force and
effect;
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(xiv) not, and will cause its subsidiaries not to, settle or
compromise any claim brought by any present, former or
purported holder of any of its securities in connection with
the transactions contemplated by this Agreement or the
Arrangement prior to the Effective Date;
(xv) except in the usual, ordinary and regular course of business
and consistent with past practice or as required by applicable
Laws, not, and will cause its subsidiaries not to, enter into
or modify in any material respect any contract, agreement,
commitment or arrangement which new contract or series of
related new contracts or modification to an existing contract
or series of related existing contracts would have a Material
Adverse Effect on MB;
(xvi) incur or commit to capital expenditures prior to the Effective
Date only in the ordinary course consistent with past practice
and not, in any event, exceeding $20 million, individually or
in the aggregate;
(xvii) not make any changes to existing accounting practices relating
to MB or any subsidiary except as required by Law or required
by generally accepted accounting principles or make any
material tax election inconsistent with past practice; and
(xviii) promptly advise Weyerhaeuser orally and, if then requested, in
writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of MB contained in this Agreement (except any such
representation or warranty which speaks as of a date prior
to the occurrence of such event), if made on or as of the
date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(B) of any Material Adverse Change in respect of MB; and
(C) of any material breach by MB of any covenant or agreement
contained in this Agreement;
(b) MB shall and shall cause its subsidiaries to perform all obligations
required or desirable to be performed by MB or any of its
subsidiaries under this Agreement, co-operate with Weyerhaeuser in
connection therewith, and do all such other acts and things as may be
necessary or desirable in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated in this
Agreement and, without limiting the generality of the foregoing, MB
shall and where appropriate shall cause its subsidiaries to:
(i) use all reasonable efforts to obtain the approvals of holders
of MB Common Shares to the Arrangement, subject, however, to
the exercise by the Board of Directors of MB of its fiduciary
duties as provided herein;
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(ii) apply for and use all reasonable efforts to obtain all
Appropriate Regulatory Approvals relating to MB or any of its
subsidiaries and, in doing so, to keep Weyerhaeuser reasonably
informed as to the status of the proceedings related to
obtaining the Appropriate Regulatory Approvals, including, but
not limited to, providing Weyerhaeuser with copies of all
related applications and notifications, in draft form, in
order for Weyerhaeuser to provide its reasonable comments;
(iii) apply for and use all reasonable efforts to obtain the Interim
Order and the Final Order;
(iv) defend all lawsuits or other legal, regulatory or other
proceedings challenging or affecting this Agreement or the
consummation of the transactions contemplated hereby;
(v) use its reasonable efforts to have lifted or rescinded any
injunction or restraining order or other order which may
adversely affect the ability of the parties to consummate the
transactions contemplated hereby;
(vi) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from MB or any
of its subsidiaries;
(vii) use its reasonable efforts to obtain all necessary waivers,
consents and approvals required to be obtained by MB or a
subsidiary from other parties to loan agreements, leases or
other contracts; and
(viii) use its reasonable efforts to ensure that MB's affiliates (for
the purposes of Rule 145 under the 0000 Xxx) execute and
deliver to Weyerhaeuser, on or prior to the date that is 30
days prior to the Effective Date, an Affiliate's Letter; and
(c) MB shall not take or agree to take any action which would be
reasonably expected to prevent the business combination to be effected
by the Plan of Arrangement from qualifying for pooling-of-interest
accounting treatment under United States generally accepted accounting
principles. MB shall use its reasonable efforts to take such actions
as may be necessary to permit the business combination to be effected
by the Plan of Arrangement to qualify for pooling-of-interests
accounting treatment under United States generally accepted accounting
principles.
4.4 Covenants of the Weyerhaeuser Parties
Each of the Weyerhaeuser Parties hereby jointly and severally
covenants and agrees (and, if applicable, cause its subsidiaries):
(a) to perform all obligations required or desirable to be performed by it
under this Agreement, co-operate with MB in connection therewith, and to
do all such other acts and things as may be necessary or desirable in order
to consummate and
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make effective, as soon as reasonably practicable, the transactions
contemplated by this Agreement and, without limiting the generality of
the foregoing, to:
(i) apply for and use all reasonable efforts to obtain all
Appropriate Regulatory Approvals relating to the Weyerhaeuser
Parties, and, in doing so, to keep MB reasonably informed as
to the status of the proceedings related to obtaining the
Appropriate Regulatory Approvals, including, but not limited
to, providing MB with copies of all related applications and
notifications, in draft form, in order for MB to provide its
reasonable comments;
(ii) defend all lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or affecting
this Agreement or the consummation of the transactions
contemplated hereby;
(iii) use all reasonable efforts to have lifted or rescinded any
injunction or restraining order or other order relating to the
Weyerhaeuser Parties which may adversely affect the ability of
the parties to consummate the transactions contemplated
hereby;
(iv) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the
Weyerhaeuser Parties or their subsidiaries;
(v) cause the articles of Weysub to be amended to, among other
things, create the Exchangeable Shares; and
(vi) cause Weyerhaeuser to reserve a sufficient number of
Weyerhaeuser Common Shares for issuance upon the completion of
the Arrangement and the exchange from time to time of
Exchangeable Shares and the exercise from time to time of
Replacement Options;
(b) to use all reasonable efforts to (i) cause the Exchangeable Shares to
be listed and posted for trading on The Toronto Stock Exchange by the
Effective Date and (ii) to ensure that Weysub remains a "public
corporation" within the meaning of the Income Tax Act (Canada) for so
long as there are Exchangeable Shares outstanding (other than those
Exchangeable Shares held by Weyerhaeuser or any of its affiliates);
(c) carry out the terms of the Interim Order and Final Order applicable to
it and use its reasonable efforts to comply promptly with all
requirements which applicable Laws may impose on Weyerhaeuser or its
subsidiaries with respect to the transactions contemplated hereby and
by the Arrangement;
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(d) in connection with the consummation of the transactions contemplated
hereby and by the Arrangement, use its reasonable efforts to obtain
all necessary waivers, consents and approvals required to be obtained
by Weyerhaeuser or a subsidiary of Weyerhaeuser from other parties to
loan agreements, leases or other contracts;
(e) use its reasonable efforts to ensure that Weyerhaeuser's affiliates
(for the purposes of Rule 145 under the 0000 Xxx) execute and deliver
to MB, on or prior to the date that is 30 days prior to the Effective
Date, an Affiliate's Letter;
(f) if the holders of MB Convertible Debentures approve the amendments to
the terms of the trust indenture governing the MB Convertible
