Exhibit (e)(9)
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AGREEMENT AND PLAN OF MERGER
Dated as of January 28, 2002,
Among
WEYERHAEUSER COMPANY,
COMPANY HOLDINGS, INC.
And
WILLAMETTE INDUSTRIES, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I
The Offer and Merger
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SECTION 1.01. The Offer ................................................. 1
SECTION 1.02. Company Actions ........................................... 3
SECTION 1.03. The Merger ................................................ 4
SECTION 1.04. Closing ................................................... 4
SECTION 1.05. Effective Time ............................................ 4
SECTION 1.06. Effects ................................................... 4
SECTION 1.07. Articles of Incorporation and By-laws ..................... 5
SECTION 1.08. Directors ................................................. 5
SECTION 1.09. Officers .................................................. 5
ARTICLE II
Effect on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock ................................... 5
SECTION 2.02. Exchange of Certificates .................................. 6
ARTICLE III
Representations and Warranties of the Company
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SECTION 3.01. Organization, Standing and Power .......................... 8
SECTION 3.02. Company Subsidiaries; Equity Interests .................... 9
SECTION 3.03. Capital Structure ......................................... 9
SECTION 3.04. Authority; Execution and Delivery; Enforceability ......... 10
SECTION 3.05. No Conflicts; Consents .................................... 12
SECTION 3.06. SEC Documents; Undisclosed Liabilities .................... 13
SECTION 3.07. Information Supplied ...................................... 13
SECTION 3.08. Absence of Certain Changes or Events ...................... 14
SECTION 3.09. Taxes ..................................................... 15
SECTION 3.10. Absence of Changes in Benefit Plans ....................... 16
SECTION 3.11. ERISA Compliance; Excess Parachute Payments ............... 17
SECTION 3.12. Litigation ................................................ 19
SECTION 3.13. Compliance with Applicable Laws ........................... 20
SECTION 3.14. Brokers; Schedule of Fees and Expenses .................... 22
SECTION 3.15. Opinion of Financial Advisor .............................. 22
SECTION 3.16. Labor Matters ............................................. 22
SECTION 3.17. Contracts; Debt Instruments ............................... 23
SECTION 3.18. Intellectual Property ..................................... 23
SECTION 3.19. Charitable Contributions .................................. 23
SECTION 3.20. Termination of Georgia-Pacific Discussions ................ 23
ARTICLE IV
Representations and Warranties of Parent and Sub
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SECTION 4.01. Organization, Standing and Power .......................... 24
SECTION 4.02. Sub ....................................................... 24
SECTION 4.03. Authority; Execution and Delivery; Enforceability ......... 24
SECTION 4.04. No Conflicts; Consents .................................... 25
SECTION 4.05. Information Supplied ...................................... 25
SECTION 4.06. Brokers ................................................... 26
SECTION 4.07. Financing ................................................. 26
SECTION 4.08. Stock Ownership; Interested Shareholder ................... 26
ARTICLE V
Covenants Relating to Conduct of Business
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SECTION 5.01. Conduct of Business ....................................... 26
SECTION 5.02. Actions of Company Board; Company Takeover Proposals ...... 30
ARTICLE VI
Additional Agreements
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SECTION 6.01. Preparation of the Proxy Statement; Shareholders Meeting........... 30
SECTION 6.02. Access to Information ............................................. 31
SECTION 6.03. Reasonable Best Efforts; Notification.............................. 32
SECTION 6.04. Awards under the Company Stock Plans............................... 33
SECTION 6.05. Employee Benefits.................................................. 35
SECTION 6.06. Indemnification.................................................... 35
SECTION 6.07. Fees and Expenses.................................................. 38
SECTION 6.08. Public Announcements............................................... 38
SECTION 6.09. Transfer Taxes..................................................... 38
SECTION 6.10. Directors.......................................................... 38
SECTION 6.11. Rights Agreement; Consequences if Rights Triggered................. 39
SECTION 6.12. Shareholder Litigation............................................. 39
SECTION 6.13. Charitable Giving.................................................. 39
SECTION 6.14. Employment Matters................................................. 40
ARTICLE VII
Conditions Precedent
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SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger......... 40
ARTICLE VIII
Termination, Amendment and Waiver
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SECTION 8.01. Termination........................................................ 40
SECTION 8.02. Effect of Termination.............................................. 42
SECTION 8.03. Amendment.......................................................... 42
SECTION 8.04. Extension; Waiver.................................................. 42
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver.......... 42
ARTICLE IX
General Provisions
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SECTION 9.01. Nonsurvival of Representations and Warranties....................... 43
SECTION 9.02. Notices............................................................. 43
SECTION 9.03. Definitions......................................................... 44
SECTION 9.04. Interpretation; Disclosure Letter................................... 47
SECTION 9.05. Severability........................................................ 47
SECTION 9.06. Counterparts........................................................ 48
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries...................... 48
SECTION 9.08. Governing Law....................................................... 48
SECTION 9.09. Assignment.......................................................... 48
SECTION 9.10. Enforcement......................................................... 48
EXHIBIT A - Conditions of the Offer
AGREEMENT AND PLAN OF MERGER dated as of
January 28, 2002, among WEYERHAEUSER COMPANY, a
Washington corporation ("Parent"), COMPANY HOLDINGS,
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INC., a Washington corporation ("Sub"), and a direct
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wholly owned subsidiary of Parent, and WILLAMETTE
INDUSTRIES, INC., an Oregon corporation (the
"Company").
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WHEREAS Sub has outstanding an offer (the "Existing Offer", and, as amended
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from time to time in accordance with this Agreement, the "Offer") to purchase
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all the outstanding shares of common stock, par value $0.50 per share, of the
Company (the "Company Common Stock"), including the associated Company Rights
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(as defined in Section 3.03), on the terms and subject to the conditions set
forth in the Offer to Purchase dated November 29, 2000 (as supplemented by the
Supplement to the Offer to Purchase dated May 7, 2001), and in the related
letter of transmittal;
WHEREAS the board of directors of the Company (the "Company Board") has
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approved the acquisition of the Company by Parent and resolved and agreed to
recommend that holders of Company Common Stock tender their shares of Company
Common Stock pursuant to the Offer;
WHEREAS, in furtherance of such transaction, the respective Boards of
Directors of Parent, Sub and the Company have approved the merger (the "Merger")
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of Sub into the Company on the terms and subject to the conditions set forth in
this Agreement, whereby each issued share of Company Common Stock not owned
directly by Parent, Sub or the Company (other than Dissent Shares (as defined in
Section 2.01(d))) shall be converted into the right to receive the per share
consideration paid pursuant to the Offer; and
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
SECTION 1.01 The Offer.
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(a) Subject to the conditions of this Agreement, as promptly as practicable
after the date of this Agreement, Sub shall, and Parent shall cause Sub to,
amend the Existing Offer to reflect the terms and conditions of this Agreement,
including the purchase price of $55.50 per share of Company Common Stock (and
associated Right), net to the seller in cash, without interest thereon (the
"Offer Price"), and to set
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February 8, 2002 (the "Initial Expiration Date"), as the expiration date for the
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Offer. The obligations of Sub to, and of Parent to cause Sub to, accept for
payment, and pay for, any shares of Company Common Stock tendered pursuant to
the Offer are subject only to the satisfaction or waiver by Sub of the
conditions set forth in Exhibit A. Sub expressly reserves the right to waive any
condition to the Offer or modify the terms of the Offer, except that, without
the consent of the Company, Sub shall not (i) reduce the number of shares of
Company Common Stock subject to the Offer, (ii) reduce the Offer Price, (iii)
waive or change the Minimum Tender Condition (as defined in Exhibit A), (iv) add
to the conditions set forth in Exhibit A, modify any condition set forth in
Exhibit A or amend any term of the Offer set forth in this Agreement, in each
case, in any manner adverse to the holders of Company Common Stock, (v) extend
the Offer or (vi) change the form of consideration payable in the Offer (other
than by adding consideration). Notwithstanding the foregoing, Sub (i) shall
extend the Offer, if at the scheduled expiration date of the Offer any of the
conditions set forth in Exhibit A (other than the Minimum Tender Condition or
condition (c), (d) or (g)) to Sub's obligation to purchase shares of Company
Common Stock are not satisfied, until such time as such conditions are satisfied
or waived but in no event later than March 29, 2002, and (ii) may, without the
consent of the Company, extend the Offer (x) for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer or (y) if at
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the scheduled expiration date of the Offer any of the Minimum Condition or
condition (c), (d) or (g) set forth in Exhibit A to Sub's obligation to purchase
shares of Company Common Stock are not satisfied until such time as such
conditions are satisfied or waived. In addition, if, at the scheduled or
extended expiration date of the Offer, all the conditions to the Offer have been
satisfied or waived but the Company Common Stock tendered and not withdrawn
pursuant to the Offer constitutes less than 90 percent of the outstanding
Company Common Stock, without the consent of the Company, Sub shall (subject to
applicable law) have the right to provide for a "subsequent offering period" (as
contemplated by Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), for up to 20 business days after Sub's acceptance
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for payment of the shares of Company Common Stock then tendered and not
withdrawn pursuant to the Offer. On the terms and subject to the conditions of
the Offer and this Agreement, Sub shall, and Parent shall cause Sub to, pay for
all shares of Company Common Stock validly tendered and not withdrawn pursuant
to the Offer that Sub becomes obligated to purchase pursuant to the Offer as
soon as practicable after the expiration of the Offer or (in the case of shares
tendered during any subsequent offering period) as soon as practicable following
the valid tender thereof.
(b) As promptly as practicable after the date of this Agreement, Parent and
Sub shall amend the Tender Offer Statement on Schedule TO (the "Schedule TO")
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with respect to the Offer that was originally filed on November 29, 2000, and
file such amendment (the "Schedule TO Amendment") with the SEC. The Schedule TO
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Amendment shall contain a supplement to the Offer to Purchase dated November 29,
2000 (as supplemented by the Supplement to the Offer to Purchase dated May 7,
2001), and a revised form of the letter of transmittal and summary advertisement
(such Schedule TO and the documents included therein pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the "Offer
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Documents"). Parent and Sub shall mail the supplement to the Offer to Purchase
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and revised letter of transmittal to holders of shares of Company Common Stock.
Each of Parent, Sub and the Company shall promptly correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
each of Parent and Sub shall take all steps necessary to amend or supplement the
Offer Documents and to cause the Offer Documents as so amended or supplemented
to be filed with the SEC and to be disseminated to the Company's shareholders,
in each case as and to the extent required by applicable federal securities
laws. Parent and Sub shall provide the Company and its counsel in writing with
any comments Parent, Sub or their counsel may receive after the date of this
Agreement from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to purchase any shares of Company Common Stock that Sub
becomes obligated to purchase pursuant to the Offer.
SECTION 1.02 Company Actions.
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(a) The Company hereby approves of and consents to the Offer, the Merger
and the other transactions contemplated by this Agreement (collectively, the
"Transactions").
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(b) On the date the Schedule TO Amendment is filed with the SEC, the
Company shall file with the SEC an amendment (the "Schedule 14D-9 Amendment") to
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its Solicitation/Recommendation Statement on Schedule 14D-9 originally filed on
December 5, 2000 with respect to the Offer, including an Information Statement
(as defined in Section 3.05(b)) (such Schedule 14D-9, as amended from time to
time, the "Schedule 14D-9"), and shall mail the Schedule 14D-9 Amendment
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(including the Information Statement) to the holders of Company Common Stock.
