STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of February 17, 2000 is by
and between CHAMPION INTERNATIONAL CORPORATION, a New York corporation (the
"Company"), and UPM-KYMMENE CORPORATION, a corporation organized under the
laws of the Republic of Finland ("Grantee").
RECITALS
WHEREAS, Grantee, the Company and Blue Acquisition, Inc. ("Merger
Sub") propose to enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), providing for, among other
things, a merger (the "Merger") of Merger Sub with and into the Company;
and
WHEREAS, as a condition and inducement to Grantee's willingness
to enter into the Merger Agreement, Grantee has requested that the Company
agree, and the Company has agreed, to grant Grantee the Option (as defined
below).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, the Company and Grantee agree as
follows:
1. Capitalized Terms. Certain capitalized terms used in this
Agreement are defined in Annex A hereto and are used herein with the
meanings therein ascribed. Those capitalized terms used but not defined
herein (including in Annex A hereto) that are defined in the Merger
Agreement are used herein with the same meanings as ascribed to them
therein; provided, however, that, as used in this Agreement, "Person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions set
forth herein, the Company hereby grants to Grantee an irrevocable option
(the "Option") to purchase up to 19,219,034 shares (as adjusted as set
forth herein) (the "Option Shares") of common stock, par value $.50 per
share (the "Shares"), of the Company (being 19.9% of the number of shares
outstanding on February 17, 2000 before such issuance), at a purchase price
per share equal to the Exercise Price (as defined below).
(b) Exercise Price. The exercise price, as adjusted as set
forth herein (the "Exercise Price"), of the Option shall be $66.00 per
Option Share.
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event and shall remain
in full force and effect until the earliest to occur of (i) the Effective
Time, (ii) six months after the first occurrence of an Exercise Event (or
if, at the expiration of such six months after the first occurrence of an
Exercise Event, the Option cannot be exercised by reason of any applicable
Order, Law or Regulation, 10 business days after such impediment to
exercise shall have been removed, but in no event under this clause (ii)
later than the first anniversary of the Exercise Event), (iii) termination
of the Merger Agreement in accordance with its terms other than a
termination with respect to which an Exercise Event shall occur and (iv)
the date on which Grantee shall have received the Profit Cap pursuant to
Section 7 (the "Option Term"). If the Option is not theretofore exercised,
the rights and obligations set forth in this Agreement shall terminate at
the expiration of the Option Term. "Exercise Event" shall mean any of the
events giving rise to the obligation of the Company to pay the Termination
Fee under Section 9.3 of the Merger Agreement.
(d) Exercise of Option.
(i) Grantee may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of an Exercise Event
during the Option Term. Notwithstanding the expiration of the Option Term,
Grantee shall be entitled to purchase those Option Shares with respect to
which it has exercised the Option in accordance with the terms hereof prior
to the expiration of the Option Term.
(ii) If Grantee wishes to exercise the Option, it shall send a
written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total
number of Option Shares it intends to purchase pursuant to such exercise
and (ii) a place and a date (the "Closing Date") not earlier than three
Business Days nor later than 15 Business Days from the Notice Date for the
closing of the purchase and sale pursuant to the Option (the "Closing");
provided that such closing shall be held only if (A) such purchase would
not otherwise violate or cause the violation of applicable Law (including
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), (B) no Law or
Regulation shall have been adopted or promulgated, and no Order shall be in
effect, which prohibits delivery of such Option Shares (and the parties
shall use their reasonable best efforts to have any such Order vacated or
reversed), and (C) any prior notification to or approval of any other
regulatory authority in the United States or elsewhere required in
connection with such purchase shall have been made or obtained, other than
those which if not made or obtained would not reasonably be expected to
result in a significant detriment to the Company and its Subsidiaries taken
as a whole.
(iii) If the Closing cannot be effected by reason of a
restriction set forth in Clause (A), (B) or (C) of the proviso in Section
2(d)(ii), the Closing Date shall be extended to the tenth Business Day
following the expiration or termination of such restriction. Without
limiting the foregoing, if prior notification to, or Authorization of, any
Governmental Entity is required in connection with the purchase of such
Option Shares by virtue of the application of such Law, Regulation or
Order, Grantee and, if applicable, the Company shall promptly file the
required notice or application for Authorization and Grantee, with the
cooperation of the Company, shall expeditiously process the same.
