As filed with the Securities and Exchange Commission on July 30, 1999
Registration No. 333-____
- --------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
Weyerhaeuser Company
(Exact name of registrant as specified in its charter)
Washington 91-0470860
(State of Incorporation) (I.R.S. Employer
Identification Number)
----------------------
P.O. Box 2999
Tacoma, Washington 98477
(253) 924-2345
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Sandy D. McDade
Corporate Secretary
Weyerhaeuser Company
P.O. Box 2999
Tacoma, Washington 98477
(253) 924-2345
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Richard Hall
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement. If
the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, as amended (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans,
check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
Calculation of Registration Fee
==========================================================================
Proposed
maximum Proposed
Title of each aggregate maximum
class of Amount to offering aggregate Amount of
securities to be price per offering registration
be registered registered unit price fee (1)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 14,000,000 $65.375 $915,250,000 $254,440
par value Shares
$1.25
==========================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(c) based on the average of the
high and low prices of the common stock reported in the consolidated
reporting system on July 29, 1999.
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
- --------------------------------------------------------------------------
<PAGE>
[logo]
Weyerhaeuser Company
14,000,000 Shares
COMMON STOCK
----------------------
Weyerhaeuser Company may issue from time to time up to 14,000,000 shares
of Common Stock in exchange for exchangeable shares (the "Exchangeable
Shares") of a special purpose Weyerhaeuser subsidiary, Weyerhaeuser
Exchangeco Limited ("Weysub"). Weysub will issue the Exchangeable Shares
to shareholders of MacMillan Bloedel Limited who are Canadian residents and
who choose to receive the Exchangeable Shares in connection with the
acquisition by Weyerhaeuser of MacMillan Bloedel. If the holders of the
MacMillan Bloedel's Adjustable Rate Convertible Subordinated Debentures
(the "Debentures") approve amendments to the terms of the indenture under
which the Debentures were issued, Weysub will also issue Exchangeable
Shares to the holders of the Debentures when they are converted under the
terms of supplemental indenture that we will enter into with MacMillan
Bloedel and the Royal Trust Company, as Trustee. These shareholders may
exchange the Exchangeable Shares for our Common Stock at any time. We will
redeem any Exchangeable Shares that remain outstanding for Common Stock on
December 31, 2007. We will redeem the Exchangeable Shares for Common Stock
before December 31, 2007 if there are 1,000,000 or fewer Exchangeable
Shares outstanding that are not owned by us or our affiliates. We also
will redeem the Exchangeable Shares for Common Stock before December 31,
2007 if certain other events occur.
Our Common Stock trades on the New York Stock Exchange, the Pacific Stock
Exchange and the Chicago Stock Exchange under the symbol "WY". On July 29,
1999, the last reported sale price of the Common Stock on the New York
Stock Exchange was $65.125 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or determined if
this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
----------------------
This Prospectus is dated July 30, 1999.
----------------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Where You Can Find More Information 3
Incorporation by Reference 3
The Company 4
Use of Proceeds 4
Market Prices and Dividend Policy 4
Description of Weyerhaeuser Capital Stock 5
The Exchangeable Shares 6
Plan of Distribution 6
Experts 6
Legal Matters 6
</TABLE>
----------------------
You should rely only on the information contained in this prospectus
or to which we have referred you. We have not authorized anyone to provide
you with information that is different. This prospectus may only be used
where it is legal to sell these securities. The information in this
prospectus may only be accurate on the date of this prospectus.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports and other information with the Securities and
Exchange Commission (the "Commission"). We have filed with the Commission
a Registration Statement on Form S-3 regarding this offering. This
prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and you
should refer to the Registration Statement and its exhibits and schedules
to read that information. References in this prospectus to any contract or
any other documents are not necessarily complete, and you should refer to
the exhibits attached to the Registration Statement for copies of the
actual contract or document.
You may read and copy the Registration Statement, the related exhibits
and schedules and the other materials we file with the Commission at the
Commission's following locations:
<TABLE>
<S> <C> <C>
Public Reference New York Regional Chicago Regional
Room Office Office Office
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Washington, DC 20549 Suite 1300 500 West Madison Street
New York, NY 10048 Chicago, IL 60661-2511
</TABLE>
You may also obtain copies of the Registration Statement by mail upon
payment of a duplicating fee from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, DC 20549 or by telephone at 1-800-SEC-0330. The
Registration Statement is available to the public from commercial document
retrieval services and at the Commission's World Wide Website located at
http://www.sec.gov. You may also read our reports, proxy and information
statements and other information at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York, at the office of the Chicago
Stock Exchange, 440 South LaSalle Street, Chicago, Illinois, and at the
offices of the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California or 233 South Beaudy Avenue, Los Angeles, California.
INCORPORATION BY REFERENCE
The Commission allows us to "incorporate by reference" in this
prospectus other information we file with them, which means that we can
disclose important information to you by referring you to those documents.
The information incorporated by reference is an important part of this
prospectus; however, to the extent that there are any inconsistencies
between information presented in this prospectus and information contained
in incorporated documents filed with the Commission before the date of this
prospectus, the information in this prospectus automatically updates and
supersedes the earlier information. Information that we file with the
Commission after the date of this prospectus will automatically update and
supersede the information in this prospectus and any earlier filed or
incorporated information. Specifically, we incorporate by reference
our Annual Report on Form 10-K for the fiscal year ended December 27,
1998;
our Quarterly Report on Form 10-Q for the fiscal quarter ended March
28, 1999;
our Current Reports on Form 8-K dated January 7, 1999; January 21,
1999; April 14, 1999; June 22,1999; and July 16, 1999;
our Proxy Statement on Schedule 14A dated March 9, 1999;
the description of our Common Stock contained in the Registration
Statement on Form S-3 dated April 14, 1983; and
any future filings made with the Commission under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act until all the Exchangeable
Shares have been exchanged for Common Stock.
3
<PAGE>
We will provide without charge upon written or oral request, to each
person to whom a copy of this prospectus is delivered, a copy of the
material described above (not including exhibits to such documents unless
such exhibits are specifically incorporated by reference into such
documents). Requests should be directed to:
Weyerhaeuser Company
P.O. Box 2999
Tacoma, Washington 98477
Attention: Richard J. Taggart, Director of Investor Relations
(253) 924-2345.
THE COMPANY
We were incorporated in the state of Washington in January 1900, as
Weyerhaeuser Timber Company. We are principally engaged in the growing and
harvesting of timber and the manufacture, distribution and sale of forest
products and real estate and financial services. Our principal business
segments include timberlands, wood products, and pulp, paper and packaging.
Our principal executive office is located at 33663 Weyerhaeuser Way S,
Federal Way, WA 98003, and its telephone number is (253) 924-5272.
USE OF PROCEEDS
Because the Common Stock will be issued upon exchange of the Exchangeable
Shares, we will receive no cash proceeds from the offering.