Each of the Company, Parent and Sub shall promptly correct any information
provided by it for use in the Schedule 14D-9 (including the Information
Statement) if and to the extent that such information shall have become false or
misleading in any material respect, and the Company shall take all steps
necessary to amend or supplement the Schedule 14D-9 (including the Information
Statement) and to cause the Schedule 14D-9 (including the Information Statement)
as so amended or supplemented to be filed with the SEC and disseminated to the
Company's shareholders, in each case as and to the extent required by applicable
federal securities laws. The Company shall provide Parent and its counsel in
writing with any comments the Company or its counsel may receive after the date
of this
Agreement from the SEC or its staff with respect to the Schedule 14D-9 or the
Information Statement promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of shareholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of shareholders, security
position listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's shareholders.
SECTION 1.03 The Merger. On the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the Oregon Revised Statutes (the
"ORS")and the Revised Code of Washington ("RCW"), Sub shall be merged with and
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into the Company at the Effective Time (as defined in Section 1.05). At the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
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Corporation"). At the election of Parent, any direct wholly owned subsidiary of
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Parent may be substituted for Sub as a constituent corporation in the Merger. In
such event, the parties shall execute an appropriate amendment to this Agreement
in order to reflect the foregoing.
SECTION 1.04 Closing. The closing (the "Closing") of the Merger shall take
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place at the offices of Cravath, Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by applicable Law (as defined in
Section 3.05), waiver by all parties) of the conditions set forth in Section
7.01, or at such other place, time and date as shall be agreed in writing
between Parent and the Company. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
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SECTION 1.05 Effective Time. Subject to the provisions of this Agreement,
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the parties shall file with the Secretary of State of the State of Oregon and
the Secretary of State of the State of Washington, articles of merger or other
appropriate documents (in each such case, "Articles of Merger") executed in
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accordance with the relevant provisions of the ORS and the RCW, as the case may
be, and shall make all other filings or recordings required under the ORS and
the RCW. The Merger shall become effective at such time as the applicable
Articles of Merger are duly filed with the Secretary of State of the State of
Oregon and the Secretary of State of the State of Washington, or at such other
time as Parent and the Company shall agree and specify in the Articles of Merger
(the time the Merger becomes effective being the "Effective Time").
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SECTION 1.06 Effects. The Merger shall have the effects set forth in
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Section 60.497 of the ORS and Section 23B.11.060 of the RCW.
SECTION 1.07 Articles of Incorporation and By-laws.
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(a) The Articles of Incorporation of the Company at the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
(b) The By-laws of the Company as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.08 Directors. The directors of Sub immediately prior to the
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Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.09 Officers. The officers of the Company immediately prior to the
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Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01 Effect on Capital Stock. At the Effective Time, by virtue of
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the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
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stock of Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.50 per share, of the Surviving Corporation.
(b) Cancellation of Company-Owned Stock and Parent-Owned Stock. Each share
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of Company Common Stock that is held by the Company, Parent or Sub shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
(c) Conversion of Company Common Stock. Subject to Sections 2.01(b) and
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2.01(d), each issued and outstanding share of Company Common Stock shall be
converted into the right to receive the Offer Price in cash. The cash payable
upon the conversion of shares of Company Common Stock pursuant to this Section
2.01(c) is referred to collectively as the "Merger Consideration". As of the
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Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
Merger Consideration upon surrender of such certificate in accordance with
Section 2.02, without interest.
(d) Dissent Rights. Notwithstanding anything in this Agreement to the
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contrary, shares ("Dissent Shares") of Company Common Stock that are outstanding
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immediately prior to the Effective Time and that are held by any person who is
entitled to demand and properly demands payment of the fair value of such
Dissent Shares pursuant to, and who complies in all respects with, Section
60.551 et seq. of the ORS shall not be converted into Merger Consideration as
provided in Section 2.01(c), but rather the holders of Dissent Shares shall be
entitled to payment of the fair value of such Dissent Shares in accordance with
Section 60.551 et seq. of the ORS; provided, however, that if any such holder
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shall fail to perfect or otherwise shall waive, withdraw or lose the right to
receive payment of fair value under Section 60.551 et seq. of the ORS, then the
right of such holder to be paid the fair value of such holder's Dissent Shares
shall cease and such Dissent Shares shall be deemed to have been converted as of
the Effective Time into, and to have become exchangeable solely for the right to
receive, Merger Consideration as provided in Section 2.01(c). The Company shall
serve prompt notice to Parent of any demands received by the Company for payment
of fair value in respect of any shares of Company Common Stock, and Parent shall
have the right to participate in and direct all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands, or agree to do any of the
foregoing.
SECTION 2.02 Exchange of Certificates.
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(a) Paying Agent. Mellon Investor Services LLC shall act as paying agent
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(the "Paying Agent") for the payment of the Merger Consideration upon surrender
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of certificates representing Company Common Stock. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to provide to the Paying
Agent on a timely basis, as and when needed after the Effective Time, cash
necessary to pay for the shares of Company Common Stock converted into the right
to receive cash pursuant to Section 2.01(c) (such cash being hereinafter
referred to as the "Exchange Fund").
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(b) Exchange Procedures. As soon as reasonably practicable after the
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Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") that immediately prior to the
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Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive Merger Consideration pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.01, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Company Common Stock that is not registered
in the transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is registered if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender Merger
Consideration as contemplated by this Section 2.02.
(c) No Further Ownership Rights in Company Common Stock. The Merger
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Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Company
Common Stock, subject, however, to the Surviving Corporation's obligation to pay
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any dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by the Company on such shares
of Company Common Stock in accordance with the terms of this Agreement or prior
to the date of this Agreement and which remain unpaid at the Effective Time, and
after the Effective Time there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, any certificates formerly representing shares of
Company Common Stock are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
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remains undistributed to the holders of Company Common Stock for twelve months
after the Effective Time shall be delivered to Parent, upon demand, and any
holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent
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shall be liable to any person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate has not been surrendered prior to
five years after the
Effective Time (or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.05(b)),
any such shares, cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable Law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
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included in the Exchange Fund, as directed by Parent, on a daily basis;
provided, however, that such investments shall be in obligations of or
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guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any interest and other income resulting from such investments
shall be paid to Parent.
(g) Withholding Rights. Parent and the Surviving Corporation shall be
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entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code (as defined in Section 3.09), or under any provision of state,
local or foreign tax Law. To the extent that amounts are so withheld by Parent
or the Surviving Corporation and paid over to the appropriate taxing authority,
such withheld amounts will be treated for all purposes of this Agreement as
having been paid to the holder of Company Common Stock in respect of which such
deduction and withholding was paid by Parent or the Surviving Corporation.
ARTICLE III
Representations and Warranties of the Company
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The Company represents and warrants to Parent and Sub as follows:
SECTION 3.01 Organization, Standing and Power. Each of the Company and each
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of its subsidiaries (the "Company Subsidiaries") is duly organized, validly
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existing and in good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, except for failures which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on the Company or a material adverse
effect on the ability of the Company to consummate the Merger and the other
Transactions (together, a "Company Material Adverse Effect"). The Company and
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each Company Subsidiary is duly qualified or licensed to do business in each
jurisdiction where the nature of its business or its ownership or leasing of its
properties make such qualification or licensing necessary or the failure to so
qualify or be licensed has had or would reasonably be expected to have a Company
Material Adverse Effect. The Company has delivered to Parent true and complete
copies of the restated articles of incorporation of the Company, as amended to
the date of this Agreement (as so amended, the "Company Charter"), and the
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By-laws of the Company, as amended to the date of this Agreement (as so amended,
the "Company By-laws"), and the comparable charter and organizational documents
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of each Company Subsidiary, in each case as amended through the date of this
Agreement.
SECTION 3.02 Company Subsidiaries; Equity Interests.
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(a) The letter, dated as of the date of this Agreement, from the Company to
Parent and Sub (the "Company Disclosure Letter") lists each Company Subsidiary
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and its jurisdiction of organization. All the outstanding shares of capital
stock of each Company Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in the Company Disclosure Letter, are
owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges, liens, charges,
mortgages, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), except for such Liens as have not had and would not
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reasonably be expected to have a Company Material Adverse Effect.
(b) Except for its interests in the Company Subsidiaries and except for the
ownership interests set forth in the Company Disclosure Letter, the Company does
not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person other than any such capital stock or other interests with a current book
value, in the aggregate, not in excess of $1,000,000.
SECTION 3.03 Capital Structure. The authorized capital stock of the Company
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consists of 150,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $0.50 per share ("Company Preferred Stock" and,
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together with the Company Common Stock, the "Company Capital Stock"). At the
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close of business on January 23, 2002, (i) 110,171,443 shares of Company Common
Stock were issued and outstanding, (ii) 3,986,801 shares of Company Common Stock
were subject to outstanding Company Employee Stock Options (as defined in
Section 6.04(e)), (iii) 1,842,942 additional shares of Company Common Stock were
reserved for issuance pursuant to the Company Stock Plans (as defined in Section
6.04(e)), (iv) 5,000,000 shares of Company Preferred Stock were reserved for
issuance in connection with the rights (the "Company Rights") issued pursuant to
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the Rights Agreement dated as of February 25, 2000 (as amended from
time to time, the "Company Rights Agreement"), between the Company and Mellon
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Investor Services LLC (formerly known as ChaseMellon Shareholder Services,
L.L.C.), as Rights Agent, and (v) 76,910 stock appreciation rights linked to the
price of Company Common Stock and granted under a Company Stock Plan, but not in
tandem with any Company Employee Stock Option (each, a "Company Non-Tandem
------------------
SAR"), were outstanding. Except as set forth above, at the close of business on
---
January 23, 2002, no restricted shares or other shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. Except as set forth in the Company Disclosure Letter, between
January 23, 2002 and the date of this Agreement, the Company has not issued any
shares of Company Capital Stock (other than shares of Company Common Stock
issued upon exercise of Company Employee Stock Options) or granted or agreed to
grant any options to purchase Company Common Stock. All outstanding shares of
Company Capital Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the ORS, the Company Charter,
the Company By-laws or any Contract (as defined in Section 3.05(a)) to which the
Company is a party or otherwise bound. There are not any bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which holders of Company Common Stock may vote ("Voting Company
--------------
Debt"). Except as set forth above, as of the date of this Agreement, there are
----
not any options, warrants, rights, convertible or exchangeable securities,
"phantom" stock, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of any
kind to which the Company or any Company Subsidiary is a party or by which any
of them is bound (i) obligating the Company or any Company Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, the Company or of any Company Subsidiary or any Voting Company Debt
(or to make any payment based on the value of any equity interest in the Company
or in any Company Subsidiary) or (ii) obligating the Company or any Company
Subsidiary to issue, grant, extend or enter into any such option, warrant, call,
right, security, commitment, Contract, arrangement or undertaking. As of the
date of this Agreement, there are not any outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary. The
Company has delivered to Parent a complete and correct copy of the Company
Rights Agreement, as amended to the date of this Agreement.
SECTION 3.04 Authority; Execution and Delivery; Enforceability.