(iv) Notwithstanding Section 2(d)(iii), if the Closing Date shall
not have occurred within twelve months after the first occurrence of an
Exercise Event as a result of one or more restrictions imposed by the
application of any Law, Regulation or Order, the exercise of the Option
effected on the Notice Date shall be deemed to have expired.
(e) Payment and Delivery of Certificates.
(i) At each Closing, Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated
by the Company an amount equal to the Exercise Price multiplied by the
number of Option Shares to be purchased on such Closing Date.
(ii) At each Closing, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all
Liens, and Grantee shall deliver to the Company its written agreement that
Grantee will not offer to sell or otherwise dispose of such Option Shares
in violation of applicable Law or the provisions of this Agreement.
(f) Certificates. Certificates for the Option Shares delivered
at each Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF FEBRUARY 17, 2000. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) a new certificate or certificates
evidencing the same number of Shares will be issued to Grantee in lieu of
the certificate bearing the above legend, and such new certificate shall
not bear such legend, insofar as it applies to the Securities Act, if
Grantee shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission, or an opinion of counsel
in form and substance reasonably satisfactory to the Company and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that
do not require the retention of such reference.
(g) If at the time of issuance of any Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase
rights or similar securities to holders of Shares, then each Option Share
purchased pursuant to the Option shall also include rights with terms
substantially the same as and at least as favorable to Grantee as those
issued to other holders of Shares.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Shares by reason of stock
dividend, stock split, split-up, combination, reclassification,
recapitalization, exchange of shares, dividend, dividend payable in any
other securities or similar event, the type and number of Shares or
securities subject to the Option, and the Exercise Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the same class and number of outstanding shares or
other securities or property that Grantee would have received in respect of
the Shares if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable.
(b) If any additional Shares are issued after the date of this
Agreement (other than pursuant to an event described in Section 3(a)
above), the number of Shares then remaining subject to the Option shall be
adjusted so that, after such issuance of additional Shares, such number of
Shares then remaining subject to the Option, together with shares
theretofore issued pursuant to the Option, equals 19.9% of the number of
Shares then issued and outstanding. In no event shall the number of Option
Shares exceed 19.9% of the number of Shares issued and outstanding at the
time of exercise (without giving effect to the issuance of any Shares
subject to or issued pursuant to the Option).
(c) To the extent any of the provisions of this Agreement apply
to the Exercise Price, they shall be deemed to refer to the Exercise Price
as adjusted pursuant to this Section 3.
(d) Without limiting the foregoing, whenever the number of
Option Shares purchasable upon exercise of the Option is adjusted as
provided in this Section 3, the Exercise Price per Option Share shall be
adjusted by multiplying the Exercise Price by a fraction, the numerator of
which is equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which is equal to the number of Option
Shares purchasable after the adjustment.
(e) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that the Company
enters into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and the Company will not be
the continuing or surviving corporation in such consolidation or merger,
(ii) to permit any Person, other than Grantee or one of its Subsidiaries,
to merge into the Company and the Company will be the continuing or
surviving corporation, but in connection with such merger, the shares of
Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of
the Company or any other Person or cash or any other property, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
Person, other than Grantee or one of its Subsidiaries, then, and in each
such case, the agreement governing such transaction will make proper
provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of
Option Shares had the Option been exercised immediately prior to such
consolidation, merger, sale or transfer or the record date therefor, as
applicable. The Company shall take such steps in connection with such
consolidation, merger, liquidation or other such transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option.