Debentures as proposed in the Debenture Circular, to make the
appropriate adjustments in accordance with the terms of the MB
Convertible Debentures with respect to the shares, securities or other
property that the holders of the MB Convertible Debentures will be
entitled to receive upon conversion of the MB Convertible Debentures
after the Effective Date such that after the Effective Date, the
holders of the MB Convertible Debentures will be entitled to convert
their MB Convertible Debentures into Exchangeable Shares on the same
basis as if they had converted the MB Convertible Debentures into MB
Common Shares prior to the Effective Date and each such MB Common
Share had been exchanged for a number of Exchangeable Shares equal to
the Exchange Ratio and Weyerhaeuser shall become a co-obligor with
respect to, or fully and unconditionally guarantee the payment of all
amounts due under, the MB Convertible Debentures;
(g) at or prior to the Effective Time, Weyerhaeuser shall use its best
efforts to cause one of the current directors of MB to become a
director of Weyerhaeuser whose term expires no earlier than 2002;
(h) until the Effective Date or the earlier termination of this Agreement
in accordance with Article 6, except (i) with the consent of MB to any
deviation therefrom, which shall not be unreasonably withheld; (ii)
with respect to any matters which were disclosed by Weyerhaeuser to MB
in writing; or (iii) with respect to any matter contemplated by this
Agreement or the Plan of Arrangement, including the transactions
involving the businesses of MB and Weyerhaeuser contemplated hereby,
Weyerhaeuser will:
(i) not split, combine or reclassify any of the outstanding shares
of Weyerhaeuser nor declare, set aside or pay any dividends on
or make any other distributions on or in respect of the
outstanding shares of Weyerhaeuser, other than normal and
customary quarterly dividend on Weyerhaeuser Common Shares;
(ii) not make any changes to existing accounting practices related
to Weyerhaeuser except as required by a change in United
States generally accepted accounting practice or by applicable
Law;
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(iii) not reorganize, amalgamate or merge Weyerhaeuser with any
other Person, nor acquire by amalgamating, merging or
consolidating with, purchasing a majority of the voting
securities or substantially all of the assets of or otherwise,
any business or Person which acquisition would reasonably be
expected to materially delay the transactions contemplated
hereby;
(iv) promptly advise MB orally and, if then requested, in writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of Weyerhaeuser contained in this Agreement (except any
such representation or warranty which speaks as of a date
prior to the occurrence of such event), if made on or as of
the date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(B) of any Material Adverse Change in respect of Weyerhaeuser;
and
(C) of any material breach by Weyerhaeuser of any covenant or
agreement contained in this Agreement; and
(i) the Weyerhaeuser Parties shall not take any action which may
jeopardize the exchange of the MB Common Shares by holders of
the MB Common Shares resident in Canada for the purposes of
the Income Tax Act (Canada) from being treated on a tax-free
basis for holders who are otherwise eligible for such treatment.
4.5 Covenants Regarding Non-Solicitation
(a) Subject to section 4.6, MB shall not, directly or indirectly,
through any officer, director, employee, representative or agent of MB or
any of its subsidiaries, (i) solicit, initiate or knowingly encourage
(including by way of furnishing information or entering into any form of
agreement, arrangement or understanding) the initiation of any inquiries or
proposals regarding an Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal, (iii)
withdraw or modify in a manner adverse to Weyerhaeuser the approval of the
Board of Directors of MB of the transactions contemplated hereby, (iv)
approve or recommend any Acquisition Proposal or (v) enter into any
agreement, arrangement or understanding related to any Acquisition
Proposal. Notwithstanding the preceding part of this section 4.5(a) and any
other provision of this Agreement, nothing shall prevent the Board of
Directors of MB prior to the issuance of the Final Order from considering,
participating in any discussions or negotiations, or entering into a
confidentiality agreement and providing information pursuant to section
4.5(c), regarding an unsolicited bona fide written Acquisition Proposal
that did not otherwise result from a breach of this section 4.5 and that
the Board of Directors of MB
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determines in good faith, after consultation with financial advisors
and outside counsel, is reasonably likely to result in a Superior
Proposal; provided, however, that prior to taking such action, the
Board of Directors must receive advice of outside counsel that it is
appropriate that the Board of Directors of MB take such action in
order to discharge properly its fiduciary duties. MB shall not
consider, negotiate, accept, approve or recommend an Acquisition
Proposal after the date of the issuance of the Final Order. MB shall,
and shall cause the officers, directors, employees, representatives
and agents of MB and its subsidiaries to, cease immediately all
discussions and negotiations regarding any proposal that constitutes,
or may reasonably be expected to lead to, an Acquisition Proposal.
(b) MB shall promptly notify Weyerhaeuser, at first orally and then in
writing, of any Acquisition Proposal and any inquiry that could lead
to an Acquisition Proposal, or any amendments to the foregoing, or any
request for non-public information relating to MB or any Material
Subsidiary in connection with an Acquisition Proposal or for access to
the properties, books or records of MB or any Material Subsidiary by
any Person that informs MB or such Material Subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice
shall include a description of the material terms and conditions of
any proposal, the identity of the Person making such proposal, inquiry
or contact and provide such other details of the proposal, inquiry or
contact as Weyerhaeuser may reasonably request. MB shall (i) keep
Weyerhaeuser fully informed of the status including any change to the
material terms of any such Acquisition Proposal or inquiry and (ii)
provide to Weyerhaeuser as soon as practicable after receipt or
delivery thereof with copies of all correspondence and other written
material sent or provided to MB or any Material Subsidiary from any
Person in connection with any Acquisition Proposal sent or provided
by MB to any Person in connection with any Acquisition Proposal.
(c) If MB receives a request for material non-public information from a
Person who has made an unsolicited bona fide written Acquisition
Proposal and MB is permitted, as contemplated under the second
sentence of Section 4.5(a), to negotiate the terms of such Acquisition
Proposal, then, and only in such case, the Board of Directors of MB
may, subject to the execution by such Person of a confidentiality
agreement containing a standstill provision substantially similar to
that contained in the confidentiality agreement then in effect between
MB and Weyerhaeuser, provide such Person with access to information
regarding MB; provided, however, that the Person making the
Acquisition Proposal shall not be precluded under such confidentiality
agreement from making the Acquisition Proposal (but not any material
amendment thereto) and provided further that MB sends a copy of any
such confidentiality agreement to Weyerhaeuser promptly upon its
execution and Weyerhaeuser is provided with a list of or copies of the
information provided to such Person and immediately provided with
access to similar information to which such person was provided.