-------------------------------------------------
(a) The Company has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the Transactions. The execution and
delivery by the Company of this Agreement and the consummation by the Company of
the Transactions have been duly authorized by all necessary corporate action on
the part of the Company, subject, in the case of the Merger, to receipt of the
Company Shareholder Approval (as defined in Section 3.04(c)). The Company has
duly executed and delivered this Agreement, and, assuming the due authorization,
execution and delivery
hereof by Parent and Sub, this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(b) The Company Board, at a meeting duly called and held duly and
unanimously adopted resolutions (i) approving this Agreement, the Offer, the
Merger and the other Transactions, (ii) determining that the terms of the Offer,
the Merger and the other Transactions are fair to and in the best interests of
the Company and its shareholders, (iii) recommending that the holders of Company
Common Stock accept the Offer and tender their shares of Company Common Stock
pursuant to the Offer (the "Company Recommendation"), (iv) recommending that the
----------------------
Company's shareholders approve this Agreement, (v) adopting a plan of merger
relating to the Merger as required by the ORS and (vi) directing that such plan
of merger be submitted for approval by the Company's shareholders. In addition,
the Company Board has taken all action necessary to render (x) (i) Sections
60.801 to 60.816 of the ORS and (ii) if applicable, Article VI of the Company
Charter inapplicable (A) to Parent and Sub and (B) to the Offer, the Merger and
the other Transactions and (y) Sections 60.825 to 60.845 of the ORS inapplicable
to the Offer, the Merger and the other Transactions. To the Company's knowledge,
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Company with respect to this Agreement, the Offer, the
Merger or any other Transaction. Unless otherwise required by its fiduciary
duties (as determined in good faith by a majority of its members after
consultation with outside legal counsel to the Company) the Company Board shall
not amend, modify, withdraw, condition or qualify the Company Recommendation in
a manner adverse to Parent or Sub.
(c) Unless the Merger can be effected pursuant to Section 60.491 of the ORS
(in which case no approval of holders of any class or series of Company Capital
Stock is required), the only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the approval of this Agreement by the holders of shares of Company Common Stock
representing a majority of all the votes entitled to be cast thereon (the
"Company Shareholder Approval"). The affirmative vote of the holders of Company
----------------------------
Capital Stock, or any of them, is not necessary to consummate any Transaction
(including the Offer) other than the Merger.
(d) The members of the Company Board have advised the Company that they
intend to tender all shares of Company Common Stock owned by them into the
Offer, except for (i) the tender of shares of Company Common Stock that would
subject a member of the Company Board to liability under Section 16(b) under the
Exchange Act and (ii) shares of Company Common Stock which, or with respect to
which, any such member of the Company Board acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender.
SECTION 3.05 No Conflicts; Consents.
----------------------
(a) The execution and delivery by the Company of this Agreement do not, and
the consummation of the Offer, the Merger and the other Transactions and
compliance with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
Company Subsidiary under, any provision of (i) the Company Charter, the Company
By-laws or the comparable charter or organizational documents of any Company
Subsidiary, (ii) any contract, lease, license, indenture, note, bond, agreement,
permit, concession, franchise or other instrument (a "Contract") to which the
--------
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other matters
referred to in Section 3.05(b), any judgment, order or decree ("Judgment") or
--------
statute, law, ordinance, rule or regulation ("Law") applicable to the Company or
---
any Company Subsidiary or their respective properties or assets, other than, in
the case of clauses (ii) and (iii) above, any such items that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from, any
-------
federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"), is
-------------------
necessary for the execution, delivery and performance of this Agreement or the
consummation of the Transactions by the Company or any Company Subsidiary, other
than (i) the filing with the SEC of (A) the Schedule 14D-9 Amendment, (B) a
proxy or information statement relating to the approval of this Agreement by the
Company's shareholders (the "Proxy Statement"), (C) any information statement
---------------
(the "Information Statement") required to be filed in connection with the Offer
---------------------
pursuant to Rule 14f-1 of the Exchange Act, and (D) such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement,
the Offer, the Merger and the other Transactions, (ii) the filing of Articles of
Merger with the Secretary of State of the State of Oregon and the Secretary of
State of the State of Washington and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is qualified to do
business, (iii) compliance with and such filings as may be required under
applicable Environmental Laws (as defined in Section 3.13(d)), (iv) such filings
as may be required in connection with the taxes described in Section 6.09, (v)
compliance with the rules and regulations of the New York Stock Exchange and
(vi) such other items (A) that may be required under the applicable Law of any
foreign country, (B) required solely by reason of the participation of Parent or
Sub (as opposed to any third party) in the Transactions, (C) that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect or (D) as are set forth in the Company
Disclosure Letter.
(c) The Company and the Company Board have taken all action necessary to
(i) render the Company Rights inapplicable to this Agreement, the Offer, the
Merger and the other Transactions and (ii) ensure that (A) neither Parent nor
any of its affiliates or associates is or will become an "Acquiring Person" (as
defined in the Company Rights Agreement) by reason of this Agreement, the Offer,
the Merger or any other Transaction), (B) a "Distribution Date" or a "Shares
Acquisition Date" (each as defined in the Company Rights Agreement) shall not
occur by reason of this Agreement, the Offer, the Merger or any other
Transaction and (C) the Company Rights shall expire immediately prior to the
Effective Time.
SECTION 3.06 SEC Documents; Undisclosed Liabilities. The Company has filed
--------------------------------------
all reports, schedules, forms, statements and other documents required to be
filed by the Company with the SEC since January 1, 2000 (the "Company SEC
-----------
Documents"). As of its respective date, each Company SEC Document complied in
---------
all material respects with the applicable requirements of the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act"), as the case may
--------------
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such Company SEC Document, each as in effect on the date so filed, and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Company SEC
Document has been revised or superseded by a later filed Company SEC Document,
none of the Company SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
----
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as
otherwise stated in such financial statements) and fairly present the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
Filed Company SEC Documents (as defined in Section 3.08), neither the Company
nor any Company Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto and that, individually or in the aggregate,
would reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.07 Information Supplied. None of the information supplied or to
--------------------
be supplied by the Company expressly for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-9 or the Information
Statement will, at the time such document is filed with the SEC, at any time it
is amended or supplemented or at the time it is first published, sent or given
to the Company's shareholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting (as defined in Section 6.01(b)), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-9,
the Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
SECTION 3.08 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the Company SEC Documents filed pursuant to Section 13(a) of the Exchange Act
and publicly available prior to the date of this Agreement (the "Filed Company
-------------
SEC Documents") or in the Company Disclosure Letter, from the date of the most
-------------
recent audited financial statements included in the Filed Company SEC Documents
to the date of this Agreement, the Company has conducted its business only in
the ordinary course, and during such period there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock, other than regular quarterly cash dividends not in
excess of $0.23 per share on Company Common Stock, with usual declaration,
record and payment dates and in accordance with the Company's past dividend
policy;
(iii) any repurchase for value by the Company of any Company Capital
Stock;
(iv) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock, except for issuances of Company Common Stock (and
associated Company Rights) upon the exercise of Company Employee Stock
Options awarded prior to the date hereof in accordance with their present
terms or issued in compliance with Section 5.01(a);
(v) (A) any granting by the Company or any Company Subsidiary to
any director or executive officer of the Company or any Company Subsidiary
of any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents or (B) any granting
by the Company or any Company Subsidiary to any such director or executive
officer of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in
effect as of the date of the most recent audited financial statements
included in the Filed Company SEC Documents;
(vi) any change in accounting methods, principles or practices by
the Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar
as may have been required by a change in GAAP; or
(vii) any material elections with respect to Taxes (as defined in
Section 3.09(f)) by the Company or any Company Subsidiary or settlement or
compromise by the Company or any Company Subsidiary of any material Tax
liability or refund.
SECTION 3.09 Taxes.
-----
(a) Each of the Company and each Company Subsidiary has timely filed, or
has caused to be timely filed on its behalf, all Tax Returns required to be
filed by it, and all such Tax Returns are true, complete and accurate, except to
the extent any failure to file or any inaccuracies in any filed Tax Returns,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect. All material Taxes shown to
be due on such Tax Returns, or otherwise owed, have been, or will be, timely
paid.
(b) The most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve for all Taxes payable by the Company and
the Company Subsidiaries (in addition to any reserve for deferred Taxes
established to reflect timing differences between book and Tax items) for all
Taxable periods and portions thereof through the date of such financial
statements. No deficiency with respect to any Taxes has been proposed, asserted
or assessed against the Company or any Company Subsidiary, and no requests for
waivers of the time to assess any such Taxes are pending, except to the extent
any such deficiencies or requests for waiver,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(c) The Federal income Tax Returns of the Company and each Company
Subsidiary consolidated in such Tax Returns have been examined by and settled
with the United States Internal Revenue Service or have closed by virtue of the
applicable statute of limitations for all years through 1991.
(d) There are no material Liens for Taxes (other than for current Taxes not
yet due and payable) on the assets of the Company or any Company Subsidiary.
Neither the Company nor any Company Subsidiary is bound by any Tax sharing or
material Tax indemnification agreement other than the Agreement Allocating
Federal Tax Liability, dated May 11, 1972, a copy of which has been provided to
Parent.
(e) Neither the Company nor any Company Subsidiary has constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (i) in the
two years prior to the date of this Agreement or (ii) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Internal Revenue Code of 1986, as
amended (the "Code")) in conjunction with the Merger.
----
(f) For purposes of this Agreement:
"Taxes" includes all (i) forms of taxation, whenever created or imposed,
-----
and whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, foreign, federal or other Governmental Entity,
or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts, (ii)
liability for the payment of any amounts of the type described in clause (i) as
a result of being a member of an affiliated, consolidated, combined or unitary
group and (iii) liability for any Tax sharing agreement or as a result of any
express or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (i) or (ii).
"Tax Return" means all federal, state, local, provincial and foreign Tax
----------
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.
SECTION 3.10 Absence of Changes in Benefit Plans. Except as disclosed in
-----------------------------------
the Filed Company SEC Documents or in the Company Disclosure Letter, from the
date of the most recent audited financial statements included in the Filed
Company SEC Documents to the date of this Agreement, there has not been any
adoption or amendment in any material respect by the Company or any Company
Subsidiary of
any Company Benefit Plan (as defined in Section 3.11). Except as disclosed in
the Filed Company SEC Documents or in the Company Disclosure Letter, (i) as of
the date of this Agreement there are not any employment, consulting,
indemnification, personal service, change in control, severance or termination
agreements or arrangements between the Company or any Company Subsidiary and any
current or former employee, officer or director of, or independent contractor
with respect to, the Company or any Company Subsidiary, nor does the Company or
any Company Subsidiary have any general severance plan or policy and (ii) from
the date of the most recent audited financial statements included in the Filed
Company SEC Documents, none of such agreements or arrangements have been
amended.
SECTION 3.11 ERISA Compliance; Excess Parachute Payments.
-------------------------------------------
(a) The Company Disclosure Letter contains a list of all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes
-----
referred to herein as "Company Pension Plans"), all "employee welfare benefit
---------------------
plans" (as defined in Section 3(1) of ERISA) and any severance, change in
control, deferred compensation, or employment plan, program or agreement, and
vacation, incentive, bonus, stock option, stock purchase and restricted stock
plan, program, agreement, arrangement or policy entered into, maintained, or
contributed to, by the Company or any Company Subsidiary for the benefit of any
current or former employees, officers or directors of, or independent contractor
with respect to, the Company or any Company Subsidiary (or under which the
Company or any Company Subsidiary has any current potential liabilities or
obligations)(together with the Company Pension Plans, the "Company Benefit
---------------
Plans"). The Company has delivered or made available to Parent complete and
-----
correct copies of (i) each Company Benefit Plan (or, in the case of any
unwritten Company Benefit Plan, a description thereof), (ii) the most recent
annual report on Form 5500 filed with the Internal Revenue Service or the U.S.
Department of Labor with respect to each Company Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description is required and
(iv) each trust agreement and group annuity contract relating to any Company
Benefit Plan. The Company, each Company Subsidiary, and each Company Benefit
Plan and, to the knowledge of the Company, each officer of the Company or a
Company Subsidiary is in substantial compliance in all material respects with
all applicable provisions of any applicable collective bargaining or other labor
agreement, and ERISA, the Code and all other applicable U.S. and non-U.S. laws,
rules and regulations relating to any benefits, compensation or employment
matters, except where the failure to comply would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. No
Company Benefit Plan is an employee Stock Purchase Plan which is intended to
comply with the requirements of Section 423 of the Code.