4. Purchase Not For Distribution. Grantee hereby represents
and warrants to the Company that any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be taken with a
view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
5. Repurchase at the Option of Grantee.
(a) At the request of Grantee made at any time and from time to
time after the occurrence of an Exercise Event and prior to 120 days after
the expiration of the Option Term (the "Put Period"), the Company (or any
successor thereto) shall, at the election of Grantee (the "Put Right"),
repurchase from Grantee (i) that portion of the Option relating to all or
any part of the Unexercised Option Shares (or as to which the Option has
been exercised but the Closing has not occurred) and (ii) all or any
portion of the Shares purchased by Grantee pursuant hereto and with respect
to which Grantee then has ownership. The date on which Grantee exercises
its rights under this Section 5 is referred to as the "Put Date." Such
repurchase shall be at an aggregate price (the "Put Consideration") equal
to the sum of:
(i) the aggregate Exercise Price paid by Grantee for any Option
Shares which Grantee owns and as to which Grantee is exercising the Put
Right;
(ii) the excess, if any, of the Applicable Price for a Share over
the Exercise Price paid by Grantee for each Option Share as to which
Grantee is exercising the Put Right multiplied by the number of such
shares; and
(iii) the excess, if any, of (x) the Applicable Price for a
Share over (y) the Exercise Price multiplied by the number of Unexercised
Option Shares as to which Grantee is exercising the Put Right. Upon
exercise of its right pursuant to this Section 5(a) and the receipt by
Grantee of the Put Consideration, the obligation of the Company to deliver
Option Shares pursuant to Section 3 shall be terminated with respect to the
number of Option Shares for which the Company shall have elected to be paid
the Put Consideration.
(b) If Grantee exercises its rights under this Section 5, the
Company shall, within five Business Days after the Put Date, pay the Put
Consideration in immediately available funds to an account specified by
Grantee, and Grantee shall promptly thereupon surrender to the Company the
Option or portion of the Option and the certificates evidencing the Shares
purchased thereunder.
(c) If the Option has been exercised, in whole or in part, as to
any Option Shares subject to the Put Right but the Closing thereunder has
not occurred, the payment of the Put Consideration shall, to that extent,
render such exercise null and void.
(d) Notwithstanding any provision to the contrary in this
Agreement Grantee may not exercise its rights pursuant to this Section 5 in
a manner that would result in Total Profit of more than the Profit Cap;
provided, however, that nothing in this sentence shall limit Grantee's
ability to exercise the Option in accordance with its terms.
6. Registration Rights.
(a) The Company shall, if requested by Grantee at any time and
from time to time during the Registration Period, as expeditiously as
practicable, prepare, file and cause to be made effective up to two
registration statements under the Securities Act if such registration is
required in order to permit the offering, sale and delivery of any or all
Shares or other securities that have been acquired by or are issuable to
Grantee upon exercise of the Option in accordance with the intended method
of sale or other disposition stated by Grantee, including, at the sole
discretion of the Company, a "shelf" registration statement under Rule 415
under the Securities Act or any successor provision, and the Company shall
use all reasonable efforts to qualify such shares or other securities under
any applicable state securities laws. The Company shall use all reasonable
efforts to cause each such registration statement to become effective, to
obtain all consents or waivers of other parties that are required therefor
and to keep such registration statement effective for such period not in
excess of 90 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a
registration statement and to maintain its effectiveness may be suspended
for one or more periods of time not exceeding 90 days in the aggregate if
the Board of Directors of the Company shall have determined in good faith
that the filing of such registration or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect the Company. For purposes of determining
whether two requests have been made under this Section 6, only requests
relating to a registration statement that has become effective under the
Securities Act shall be counted. The Registration Expense shall be for the
account of the Company.
(b) Grantee shall provide all information reasonably requested
by the Company for inclusion in any registration statement to be filed
hereunder. Grantee shall choose the managing underwriter in any
registration contemplated by this Section 6. If during the Registration
Period the Company shall propose to register under the Securities Act the
offering, sale and delivery of Shares for cash for its own account or for
any other stockholder of the Company pursuant to a firm underwriting, it
shall, in addition to the Company's other obligations under this Section 6,
allow Grantee the right to participate in such registration provided that
Grantee participates in the underwriting; provided, however, that, if the
managing underwriter of such offering advises the Company in writing that
in its opinion the number of Shares requested to be included in such
registration exceeds the number that can be sold in such offering without
adversely affecting the Offering Price, the Company shall, after fully
including therein all securities to be sold by the Company, include the
shares requested to be included therein by Grantee pro rata (based on the
number of Shares intended to be included therein) with the shares intended
to be included therein by Persons other than the Company.