MARKET PRICES AND DIVIDEND POLICY
Our Common Stock is listed and principally traded on the NYSE under
the symbol "WY" and is also listed on the Chicago Stock Exchange and the
Pacific Stock Exchange. There were approximately 201,166,800 shares of
Common Stock held of record by approximately 18,400 stockholders as of
July 28, 1999. The table below sets forth the high and low sales prices
of the Common Stock as reported for NYSE Composite Transactions and the
quarterly cash dividends declared per share of Common Stock during the
periods indicated.
<TABLE>
<CAPTION>
Cash
Price Range Dividends
--------------------
Low High Declared
-------- ---------- ---------
<S> <C> <C> <C>
1997
First Quarter $44 1/2 $50 5/8 $ 0.400
Second Quarter 42 5/8 55 1/4 0.400
Third Quarter 51 1/2 63 15/16 0.400
Fourth Quarter 46 1/16 60 3/4 0.400
1998
First Quarter $44 15/16 $57 15/16 $0.400
Second Quarter 44 9/16 62 0.400
Third Quarter 36 3/4 47 7/16 0.400
Fourth Quarter 41 3/4 51 11/16 0.400
1999
First Quarter $55 1/2 $62 $0.400
Second Quarter 55 9/16 73 15/16 0.400
</TABLE>
See the cover page for the closing price for our Common Stock on the
NYSE on July 29, 1999.
We anticipate continuing to pay regular quarterly cash dividends;
however, the declaration and payment of future dividends will be determined
by our Board of Directors in its sole discretion and will depend upon the
earnings, financial condition and capital needs of the Company and other
factors that our Board of Directors may consider relevant.
The terms of our Support Agreement relating to the Exchangeable Shares
prohibit us from declaring or paying any dividend on our Common Stock
unless (a) Weysub immediately thereafter declares or pays, as
4
<PAGE>
the case may be, an equivalent dividend on the Exchangeable Shares and
(b) Weysub has sufficient money or other assets or authorized but unissued
securities available to enable the due declaration and the due and punctual
payment of an equivalent dividend on the Exchangeable Shares.
DESCRIPTION OF WEYERHAEUSER CAPITAL STOCK
The following description sets forth the general terms of our Capital
Stock. The descriptions set forth below do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, the
Restated Articles of Incorporation, as amended, which are filed as an
exhibit to the Registration Statement.
General
Our authorized capital stock consists of 400,000,000 shares of Common
Stock, par value $1.25 per share, 7,000,000 shares of preferred stock, par
value $1 per share, issuable in series ("Preferred Stock"), and 40,000,000
shares of preference stock, par value $1 per share ("Preference Stock"),
issuable in series. As of July 28, 1999, there were 201,166,800 shares of
our Common Stock outstanding and no shares of Preferred Stock or Preference
Stock outstanding.
Common Stock
The Common Stock will be, when issued, fully paid and nonassessable.
Our Common Stock does not carry any preemptive rights enabling a holder to
subscribe for or receive any additional securities that may be issued from
time to time by us. The rights of holders of Common Stock will be subject
to the rights of holders of any Preferred Stock and any Preference Stock
that may be issued in the future, which may adversely affect the rights of
holders of Common Stock. Our Board of Directors may issue additional
shares of Common Stock, Preferred Stock or Preference Stock to obtain
additional financing, in connection with acquisitions, to officers,
directors and employees of the Company and its subsidiaries pursuant to
benefit plans or otherwise and for other proper corporate purposes. No
preemptive rights, conversion rights, redemption rights or sinking fund
provisions are applicable to our Common Stock, and there are no dividends
in arrears or default.
ChaseMellon Shareholder Services, L.L.C. is the principal transfer
agent for our Common Stock.
Dividends. The holders of our Common Stock are entitled to receive
such dividends as may be declared by the Board of Directors of the Company
out of funds legally available for distribution. The rights of holders of
Common Stock are subject to the rights of the holders of any class of
capital stock of the Company having any preference or priority over the
Common Stock.
Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution, or winding-up of the Company, the holders of Common Stock will
be entitled to receive ratably, after payment of all of our debts and
liabilities and of all sums to which holders of any Preferred Stock or
Preference Stock may be entitled, all of the remaining assets of the
Company.
Voting Rights. The holders of Common Stock currently possess
exclusive voting rights on all matters submitted to the Stockholders.
However, in connection with the Plan of Arrangement, we expect to issue to
a trustee for the benefit of the holders of the Exchangeable Shares a
special voting share (described below) carrying voting rights equal to the
number of then outstanding Exchangeable Shares not owned by us or our
affiliates. Our Board of Directors may also specify voting rights with
respect to any Preferred Stock or Preference Stock that may be issued in
the future. Each holder of Common Stock is entitled to one vote per share
with respect to all matters. There is no cumulative voting in the election
of directors.
Our Board of Directors is currently comprised of 10 directors, divided
into three classes, the precise number of members to be fixed from time to
time by the Board of Directors. The directors of the class elected at each
annual election hold office for a term of three years, with the term of
each class expiring at successive annual meetings of stockholders. An
additional director, from the MacMillan Bloedel board of directors, will be
appointed to our Board of Directors at or prior to consummation of the
acquisition of MacMillan Bloedel, with a term expiring no earlier than
2002.
5
<PAGE>
Special Voting Stock
Our Board of Directors has designated a series of Preference Stock as
"Special Voting Shares," and has authorized the issuance of one share of
such series (the "Special Voting Stock"). The holder of the share of
Special Voting Stock is entitled to cast a number of votes equal to the
number of then outstanding Exchangeable Shares not owned by us or our
affiliates. Under the terms of our Voting and Exchange Trust Agreement
described below, the holder of the share of Special Voting Stock must
receive timely notice from holders of the Exchangeable Shares in order to
cast those votes corresponding to the Exchangeable Shares then outstanding.
The holders of Common Stock and the holder of the share of Special Voting
Stock WILL vote together as a single class on all matters, except as
otherwise required by law. The Special Voting Stock, with respect to
rights on liquidation, dissolution and winding-up, ranks senior to all
classes of Common Stock and junior to any other class or series of
Preferred Stock or Preference Stock. In the event of any liquidation,
dissolution or winding-up of the Company, the holder of the share of
Special Voting Stock will be entitled to receive, prior to any
distributions to holders of Common Stock, $1.00 out of the assets of the
Company available for distribution to its shareholders. No dividends are
payable on the share of Special Voting Stock. The Special Voting Stock
will be issued to a Canadian trustee (the "Trustee") under a Voting and
Exchange Trust Agreement, which will be entered into by us, Weysub and the
Trustee. The Special Voting Stock, and the Exchangeable Shares, may be
redeemed on the earlier of, among other dates, December 31, 2007, or when
there are 1,000,000 or fewer Exchangeable Shares outstanding not owned by
us or our affiliates.