(b) Each U.S. Company Pension Plan is qualified and exempt from Federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, except
where the failure to be so qualified or exempt would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. The
Company has delivered or made available to Parent a complete and correct copy of
each determination letter from the Internal Revenue Service to the effect that
each such
Company Pension Plan is qualified and no such determination letter has been
revoked nor, to the knowledge of the Company, has revocation been threatened.
Each non-U.S. Company Pension Plan that is capable of formal approval or
qualification by the appropriate local tax authorities has obtained such
approval or qualification and, to the knowledge of the Company and the Company
Subsidiaries, nothing has been done or omitted to be done, and there are no
circumstances, which would reasonably be expected to result in the loss of such
approval or qualification, except where the failure to obtain, or the loss of,
such approval or qualification would not individually or in the aggregate
reasonably be expected to have a Company Material Adverse Effect.
(c) None of the Company Pension Plans has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived, except where such deficiency would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. There has not been any "reportable event" (as that term
is defined in Section 4043 of ERISA) with respect to any Company Benefit Plan
during the last five years that would result in a liability that would have a
Company Material Adverse Effect. Neither the Company nor any Company Subsidiary
has incurred a "complete withdrawal" or a "partial withdrawal" (as such terms
are defined in Sections 4203 and 4205, respectively, of ERISA) since the
effective date of such Sections 4203 and 4205 with respect to any Company
Pension Plan that is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA that would result in liability that would have a Company
Material Adverse Effect.
(d) Set forth in the Company Disclosure Letter is the Company's most recent
calculation of the estimated maximum amount that could be paid to each of the
persons listed in the Company Disclosure Letter (including all of the employees
who are party to an individual agreement with the Company containing
change-in-control provisions) as a result of the Merger and other Transactions
under all employment, severance and termination agreements, other compensation
arrangements and Company Benefit Plans currently in effect.
SECTION 3.12 Litigation. Except as disclosed in the Filed Company SEC
----------
Documents or in the Company Disclosure Letter, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Company Subsidiary that, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material Adverse Effect,
nor is there any Judgment outstanding against the Company or any Company
Subsidiary that has had or would reasonably be expected to have a Company
Material Adverse Effect; provided,
--------
however, that the Company makes no representation or warranty as to suits,
-------
actions or proceedings commenced or first threatened after the date of this
Agreement and challenging the Offer, the Merger or any other Transaction.
SECTION 3.13 Compliance with Applicable Laws.
--------------------------------
(a) Except as disclosed in the Filed Company SEC Documents or in the
Company Disclosure Letter, the Company and Company Subsidiaries are in
compliance with all applicable Laws, except for instances of noncompliance that,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect. As of the date of this
Agreement, except as set forth in the Filed Company SEC Documents or in the
Company Disclosure Letter, neither the Company nor any Company Subsidiary has
received any written communication during the past two years from a Governmental
Entity that alleges that the Company or a Company Subsidiary is not in
compliance in any material respect with any applicable Law, except for such
instances of noncompliance that have not had and would not reasonably be
expected to have a Company Material Adverse Effect. This Section 3.13(a) does
not relate to matters with respect to Taxes, which are the subject of Section
3.09, or to matters involving Environmental Laws, which are the subject of
Sections 3.13(b) through 3.13(d).
(b) Except as disclosed in the Filed Company SEC Documents or the Company
Disclosure Letter,
(i) the Company and each of the Company Subsidiaries are in compliance
with all applicable Environmental Laws, except for instances of
noncompliance that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect,
and the Company and each of the Company Subsidiaries hold, and are in
compliance with, all permits, licenses and other authorizations required to
conduct their respective businesses under Environmental Laws, except for
the failure to hold or comply with such permits, licenses and other
authorizations that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect;
(ii) neither the Company nor any of the Company Subsidiaries has (A)
placed, held, located, released, transported or disposed of any Hazardous
Substances on, under, from or at any of the Company's or any of the Company
Subsidiaries' currently or formerly owned, leased or operated properties or
any other properties, other than in a manner that has not had and would not
reasonably be expected to have, in all such cases taken individually or in
the aggregate, a Company Material Adverse Effect, or (B) any knowledge of
the presence of any Hazardous Substances on, under or at any of the
Company's or any of the Company Subsidiaries' currently or formerly owned,
leased or operated properties or any other
property arising from the Company's or any of the Company Subsidiaries'
currently or formerly owned, leased or operated properties, other than in a
manner that has not had and would not reasonably be expected to have, in
all such cases taken individually or in the aggregate, a Company Material
Adverse Effect;
(iii) there are no notices of violation or any other enforcement
proceedings, investigations, actions, suits or claims under Environmental
Laws that have been asserted, or are pending or, to the knowledge of the
Company and the Company Subsidiaries, threatened, that would reasonably be
expected to result in (A) fines or penalties, (B) any obligation on the
part of the Company to undertake supplemental environmental projects or
comparable mitigative environmental measures, (C) any obligation on the
part of the Company to install emission or pollution control devices, (D)
any restrictions on operations or production at any of the facilities
owned, leased or operated by the Company or any of the Company
Subsidiaries, including the temporary or permanent shutdown of any such
facility, or (E) the placement of a Lien upon any of the Company's or the
Company Subsidiaries' properties, in any such case that would reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect; and
(iv) there are no restrictions, limitations or controls in effect,
pending, or, to the knowledge of the Company and the Company Subsidiaries,
threatened or contemplated under Environmental Laws on the Company's or any
Company Subsidiary's operations relating to harvesting forest products,
whether such restrictions, limitations or controls are voluntary or have
been imposed by any Governmental Entity, except for such restrictions,
limitations or controls that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Company Material Adverse
Effect.
(c) Except as disclosed in the Filed SEC Documents or in the Company
Disclosure Letter, and except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, no
Environmental Law imposes any obligation upon the Company or the Company
Subsidiaries arising out of or as a condition to any Transaction, including any
requirement to modify or transfer any permit or license, file any notice or
other submission with any Governmental Entity, place any notice, acknowledgment
or covenant in any land records, or modify or provide notice under any
agreement, consent order or consent decree.
(d) For purposes of this Agreement, (i) "Environmental Laws" means any
------------------
applicable Federal, state, local or foreign law, regulation, order, decree,
permit, authorization, common law or legally enforceable requirement of any
Governmental Entity in effect as of the Closing Date relating to: (A) protection
or restoration of the environment, human health (to the extent relating to the
environment or exposure to Hazardous Substances) or protection of or damage to
natural resources and endangered species, (B) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance or (C) noise,
odor, indoor air, employee exposure to Hazardous Substances, pollution,
contamination or any injury or threat of injury to persons or property relating
to any Hazardous Substance; and (ii) "Hazardous Substance" means (A) any
-------------------
hazardous, toxic, radioactive, explosive or flammable material, chemical, waste
or substance or (B) any petroleum product or by-product, asbestos containing
material or any other material, chemical, waste or substance that is harmful to
human health or the environment.
SECTION 3.14 Brokers; Schedule of Fees and Expenses. No broker,
--------------------------------------
investment banker, financial advisor or other person, other than Xxxxxxx, Xxxxx
& Co., the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Offer, the Merger and the other Transactions
based upon arrangements made by or on behalf of the Company. The estimated fees
and expenses incurred and to be incurred by the Company in connection with the
Offer, the Merger, the other Transactions and any proposed GP Transaction (as
defined in Section 3.20) (including the fees of Xxxxxxx, Sachs & Co. and the
fees of the Company's legal counsel) are set forth in the Company Disclosure
Letter. All arrangements between the Company and Xxxxxxx, Xxxxx & Co. relating
to the Offer, the Merger and the other Transactions have been disclosed to
Parent prior to the date hereof.
SECTION 3.15 Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of Xxxxxxx, Sachs & Co., to the effect that, as of the date hereof,
the consideration to be received in the Offer and the Merger by the holders of
Company Common Stock is fair to such holders from a financial point of view.
SECTION 3.16 Labor Matters. The Company Disclosure Letter sets forth
-------------
each collective bargaining or other labor union contract to which the Company or
any of its subsidiaries is a party applicable to persons employed by the Company
or any Company Subsidiary and no collective bargaining agreement is currently
being negotiated by the Company or any Company Subsidiary. Except as set forth
in the Company Disclosure Letter, as of the date of this Agreement, there is no
labor dispute, strike or work stoppage against the Company or any of the Company
Subsidiaries pending or, to the knowledge of the Company, threatened, which may
interfere with the respective business activities of the Company or any of the
Company Subsidiaries, except where such dispute, strike or work stoppage,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth
in the Company Disclosure Letter, as of the date of this Agreement, there is no
charge or complaint against the Company or any of the Company Subsidiaries by
the National Labor Relations Board or any comparable governmental agency pending
or, to the knowledge of the Company, threatened.
SECTION 3.17 Contracts; Debt Instruments. As of the date of this Agreement,
---------------------------
there are no Contracts that are required to be filed as part of the Company SEC
Documents and are not so filed. To the knowledge of the Company, neither the
Company nor any of the Company Subsidiaries is in violation of or in default
under (nor does there exist any condition which upon the passage of time or the
giving of notice would cause such a violation of or default under) any Contract
to which it is a party or by which it or any of its properties or assets is
bound that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.18 Intellectual Property. The Company and the Company
---------------------
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, trademarks, trade names, service marks, copyrights, computer
programs and other intellectual property rights (collectively, "Intellectual
------------
Property Rights") that are material to the conduct of the business of the
---------------
Company and the Company Subsidiaries taken as a whole. Except as set forth in
the Company Disclosure Letter, no claims are pending or, to the knowledge of the
Company, threatened, that the Company or any of the Company Subsidiaries is
infringing or otherwise adversely affecting the rights of any person with regard
to any Intellectual Property Right, except for such claims that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. To the knowledge of the Company, no person is
infringing the rights of the Company or any of the Company Subsidiaries with
respect to any Intellectual Property Rights, except for such infringements that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.19 Charitable Contributions. The Company Disclosure Letter sets
------------------------
forth (i) the individual and aggregate monetary contributions made by the
Company to charitable organizations in Oregon during the year ended December 31,
2001, and (ii) all outstanding pledges to charitable organizations (wherever
located) as of the date of this Agreement (the charitable organizations in
Oregon to which the Company has made or pledged to make charitable donations in
the year ended December 31, 2001 being referred to herein as the "Oregon
------
Charities").
---------
SECTION 3.20 Termination of Georgia-Pacific Discussions. The Company and
------------------------------------------
its representatives have terminated all discussions and negotiations with
Georgia-Pacific Corp. ("GP") and its representatives regarding any proposed
--
(i) acquisition by the Company of any portion of the business of GP,
including the building products business thereof, or (ii) combination of any
portion of the business of GP, including without limitation, the building
products business
thereof, with all or any portion of the business of the Company (any such
acquisition or combination being referred to herein as a "GP Transaction"). In
--------------
connection with the termination of such discussions and negotiations, the
Company has paid to GP the amount set forth in the Company Disclosure Letter,
and, except as set forth in the Company Disclosure Letter, such payment has
discharged in full all obligations of the Company to GP in respect of such
discussions and negotiations.
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
Parent and Sub, jointly and severally, represent and warrant to the Company
as follows:
SECTION 4.01 Organization, Standing and Power. Each of Parent and Sub is
--------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, except for
failures which, individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect on Parent or on the
ability of Parent or Sub to consummate the Offer, the Merger and the other
Transactions (a "Parent Material Adverse Effect").
------------------------------
SECTION 4.02 Sub.
---
(a) Since the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of this Agreement,
the performance of its obligations hereunder and matters ancillary thereto
(including, matters ancillary to the Existing Offer prior to the date of this
Agreement).