(c) In connection with any offering, sale and delivery of Shares
pursuant to a registration statement effected pursuant to this Section 6,
the Company and Grantee shall provide each other and each underwriter of
the offering with customary representations, warranties and covenants,
including covenants of indemnification and contribution and, with respect
to an underwritten offering, enter into an underwriting agreement and other
documents in form and substance customary for transactions of such type.
7. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement in no
event shall Grantee's Total Profit exceed the Profit Cap and, if it
otherwise would exceed such amount, Grantee, at its sole election, shall
either (i) deliver to the Company for cancellation Shares (or other
securities into which such Option Shares are converted or exchanged)
previously purchased by Grantee, (ii) pay cash or other consideration to
the Company, (iii) reduce the number of Shares subject to the Option or
(iv) undertake any combination thereof, so that Grantee's Total Profit
shall not exceed the Profit Cap after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, this
Stock Option may not be exercised for a number of Option Shares that would,
as of any Notice Date, result in a Notional Total Profit of more than the
Profit Cap, and, if exercise of the Option otherwise would exceed the
Profit Cap, Grantee, at its sole option, may (in addition to the actions
specified in Section 7(a)) (i) reduce the number of Option Shares subject
to the Option or (ii) increase the Exercise Price for that number of Option
Shares set forth in the Exercise Notice so that the Notional Total Profit
shall not exceed the Profit Cap; provided, however, that nothing in this
sentence shall restrict any exercise of the Option otherwise permitted by
this Section 7(b) on any subsequent date at the Exercise Price set forth in
Section 2(b) if such exercise would not then be restricted under this
Section 7(b).
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive,
nor relieve the Company's obligation to pay, any Termination Fee provided
for in Section 9.3 of the Merger Agreement; provided that if and to the
extent the Total Profit received by Grantee would exceed the Profit Cap
following receipt of such payment, Grantee shall be obligated to promptly
comply with the terms of Section 7(a).
(d) For purposes of Section 7(a) and clause (ii) of the
definition of Total Profit, the value of any Option Shares delivered by
Grantee to the Company shall be the Applicable Price of such Option
Shares.
8. Additional Covenants of the Company. (a) If the Shares or
any other securities then subject to the Option are then listed on the
NYSE, the Company, upon the occurrence of an Exercise Event, will promptly
file an application to list on the NYSE the Shares or other securities then
subject to the Option and will use all reasonable efforts to cause such
listing application to be approved as promptly as practicable.
(b) The Company will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
permit the exercise of the Option in accordance with the terms and
conditions hereof, as soon as practicable after the date hereof, including
making any appropriate filing pursuant to the HSR Act and any other
applicable law, supplying as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and any other applicable law, and taking all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(c) The Company agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by it.
(d) The Company shall take all such steps as may be required to
cause any acquisitions or dispositions by Grantee (or any affiliate who may
become subject to the reporting requirements of Section 16(a) of the
Exchange Act) of any Shares acquired in connection with this Agreement
(through conversion or exercise of the Option or otherwise) to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
(e) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary; Severability.
Except as otherwise set forth in the Merger Agreement, this Agreement
(including the Merger Agreement and the other documents and instruments
referred to herein and therein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) is
not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
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.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York, regardless
of the Laws that might otherwise govern under applicable principles of
conflicts of law.
(f) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
If to the Company to:
Champion International Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxxx X. Coco, Esq.
If to Grantee to:
UPM-Kymmene Corporation
Xxxxxxxxxxxxxx 0
X.X. Xxx 000
FIN-00101 Helsinki
Telecopy: 011-358-204-150-304
Attention: Xxxx Xxxxx-Xxxxxx
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original and
all of which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold,
assigned or otherwise disposed of or transferred by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Grantee may assign this Agreement
to a wholly owned Subsidiary of Grantee; provided, however, that no such
assignment shall have the effect of releasing Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(j) Further Assurances. In the event of any exercise of the
Option by Grantee, the Company and Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(k) Specific Performance. The parties hereto hereby acknowledge
and agree that the failure of any party to this Agreement to perform its
agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will
not be an adequate remedy. Accordingly, each of the parties hereto hereby
consents to the granting of equitable relief (including specific
performance and injunctive relief) by any court of competent jurisdiction
to enforce any party's obligations hereunder. The parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for
any failure to perform this Agreement.