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(d) MB shall ensure that its officers, directors and employees and its
subsidiaries and their officers, directors and employees and any
financial advisors or other advisors or representatives retained by it
are aware of the provisions of this section 4.5, and it shall be
responsible for any breach of this section 4.5 by its officers,
directors, employees, financial advisors or other advisors or
representatives.
(e) Notwithstanding section 4.5(a)(iii), the Board of Directors of MB may
withdraw or modify in a manner adverse to Weyerhaeuser the approval of
the Board of Directors of MB of the transactions contemplated hereby
if a Specified Weyerhaeuser Event has occurred and is continuing.
4.6 Notice by MB of Superior Proposal Determination
Notwithstanding sections 4.5(a), (b), (d) and (e), MB may accept,
approve, recommend or enter into any agreement, understanding or
arrangement in respect of a Superior Proposal if, and only if, (i) it has
provided Weyerhaeuser with a copy of the Superior Proposal document, (ii)
five Business Days shall have elapsed from the later of the date
Weyerhaeuser received written notice advising Weyerhaeuser that MB's Board
of Directors has resolved, subject only to compliance with this section 4.6
and termination of this Agreement, to accept, approve, recommend or enter
into an agreement in respect of such Superior Proposal, specifying the
terms and conditions of such Superior Proposal and identifying the Person
making such Superior Proposal, and the date Weyerhaeuser received a copy of
such Superior Proposal and (iii) it has previously or concurrently will
have (A) paid to Weyerhaeuser the break fee, if any, payable under section
6.4 and (B) terminated this Agreement pursuant to section 6.3. Any
information provided by MB to Weyerhaeuser pursuant to this section 4.6 or
pursuant to section 4.5 shall constitute "Information" under section
4.7(b).
During such five Business Day period, MB agrees that Weyerhaeuser
shall have the right, but not the obligation, to offer to amend the terms
of this Agreement. The Board of Directors of MB will review any offer by
Weyerhaeuser to amend the terms of this Agreement in good faith in order to
determine, in its discretion in the exercise of its fiduciary duties,
whether Weyerhaeuser's offer upon acceptance by MB would result in such
Superior Proposal ceasing to be a Superior Proposal. If the Board of
Directors of MB so determines, it will enter into an amended agreement with
Weyerhaeuser reflecting Weyerhaeuser's amended proposal. If the Board of
Directors of MB continues to believe, in good faith and after consultation
with financial advisors and outside counsel, that such Superior Proposal
remains a Superior Proposal and therefore rejects Weyerhaeuser's amended
proposal, MB may terminate this Agreement pursuant to section 6.3(c)(iv);
provided, however, that MB must concurrently pay to Weyerhaeuser the break
fee payable, if any, to Weyerhaeuser under section 6.4 and must
concurrently with termination enter into a definitive agreement with
respect to such Acquisition Proposal. MB acknowledges and agrees that
payment of the break fee, if any, payable under section 6.4 is a condition
to valid termination of this Agreement under section 6.3(c)(iv) and this
section 4.6.
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MB also acknowledges and agrees that each successive modification of
any Acquisition Proposal shall constitute a new Acquisition Proposal for
purposes of the requirement under clause (ii) of this section 4.6 to
initiate an additional five Business Day notice period.
4.7 Access to Information
(a) Subject to sections 4.7(b) and (c) and applicable Laws, upon
reasonable notice, MB shall (and shall cause each of its subsidiaries to)
afford Weyerhaeuser's officers, employees, counsel, accountants and other
authorized representatives and advisors ("Representatives") access, during
normal business hours from the date hereof and until the earlier of the
Effective Date or the termination of this Agreement, to its properties,
books, contracts and records as well as to its management personnel, and,
during such period, MB shall (and shall cause each of its subsidiaries to)
furnish promptly to Weyerhaeuser all information concerning MB's business,
properties and personnel as Weyerhaeuser may reasonably request. Nothing
in the foregoing shall require MB to disclose information subject to a
written confidentiality agreement with third parties or customer-specific
or competitively sensitive information relating to areas or projects where
Weyerhaeuser is in direct competition with MB. Subject to sections 4.7(b)
and (c) and applicable laws, upon reasonable notice, Weyerhaeuser shall
afford MB's Representatives access, upon reasonable notice and during
normal business hours from the date hereof and until the earlier of the
Effective Date or the termination of this Agreement, to such of
Weyerhaeuser's management personnel as Weyerhaeuser may determine, acting
reasonably, and, during such period, Weyerhaeuser shall furnish promptly to
MB all information respecting material changes in Weyerhaeuser's business,
properties and personnel as MB may reasonably request.
(b) In accordance with the Confidentiality Agreement, each of Weyerhaeuser
and MB acknowledges that certain information provided to it under section
4.7(a) above will be non-public and/or proprietary in nature (the
"Information"). Except as permitted below, each of Weyerhaeuser and MB
will keep Information confidential and will not, without the prior written
consent of the other, disclose it, in any manner whatsoever, in whole or in
part, to any other Person, and will not use it for any purpose other than
to evaluate the transactions contemplated by this Agreement. Each of
Weyerhaeuser and MB will make all reasonable, necessary and appropriate
efforts to safeguard the Information from disclosure to anyone other than
as permitted hereby and to control the copies, extracts or reproductions
made of the Information. The Information may be provided to the
Representatives of each of Weyerhaeuser and MB who require access to the
same to assist it in proceeding in good faith with the transactions
contemplated by this Agreement and whose assistance is required for such
purposes, provided that it has first informed such Representatives to whom
Information is provided that the Representative has the same obligations,
including as to confidentiality, restricted use and otherwise, that it has
with respect to such Information. This provision shall not apply to such
portions of the Information that: (i) are or become
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generally available to the public otherwise than as a result of
disclosure by a party or its Representatives; or (ii) become available
to a party on a non-confidential basis from a source other than,
directly or indirectly, the other party or its Representatives,
provided that such source is not to the knowledge of the first party,
upon reasonable inquiry, prohibited from transmitting the Information
by a contractual, legal or fiduciary obligation; (iii) were known to a
party or were in its possession on a non-confidential basis prior to
being disclosed to it by the other party or by someone on its behalf;
or (iv) are required by applicable Laws or court order to be
disclosed. The provisions of this section 4.7(b) shall survive the
termination of this Agreement.