THE EXCHANGEABLE SHARES
The rights of holders of Exchangeable Shares, including exchange
rights, are described in the terms of our Plan of Arrangement with
MacMillan Bloedel, which is included as an exhibit to this Registration
Statement.
PLAN OF DISTRIBUTION
The Common Stock offered in this Registration Statement will be issued
in exchange for Exchangeable Shares, and no broker, dealer or underwriter
has been engaged in connection with this offering. The Exchangeable Shares
will be issued to: (1) shareholders of MacMillan Bloedel who are Canadian
residents and choose to receive Exchangeable Shares in connection with the
acquisition of MacMillan Bloedel by Weyerhaeuser, and (2) holders of the
Debentures, if those holders vote in favor of amending the trust indenture
governing the Debentures. In the event that the required vote of the
holders of the Debentures is obtained, Weyerhaeuser, MacMillan Bloedel and
the Royal Trust Company, as trustee, will enter into a supplemental
indenture, pursuant to which holders of the Debentures will be entitled to
convert their Debentures into Exchangeable Shares after the effective time
of the acquisition of MacMillan Bloedel. The conversion of the Debentures
into Exchangeable Shares would occur on the same basis as if they had
converted their Debentures into shares of MacMillan Bloedel prior to the
effective time of the acquisition and those shares of MacMillan Bloedel
stock had been exchanged into Exchangeable Shares in connection with the
acquisition. If the required vote of the holders of the Debentures is not
obtained, MacMillan Bloedel will redeem the Debentures at Weyerhaeuser's
request in accordance with the terms of the Debentures.
EXPERTS
The financial statements and schedules incorporated in this
Registration Statement by reference to our Annual Report on Form 10-K for
the year ended December 27, 1998 have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
LEGAL MATTERS
The validity of the Common Stock offered in this Registration
Statement is being passed upon for us by Claire S. Grace, Esq., our Senior
Legal Counsel.
6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.(1)
<TABLE>
<S> <C>
Registration Fee $254,400
Legal Fees and Expenses 15,000
Accountants' Fees and Expenses 5,000
Printing and Engraving 0
Listing Fees 64,000
Miscellaneous 0
---------
Total $338,400
=========
</TABLE>
- ----------------------------------
(1) All amounts, other than the registration fee, are estimated and are
subject to future contingencies.
Item 15. Indemnification.
The Washington Business Corporation Act sets forth provisions pursuant
to which officers and directors of the Registrant may be indemnified
against liabilities that they may incur in their capacity as such. Article
XII of the Registrant's Bylaws provides for the indemnification of
directors and officers of the Registrant against certain liabilities under
certain circumstances.
Under insurance policies of the Registrant, directors and officers of
the Registrant may be indemnified against certain losses arising from
certain claims that may be made against such persons by reason of their
being such directors or officers.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
CAPTION>
Exhibit
Number Description
- -------
<S> <C>
3.1 Restated Articles of Incorporation, as amended, of Registrant
(incorporated by reference to 1997 Form 10-K filed with the
Securities and Exchange Commission on March 13, 1998 - Commission
File Number 1-4825)
3.2 Bylaws of Registrant (incorporated by reference to 1998 Form 10-K
filed with the Securities and Exchange Commission on March 12,
1999 - Commission File Number 1-4825)
5* Opinion of Claire S. Grace, Esq., as to the legality of the
Registrant's Common Stock being registered hereby
23.1* Consent of Claire S. Grace, Esq., with respect to the legality of
securities being registered (contained in Exhibit 5)
23.2* Consent of Arthur Andersen, LLP, independent public accountants,
with respect to financial statements of the Registrant
24* Power of Attorney (included on page II-3)
99* Merger Agreement dated June 20, 1999 among Weyerhaeuser Company
and Weyerhaeuser Exchangeco Limited and MacMillan Bloedel
Limited, including the Plan of Arrangement
</TABLE>
*Filed herewith.
II-1
<PAGE>
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are incorporated by reference into the Registration Statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the
event that such a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Federal Way, State
of Washington, on this 29th day of July, 1999.
WEYERHAEUSER COMPANY
By /s/ Sandy D. McDade
----------------------
Sandy D. McDade
Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Robert A. Dowdy, Sandy D.
McDade and Claire S. Grace, and each of them, as true and lawful attorneys-
in-fact, with full power of substitution and resubstitution, to execute in
the name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and
purposes as could be done in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------------------------------------------------
<S> <C> <C>
/s/ Steven R. Rogel President July 29, 1999
- ----------------------------------- Chief Executive
Steven R. Rogel Officer and Director
/s/ William C. Stivers Executive Vice July 29, 1999
- ----------------------------------- President and Chief
William C. Stivers Financial Officer
/s/ Kenneth J. Stancato Vice President July 29, 1999
- ----------------------------------- and Controller
Kenneth J. Stancato
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------------------------------------------------
<S> <C> <C>
/s/ W. John Driscoll Director July 29, 1999
- -----------------------------------
W. John Driscoll
- -----------------------------------
Philip M. Hawley Director July 29, 1999
/s/ Martha R. Ingram Director July 29, 1999
- -----------------------------------
Martha R. Ingram
/s/ John I. Kieckhefer Director July 29, 1999
- -----------------------------------
John I. Kieckhefer
/s/ Rt. Hon. Donald F. Mazankowski Director July 29, 1999
- -----------------------------------
Rt. Hon. Donald F. Mazankowski
/s/ William D. Ruckelshaus Director July 29, 1999
- -----------------------------------
William D. Ruckelshaus
/s/ Richard H. Sinkfield Director July 29, 1999
- -----------------------------------
Richard H. Sinkfield
/s/ James N. Sullivan Director July 29, 1999
- -----------------------------------
James N. Sullivan
/s/ George H. Weyerhaeuser Director July 29, 1999
- -----------------------------------
George H. Weyerhaeuser
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
CAPTION>
Exhibit
Number Description
- -------
<S> <C>
3.1 Restated Articles of Incorporation, as amended, of Registrant
(incorporated by reference to 1997 Form 10-K filed with the
Securities and Exchange Commission on March 13, 1998 - Commission
File Number 1-4825)
3.2 Bylaws of Registrant (incorporated by reference to 1998 Form 10-K
filed with the Securities and Exchange Commission on March 12,
1999 - Commission File Number 1-4825)
5* Opinion of Claire S. Grace, Esq., as to the legality of the
Registrant's Common Stock being registered hereby
23.1* Consent of Claire S. Grace, Esq., with respect to the legality of
securities being registered (contained in Exhibit 5)
23.2* Consent of Arthur Andersen, LLP, independent public accountants,
with respect to financial statements of the Registrant
24* Power of Attorney (included on page II-3)
99* Merger Agreement dated June 20, 1999 among Weyerhaeuser Company
and Weyerhaeuser Exchangeco Limited and MacMillan Bloedel
Limited, including the Plan of Arrangement
</TABLE>
*Filed herewith.