(b) The authorized capital stock of Sub consists of 1,000 shares of common
stock, par value $1.00 per share, all of which have been validly issued, are
fully paid and nonassessable and are owned by Parent free and clear of any Lien.
SECTION 4.03 Authority; Execution and Delivery; Enforceability. Each of
-------------------------------------------------
Parent and Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution and
delivery by each of Parent and Sub of this Agreement and the consummation by it
of the Transactions have been duly authorized by all necessary corporate action
on the part of Parent and Sub. Parent, as sole shareholder of Sub, has approved
the Offer, the Merger, this Agreement and the Transactions. Each of Parent and
Sub has duly executed and delivered this Agreement, and, assuming the due
authorization, execution and delivery hereof by the Company, this Agreement
constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 4.04 No Conflicts; Consents.
----------------------
(a) The execution and delivery by each of Parent and Sub of this Agreement,
do not, and the consummation of the Offer, the Merger and the other Transactions
and compliance with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Parent or Sub
under, any provision of (i) the charter or organizational documents of Parent or
Sub, (ii) any Contract to which Parent or Sub is a party or by which any of
their respective properties or assets is bound or (iii) subject to the filings
and other matters referred to in Section 4.04(b), any Judgment or Law applicable
to Parent or Sub or their respective properties or assets, other than, in the
case of clauses (ii) and (iii) above, any such items that, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing with, or permit
from, any Governmental Entity is necessary for the execution, delivery and
performance of this Agreement or the consummation of the Transactions by Parent
or Sub, other than (i) the filing with the SEC of (A) the Offer Documents and
(B) such reports under Section 13 and 16 of the Exchange Act as may be required
in connection with this Agreement, the Offer, the Merger and the other
Transactions, (ii) the filing of Articles of Merger with the Secretary of State
of the State of Oregon and the Secretary of State of the State of Washington,
(iii) compliance with and such filings as may be required under applicable
Environmental Laws, (iv) such filings as may be required in connection with the
taxes described in Section 6.09, (v) compliance with the rules and regulations
of the New York Stock Exchange and (vi) such other items (A) that may be
required under the applicable Law of any foreign country, (B) required solely by
reason of the participation of the Company (as opposed to any third party) in
the Transactions or (C) that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.05 Information Supplied. None of the information supplied or to
--------------------
be supplied by Parent or Sub expressly for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-9 Amendment or the
Information Statement will, at the time such document is filed with the SEC, at
any time it is amended or supplemented or at the time it is first published,
sent or given to the Company's
shareholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Proxy Statement will, at the date
it is first mailed to the Company's shareholders or at the time of the Company
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, and the Offer shall comply in all material respects with the
Exchange Act and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, no representation or warranty is made by Parent
or Sub with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference therein.
SECTION 4.06 Brokers. No broker, investment banker, financial advisor or
-------
other person, other than Xxxxxx Xxxxxxx & Co. Incorporated, the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Offer, the Merger and the other Transactions based upon arrangements made by or
on behalf of Parent or Sub.
SECTION 4.07 Financing. At the expiration of the Offer and the Effective
---------
Time, Parent and Sub will have available all of the funds necessary for the
acquisition of shares of Company Common Stock to be purchased pursuant to the
Offer, to perform their respective obligations under this Agreement and to pay
all fees and expenses related to the Transactions payable by them.
SECTION 4.08 Stock Ownership; Interested Shareholder. As of the date
---------------------------------------
hereof, except for (i) 500 shares of Company Common Stock owned by Sub, (ii) 500
shares of Company Common Stock owned by Parent and (iii) an aggregate of 56,324
shares of Company Common Stock owned by members of the board of directors of
Parent, none of Parent, Sub or any of their respective affiliates beneficially
owns any Company Capital Stock and none of Parent, Sub or any of their
respective affiliates is an "Interested Shareholder", as such term is defined in
Section 60.825 of the ORS.
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01 Conduct of Business.
-------------------
(a) Conduct of Business by the Company. Except for matters set forth in the
----------------------------------
Company Disclosure Letter or expressly contemplated by this Agreement, from the
date of this Agreement to the Effective Time the Company shall, and shall cause
each Company Subsidiary to, conduct its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted and, to
the extent consistent therewith, use all reasonable efforts to (i) preserve
intact its current business organization,
(ii) keep available the services of its current officers and employees and (iii)
keep its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time. In
addition, and without limiting the generality of the foregoing, except for
matters set forth in the Company Disclosure Letter or otherwise expressly
permitted by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any Company Subsidiary to, do
any of the following without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned subsidiary
of the Company to its parent, (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or (C) purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any Company Subsidiary or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, or any similar stock, rights or units, other than the
issuance of Company Common Stock (and associated Company Rights) upon the
exercise of Company Employee Stock Options outstanding on the date of this
Agreement and in accordance with their present terms;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents (other than any amendment to
the Company By-laws to exempt the acquisition of shares of Company Capital
Stock from the applicability of Sections 60.801 to 60.816 of the ORS);
(iv) (A) enter into any discussions, negotiations or agreements with
respect to a GP Transaction or (B) acquire or agree to acquire (1) by
merging or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any equity interest in or business
or any corporation, partnership, joint venture, association or other
business organization or division thereof or (2) any assets that are
material, individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in compensation, except in the ordinary
course of business consistent with prior practice or to the extent required
under employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC Documents,
(B) grant to any employee, officer or director of the Company or any
Company Subsidiary any increase in severance or termination pay, except to
the extent required under any agreement in effect as of the date of the
most recent audited financial statements included in the Filed Company SEC
Documents, (C) enter into, amend or terminate any employment, consulting,
indemnification, severance or termination agreement with any such employee,
officer or director, (D) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or other union
agreement or Company Benefit Plan, except as required by applicable Law or
(E) take any action to accelerate any rights or benefits, or make any
material determinations not in the ordinary course of business consistent
with prior practice, under any collective bargaining agreement or Company
Benefit Plan;
(vi) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice, or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the
Company or any direct or indirect wholly owned subsidiary of the Company;
(ix) make or agree to make any new capital expenditures that in the
aggregate are in excess of $5.0 million over the amount budgeted for
capital expenditures on the date hereof (as reflected on the capital
expenditure budgets included in the Company Disclosure Letter), other than
as required by law;
(x) make any material Tax election or settle or compromise any
material Tax liability or refund other than in the ordinary course of
business consistent with past practice;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed Company SEC Documents
or incurred in the ordinary course of business consistent with past
practice, (B) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value, (C) waive
the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Company
Subsidiary is a party or (D) other than in the ordinary course of business
consistent with past practice, enter into any interest rate, currency or
commodity swaps, xxxxxx or other similar financial instruments; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall not permit
-------------
any of their respective subsidiaries to, take any action that would, or that
would reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii)
subject to Section 8.01(f), any condition to the Offer set forth in Exhibit A or
any condition to the Merger set forth in Article VII not being satisfied.
(c) Advice of Changes. The Company shall promptly advise Parent orally
-----------------
and in writing of any change or event that has or would reasonably be expected
to have a Company Material Adverse Effect.
SECTION 5.02 Actions of Company Board; Company Takeover Proposals.
----------------------------------------------------
(a) Subject to Section 8.01(f), neither the Company Board nor any committee
thereof shall (i) approve any letter of intent, agreement in principle,
acquisition agreement or similar agreement relating to any Company Takeover
Proposal, (ii) approve or recommend, or propose to approve or recommend, any
Company Takeover Proposal, (iii) take any action that would result in the
holders of the Company Capital Stock no longer being legally capable under the
ORS of validly approving the Merger or this Agreement or (iv) adopt any
amendment to the Company Charter or Company By-Laws or any resolution or take
any other action that would have the effect of rescinding the actions taken to
render (A) Sections 60.801 to 60.816 of the ORS, (B) Article VI of the Company
Charter inapplicable to Parent and Sub and to the Offer, the Merger and the
other Transactions or (C) Sections 60.825 to 60.845 of the ORS inapplicable to
the Offer, the Merger and the other Transactions.
(b) The Company promptly shall advise Parent orally and in writing of any
Company Takeover Proposal and the identity of the person making any such Company
Takeover Proposal. The Company shall keep Parent fully informed of the status,
including any change to the material terms of, any such Company Takeover
Proposal.
(c) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer for a merger,
-------------------------
consolidation, dissolution, recapitalization or other business combination
involving the Company, (ii) any proposal for the issuance by the Company of over
10% of its equity securities as consideration for the assets or securities of
another person or (iii) any proposal or offer to acquire in any manner, directly
or indirectly, over 10% of the equity securities or consolidated total assets of
the Company, in each case other than the Transactions.
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01 Preparation of the Proxy Statement; Shareholders Meeting.
--------------------------------------------------------
(a) If the approval of this Agreement by the Company's shareholders is
required by Law, as soon as reasonably practicable following the expiration of
the Offer, the Company and Parent shall, at Parent's request, prepare and file
with the SEC the Proxy Statement in preliminary form, and each of the Company
and Parent shall use its reasonable best efforts to respond as promptly as
reasonably practicable to any comments of the SEC with respect thereto. The
Company shall notify Parent promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement. If at any
time prior to receipt of the Company Shareholder Approval there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall as promptly as reasonably practicable prepare and
mail to its shareholders such an amendment or supplement. The Company shall not
mail any Proxy Statement, or any amendment or supplement thereto, to which
Parent reasonably objects. Subject to the foregoing, the Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's shareholders as promptly as reasonably practicable after filing with
the SEC.
(b) If the approval of this Agreement by the Company's shareholders is
required by Law, at Parent's request, as soon as reasonably practicable
following the expiration of the Offer, the Company shall duly call, give notice
of, convene and hold a meeting of its shareholders (the "Company Shareholders
--------------------
Meeting") for the purpose of seeking the Company Shareholder Approval. Without
-------
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 6.01(b) shall not be
affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Company Takeover Proposal or (ii) the
withdrawal or modification by the Company Board of its approval or
recommendation of this Agreement or the Merger. Notwithstanding the foregoing,
if Sub or any other subsidiary of Parent shall acquire at least 90% of the
outstanding shares of each series of Company Capital Stock, the parties shall,
at the request of Parent, take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after the
expiration of the Offer without a shareholders meeting in accordance with
Section 60.491 of the ORS.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by
Parent, Sub or any other subsidiary of Parent to be voted in favor of this
Agreement and the transactions contemplated hereby.
SECTION 6.02 Access to Information. Subject to applicable
---------------------
Law, upon reasonable prior notice, the Company shall, and shall cause each
Company Subsidiary to, afford to Parent and to the officers, employees,
accountants, counsel, financial advisors and other representatives of Parent,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each Company Subsidiary to, furnish promptly to the Parent (a) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of federal or
state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Without limiting the
generality of the foregoing, the Company shall, within two business days of
request therefor, provide to Parent the information described in Rule
14a-7(a)(2)(ii) under the Exchange Act and any information to which a holder of
Company Common Stock would be entitled under Section 60.774 of the ORS (assuming
such holder met the requirements of such Section). No information or knowledge
obtained pursuant to this Section 6.02 shall affect or be deemed to modify any
representation or warranty made by the Company hereunder.
SECTION 6.03 Reasonable Best Efforts; Notification.
-------------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other Transactions, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of this
Agreement. In connection with and without limiting the foregoing, the Company
and the Company Board shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to any Transaction or this Agreement and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to any Transaction or this
Agreement, take all action necessary to ensure that the Offer, the Merger and
the other Transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent or Sub shall
give prompt notice to the Company, of (i) any representation or warranty made by
it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
-------- -------
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 6.04 Awards under the Company Stock Plans.