(c) The parties acknowledge that certain Information may be competitively
sensitive and that disclosure thereof shall be limited to that which
is reasonably necessary for the purpose of (i) preparing submissions
or applications in order to obtain the Appropriate Regulatory
Approvals, (ii) preparing the Circular, (iii) avoiding conflicts and
(iv) integrating the operations of Weyerhaeuser and MB.
4.8 Closing Matters
Each of the Weyerhaeuser Parties and MB shall deliver, at the closing
of the transactions contemplated hereby, such customary certificates,
resolutions and other closing documents as may be required by the other
parties hereto, acting reasonably.
4.9 Indemnification
(a) Weyerhaeuser agrees that all rights to indemnification or exculpation
now existing in favour of the directors or officers of MB or any
subsidiary as provided in its articles of incorporation or by-laws in
effect on the date hereof shall survive the Arrangement and shall
continue in full force and effect for a period of not less than six
years from the Effective Time and Weyerhaeuser hereby assumes,
effective upon consummation of the Arrangement, all such liability
with respect to any matters arising prior to the Effective Time.
(b) There shall be maintained in effect, for not less than six years from
the Effective Time, coverage equivalent to that in effect under the current
policies of the directors' and officers' liability insurance maintained by
MB or any of its subsidiaries, as the case may be, which is no less
advantageous, and with no gaps or lapses in coverages with respect to
matters occurring prior to the Effective Time.
4.10 Employment Agreements and Related Matters
Weyerhaeuser covenants and agrees, and after the Effective Time will
cause MB or any of its subsidiaries, as the case may be, and any successor
to MB to agree, to:
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(a) honour and comply with the terms of those existing employment and
severance agreements of MB or any of its subsidiaries, as the case may
be, which MB has disclosed in the MB Disclosure Letter;
(b) for a period of one year it will deal with any employees of MB or any
of its subsidiaries, as the case may be, whose employment may be
terminated after the Effective Date in a fair and equitable manner
consistent with the existing termination policies of MB or any of its
subsidiaries, as the case may be, as disclosed in the MB Disclosure
Letter;
(c) for at least two years following the Effective Time, provide Affected
Employees, taken as a whole, of MB and its subsidiaries, for as long as
such Affected Employees remain employed during such two year period,
employee benefits which, in the aggregate, are comparable to those offered
(i) pursuant to MB or its subsidiaries' employee benefit plans, programs,
policies and arrangements as provided to such Affected Employees
immediately prior to the Effective Time and previously made available to
Weyerhaeuser or (ii) pursuant to employee benefit plans, programs, policies
or arrangements maintained by Weyerhaeuser or any subsidiary of
Weyerhaeuser providing coverage and benefits which, in the aggregate, are
no less favourable than those provided from time to time after the
Effective Time to employees of Weyerhaeuser or its subsidiaries who are
similarly situated, in terms of their positions and geographic locations to
such Affected Employees; "Affected Employees" means individuals who are
actively employed by MB or any of its subsidiaries as of the Effective Time
who remain employed with Weyerhaeuser or any subsidiary of Weyerhaeuser.
For at least two years following the Effective Time, Weyerhaeuser shall
continue to provide to eligible Affected Retirees post retirement benefits
(other than pensions) which, in the aggregate, are comparable to those
offered (i) pursuant to MB Plans applicable to such Affected Retirees,
taken as a whole, each as in effect on the date hereof and previously
described to Weyerhaeuser, or (ii) pursuant to employee benefit plans,
programs, polices or arrangements maintained by Weyerhaeuser or any
subsidiary of Weyerhaeuser providing post retirement coverage and benefits
(other than pensions) which, in the aggregate, are no less favourable than
those provided to former employees of Weyerhaeuser or its subsidiaries who
were similarly situated, in terms of their positions and geographic
locations, to such Affected Retirees prior to their retirement; "Affected
Retirees" means former employees of MB or its subsidiaries (and employees
of MB or its subsidiaries whose employment terminates prior to the
Effective Time);
(d) give Affected Employees full credit for purposes of eligibility,
vesting, benefit accrual (including benefit accrual under any defined
benefit pension plans, provided that a participant's benefit under any such
defined benefit pension plan may be offset by such participant's accrued
benefit under the MB defined benefit pension plan) and determination of the
level of benefits under any employee benefit plans or arrangements
maintained by Weyerhaeuser or any subsidiary of Weyerhaeuser
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in which such Affected Employees begin participation within two years
after the Effective Time, for such Affected Employee's service with MB
or any subsidiary of MB to the same extent recognized by MB
immediately prior to the Effective Time and previously disclosed to
Weyerhaeuser; provided, however, that in no event shall Weyerhaeuser
be required to increase the benefit accrued by any Affected Employee
as of the Effective Time with respect to their service for MB or its
subsidiaries prior to the Effective Time in an amount which would be
greater than the benefit that such Affected Employee would have
accrued under the MB defined benefit pension plan (as in effect as of
the date hereof) had they continued to participate thereunder
following the Effective Time through their date of termination of
employment;
(e) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare
benefit plans that such employee may be eligible to participate within
two years after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such Affected
Employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees
immediately prior to the Effective Time and previously described to
Weyerhaeuser; and
(f) provide Affected Employees with credit for any co-payments and
deductibles paid by such Affected Employees during the calendar year
in which the Effective Time occurs in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that
such Affected Employees are eligible to participate in after the
Effective Time and previously described to Weyerhaeuser.
Nothing herein shall be construed as (i) requiring Weyerhaeuser to
continue the employment of any Affected Employee following the Effective
Time, (ii) limiting Weyerhaeuser's ability to amend, modify or terminate
any individual employee benefit plan or arrangement of MB, Weyerhaeuser or
any of their respective subsidiaries, or (iii) requiring Weyerhaeuser to
maintain any particular level of employee benefits for any individual
employee following the Effective Time so long as clause (ii) of Section
4.10(c) is complied with.
4.11 Redemption of MB Convertible Debentures
In the event of a failure to obtain the required vote from the holders
of MB Convertible Debentures at the Debenture Meeting, Weyerhaeuser shall
have the right to require MB to redeem the MB Convertible Debentures in
accordance with their terms. Weyerhaeuser shall deliver a written notice
to MB on the exercise of such right by Weyerhaeuser. Upon receipt of such
notice by MB, MB covenants to deliver a redemption notice (specifying a 30-
day redemption period) to and redeem the MB Convertible Debentures from the
holders of the MB Convertible Debentures, provided that at the time of
receipt of such written notice by MB a Specified Weyerhaeuser Event has not
occurred and is continuing and MB and Weyerhaeuser agree, acting
reasonably, that all of the conditions in Article 5 in this Agreement are
capable of being satisfied prior to the Drop Dead Date. Notwithstanding
any other provision of this Agreement,
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any act by MB to redeem such MB Convertible Debentures as a result of the
exercise of such right by Weyerhaeuser shall be deemed not to breach or
violate or fail to satisfy any representation, warranty, covenant or
condition contained in this Agreement.