<PAGE>
EXHIBIT 5
[Letterhead of Weyerhaeuser Company]
July 30, 1999
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3 pursuant to the
Securities Act of 1933, as amended, which is being filed with the
Securities and Exchange Commission by Weyerhaeuser Company, a Washington
corporation ("Weyerhaeuser"), on or about July 30, 1999 (the "Registration
Statement"), relating to 14,000,000 common shares of Weyerhaeuser Company,
par value $1.25 per share (the "Common Stock").
The Common Stock is issuable pursuant to the terms of the Merger Agreement
dated as of June 20, 1999 (the "Merger Agreement"), among Weyerhaeuser,
Weyerhaeuser Exchangeco Limited ("Weysub"), an indirectly owned subsidiary
of Weyerhaeuser, and MacMillan Bloedel Limited ("MB"), which provides for
the acquisition of MB by Weyerhaeuser and certain other transactions
related thereto. The shares of Common Stock are subject to issuance in
connection with a plan of arrangement under Canadian law involving MB and
its shareholders (the "Arrangement") pursuant to which each holder of
common shares of MB who is a Canadian resident (other than holders who
properly exercise their dissent rights) will be entitled to receive in
connection with the acquisition, at the election of such holder,
exchangeable shares of Weysub (the "Exchangeable Shares") or shares of the
common stock of Weyerhaeuser. The Exchangeable Shares are subsequently
exchangeable for shares of Common Stock covered by the Registration
Statement. Shares of Common Stock are also subject to issuance upon the
exchange (by way of purchase or redemption) of Exchangeable Shares in
accordance with the Voting and Exchange Trust Agreement (the "Voting and
Exchange Trust Agreement"), which will be entered into by Weyerhaeuser,
Weysub and a Canadian trustee, as trustee. If the holders of MB's
Adjustable Rate Convertible Subordinated Debentures (the "Debentures")
approve certain amendments to the terms of the trust indenture under which
the Debentures were issued, the holders of the Debentures will be entitled
to receive Exchangeable Shares upon the conversion of the Debentures, and,
subsequently, the Common Stock may also be issued upon the exchange of such
Exchangeable Shares.
In connection with the preparation and filing of the Registration
Statement, I have examined and am familiar with, among other things,
Weyerhaeuser's Restated Articles of Incorporation, as amended, the Bylaws
of Weyerhaeuser and the corporate proceedings taken to date with respect to
the issuance of the Common Stock. I am rendering this opinion as of the
time the Registration Statement becomes effective.
Based upon the foregoing, and having regard to legal considerations I deem
relevant, I am of the opinion that:
1. Weyerhaeuser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington; and
2. The Common Stock, when issued upon the exchange of Exchangeable Shares
in accordance with the terms of the Voting and Exchange Trust Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement, and to the reference to my name under the heading
"Legal Matters" in the Prospectus.
Very truly yours,
/s/ Claire S. Grace
Claire S. Grace, Esq.
Senior Legal Counsel
<PAGE>
EXHIBIT 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports
dated February 10, 1999 included (or incorporated by reference) in
Weyerhaeuser Company's Form 10-K for the year ended December 27, 1998 and
to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Seattle, Washington
July 30, 1999
MERGER AGREEMENT
MEMORANDUM OF AGREEMENT made the 20th day of June, 1999.
BETWEEN:
WEYERHAEUSER COMPANY
a corporation existing under the laws of the State of
Washington
(hereinafter referred to as "Weyerhaeuser")
- and -
586476 B.C. LTD.
a company existing under the laws of the Province of
British Columbia
(hereinafter referred to as "Weysub")
- and -
MACMILLAN BLOEDEL LIMITED
a corporation existing under the laws of Canada
(hereinafter referred to as "MB")
THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants and agreements herein contained, the parties hereto covenant and
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the
following meanings respectively:
"1933 Act" means the United States Securities Act of 1933, as amended;
"Acquisition Proposal" means any bona fide proposal with respect to
any merger, amalgamation, arrangement, take-over bid, sale of assets
(excluding inventory sold in the ordinary course of business)
representing more than 25% of the book value (on a consolidated basis)
of MB's total assets (or any lease, long-term supply agreement or
other arrangement having the same economic effect as a sale), any sale
of more than 25%
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of the MB Common Shares then outstanding or similar transactions
involving MB or any Material Subsidiary, or a proposal to do so,
excluding the Arrangement;
"Affected Employees" has the meaning ascribed thereto in section 4.10;
"Affected Retirees" has the meaning ascribed thereto in section 4.10;
"affiliate" has the meaning ascribed thereto in the Securities Act,
unless otherwise expressly stated herein;
"Affiliate's Letter" means a letter, to be substantially in the form
and content of Schedule A-1 or A-2 annexed hereto, as applicable;
"Appropriate Regulatory Approvals" means those sanctions, rulings,
consents, orders, exemptions, permits and other approvals (including
the lapse, without objection, of a prescribed time under a statute or
regulation that states that a transaction may be implemented if a
prescribed time lapses following the giving of notice without an
objection being made) of Governmental Entities, regulatory agencies or
self-regulatory organizations, as set out in Schedule B hereto;
"Arrangement" means an arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in the Plan of
Arrangement, subject to any amendments or variations thereto made in
accordance with section 6.1 or Article 6 of the Plan of Arrangement or
made at the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution of the MB
Shareholders, to be substantially in the form and content of Schedule
C annexed hereto;
"Articles of Arrangement" means the articles of arrangement of MB in
respect of the Arrangement that are required by the CBCA to be sent to
the Director after the Final Order is made;
"Business Day" means any day on which commercial banks are generally
open for business in Seattle, Washington and Vancouver, British
Columbia other than a Saturday, a Sunday or a day observed as a
holiday in Seattle, Washington under the laws of the State of
Washington or the federal laws of the United States of America or in
Vancouver, British Columbia under the laws of the Province of British
Columbia or the federal laws of Canada;
"CBCA" means the Canada Business Corporations Act as now in effect and
as it may be amended from time to time prior to the Effective Date;
"Circular" means the notice of the MB Meeting and accompanying
management information circular, including all schedules and exhibits
thereto, to be sent to holders of MB Common Shares and MB Options in
connection with the MB Meeting;
"Code" has the meaning ascribed thereto in section 3.1(k)(ii);
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<PAGE>
"Confidentiality Agreement" means the confidentiality letter agreement
dated May 21, 1999 between Weyerhaeuser and MB;
"Court" means the Supreme Court of British Columbia;
"Debenture Circular" means the notice of the Debenture Meeting and
accompanying management information circular, including all exhibits
and schedules thereto, to be sent to the holders of MB Convertible
Debentures in connection with the Debenture Meeting;
"Debenture Meeting" has the meaning ascribed thereto in section
2.1(b);
"Director" means the Director appointed pursuant to section 260 of the
CBCA;
"Dissent Rights" means the rights of dissent in respect of the
Arrangement described in section 3.1 of the Plan of Arrangement;
"Dissenting Shareholder" has the meaning ascribed thereto in the Plan
of Arrangement;