IN WITNESS WHEREOF, the Company and Grantee have caused this
Stock Option Agreement to be signed by their respective officers thereunto
duly authorized, all as of the day and year first written above.
CHAMPION INTERNATIONAL
CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief Executive
Officer
UPM-KYMMENE CORPORATION
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: President and Chief Executive
Officer
By /s/ Xxxx Xxxxx-Xxxxxx
------------------------------------
Name: Xxxx Xxxxx-Xxxxxx
Title: General Counsel
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall
have the meanings set forth below unless the context shall otherwise
require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price", as of any date, means the highest of (i) the
highest purchase price per Share paid or proposed to be paid by any third
Person for Shares pursuant to any Takeover Proposal for or with the Company
made on or prior to such date, and (ii) the Current Market Price. If the
consideration to be offered, paid or received pursuant to the foregoing
clause (i) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally recognized
investment banking firm jointly selected by Grantee and the Company.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals
granted by any Governmental Entity.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday in the United States or in Finland.
"Closing" shall have the meaning ascribed to such term in Section
2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Current Market Price" shall mean, as of any date, the average of
the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Shares as reported on the New York Stock Exchange Composite Tape during the
ten consecutive trading days ending on (and including) the trading day
immediately prior to such date or, if the Shares are not quoted thereon, on
The Nasdaq Stock Market or, if the Shares are not quoted thereon, on the
principal trading market (as defined in Regulation M under the Exchange
Act) on which such shares are traded as reported by a recognized source
during such ten trading day period.
"Exercise Event" shall have the meaning ascribed to such term in
Section 2(c).
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Governmental Entity" shall mean any federal, state or foreign
governmental or regulatory agency, body or authority.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of
Governmental Entities having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
adverse claim, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature thereof or the filing of
or agreement to give financing statement under the Laws of any
jurisdiction.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that
the Option were exercised on such date for such number of Option Shares and
assuming that such Option Shares, together with all other Option Shares
previously acquired upon exercise of the Option and held by Grantee as of
such date, were sold for cash at the closing market price per Share as of
the close of business on the preceding trading day (less customary
brokerage commissions).
"Option" shall have the meaning ascribed to such term in Section
2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any
Governmental Entity.
"Profit Cap" shall mean $210 million.
"Put Consideration" shall have the meaning ascribed to such term
in Section 5 herein.
"Put Date" shall have the meaning ascribed to such term in
Section 5 herein.
"Put Period" shall have the meaning ascribed to such term in
Section 5 herein.
"Put Right" shall have the meaning ascribed to such term in
Section 5 herein.
"Registration Expenses" shall mean the expenses associated with
the preparation and filing of any registration statement pursuant to
Section 6 herein and any sale covered thereby (including any fees related
to blue sky qualifications and filing fees in respect of the National
Association of Securities Dealers, Inc.), but excluding underwriting
discounts or commissions or brokers' fees in respect to shares to be sold
by Grantee and the fees and disbursements of Grantee's counsel.
"Registration Period" shall mean the period of two years
following the first exercise of the Option by Grantee.
"Regulation" shall mean any rule or regulation of any
Governmental Entity having the effect of Law or of any rule or regulation
of any self-regulatory organization, such as the NYSE.
"Total Profit" shall mean (i) the aggregate amount (before income
taxes) of (A) any excess of (x) the net cash amounts plus the fair market
value of any other consideration (net of expenses incurred) received by
Grantee pursuant to a sale of the Option Shares (or securities into which
such shares are converted or exchanged) over (y) Grantee's aggregate
purchase price for such Option Shares (or other securities) plus (B) any
amounts received by Grantee from the Company or concurrently being paid to
Grantee pursuant to Section 9.3 of the Merger Agreement minus (ii) the
amounts of any cash previously paid by Grantee to the Company pursuant to
Section 7 of this Agreement plus the value of the Option Shares (or other
securities) previously delivered to the Company pursuant to Section 7 of
this Agreement plus (iii) any amounts paid to Grantee pursuant to an
exercise of Grantee's rights under Section 5.
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares
as to which the Option remains unexercised from time to time.