4.12 Prohibition on Voluntary Liquidation
The Weyerhaeuser Parties shall not, and agree to cause Weyerhaeuser
Newco to not, take any action relating to a voluntary liquidation,
dissolution or winding-up of Weysub or Weyerhaeuser Newco, as the case may
be, prior to the Redemption Date (as defined in the Plan of Arrangement).
4.13 Non-Application of Covenants
The parties hereto agree that no covenant of MB in this Agreement
shall be deemed to have been breached as a result of any action taken or
omitted to be taken by MB or its affiliates as may be required under any
existing agreements of MB or its affiliates relating to the MB Partially-
Owned Entity or its affiliates.
ARTICLE 5
CONDITIONS
5.1 Mutual Conditions Precedent
The respective obligations of the parties hereto to complete the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Effective Date, of the following
conditions precedent, each of which may only be waived by the mutual
consent of Weyerhaeuser, on behalf of the Weyerhaeuser Parties, and MB:
(a) the Arrangement shall have been approved at the MB Meeting by not less
than two-thirds of the votes cast by the holders of MB Common Shares who
are represented at the MB Meeting;
(b) the Arrangement shall have been approved at the MB Meeting in
accordance with any conditions in addition to those set out in section
5.1(a) which may be imposed by the Interim Order;
(c) the Interim Order and the Final Order shall each have been obtained in
form and terms satisfactory to each of MB and Weyerhaeuser, acting
reasonably, and shall not have been set aside or modified in a manner
unacceptable to such parties on appeal or otherwise;
(d) the Form S-3 shall have become effective under the 1933 Act and shall
not be the subject of any stop order or proceedings seeking a stop
order, and Weyerhaeuser shall have received all United States state
securities or "blue sky" authorizations necessary to issue the
Weyerhaeuser Common Shares;
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(e) there shall not be in force any order or decree restraining or
enjoining the consummation of the transactions contemplated by this
Agreement and there shall be no proceeding (other than an appeal made
in connection with the Arrangement), of a judicial or administrative
nature or otherwise, brought by a Governmental Entity in progress or
threatened that relates to or results from the transactions
contemplated by this Agreement that would, if successful, result in an
order or ruling that would preclude completion of the transactions
contemplated by this Agreement in accordance with the terms hereof or
would otherwise be inconsistent with the Appropriate Regulatory
Approvals which have been obtained;
(f) this Agreement shall not have been terminated pursuant to Article 6;
(g) the Exchangeable Shares issuable pursuant to the Arrangement shall
have been conditionally approved for listing on The Toronto Stock
Exchange, subject to the filing of required documentation, and the
Weyerhaeuser Common Shares issuable pursuant to the Arrangement, upon
exchange of the Exchangeable Shares from time to time and upon
exercise of the Replacement Options from time to time shall have been
approved for listing on The New York Stock Exchange, subject to notice
of issuance; and
(h) all consents, waivers, permits, orders and approvals of any
Governmental Entity (including the Appropriate Regulatory Approvals), and
the expiry of any waiting periods, in connection with, or required to
permit, the consummation of the Arrangement, the failure of which to obtain
or the non-expiry of which would constitute a criminal offense, or would
have a Material Adverse Effect on Weyerhaeuser or MB, as the case may be,
shall have been obtained or received on terms that will not have a Material
Adverse Effect on Weyerhaeuser and/or MB; there shall not be pending or
threatened any suit, action or proceeding by any Governmental Entity, in
each case that has a reasonable likelihood of success, (i) seeking to
prohibit or restrict the acquisition by Weyerhaeuser or any of its
subsidiaries of any MB Common Shares, seeking to restrain or prohibit the
consummation of the Plan of Arrangement or seeking to obtain from MB or
Weyerhaeuser any damages that are material in relation to MB and its
subsidiaries taken as a whole, (ii) seeking to prohibit or materially limit
the ownership or operation by Weyerhaeuser or any of its subsidiaries of
any material portion of the business or assets of MB or any of its
subsidiaries or to compel Weyerhaeuser or any of its subsidiaries to
dispose of or hold separate any material portion of the business or assets
of MB or any of its subsidiaries, as a result of the Plan of Arrangement,
(iii) seeking to impose limitations on the ability of Weyerhaeuser or any
of its subsidiaries to acquire or hold, or exercise full rights of
ownership of, any MB Common Shares, including the right to vote the MB
Common Shares purchased by it on all matters properly presented to the
shareholders of MB, (iv) seeking to prohibit Weyerhaeuser or any of its
subsidiaries from effectively controlling in any material respect the
business or operations of MB and its Material Subsidiaries or (v) which
otherwise is reasonably likely to have a
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Material Adverse Effect on MB or Weyerhaeuser; provided that a
reduction of up to 5% of the allowable annual cut available under MB
or its subsidiaries' Crown timber tenures, as provided in the Forest
Act (British Columbia), directly resulting from the completion of the
Arrangement shall be deemed not to have a Material Adverse Effect on
Weyerhaeuser or MB or give rise to any other remedy under this
Agreement.
5.2 Additional Conditions Precedent to the Obligations of the Weyerhaeuser
Parties
The obligations of the Weyerhaeuser Parties to complete the
transactions contemplated by this Agreement shall also be subject to the
fulfillment of each of the following conditions precedent (each of which
is for the Weyerhaeuser Parties' exclusive benefit and may be waived by
Weyerhaeuser on behalf of the Weyerhaeuser Parties):
(a) all covenants of MB under this Agreement to be performed on or before
the Effective Date shall have been duly performed by MB in all
material respects;
(b) the representations and warranties of MB shall be true and correct in
all material respects as of the Effective Date as if made on and as of
such date (except to the extent such representations and warranties
speak as of an earlier date, in which event such representations and
warranties shall be true and correct in all material respects as of
such earlier date, or except as affected by transactions contemplated
or permitted by this Agreement) and the Weyerhaeuser Parties shall
have received a certificate of MB addressed to the Weyerhaeuser
Parties and dated the Effective Date, signed on behalf of MB by two
senior executive officers of MB, confirming the same as at the
Effective Date;
(c) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to MB;
(d) the Board of Directors of MB shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by MB and the subsidiaries to permit the consummation of the
Arrangement; and
(e) if Weyerhaeuser has delivered the notice referred to in section 4.11,
the period set out in the redemption notice sent to holders of MB
Convertible Debentures shall have expired.