"Drop Dead Date" means February 15, 2000, or such later date as may be
mutually agreed by the parties to this Agreement;
"Effective Date" means the date shown on the certificate of
arrangement to be issued by the Director under the CBCA giving effect
to the Arrangement provided that such date occurs on or prior to the
Drop Dead Date;
"Effective Time" has the meaning ascribed thereto in the Plan of
Arrangement;
"Election Deadline" means 5:00 p.m. (local time) at the place of
deposit on the date which is two Business Days prior to the date of
the MB Meeting;
"Environmental Laws" means all applicable Laws, including applicable
common law, relating to the protection of the environment and public
health and safety;
"Environmental Permits" has the meaning ascribed thereto in section
3.1(j)(ii);
"ERISA" has the meaning ascribed thereto in section 3.1(l)(i);
"Exchange Act" has the meaning ascribed thereto in section 2.6(d);
"Exchange Ratio" has the meaning ascribed thereto in the Plan of
Arrangement;
"Exchangeable Elected Share" has the meaning ascribed thereto in the
Plan of Arrangement;
"Exchangeable Shares" means the non-voting exchangeable shares in the
capital of Weysub, having substantially the rights, privileges,
restrictions and conditions set out in Appendix I to the Plan of
Arrangement;
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<PAGE>
"Final Order" means the final order of the Court approving the
Arrangement as such order may be amended by the Court at any time
prior to the Effective Date or, if appealed, then, unless such appeal
is withdrawn or denied, as affirmed;
"Form S-3" has the meaning ascribed thereto in section 2.6(b);
"Form S-8" has the meaning ascribed thereto in section 2.6(c);
"Governmental Entity" means any (a) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, commission, board, bureau or agency, domestic or
foreign, (b) any subdivision, agent, commission, board, or authority
of any of the foregoing, or (c) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or
for the account of any of the foregoing;
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
dangerous substance or dangerous good as defined or identified in or
regulated by any Environmental Law;
"including" means including without limitation;
"Information" has the meaning ascribed thereto in section 4.7(b);
"Interim Order" means the interim order of the Court, as the same may
be amended, in respect of the Arrangement, as contemplated by section
2.3;
"Laws" means all statutes, regulations, statutory rules, orders, and
terms and conditions of any grant of approval, permission, authority
or license of any court, Governmental Entity, statutory body
(including The Toronto Stock Exchange) or self-regulatory authority,
and the term "applicable" with respect to such Laws and in the context
that refers to one or more Persons, means that such Laws apply to such
Person or Persons or its or their business, undertaking, property or
securities and emanate from a Governmental Entity having jurisdiction
over the Person or Persons or its or their business, undertaking,
property or securities;
"Letter of Transmittal and Election Form" means the letter of
transmittal and election form for use by holders of MB Common Shares,
in the form accompanying the Circular;
"Material Adverse Change", when used in connection with Weyerhaeuser
or MB, means any change, effect, event or occurrence with respect to
its condition (financial or otherwise), properties, assets,
liabilities, obligations (whether absolute, accrued conditional or
otherwise), businesses, operations or results of operations or those
of its subsidiaries that is, or would reasonably be expected to be,
material and adverse to the business, operations or financial
condition of such party and its subsidiaries taken as a whole other
than any change, effect, event or occurrence (i) relating to the
Canadian or United States' economy or securities markets in general or
(ii) affecting the Canadian or United States forest products industry
in general;
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<PAGE>
"Material Adverse Effect" when used in connection with Weyerhaeuser or
MB, means any effect that is, or would reasonably be expected to be,
material and adverse to the business, operations or financial
condition of such party and its subsidiaries taken as a whole;
"Material Subsidiary" means each subsidiary of MB, the total assets of
which constituted more than ten percent of the consolidated assets of
MB or the total revenues of which constituted more than ten percent of
the consolidated revenues of MB, in each case as set out in the
financial statements of MB for the year ended December 31, 1998 and
including each affiliate of MB that directly or indirectly holds an
equity interest in each such subsidiary;
"MB Common Shares" means the outstanding common shares in the capital
of MB;
"MB Convertible Debentures" means the debentures of MB convertible at
the holder's option into MB Common Shares at a conversion price of
$28.625 per MB Common Share or, at MB's option, redeemable for cash at
any time or, upon maturity in 2007, for MB Common Shares;
"MB Disclosure Letter" means that certain letter dated as of even date
herewith and delivered by MB to the Weyerhaeuser Parties;
"MB Dividend Reinvestment Plan" means the plan of MB existing on the
date hereof pursuant to which holders of MB Common Shares may elect to
receive dividends in equivalent value of MB Common Shares in lieu of
cash;
"MB Documents" has the meaning ascribed thereto in section 3.1(m);
"MB Employee Share Purchase Plans" means the share purchase plan for
MB employees in Canada and the share purchase plan for MB employees in
the United States, in each case, as amended;
"MB Meeting" means the special meeting of MB Shareholders, including
any adjournment thereof, to be called and held in accordance with the
Interim Order to consider the Arrangement;
"MB Options" means the MB Common Share purchase options granted under
MB Stock Option Plan, as amended, and under separate agreements with
three senior officers of MB, and being outstanding and unexercised on
the Effective Date;
"MB Partially Owned Entity" means Trus Joist MacMillan a Limited
Partnership, a joint venture in which MB has a 49% interest;
"MB Plans" has the meaning ascribed thereto in section 3.1(l)(1);
"MB Preferred Shares" means the Class B Preferred Shares, Series 8
and Series 10, in the capital of MB;
-5-
<PAGE>
"MB Shareholders" means the holders of MB Common Shares, MB Options
and MB Warrants, collectively;
"MB Stock Option Plan" means MB's Senior Management Stock Option
Plan instituted February 10, 1997;
"MB Target Stock Units" means the units granted by MB to officers and
senior managers employed in the Packaging Business in the United
States pursuant to which the holders of such units may elect to
receive the difference between the issue price and the calculated
value of the units after holding them for a one-year period;
"MB Warrants" means the bearer warrants of MB exercisable for MB
Common Shares and being outstanding and unexercised on the Effective
Date;
"OSC" means the Ontario Securities Commission;
"Packaging Business" means MB's business related to containerboard,
linerboard, corrugated medium, corrugating and other packaging
products, including the assets and operations in Sturgeon Falls,
Ontario, the assets and operations of MacMillan Bloedel Pulp and Paper
Sales Ltd., and the assets and operations of MacMillan Bloedel
Packaging Inc. and its subsidiaries including associated timberlands
and mills;
"Person" includes any individual, firm, partnership, joint venture,
venture capital fund, limited liability company, unlimited liability
company, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement substantially in
the form and content of Schedule D annexed hereto and any amendments
or variations thereto made in accordance with section 6.1 or Article 6
of the Plan of Arrangement or made at the direction of the Court in
the Final Order;
"Pre-Effective Date Period" shall mean the period from and including