------------------------------------
(a) As soon as practicable following the date of this Agreement, the
Company Board shall, or shall cause the relevant committee administering the
Company Stock Plans to, adopt such resolutions or take such other actions as may
be required to adjust the terms of all outstanding Company Non-Tandem SARs as
necessary to provide that, as of the Effective Time, each Company Non-Tandem SAR
which is then outstanding shall be cancelled at such time with the holder
thereof becoming entitled to receive an amount of cash equal to the excess, if
any, of (i) the Offer Price over (ii) the strike price.
(b) As soon as practicable following the date of this Agreement, the
Company Board shall, or shall cause the relevant committee administering the
Company Stock Plans to, adopt such resolutions or take such other actions as may
be required to adjust the terms of all outstanding Company Employee Stock
Options, whether vested or unvested, as necessary to provide that: (i) each
Company Employee Stock Option (and any Company SAR related thereto) outstanding
immediately prior to acceptance for payment of shares pursuant to the Offer may
be surrendered at that time, with the holder thereof becoming entitled to
receive a cash payment from the Company one business day after the purchase of
shares of Company Common Stock pursuant to the Offer of an amount equal to (i)
the excess, if any, of (x) the Offer Price over (y) the exercise price per share
of Company Common Stock subject to such Company Employee Stock Option,
multiplied by (ii) the number of shares of Company Common Stock for which such
Company Employee Stock Option shall not theretofore have been exercised; and
each Company Employee Stock Option (and each Company SAR related thereto) not
surrendered for cash immediately prior to the acceptance for payment of shares
pursuant to the Offer shall be treated as follows: the Company SAR shall be
terminated at the Effective Time and the Company Employee Stock Option shall be
amended and converted at the Effective Time into a vested option to acquire, on
the same terms and conditions as are applicable under Parent's employee stock
option plan, the number of shares of common stock of Parent, par value $1.25 per
share ("Parent Common Stock"), equal to the product (rounded down to the nearest
-------------------
whole share) obtained by multiplying (A) the number of shares of Company Common
Stock the holder of such Company Employee Stock Option would have been entitled
to receive had such holder exercised such Company Employee Stock Option in full
immediately prior to the Effective Time and (B) the quotient (rounded to the
nearest one-thousandth) obtained by dividing the Offer Price by the average
(rounded to the nearest one-thousandth) of the 4:00 p.m. closing prices per
share of Parent Common Stock on the NYSE Composite tape over the 20 consecutive
trading days immediately preceding the date of the Effective Time as reported in
the Wall Street Journal, New York City edition (such quotient, the "Conversion
Ratio"), at an exercise price per share of Parent Common Stock (rounded up to
the nearest cent) equal to (x) the exercise price per share set forth in such
Company Employee Stock Option divided by (y) the Conversion Ratio (each, as so
adjusted, an "Adjusted Option"); provided, however, that any Company Employee
--------------- -------- -------
Stock Option which is intended to be an "incentive stock option" (as
defined in Section 422 of the Code), and which may not be adjusted in the
foregoing manner and remain an incentive stock option, shall be adjusted in
accordance with the requirements of Section 424 of the Code (in a manner
which most closely produces the economic results obtained with respect to
other Adjusted Options); and
(ii) ensure that a holder of an Adjusted Option may only exercise
such Adjusted Option in whole or in part in accordance with its terms by
delivering a properly executed notice of exercise to Parent, together with
the consideration therefor and the federal withholding tax information, if
any, required in accordance with the related Company Stock Plan.
(c) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Adjusted Options appropriate notices setting forth such
holders' rights and specifying that such Adjusted Options shall be assumed by
Parent and shall thereafter have terms and conditions consistent in all material
respects with options granted under Parent's 1998 Long-Term Incentive
Compensation Plan, as amended and restated (a complete and correct copy of
which Parent has provided to the Company's advisors and which sets forth the
material terms which will be applicable to the Adjusted Options) (subject to the
adjustments required by Section 6.04(b)). Prior to the Effective Time, Parent
shall take all actions as may be reasonably required to cause the acquisition of
equity securities of Parent, as contemplated by this Section 6.04, by any person
who is or will become a director or officer of Parent to be eligible for
exemption under Rule 16b-3(d) of the SEC. Parent shall file, no later than 30
business days after the Closing Date, a registration statement on Form S-8
covering the shares of Parent Common Stock issuable pursuant to outstanding
Adjusted Options, provided that such Company Employee Stock Options qualify for
registration on such Form S-8. The Company shall cause to be delivered to Parent
prior to the Closing all relevant information relating to the outstanding
Company
Employee Stock Options which become Adjusted Options, and, in the event such
delivery is delayed, Parent's obligation to file the registration statement on
Form S-8 shall be commensurately delayed.
(d) All cash amounts payable pursuant to this Section 6.04 shall be subject
to any required withholding of Taxes and shall be paid without interest.
(e) In this Agreement:
"Company Employee Stock Option" means any option to purchase Company
-----------------------------
Common Stock granted in 2002 or under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
-----------
of Company Common Stock and granted under any Company Stock Plan in tandem
with a Company Employee Stock Option.
"Company Stock Plans" means the Company's 1995 Long-Term Compensation
-------------------
Incentive Program, as amended, and the Company's 1986 Stock Option and
Stock Appreciation Rights Plan, as amended.
SECTION 6.05 Employee Benefits.
-----------------
(a) For one year following the Closing, Parent shall or shall cause the
Surviving Corporation to (i) provide each individual who is an employee of the
Company immediately prior to the Effective Time (other than those employees
whose terms and conditions of employment are subject to a collective bargaining
agreement) (the "Affected Employees") an annual salary or hourly wage rate, as
------------------
applicable, that is no less than the annual salary or hourly wage rate payable
to such Affected Employees by the Company immediately prior to the Effective
Time; and (ii) provide Affected Employees with employee benefits and coverage
and other fringe benefits that are no less favorable than the employee benefits
and coverage and fringe benefits provided to similarly situated employees of the
Parent. For purposes of Section 6.05(a)(ii), "employee benefits" shall include,
but shall not be limited to, qualified and nonqualified retirement plans (i.e.,
----
401(k) plans), severance pay and retention plans, deferred compensation plans,
retiree medical plans, health and welfare plans, dental and vision plans, life
insurance and AD&D plans, and salary continuation, short-term and long-term
disability plans; provided, however, that neither "employee benefits" nor
-------- -------
"fringe benefits" shall include any incentive compensation, bonus, stock option
or other equity-related plans, opportunities or arrangements.
(b) At the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, maintain the Company's Management Retention Benefits Plan and
the Broad-Based Retention Benefits Plan for Salaried Employees (the "Retention
---------
Plans") in accordance with their terms for a period of not less than 24 months
-----
following a Change in Control (as defined in the Retention Plans). Parent shall
assume all liabilities and honor all obligations of the Retention Plans. Parent
is not permitted at any time to amend any provision of the Retention Plans or
terminate the Retention Plans, except as required by law.
(c) Parent agrees that the consummation of the Offer shall constitute a "Change
in Control" for all purposes under each applicable Company Benefit Plan,
including, without limitation, any change in control agreement between the
Company and any current or former employee, officer, director or independent
contractor of the Company. Parent agrees to honor all terms and obligations of
each such Company Benefit Plan, related trust or any other severance or
employment agreement set forth in the Company Disclosure Letter, including,
without limitation, any change in control agreement between the Company and any
current or former employee, officer, director or independent contractor of the
Company, and to withhold only the minimum amount required by law in making
payments thereunder. It is also generally the intention of Parent to treat an
Affected Employee who is terminated by Parent or the Surviving Corporation as a
result of the integration of the businesses of Parent and the Company as having
incurred a "position elimination" for purposes of his or her Adjusted Options.
With respect to Adjusted Options, Parent acknowledges that: (i) any Affected
Employee whose employment is terminated after the Closing by Parent or the
Surviving Corporation, other than for "Cause" (as defined in the Company's
Broad-Based Retention Benefits Plan for Salaried Employees), within one year
following the Effective Time will be treated as having experienced a "position
elimination"; (ii) any Affected Employee who terminates employment for "Good
Reason" (within the meaning of the Company's Broad-Based Retention Benefits Plan
for Salaried Employees, including paragraph 2.7(e), but excluding paragraph
2.7(d) thereof, or, in the case of an Affected Employee listed in Section 3.11
(a)(2) or (a)(5) of the Company Disclosure Letter, such Affected Employee's
individual change-in-control agreement), within one year following the Effective
Time will be treated as having experienced a "position elimination"; and (iii)
any Affected Employee whose employment terminates following the Effective Time
and after having reached (A) age 55 shall be treated as having terminated
employment coincident with "Early Retirement" and (B) age 65 shall be treated as
having terminated conincident with "Retirement." The foregoing sentence shall
not limit the ability of any Affected Employee to otherwise assert "position
elimination." Such treatment of Adjusted Options shall in no way affect an
Affected Employee's rights under any other plans, agreements on arrangements.
(d) Parent shall, or shall cause the Surviving Corporation to, recognize
each Affected Employee's service with the Company for vesting and eligibility to
participate purposes only under each employee benefit plan or arrangement
maintained by Parent or the Surviving Corporation in which such Affected
Employee is or becomes eligible to participate, but only to the extent that such
service was recognized for such purposes under the corresponding Company Benefit
Plan; provided, however, that any defined benefit plan benefit that any Affected
-------- -------
Employee is, or otherwise becomes, entitled to under any qualified or
nonqualified defined benefit pension plan maintained by Parent or the Surviving
Corporation shall be computed under such Parent plan using all of such Affected
Employee's years of service with the Company, the Surviving Corporation, Parent
and their respective Affiliates and predecessors, but shall be offset, if
applicable, by the Company Benefit Plan defined benefit payable to such Affected
Employee, so that no duplication of such benefit results.
(e) To the extent that Affected Employees become eligible to participate in
new plans after the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, (i) 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 in which such Affected Employees may be eligible to participate 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 (ii) provide each
Affected Employee with credit for any co-payments and deductibles paid prior to
the Effective Time 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.
(f) Vacation earned as of the Effective Time and to be taken in calendar
year 2002 by Affected Employees under Company's vacation policy shall be
credited to Affected Employees at the Effective Time to the extent not then
taken. Parent shall grant Affected Employees time off with pay (vacation) for
this full credited amount, or pay (to the extent an Affected Employee is
terminated during 2002), in lieu of time off, for any portion not taken by
December 31, 2002. Unless otherwise required under an individual agreement,
vacation accruing in calendar year 2002 to be taken in calendar year 2003 by
Affected Employees shall be determined in accordance with Parent's vacation
policy.
(g) Nothing in this Section 6.05 shall be interpreted as preventing Parent
or the Surviving Corporation from (i) amending, modifying or terminating any
Company Benefit Plan (subject to the provisions of Sections 6.05(b) and
6.05(c)), parenthesis, consistent with its terms and applicable law, or (ii)
terminating the employment of any Affected Employee or any employee of the
Company whose terms and conditions of employment are subject to a collective
bargaining agreement.
SECTION 6.06 Indemnification.
---------------
(a) Parent shall, to the fullest extent permitted by applicable Law, cause
the Surviving Corporation to honor all the Company's obligations to indemnify
(including any obligations to advance funds for expenses) the present or former
directors or officers of the Company and the Company Subsidiaries for acts or
omissions by such directors and officers occurring at or prior to the Effective
Time to the extent that such obligations of the Company exist on the date of
this Agreement, whether pursuant to the Company Charter, the Company By-laws,
individual indemnity agreements or otherwise, and such obligations shall survive
the Merger and shall continue in full force and effect in accordance with the
terms of the Company Charter, the Company By-laws and such individual indemnity
agreements from the Effective Time.