The Weyerhaeuser Parties may not rely on the failure to satisfy any of
the above conditions precedent as a basis for non-compliance by the
Weyerhaeuser Parties with their obligations under this Agreement if the
condition precedent would have been satisfied but for a material default by
the Weyerhaeuser Parties in complying with their obligations hereunder.
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5.3 Additional Conditions Precedent to the Obligations of MB
The obligations of MB to complete the transactions contemplated by
this Agreement shall also be subject to the following conditions precedent
(each of which is for the exclusive benefit of MB and may be waived by MB):
(a) all covenants of the Weyerhaeuser Parties under this Agreement to
be performed on or before the Effective Date shall have been duly
performed by the Weyerhaeuser Parties in all material respects;
(b) all representations and warranties of the Weyerhaeuser Parties under
this Agreement shall be true and correct in all material respects as
of the Effective Date as if made on and as of such date (except to the
extent such representations and warranties speak as of an earlier
date, in which event such representations and warranties shall be true
and correct in all material respects as of such earlier date, or
except as affected by transactions contemplated or permitted by this
Agreement) and MB shall have received a certificate of each of the
Weyerhaeuser Parties addressed to MB and dated the Effective Date,
signed on behalf of each of the Weyerhaeuser Parties by two senior
executive officers of the relevant Weyerhaeuser Party, confirming the
same as at the Effective Date;
(c) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to Weyerhaeuser; and
(d) the Boards of Directors of the Weyerhaeuser Parties shall have adopted
all necessary resolutions, and all other necessary corporate action
shall have been taken by the Weyerhaeuser Parties to permit the
consummation of the Arrangement and the issue of the Exchangeable
Shares contemplated thereby and the issue of Weyerhaeuser Common
Shares pursuant to the Arrangement and upon the exchange from time to
time of the Exchangeable Shares and the exercise from time to time of
the Replacement Options.
MB may not rely on the failure to satisfy any of the above conditions
precedent as a basis for noncompliance by MB with its obligations under
this Agreement if the condition precedent would have been satisfied but for
a material default by MB in complying with its obligations hereunder.
5.4 Notice and Cure Provisions
The Weyerhaeuser Parties and MB will give prompt notice to the other
of the occurrence, or failure to occur, at any time from the date hereof
until the Effective Date, of any event or state of facts which occurrence
or failure would, or would be likely to:
(a) cause any of the representations or warranties of the other party
contained herein to be untrue or inaccurate in any material respect on
the date hereof or on the Effective Date; or
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(b) result in the failure in any material respect to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by the other hereunder prior to the Effective Date.
Neither the Weyerhaeuser Parties nor MB may elect not to complete the
transactions contemplated hereby pursuant to the conditions precedent
contained in sections 5.1, 5.2 and 5.3, or exercise any termination right
arising therefrom, unless forthwith and in any event prior to the filing of
the Final Order for acceptance by the Director, the Weyerhaeuser Parties or
MB, as the case may be, have delivered a written notice to the other
specifying in reasonable detail all breaches of covenants, representations
and warranties or other matters which the Weyerhaeuser Parties or MB, as
the case may be, are asserting as the basis for the non-fulfillment of the
applicable condition precedent or the exercise of the termination right, as
the case may be. If any such notice is delivered, provided that the
Weyerhaeuser Parties or MB, as the case may be, are proceeding diligently
to cure such matter, if such matter is susceptible to being cured, the
other may not terminate this Agreement as a result thereof until the later
of November 30, 1999 and the expiration of a period of 30 days from such
notice. If such notice has been delivered prior to the date of the MB
Meeting, such meeting shall be postponed until the expiry of such period.
If such notice has been delivered prior to the making of the application
for the Final Order or the filing of the Articles of Arrangement with the
Director, such application and such filing shall be postponed until the
expiry of such period. For greater certainty, in the event that such
matter is cured within the time period referred to herein, this Agreement
may not be terminated.
5.5 Satisfaction of Conditions
The conditions precedent set out in sections 5.1, 5.2 and 5.3 shall be
conclusively deemed to have been satisfied, waived or released when, with
the agreement of Weyerhaeuser and MB, a certificate of arrangement in
respect of the Arrangement is issued by the Director.
The parties hereto agree that no condition to the obligation of the
Weyerhaeuser Parties to complete the transactions contemplated by this
Agreement set forth in Section 5.2(a), (b) or (c) shall be deemed not to
have been satisfied as a result of any occurrence or circumstance directly
or indirectly related to (i) the effect of the existence or performance of
this Agreement or the transactions contemplated hereby on any existing
agreements of MB or its affiliates relating to the MB Partially-Owned
Entity or its affiliates or MB's relations with such persons or (ii) any
action taken or claim made by the MB Partially-Owned Entity or its
affiliates resulting from or with respect to (x) the existence or
performance of this Agreement or the transactions contemplated hereby, or
(y) the actions of the parties in connection herewith.
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ARTICLE 6
AMENDMENT AND TERMINATION
6.1 Amendment
This Agreement may, at any time and from time to time before or after
the holding of the MB Meeting but not later than the Effective Date, be
amended by mutual written agreement of the parties hereto, and any such
amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties;
(b) waive any inaccuracies or modify any representation contained herein
or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify performance of any of the obligations of the
parties; and
(d) waive compliance with or modify any conditions precedent herein
contained; provided, however, that any such change, waiver or
modification does not invalidate any required security holder approval
of the Arrangement.
6.2 Mutual Understanding Regarding Amendments
(a) The parties will continue, from and after the date hereof and through
and including the Effective Date, to use their respective reasonable
efforts to maximize present and future financial and tax planning
opportunities for the shareholders of MB, and for Weyerhaeuser and for MB
as and to the extent that the same shall not prejudice any party or its
security holders. The parties will ensure that such planning activities do
not impede the progress of the Arrangement in any material way.
(b) The parties agree that if the Weyerhaeuser Parties or MB, as the case
may be, propose any amendment or amendments to this Agreement or to
the Plan of Arrangement, the other will act reasonably in considering
such amendment and if the other and its shareholders are not
prejudiced by reason of any such amendment the other will co-operate
in a reasonable fashion with the Weyerhaeuser Parties or MB, as the
case may be, so that such amendment can be effected subject to
applicable Laws and the rights of the security holders.