the date hereof to and including the Effective Time on the Effective
Date;
"Publicly Disclosed by MB" means disclosed by MB in a public filing
made by it with the OSC from January 1, 1997 to and including March
31, 1999;
"Publicly Disclosed by Weyerhaeuser" means disclosed by Weyerhaeuser
in a public filing made by it with the SEC from January 1, 1997 to and
including March 31, 1999;
"Replacement Option" has the meaning ascribed thereto in section
2.4(c);
"Representatives" has the meaning ascribed thereto in section 4.7(a);
"SEC" means the United States Securities and Exchange Commission;
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<PAGE>
"Securities Act" means the Securities Act (Ontario) and the rules,
regulations and policies made thereunder, as now in effect and as they
may be amended from time to time prior to the Effective Date;
"Special Voting Share" means the share of Weyerhaeuser Special Voting
Preferred Stock having substantially the rights, privileges,
restrictions and conditions described in the Voting and Exchange Trust
Agreement;
"Specified Weyerhaeuser Event" means the occurrence of a Material
Adverse Change with respect to Weyerhaeuser, or a breach by a
Weyerhaeuser Party of its obligations hereunder, if by reason thereof,
and taking into account section 5.4, MB would be entitled to rely on
the failure of a condition set forth in sections 5.3(a), 5.3(b) or
5.3(c) as a reason not to complete the Arrangement;
"subsidiary" means, with respect to a specified body corporate, any
body corporate of which more than 50% of the outstanding shares
ordinarily entitled to elect a majority of the board of directors
thereof (whether or not shares of any other class or classes shall or
might be entitled to vote upon the happening of any event or
contingency) are at the time owned directly or indirectly by such
specified body corporate and shall include any body corporate,
partnership, joint venture or other entity over which it exercises
direction or control or which is in a like relation to a subsidiary;
"Superior Proposal" means any bona fide proposal by a third party
directly or indirectly, to acquire assets representing more than 50%
of the book value (on a consolidated basis) of MB's total assets or
more than 50% of the outstanding MB Common Shares, whether by way of
merger, amalgamation, arrangement, take-over bid, sale of assets or
otherwise, and that in the good faith determination of the Board of
Directors of MB after consultation with financial advisors and outside
counsel (a) is reasonably capable of being completed, taking into
account all legal, financial, regulatory and other aspects of such
proposal and the party making such proposal, and (b) would, if
consummated in accordance with its terms, result in a transaction (x)
more favourable to MB's Shareholders than the transaction contemplated
by this Agreement and (y) having a blended value per MB Common Share
greater than the per share value attributable thereto under the
transaction contemplated by this Agreement;
"Support Agreement" means an agreement to be made between
Weyerhaeuser, Weyerhaeuser Newco and Weysub substantially in the form
and content of Schedule E annexed hereto, with such changes thereto as
the parties hereto, acting reasonably, may agree;
"Tax" and "Taxes" have the respective meanings ascribed thereto in
section 3.1(k) (iii);
"Tax Returns" means all returns, declarations, reports, information
returns and statements required to be filed with any taxing authority
relating to Taxes;
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<PAGE>
"Trustee" means the trustee to be chosen by Weyerhaeuser and MB,
acting reasonably, to act as trustee under the Voting and Exchange
Trust Agreement, being a corporation organized and existing under the
laws of Canada and authorized to carry on the business of a trust
company in all the provinces of Canada, and any successor trustee
appointed under the Voting and Exchange Trust Agreement;
"Voting and Exchange Trust Agreement" means an agreement to be made
between Weyerhaeuser, Weysub and the Trustee in connection with the
Plan of Arrangement substantially in the form and content of Schedule
F annexed hereto, with such changes thereto as the parties hereto,
acting reasonably, may agree.
"Weyerhaeuser Common Shares" means the shares of common stock in the
capital of Weyerhaeuser;
"Weyerhaeuser Elected Share" has the meaning ascribed thereto in the
Plan of Arrangement;
"Weyerhaeuser Material Subsidiary" means each subsidiary of
Weyerhaeuser, the total assets of which constituted more than ten
percent of the consolidated assets of Weyerhaeuser or the total
revenues of which constituted more than ten percent of the
consolidated revenues of Weyerhaeuser, in each case as set out in the
financial statements of Weyerhaeuser for the year ended December 27,
1998 and including each affiliate of Weyerhaeuser that directly or
indirectly holds an equity interest in each such subsidiary;
"Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under
the laws of the Province of British Columbia and being a wholly-owned
subsidiary of Weyerhaeuser;
"Weyerhaeuser Parties" means Weyerhaeuser and Weysub; and
"Year 2000 Compliant" has the meaning ascribed thereto in section
3.1(w)(ii).
1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, sections and other
portions and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation hereof. Unless
otherwise indicated, all references to an "Article" or "section" followed
by a number and/or a letter refer to the specified Article or section of
this Agreement. The terms "this Agreement", "hereof", "herein" and
"hereunder" and similar expressions refer to this Agreement (including the
Schedules hereto) and not to any particular Article, section or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Currency
Unless otherwise specifically indicated, all sums of money referred to
in this Agreement are expressed in lawful money of Canada.
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<PAGE>
1.4 Number, etc.
Unless the context otherwise requires, words importing the singular
shall include the plural and vice versa and words importing any gender
shall include all genders.
1.5 Date For Any Action
In the event that any date on which any action is required to be
taken hereunder by any of the parties hereto is not a Business Day, such
action shall be required to be taken on the next succeeding day which is a
Business Day.
1.6 Entire Agreement
This Agreement and the agreements and other documents herein referred
to constitute the entire agreement between the parties hereto pertaining to
the terms of the Arrangement and supersede all other prior agreements,
understandings, negotiations and discussions, whether oral or written,
between the parties hereto with respect to the terms of the Arrangement.
1.7 Schedules
The following Schedules are annexed to this Agreement and are hereby
incorporated by reference into this Agreement and form part hereof:
Schedule A - Affiliate's Letter (A-1 and A-2)
Schedule B - Appropriate Regulatory Approvals
Schedule C - Arrangement Resolution
Schedule D - Plan of Arrangement
Schedule E - Support Agreement
Schedule F - Voting and Exchange Trust Agreement
1.8 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement
in respect of MB shall have the meanings attributable thereto under
Canadian generally accepted accounting principles and all determinations of
an accounting nature in respect of MB required to be made shall be made in
a manner consistent with Canadian generally accepted accounting principles
and past practice. Unless otherwise stated, all accounting terms used in
this Agreement in respect of Weyerhaeuser shall have the meanings
attributable thereto under United States generally accepted accounting
principles and all determinations of an accounting nature required to be
made in respect of Weyerhaeuser shall be made in a manner consistent with
United States generally accepted accounting principles and past practice.