(b) Without limiting any additional rights that any employee may have under
any employment agreement or Company Benefit Plan, from the Effective Time
through the sixth anniversary of the date on which the Effective Time
occurs, Parent shall, or shall cause the Surviving Corporation to, indemnify and
hold harmless the present officers and directors of the Company and the Company
Subsidiaries and any persons who were directors or officers of the Company or
the Company Subsidiaries at any time between November 29, 2000 and the Effective
Time (each an "Indemnified Party") against all losses, claims, damages,
-----------------
liabilities, fees and expenses (including attorneys' fees and disbursements),
judgments, fines and amounts paid in settlement (collectively, "Losses") arising
------
out of actions or omissions occurring at or prior to the Effective Time in
connection with this Agreement, the Offer, the Merger and the other
Transactions; provided, however, that an Indemnified Party shall not be entitled
-------- -------
to indemnification under this Section 6.06(b) for Losses arising out of actions
or omissions by the Indemnified Party constituting (i) a breach of this
Agreement, (ii) criminal conduct or (iii) any violation of federal, state or
foreign securities laws. Each Indemnified Party will be entitled to advancement
of expenses incurred in the defense of any claim, action, suit, proceeding or
investigation from Parent or the Surviving Corporation within ten business days
of receipt by Parent from the Indemnified Party of a request therefor; provided,
--------
however, that any person to whom expenses are advanced provides an undertaking
-------
to repay such advances if it is ultimately determined that such person is not
entitled to indemnification. Notwithstanding anything herein to the contrary, if
any claim, action, suit, proceeding or investigation is made against any
Indemnified Party and with respect to which such Indemnified Party is entitled
to indemnification under this Section 6.06(b), on or prior to the sixth
anniversary of the Effective Time, the provisions of this Section 6.06(b) shall
continue in effect with respect to such claim, action, suit, proceeding or
investigation until the final disposition thereof.
(c) The Articles of Incorporation and by-laws of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of former or present directors, officers
and employees than are presently set forth in the Company Charter and the
Company By-laws, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of any such individuals.
(d) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect, at no expense to the beneficiaries, the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies with reputable
and financially sound carriers of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect to
claims arising from or related to facts or events which occurred at or before
the Effective Time; provided, however, that Parent shall not be obligated to
-------- -------
make annual premium payments for such insurance to the extent such premiums
exceed 300% of the annual premiums paid as of the date hereof by the Company for
such insurance (such 300% amount, the "Maximum Premium"). If such insurance
---------------
coverage cannot be obtained at all, or can only be obtained at an annual
premium in excess of the Maximum Premium, Parent shall maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Premium; provided, however, if such
-------- -------
insurance coverage cannot be obtained at all, Parent shall purchase all
available extended reporting periods with respect to pre-existing insurance in
an amount which, together with all other insurance purchased pursuant to this
Section 6.06(d), does not exceed the Maximum Premium. The Company represents to
Parent that the Maximum Premium is $1,485,000. Parent shall not, and shall cause
the Company not to, take any action that would have the effect of limiting the
aggregate amount of insurance coverage required to be maintained for the
individuals referred to in this Section 6.06(d). Notwithstanding any other
provision of this Agreement to the contrary, if Parent has not procured
replacement coverage meeting the criteria set forth in the first sentence of
this Section 6.06(d) for the directors' and officers' liability insurance
policies currently maintained by the Company prior to the expiration of such
policies, the Company may renew such policies for a period of not longer than
one year on the terms set forth in the quotation of Aon Risk Services previously
provided to Parent.
(e) In order to be entitled to indemnification under this Section 6.06, an
Indemnified Party must give Parent and the Surviving Corporation written notice
of any third party claim which may give rise to any indemnity obligation under
this Section 6.06, and Parent and the Surviving Corporation shall have the right
to assume the defense of any such claim through counsel of their own choosing,
subject to such counsel's reasonable judgment that separate defenses that would
create a conflict of interest on the part of such counsel are not available. If
Parent and the Surviving Corporation do not assume any such defense, they shall
be liable for all reasonable costs and expenses of defending such claim incurred
by the Indemnified Party, including reasonable fees and disbursements of counsel
and shall advance such reasonable costs and expenses to the Indemnified Party;
provided, however, that such advance shall be made only after receiving an
-------- -------
undertaking from the Indemnified Party that such advance shall be repaid if it
is determined that such Indemnified Party is not entitled to indemnification
therefor. Neither Parent nor the Surviving Corporation shall be liable under
this Section 6.06 for any Losses resulting from any settlement, compromise or
offer to settle or compromise any such claim or litigation or other action,
without the prior written consent of Parent or the Surviving Corporation.
(f) This Section 6.06 is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to law, contract or otherwise.
(g) In the event that the Surviving Corporation or Parent or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or a majority of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation or Parent, as the case may be, shall succeed to the obligations set
forth in this Section 6.06.
SECTION 6.07 Fees and Expenses. All fees and expenses incurred in
-----------------
connection with the Merger and the other Transactions shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
SECTION 6.08 Public Announcements. Parent and Sub, on the one hand, and the
--------------------
Company, on the other hand, shall consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the Offer, the Merger and the other
Transactions and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law, court process or by obligations pursuant to any listing agreement with any
national securities exchange.
SECTION 6.09 Transfer Taxes. All stock transfer, real estate transfer,
--------------
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
--------------
connection with the Transactions shall be paid by either Sub or the Surviving
Corporation, and the Company shall cooperate with Sub and Parent in preparing,
executing and filing any Tax Returns with respect to such Transfer Taxes.
SECTION 6.10 Directors. Promptly upon the acceptance for payment of, and
---------
payment by Sub for, any shares of Company Common Stock pursuant to the Offer,
Sub shall be entitled to designate such number of directors on the Company Board
as will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Company Board equal to at least that number of directors,
rounded up to the next whole number, which is the product of (a) the total
number of directors on the Company Board (giving effect to the directors elected
pursuant to this sentence) multiplied by (b) the percentage that (i) such number
of shares of Company Common Stock so accepted for payment and paid for by Sub
plus the number of shares of Company Common Stock otherwise owned by Parent, Sub
or any other subsidiary of Parent bears to (ii) the number of such shares
outstanding, and the Company shall, at such time, cause Sub's designees to be so
elected; provided, however, that in the event that Sub's designees are appointed
-------- -------
or elected to the Company Board, until the Effective Time the Company Board
shall have at least three directors who are Directors on the date of this
Agreement and who are not officers of the Company (the "Independent Directors");
---------------------
and provided further that, in such event, if the number of Independent Directors
----------------
shall be reduced below three for any reason whatsoever, any remaining
Independent Directors (or Independent Director, if there shall be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Independent Directors for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall designate
three persons to fill such vacancies who are not officers, shareholders or
affiliates of the Company, Parent or Sub, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Sub's designees shall be
elected to the classes of directors of the Company Board as
evenly as possible among the class of directors whose term is expiring in 2002,
the class of directors whose term is expiring in 2003 and the class of directors
whose term is expiring in 2004. Subject to applicable Law, the Company shall
take all action reasonably requested by Parent necessary to effect any such
election, including mailing to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company shall make such mailing with
the mailing of the Schedule 14D-9 Amendment (provided that Sub shall have
provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company shall promptly, at the option of Sub,
either increase the size of the Company Board or obtain the resignation of such
number of its current directors as is necessary to enable Sub's designees to be
elected or appointed to the Company Board as provided above.
SECTION 6.11 Rights Agreement; Consequences if Rights Triggered. The
--------------------------------------------------
Company Board shall take all action reasonably requested in writing by Parent in
order to render the Company Rights inapplicable to the Offer, the Merger and the
other Transactions. Except as approved in writing by Parent, the Company Board
shall not (i) amend the Company Rights Agreement, (ii) redeem the Company
Rights, (iii) take any action with respect to, or make any determination under,
the Company Rights Agreement or (iv) enter into any other rights agreement or
take any other action that would discriminate against, or adversely effect,
Parent or Sub if it acquires shares of Company Common Stock. If any Distribution
Date or Shares Acquisition Date occurs under the Company Rights Agreement at any
time during the period from the date of this Agreement to the Effective Time,
the Company and Parent shall make such adjustment to the Offer Price and/or
Merger Consideration as the Company and Parent shall mutually agree so as to
preserve the economic benefits that the Company and Parent each reasonably
expected on the date of this Agreement to receive as a result of the
consummation of the Merger and the other Transactions.
SECTION 6.12 Shareholder Litigation. The Company shall give Parent the
----------------------
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company or its directors or officers relating to any of
the Transactions; provided, however, that no such settlement shall be agreed to
-------- -------
without Parent's consent, which shall not be unreasonably withheld.
SECTION 6.13 Charitable Giving. During each of the years in the five-year
-----------------
period ending December 31, 2006, Parent shall make or cause to be made through
one or more foundations annual aggregate monetary contributions to the Oregon
Charities of no less than $1.0 million.
SECTION 6.14 Employment Matters. Parent shall ensure that the Surviving
------------------
Corporation will continue to be bound by the terms of the collective bargaining
agreements set forth in the Company Disclosure Letter, and shall further ensure
that the Surviving Corporation complies with its obligations under such
collective bargaining agreements and all other statutory bargaining obligations.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. If required by law, the Company shall have
--------------------
obtained the Company Shareholder Approval.
(b) Antitrust. Any consents, approvals and filings under any foreign
---------
antitrust law, the absence of which would prohibit the consummation of Merger,
shall have been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
-------- -------
asserting this condition, subject to Section 6.03, each of the parties shall
have used its reasonable best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Offer. Parent, Sub or their affiliates shall have purchased, or caused
-----
to be purchased, shares of Company Common Stock, pursuant to the Offer.
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after receipt of the Company
Shareholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) unless Company Common Stock has been purchased pursuant to
the Offer, if the Merger is not consummated on or before April 30, 2002
(the "Outside Date"), unless the failure to consummate the Merger is the
------------
result of a material breach of this Agreement by the party seeking to
terminate this Agreement;
(ii) if any Governmental Entity issues an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
(iii) if the Offer has expired or has been terminated in accordance
with the terms set forth in this Agreement (including Exhibit A) without
Company Common Stock having been purchased pursuant to the Offer; provided,
--------
however, that the terminating party is not then in material breach of any
-------
representation, warranty or covenant contained in this Agreement;
(c) by Parent prior to the acceptance of shares of Company Common Stock for
payment pursuant to the Offer, if the Company breaches or fails to perform in
any material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Exhibit A, and (ii) cannot be or
has not been cured within 30 days after the giving of written notice to the
Company of such breach (provided that Parent is not then in material breach of
any representation, warranty or covenant contained in this Agreement);
(d) by Parent if the Company Board or any committee thereof withdraws or
proposes to withdraw the Company Recommendation or its approval or
recommendation of this Agreement or the Merger (it being understood and agreed
that a communication by the Company Board to the shareholders of the Company
pursuant to Rule 14d-9(f)(3) under the Exchange Act (or any similar
communication to the stockholders of the Company in connection with the
commencement of a tender offer or exchange offer) shall not be deemed to
constitute a withdrawal of the Company Recommendation or its recommendation of
this Agreement or the Merger) or approves or recommends, or proposes to approve
or recommend, any Company Takeover Proposal;
(e) by the Company prior to the acceptance of shares of Company Common
Stock for payment pursuant to the Offer, if Parent breaches or fails to perform
in any material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform cannot be or has
not been cured within 30 days after the giving of written notice to Parent of
such breach (provided that the Company is not then in material breach of any
representation, warranty or covenant in this Agreement); or
(f) by the Company prior to the acceptance of shares of Company Common
Stock for payment pursuant to the Offer in accordance with Section 8.05(b);
provided, however, that the Company shall have complied with all provisions
-------- -------
thereof, including the notice provisions therein.