6.3 Termination
(a) If any condition contained in sections 5.1 or 5.2 is not satisfied at
or before the Effective Date to the satisfaction of the Weyerhaeuser
Parties, then Weyerhaeuser on behalf of the Weyerhaeuser Parties may by
notice to MB terminate this Agreement and the obligations of the parties
hereunder except as otherwise herein provided, but without detracting from
the rights of the Weyerhaeuser Parties
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arising from any breach by MB but for which the condition would have
been satisfied.
(b) If any condition contained in sections 5.1 or 5.3 is not satisfied at
or before the Effective Date to the satisfaction of MB, then MB may by
notice to Weyerhaeuser on behalf of the Weyerhaeuser Parties terminate
this Agreement and the obligations of the parties hereunder except as
otherwise herein provided, but without detracting from the rights of
MB arising from any breach by the Weyerhaeuser Parties but for which
the condition would have been satisfied.
(c) This Agreement may:
(i) be terminated by the mutual agreement of MB and the
Weyerhaeuser Parties (without further action on the part of
MB's shareholders if terminated after the holding of the MB
Meeting);
(ii) be terminated by either MB or Weyerhaeuser, if there shall be passed
any law or regulation that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or if
any injunction, order or decree enjoining Weyerhaeuser or MB from
consummating the transactions contemplated by this Agreement is
entered and such injunction, order or decree shall become final
and non-appealable;
(iii) be terminated by Weyerhaeuser if (A) the Board of Directors of
MB shall have failed to recommend or withdrawn or modified or
changed in a manner adverse to Weyerhaeuser its approval or
recommendation of this Agreement or the Arrangement or shall
have recommended an Acquisition Proposal or (B) through the
fault of MB (whether by commission or omission), this
Arrangement is not, prior to 14 days prior to the Drop Dead
Date, submitted for the approval of the MB Shareholders at the
MB Meeting;
(iv) be terminated by MB in order to enter into a definitive
written agreement with respect to a Superior Proposal, subject
to compliance with section 4.6 and the payment of any fee
required to be paid pursuant to section 6.4(a); or
(v) be terminated by MB or Weyerhaeuser if MB shareholder approval
shall not have been obtained by reason of the failure to
obtain the required vote at the MB Meeting; in each case,
prior to the Effective Date.
(d) If the Effective Date does not occur on or prior to the Drop Dead
Date, then this Agreement shall terminate.
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(e) If this Agreement is terminated in accordance with the foregoing
provisions of this section 6.3, no party shall have any further
liability to perform its obligations hereunder except as provided in
section 6.4 and as otherwise contemplated hereby, and provided that,
subject to section 6.5, neither the termination of this Agreement nor
anything contained in this section 6.3(e) shall relieve any party from
any liability for any breach by it of this Agreement, including from
any inaccuracy in its representations and warranties and any non-
performance by it of its covenants made herein.
6.4 Break Fee
(a) If:
(i) MB shall terminate this Agreement pursuant to section
6.3(c)(iv), unless at the time of such termination, a
Specified Weyerhaeuser Event has occurred and is continuing;
(ii) Weyerhaeuser shall terminate this Agreement pursuant to
section 6.3(c)(iii), unless at the time of such failure to
recommend, withdrawal or adverse modification or change, or
recommendation of an Acquisition Proposal, a Specified
Weyerhaeuser Event has occurred and is continuing; or
(iii) either MB or Weyerhaeuser shall terminate this Agreement
pursuant to section 6.3(c)(v) in circumstances where MB
shareholder approval has not been obtained at the MB Meeting,
and (x) a bona fide Acquisition Proposal has been made by any
person other than a Weyerhaeuser Party prior to the MB Meeting
and not withdrawn more than five days prior to the vote of the
MB Shareholders and (y) MB enters into an agreement with
respect to an Acquisition Proposal, or an Acquisition Proposal
is consummated, after the date hereof and prior to the
expiration of 18 months following termination of this
Agreement, unless at the time of the MB Meeting a Specified
Weyerhaeuser Event has occurred and is continuing;
then in any such case MB shall pay to Weyerhaeuser US$92,000,000 in
immediately available funds to an account designated by Weyerhaeuser.
Such payment shall be due (A) in the case of a termination specified
in clause (i), prior to the termination of this Agreement, (B) in the
case of a termination specified in clause (ii), within five Business
Days after written notice of termination by Weyerhaeuser or (C) in the
case of a termination specified in clause (iii), at or prior to the
earlier of the entering into of the agreement and the consummation of
the transaction referred to therein. MB shall not be obligated to
make more than one payment pursuant to this section 6.4(a).
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(b) If the holders of the MB Common Shares shall fail to approve the
Arrangement (unless a Specified Weyerhaeuser Event has occurred and is
continuing) at the MB Meeting, then at 11:00 a.m., Seattle time, on
the first Business Day following the MB Meeting, MB shall pay to
Weyerhaeuser US$5,000,000 as payment in full of the Weyerhaeuser
Parties' out-of-pocket costs and expenses in connection with the
transaction contemplated by this Agreement in immediately available
funds to an account designated by Weyerhaeuser. Any payment due under
section 6.4(a) shall be reduced dollar-for-dollar by any payment
previously made under this section 6.4(b).
(c) Weyerhaeuser shall not be entitled to any break fee under Section
6.4(a)(iii) if (A) the Acquisition Proposal referred to in clause (x)
thereof does not relate solely to the Packaging Business, (B) the
Acquisition Proposal referred to in clause (y) thereof does relate
solely to the Packaging Business and (C) the Acquisition Proposal
referred to in clause (y) thereof was not made by the Person who made
the Acquisition Proposal referred to in clause (x) thereof or any
Person related to or acting in concert with such Person.
6.5 Effect of Break Fee Payment
For greater certainty, the parties hereto agree that if MB pays to
Weyerhaeuser amounts required by section 6.4(a) as a result of the
occurrence of any of the events referenced in section 6.4(a), the
Weyerhaeuser Parties shall have no other remedy for any breach of this
Agreement by MB.
6.6 Remedies
Subject to section 6.5, the parties hereto acknowledge and agree that
an award of money damages would be inadequate for any breach of this
Agreement by any party or its representatives and any such breach would
cause the non-breaching party irreparable harm. Accordingly, the parties
hereto agree that, in the event of any breach or threatened breach of this
Agreement by one of the parties, the non-breaching party will also be
entitled, without the requirement of posting a bond or other security, to
equitable relief, including injunctive relief and specific performance.