1.9 Knowledge
Each reference herein to the knowledge of a party means, unless
otherwise specified, the existing knowledge of such party without inquiry.
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ARTICLE 2
THE ARRANGEMENT
2.1 Implementation Steps by MB
MB covenants in favour of the Weyerhaeuser Parties that MB shall:
(a) subject to section 2.5, as soon as reasonably practicable, apply in a
manner acceptable to the Weyerhaeuser Parties, acting reasonably,
under section 192 of the CBCA for an order approving the Arrangement
and for the Interim Order, and thereafter proceed with and diligently
seek the Interim Order;
(b) subject to 2.5(b), convene and hold a meeting (the "Debenture
Meeting") of holders of MB Convertible Debentures to consider and vote
on a proposal to amend the trust indenture governing the MB
Convertible Debentures to provide that from and after the Effective
Time each $1,000 principal amount of MB Convertible Debentures may be
converted by the holder thereof only into that number of Exchangeable
Shares that such holder would have received if its MB Convertible
Debentures had been validly converted into MB Common Shares
immediately prior to the Effective Time, together with all necessary
or desirable amendments arising as a result thereof;
(c) subject to section 2.5(a), convene and hold the MB Meeting for the
purpose of considering the Arrangement Resolution (and for any other
proper purpose as may be set out in the notice for such meeting);
(d) subject to obtaining the approvals as are required by the Interim
Order, proceed with and diligently pursue the application to the Court
for the Final Order; and
(e) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in favour of each party, send to
the Director, for endorsement and filing by the Director, the Articles
of Arrangement and such other documents as may be required in
connection therewith under the CBCA to give effect to the Arrangement.
2.2 Implementation Steps by Weyerhaeuser Parties
The Weyerhaeuser Parties covenant in favour of MB that, on or prior to
the Effective Date and subject to the satisfaction or waiver of the other
conditions herein contained in favour of each such party:
(a) Weyerhaeuser, Weyerhaeuser Newco and Weysub shall execute and deliver
the Support Agreement;
(b) Weyerhaeuser and Weysub shall execute and deliver the Voting and
Exchange Trust Agreement; and
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(c) Weyerhaeuser shall issue to the Trustee the Special Voting Share.
2.3 Interim Order
The notice of motion for the application referred to in section 2.1
(a) shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in respect
of the Arrangement and the MB Meeting and for the manner in which such
notice is to be provided;
(b) that the requisite approval for the Arrangement Resolution shall be 66
2/3% of the votes cast on the Arrangement Resolution by MB
Shareholders present in person or by proxy at the MB Meeting (such
that each holder of MB Common Shares is entitled to one vote for each
MB Common Share held, each holder of MB Options is entitled to one
vote for each MB Common Share such holder would have received on a
valid exercise of MB Options and each holder of MB Warrants is
entitled to one vote for each MB Common Share such holder would have
received on a valid exercise of MB Warrants);
(c) that, in all other respects, the terms, restrictions and conditions of
the by-laws and articles of MB, including quorum requirements and all
other matters, shall apply in respect of the MB Meeting; and
(d) for the grant of the Dissent Rights.
2.4 Articles of Arrangement
The Articles of Arrangement shall, with such other matters as are
necessary to effect the Arrangement, and all as subject to the provisions
of the Plan of Arrangement, provide substantially as follows:
(a) each outstanding MB Common Share that is not held by a holder who has
exercised its Dissent Rights and is ultimately entitled to be paid the
fair value of the MB Common Shares (other than MB Common Shares held
by Weyerhaeuser or any subsidiary or affiliate thereof), will be
transferred by the holder thereof to Weysub in exchange for, at the
holder's election, that number of fully paid and non-assessable
Weyerhaeuser Common Shares or Exchangeable Shares, as the case may be,
equal to the Exchange Ratio, and the name of each such holder of MB
Common Shares will be removed from the register of holders of MB
Common Shares and added to the register of holders of Weyerhaeuser
Common Shares or Exchangeable Shares, as the case may be, and Weysub
will be recorded as the registered holder of such MB Common Shares so
exchanged and will be deemed to be the legal and beneficial owner
thereof; provided that, notwithstanding the foregoing, holders of MB
Common Shares, who are not residents of Canada for the purposes of the
Income Tax Act (Canada) will not be entitled to elect to receive
Exchangeable Shares, and any such election otherwise
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<PAGE>
made by any such holder shall be and be deemed to be an election to
receive Weyerhaeuser Common Shares;
(b) each MB Common Share in respect of which no election has been made by
the holder thereof, or in respect of which an effective election has
not been made (other than (i) MB Common Shares held by Dissenting
Shareholders who are ultimately entitled to be paid the fair value of
the MB Common Shares held by them and (ii) MB Common Shares held by
Weyerhaeuser or any subsidiary or affiliate thereof which shall not be
exchanged under the Arrangement and shall remain outstanding as MB
Common Shares held by Weyerhaeuser or any subsidiary or affiliate
thereof) and each MB Warrant, as the case may be, will be deemed to be
an Exchangeable Elected Share and will be transferred by the holder
thereof, without any act or formality on its part, to Weysub in
exchange for that number of fully paid and non-assessable Exchangeable
Shares equal to the Exchange Ratio, and the name of each such holder
of MB Common Shares will be removed from the register of holders of MB
Common Shares and added to the register of holders of Exchangeable
Shares and Weysub will be recorded as the registered holder of such MB
Common Shares so exchanged and will be deemed to be the legal and
beneficial owner of such MB Common Shares and MB Warrants; provided
that, notwithstanding the foregoing, each MB Common Share in respect
of which no election has been made, or in respect of which an
effective election has not been made, held by a holder who is not (and
in the case of each MB Warrant, each holder thereof shall be deemed to
be not) a resident of Canada for the purposes of the Income Tax Act
(Canada), as amended (other than (i) MB Common Shares held by
Dissenting Shareholders who are ultimately entitled to be paid the
fair value of the MB Common Shares held by them and (ii) MB Common
Shares held by Weyerhaeuser or any subsidiary or affiliate thereof
which shall not be exchanged under the Arrangement and shall remain
outstanding as MB Common Shares held by Weyerhaeuser or any subsidiary
or affiliate thereof) will be deemed to be a Weyerhaeuser Elected
Share and will be transferred by the holder thereof, without any act
or formality on his part, to Weysub in exchange for that number of
fully paid and non-assessable Weyerhaeuser Common Shares equal to the
Exchange Ratio, and the name of each such holder of MB Common Shares
will be removed from the register of holders of MB Common Shares and
added to the register of holders of Weyerhaeuser Common Shares and
Weysub will be recorded as the registered holder of such MB Common
Shares so exchanged and will be deemed to be the legal and beneficial
owner thereof; and
(c) each MB Option shall be exchanged for an option (a "Replacement
Option") to purchase that number of Weyerhaeuser Common Shares equal
to the number of MB Common Shares subject to such MB Option multiplied
by the Exchange Ratio.