SECTION 8.02 Effect of Termination. In the event of termination of this
---------------------
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than Section
3.14, Section 4.06, the last sentence of Section 6.02, this Section 8.02 and
Article IX, which provisions shall survive such termination, and except to the
extent that such termination results from the wilful breach by a party of any
representation, warranty or covenant set forth in this Agreement.
SECTION 8.03 Amendment. This Agreement may be amended by the parties at any
---------
time before or after receipt of the Company Shareholder Approval; provided,
--------
however, that after receipt of the Company Shareholder Approval, there shall be
-------
made no amendment that by law requires further approval by the shareholders of
the Company without the further approval of such shareholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective Time,
-----------------
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05 Procedure for Termination, Amendment, Extension or Waiver.
---------------------------------------------------------
(a) A termination of this Agreement pursuant to Section 8.01, an amendment
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; provided, however, that after the appointment of
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Sub's designees to the Company Board pursuant to Section 6.10, the approval of a
majority of the Independent Directors shall be required for the Company to (i)
terminate this Agreement, (ii) exercise or waive any right of the Company under
this Agreement, (iii) amend this Agreement or the Company Charter or Company
By-laws in any manner adverse to the holders of Company Common Stock, (iv)
extend the time for performance of any obligation of Parent or Sub under this
Agreement, (v) extend or alter the Effective Time
or (vi) grant any consent or take any other action with respect to this
Agreement other than compliance herewith.
(b) The Company may terminate this Agreement pursuant to Section 8.01(f)
only if (i) the Company Board has received a Company Takeover Proposal that is a
Superior Company Proposal, (ii) the Company has notified Parent in writing of
its determination that such Company Takeover Proposal is a Superior Company
Proposal, (iii) at least three business days following receipt by Parent of the
notice referred to in clause (ii) above, and taking into account any revised
proposal made by Parent since receipt of the notice referred to in clause (ii)
above, such Superior Company Proposal remains a Superior Company Proposal, (iv)
the Company is in compliance with Section 5.02 and (v) the Company Board
concurrently approves, and the Company concurrently enters into, a definitive
agreement providing for the implementation of such Superior Company Proposal.
(c) For purposes of this Agreement:
"Superior Company Proposal" means any proposal made by a third party
-------------------------
to merge with, combine or acquire substantially all the equity securities
or assets of the Company, pursuant to a tender or exchange offer, a merger,
a consolidation, a liquidation or dissolution, a recapitalization, a sale
of its assets or otherwise, (i) on terms which the Company Board determines
in good faith, after consultation with the Company's independent financial
advisor and outside counsel, to provide greater financial value to the
holders of Company Common Stock than the Transactions, taking into account
all the terms and conditions of such proposal and this Agreement (including
any proposal by Parent to amend the terms of the Transactions), and (ii)
that is reasonably capable of being completed, taking into account all
financial, regulatory, legal and other aspects of such proposal.
ARTICLE IX
General Provisions
------------------
SECTION 9.01 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or any termination
of this Agreement pursuant to Section 8.01. This Section 9.01 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given
upon receipt by the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Weyerhaeuser Company
00000 Xxxxxxxxxxxx Xxx Xxxxx
Xxxxxxx Xxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
(b) if to the Company, to
Willamette Industries, Inc.
0000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attention: Xx. Xxxxx X. XxXxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
SECTION 9.03 Definitions.
-----------
(a) For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "material adverse effect" on a party means a material adverse effect on
-----------------------
the business, assets, condition (financial or otherwise) or results of
operations of such party and its subsidiaries, taken as a whole, except to the
extent resulting from (i) any changes in general United States or global
economic conditions or (ii) any changes in general economic conditions in the
forest products industry.
A "person" means any individual, firm, corporation, partnership, company,
------
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
A "subsidiary" of any person means another person, an amount of the voting
----------
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
(b) The following terms have the meanings give such terms in the Sections
set forth below:
Term Section
---- -------
Adjusted Option 6.04(b)(i)
Affected Employees 6.05
affiliate 9.03(a)
Articles of Merger 1.05
Certificates 2.02(b)
Closing 1.04
Closing Date 1.04
Code 3.09(e)
Company Recitals
Company Benefit Plans 3.11(a)
Company Board Recitals
Company By-laws 3.01
Company Capital Stock 3.03
Company Charter 3.01
Company Common Stock Recitals
Company Disclosure Letter 3.02(a)
Company Employee Stock Option 6.04(e)
Company Material Adverse Effect 3.01
Company Non-Tandem SAR 3.03
Company Pension Plans 3.11(a)
Company Preferred Stock 3.03
Company Recommendation 3.04(b)
Company Rights 3.03
Company Rights Agreement 3.03
Company SAR 6.04(e)
Company SEC Documents 3.06
Company Shareholder Approval 3.04(c)
Company Shareholders Meeting 6.01(b)
Company Stock Plans 6.04(e)
Company Subsidiaries 3.01
Company Takeover Proposal 5.02(c)
Consent 3.05(b)
Contract 3.05(a)
Conversion Ratio 6.04(b)(i)
Dissent Shares 2.01(d)
Effective Time 1.05
Environmental Laws 3.13(d)
ERISA 3.11(a)
Exchange Act 1.01(a)
Exchange Fund 2.02(a)
Existing Offer Recitals
Filed Company SEC Documents 3.08
GAAP 3.06
GP 3.20
GP Transaction 3.20
Governmental Entity 3.05(b)
Hazardous Substance 3.13(d)
Indemnified Party 6.06(b)
Independent Directors 6.10
Information Statement 3.05(b)
Initial Expiration Date 1.01(a)
Intellectual Property Rights 3.18
Judgment 3.05(a)
Law 3.05(a)
Liens 3.02(a)
Losses 6.06(b)
material adverse effect 9.03(a)
Maximum Premium 6.06(d)
Merger Recitals
Merger Consideration 2.01(c)
Offer Recitals
Offer Documents 1.01(b)
Offer Price 1.01(a)
Oregon Charities 3.19
Outside Date 8.01(b)(i)
ORS 1.03
Parent Recitals
Parent Common Stock 6.04(b)(i)
Parent Material Adverse Effect 4.01
Paying Agent 2.02(a)
person 9.03(a)
Proxy Statement 3.05(b)
Retention Plans 6.05(b)
RCW 1.03
Schedule 14D-9 1.02(b)
Schedule 14D-9 Amendment 1.02(b)
Schedule TO 1.01(b)
Schedule TO Amendment 1.01(b)
SEC 1.01(a)
Securities Act 3.06
Sub Recitals
subsidiary 9.03(a)
Superior Company Proposal 8.05(c)
Surviving Corporation 1.03
Tax Return 3.09(f)
Taxes 3.09(f)
Transfer Taxes 6.09
Transactions 1.02(a)
Voting Company Debt 3.03
SECTION 9.04 Interpretation; Disclosure Letter. When a reference is made
---------------------------------
in this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Any matter disclosed in
any section of either the Company Disclosure Letter shall be deemed disclosed
for all purposes and all sections of the Company Disclosure Letter to which such
disclosure is clearly relevant.
SECTION 9.05 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule or Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 9.06 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.07 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, taken together with the Company Disclosure Letter, (a) constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the Transactions and
(b) except for the provisions of Article II, Section 6.04 and Section 6.06, are
not intended to confer upon any person other than the parties any rights or
remedies.
SECTION 9.08 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Oregon, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.09 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct wholly owned subsidiary of Parent, but no
such assignment shall relieve Sub of any of its obligations under this
Agreement. Any purported assignment without such consent shall be void. Subject
to the preceding sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 9.10 Enforcement. The parties agree that irreparable damage would
-----------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Oregon, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Oregon in the event any dispute arises out of this
Agreement or any Transaction, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that it will not bring any action relating to this
Agreement
or any Transaction in any court other than any Federal court sitting in the
State of Oregon and (d) waives any right to trial by jury with respect to any
action related to or arising out of this Agreement or any Transaction.
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
WEYERHAEUSER COMPANY,
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
COMPANY HOLDINGS, INC.,
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
and Treasurer
WILLAMETTE INDUSTRIES, INC.,
By: /s/ Xxxxx X. XxXxxxxxx
-------------------------
Name: Xxxxx X. XxXxxxxxx
Title: President and
Chief Executive Officer
WILLAMETTE INDUSTRIES, INC.,
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial
Officer
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless there shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer that number of shares of Company Common Stock which would represent at
least a majority of the Fully Diluted Shares (the "Minimum Tender Condition").
------------------------
The term "Fully Diluted Shares" means all outstanding securities entitled
--------------------
generally to vote in the election of directors of the Company on a fully diluted
basis, after giving effect to the exercise or conversion of all options, rights
and securities exercisable or convertible into such voting securities, other
than potential dilution attributable to the Company Rights. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer, with the consent of the Company or if, at the
time of the acceptance of such shares for payment or the payment therefor, any
of the following conditions exists:
(a) there shall be pending any suit, action or proceeding by any
Governmental Entity that has a reasonable likelihood of success, (i) challenging
the acquisition by Parent or Sub of any Company Common Stock, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger or
any other Transaction, or seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company and the Company
Subsidiaries taken as whole, (ii) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries of any
material portion of the business or assets of the Company and the Company
Subsidiaries taken as a whole or Parent and its subsidiaries taken as a whole,
or to compel the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or
2
assets of the Company and the Company Subsidiaries taken as a whole or Parent
and its subsidiaries taken as a whole as a result of the Offer, the Merger or
any other Transaction, (iii) seeking to impose limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership of, any
shares of Company Common Stock, including the right to vote the Company Common
Stock purchased by it on all matters properly presented to the shareholders of
the Company or (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect the business or operations of
the Company and the Company Subsidiaries;
(b) any statute, rule, regulation, legislation, interpretation, judgment,
order or injunction shall be enacted, entered, enforced, promulgated, amended or
issued with respect to, or deemed applicable to, or any consent or approval
withheld with respect to, (i) Parent, the Company or any of their respective
subsidiaries or (ii) the Offer, the Merger or any other Transaction, by any
Governmental Entity that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in paragraph (a) above;
(c) except as disclosed in the Filed Company SEC Documents or the Company
Disclosure Letter, since the date of the most recent audited financial
statements included in the Filed Company SEC Documents, there shall have
occurred any event, change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a Company Material Adverse
Effect other than any event, change, effect or development to the extent
resulting from the announcement of this Agreement and compliance by the Company
with the covenants set forth herein;
(d) the Company Board of Directors or any committee thereof shall have
withdrawn or proposed to withdraw the Company Recommendation or its approval or
recommendation of this Agreement or the Merger or approved or recommended, or
proposed to approve or recommend, any Company Takeover Proposal;
(e) any representation and warranty of the Company in this Agreement that
is qualified as to materiality shall not be true and correct or any such
representation and warranty that is not so qualified shall not be true and
3
correct in any material respect, as of such time, except to the extent such
representation and warranty expressly relates to an earlier date (in which case
on and as of such earlier date);
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under this Agreement; or
(g) this Agreement shall have been terminated in accordance with its terms;
which, in the sole judgment of Sub or Parent, in any such case, and regardless
of the circumstances giving rise to any such condition (including any action or
inaction by Parent or any of its affiliates), makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and may
be asserted by Sub or Parent regardless of the circumstances giving rise to such
condition or may (subject to Section 1.01) be waived by Sub and Parent in whole
or in part at any time and from time to time in their sole discretion. The
failure by Parent, Sub or any other affiliate of Parent at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