Such remedies will not be the exclusive remedies for any breach of this
Agreement but will be in addition to all other remedies available at law or
equity to each of the parties.
ARTICLE 7
GENERAL
7.1 Notices
All notices and other communications which may or are required to be
given pursuant to any provision of this Agreement shall be given or made in
writing and shall be deemed to be validly given if served personally or by
telecopy, in each case addressed to the particular party at:
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(a) If to MB, at:
MacMillan Xxxxxxx Limited
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attention: Xx. Xxxxx Xxxxx, Vice President and General Counsel
Telecopier No.: (000) 000-0000
with a copy to:
Stikeman, Xxxxxxx
Xxx 00, Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. John Stransman
Telecopier No.: (000) 000-0000
(b) If to a Weyerhaeuser Party, at:
Weyerhaeuser Company
00000 Xxxxxxxxxxxx Xxx Xxxxx
Xxxxxxx Xxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxx, Vice President and General Counsel
Telecopier No.: (000) 000-0000
with a copy to:
Blake, Xxxxxxx & Xxxxxxx
Box 25, Commerce Court West
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxx
Telecopier No.: (000) 000-0000
or at such other address of which any party may, from time to time, advise
the other parties by notice in writing given in accordance with the
foregoing. The date of receipt of any such notice shall be deemed to be
the date of delivery or telecopying thereof.
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7.2 Assignment
No party hereto may assign its rights or obligations under this
Agreement or the Arrangement.
7.3 Binding Effect
This Agreement and the Arrangement shall be binding upon and shall
enure to the benefit of the parties hereto and their respective successors
and no third party shall have any rights hereunder.
7.4 Waiver and Modification
MB and the Weyerhaeuser Parties may waive or consent to the
modification of, in whole or in part, any inaccuracy of any representation
or warranty made to them hereunder or in any document to be delivered
pursuant hereto and may waive or consent to the modification of any of the
covenants herein contained for their respective benefit or waive or consent
to the modification of any of the obligations of the other parties hereto.
Any waiver or consent to the modification of any of the provisions of this
Agreement, to be effective, must be in writing executed by the party
granting such waiver or consent.
7.5 No Personal Liability
(a) No director or officer of any Weyerhaeuser Party shall have any
personal liability whatsoever to MB under this Agreement, or any other
document delivered in connection with the Arrangement on behalf of a
Weyerhaeuser Party.
(b) No director or officer of MB shall have any personal liability
whatsoever to any Weyerhaeuser Party under this Agreement, or any
other document delivered in connection with the Arrangement on behalf
of MB.
7.6 Further Assurances
Each party hereto shall, from time to time, and at all times
hereafter, at the request of the other parties hereto, but without further
consideration, do all such further acts and execute and deliver all such
further documents and instruments as shall be reasonably required in order
to fully perform and carry out the terms and intent hereof.
7.7 Expenses
(a) Subject to section 6.4, the parties agree that all out-of-pocket
expenses of the parties relating to the Arrangement and the
transactions contemplated hereby, including legal fees, accounting
fees, financial advisory fees, regulatory filing fees, all
disbursements of advisors and printing and mailing costs, shall be
paid by the party incurring such expenses.
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(b) MB represents and warrants to the Weyerhaeuser Parties that, except
for any amounts owing to RBC Dominion Securities Inc., X.X. Xxxxxx &
Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. by MB pursuant to and
in accordance with the terms of written and executed agreements
existing as at the date hereof and disclosed to the Weyerhaeuser
Parties on or prior to the date hereof, no broker, finder or
investment banker is or will be entitled to any brokerage, finder's or
other fee or commission from MB or any subsidiary of MB in connection
with the transactions contemplated hereby or by the Arrangement.
7.8 Consultation
Weyerhaeuser and MB agree to consult with each other as to the general
nature of any news releases or public statements with respect to this
Agreement or the Arrangement, and to use their respective reasonable
efforts not to issue any news releases or public statements inconsistent
with the results of such consultations. Subject to applicable Laws, each
party shall use its reasonable efforts to enable the other parties to
review and comment on all such news releases prior to the release thereof.
The parties agree to issue jointly a news release with respect to this
Arrangement as soon as practicable following the execution of this
Agreement. Weyerhaeuser and MB also agree to consult with each other in
preparing and making any filings and communications in connection with any
Appropriate Regulatory Approvals.
7.9 Governing Laws
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada
applicable therein and shall be treated in all respects as a British
Columbia contract. Each party hereby irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia in respect
of all matters arising under or in relation to this Agreement.
7.10 Time of Essence
Time shall be of the essence in this Agreement.
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7.11 Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the date first written above.
WEYERHAEUSER COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------
Chairman, President & Chief
Executive Officer
By:
-------------------
586476 B.C. LTD.
By: /s/ Xxxxxx X. Xxxxx
-------------------
Director
By:
-------------------
MACMILLAN XXXXXXX LIMITED
By: /s/ X. X. Xxxxxxxx
-------------------
By:
-------------------
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SCHEDULE B
APPROPRIATE REGULATORY APPROVALS
Canada
. expiration or earlier termination of the waiting period under Part IX
of the Competition Act (Canada) and receipt of an advance ruling
certificate ("ARC") pursuant to the Competition Act (Canada) or, in
the alternative to an ARC, a no-action letter from the Commissioner of
Competition
. determination by the Minister responsible for Investment Canada under
the Investment Canada Act that the Arrangement is of "net benefit to
Canada" for purposes of such Act
. exemption orders from the provincial securities regulators from the
registration and prospectus requirements with respect to the
Exchangeable Share structure
. approval of the relevant Canadian stock exchange(s) regarding the
conditional listing of the Exchangeable Shares
. approvals in respect of all material tree farm licences, forest
resource licences, forest resource processing facility licences,
forest management agreements, timber permits and timber licences,
including, without limitation, the consent of the Minister of Forests
for British Columbia to the change of control of MB resulting from the
completion of the Arrangement.
United States and Other
. expiration or earlier termination of the waiting period under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
. effectiveness of the registration statement on Form S-3 regarding the
Weyerhaeuser Common Shares
. approval of The New York Stock Exchange regarding the listing of the
Weyerhaeuser Common Shares subject to official notice of issuance
. approvals in respect of all material tree farm licenses, timber
permits and timber licenses.
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