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2.5 MB Circulars
(a) As promptly as practicable after the execution and delivery of this
Agreement, Weyerhaeuser and MB shall prepare the Circular together with any
other documents required by the Securities Act or other applicable Laws in
connection with the Arrangement, and as promptly as practicable after the
execution and delivery of this Agreement, and in any event, before
September 30, 1999, MB shall cause the Circular and other documentation
required in connection with the MB Meeting to be sent to each holder of MB
Common Shares and MB Options and filed as required by the Interim Order and
applicable Laws.
(b) As promptly as practicable after the execution and delivery of this
Agreement, Weyerhaeuser and MB shall prepare the Debenture Circular
together with any documents required by the trust indenture governing the
MB Convertible Debentures, the Securities Act or other applicable Laws in
connection with the Debenture Meeting and, unless otherwise agreed by the
parties, MB shall, concurrently with the sending of the Circular to the
holders of MB Common Shares and MB Options, cause the Debenture Circular
and other documentation required in connection with the Debenture Meeting
to be sent to each holder of MB Convertible Debentures and filed as
required by the trust indenture governing the MB Convertible Debentures and
applicable Laws.
2.6 Securities Compliance
(a) Weyerhaeuser shall use all reasonable efforts to obtain all orders
required from the applicable Canadian securities authorities to permit
the issuance and first resale of (a) the Exchangeable Shares and
Weyerhaeuser Common Shares issued pursuant to the Arrangement, (b) the
Weyerhaeuser Common Shares issued upon exchange of the Exchangeable
Shares from time to time and (c) the Weyerhaeuser Common Shares issued
from time to time upon the exercise of the Replacement Options, in
each case without qualification with or approval of or the filing of
any prospectus or similar document, or the taking of any proceeding
with, or the obtaining of any further order, ruling or consent from,
any Governmental Entity or regulatory authority under any Canadian
federal, provincial or territorial securities or other Laws or
pursuant to the rules and regulations of any regulatory authority
administering such Laws, or the fulfillment of any other legal
requirement in any such jurisdiction (other than, with respect to such
first resales, any restrictions on transfer by reason of, among other
things, a holder being a "control person" of Weyerhaeuser or MB for
purposes of Canadian federal, provincial or territorial securities
Laws).
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(b) As promptly as practicable after the date hereof, Weyerhaeuser shall
file a registration statement on Form S-3 (or other applicable form)
(the "Form S-3") in order to register under the 1933 Act the
Weyerhaeuser Common Shares to be issued from time to time after the
Effective Time upon exchange of the Exchangeable Shares and shall use
its reasonable efforts to cause the Form S-3 to become effective and
to maintain the effectiveness of such registration for the period that
such Exchangeable Shares remain outstanding.
(c) As promptly as practicable after the Effective Date, Weyerhaeuser
shall file a registration statement on Form S-8 (or other applicable
form) ( the "Form S-8") in order to register under the 1933 Act those
Weyerhaeuser Common Shares to be issued from time to time after the
Effective Time upon the exercise of the Replacement Options.
(d) MB and Weyerhaeuser shall take all such steps as may be required to
cause the transactions contemplated by Article 2 and any other
dispositions of MB equity securities and/or acquisitions of
Weyerhaeuser equity securities (including, in each case derivative
securities) in connection with this Agreement or the transactions
contemplated hereby by any individual who is a director or officer of
MB, to be exempt under Rule 16b-3 promulgated under the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(e) The provisions of this section 2.6 shall apply, mutatis mutandis, in
respect of the Debenture Circular and the matters referred to therein.
2.7 Preparation of Filings
(a) Weyerhaeuser and MB shall cooperate in:
(i) the preparation of any application for the orders and the
preparation of any required registration statements and any
other documents reasonably deemed by Weyerhaeuser or MB to be
necessary to discharge their respective obligations under
United States and Canadian federal, provincial, territorial or
state securities Laws in connection with the Arrangement and
the other transactions contemplated hereby;
(ii) the taking of all such action as may be required under any
applicable United States and Canadian federal, provincial,
territorial or state securities Laws (including "blue sky
laws") in connection with the issuance of the Exchangeable
Shares and the Weyerhaeuser Common Shares in connection with
the Arrangement or the exercise of the Replacement Options;
provided, however, that with respect to the United States "blue
sky" and Canadian provincial qualifications neither
Weyerhaeuser nor MB shall be required to register or qualify as
a foreign corporation or to take any action that would subject
it to service of process in any jurisdiction where such entity
is not now so subject, except as to
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matters and transactions arising solely from the offer and sale
of the Exchangeable Shares and the Weyerhaeuser Common Shares;
and
(iii) the taking of all such action as may be required under the CBCA
in connection with the transactions contemplated by this Agreement
and the Plan of Arrangement.
(b) Each of Weyerhaeuser and MB shall furnish to the other all such
information concerning it and its shareholders as may be required
(and, in the case of its shareholders, available to it) for the
effectuation of the actions described in sections 2.5 and 2.6 and the
foregoing provisions of this section 2.7, and each covenants that no
information furnished by it (to its knowledge in the case of
information concerning its shareholders) in connection with such
actions or otherwise in connection with the consummation of the
Arrangement and the other transactions contemplated by this Agreement
will contain any untrue statement of a material fact or omit to state
a material fact required to be stated in any such document or
necessary in order to make any information so furnished for use in any
such document not misleading in the light of the circumstances in
which it is furnished.
(c) Weyerhaeuser and MB shall each promptly notify the other if at any
time before or after the Effective Time it becomes aware that the
Circular or an application for an order or a registration statement
described in section 2.6 contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading
in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Circular or such
application or registration statement. In any such event, Weyerhaeuser
and MB shall cooperate in the preparation of a supplement or amendment
to the Circular or such other document, as required and as the case
may be, and, if required, shall cause the same to be distributed to
shareholders of Weyerhaeuser or MB and/or filed with the relevant
securities regulatory authorities.
(d) MB shall ensure that the Circular complies with all applicable Laws
and, without limiting the generality of the foregoing, that the
Circular does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in
light of the circumstances in which they are made (other than with
respect to any information relating to and provided by the
Weyerhaeuser Parties or any third party that is not an affiliate of
MB). Without limiting the generality of the foregoing, MB shall ensure
that the Circular provides holders of MB Common Shares with
information in sufficient detail to permit them to form a reasoned
judgment concerning the matters to be placed before them at the MB
Meeting and Weyerhaeuser shall provide all information regarding it
necessary to do so.
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(e) Weyerhaeuser shall ensure that the Form S-3 and Form S-8 comply with
all applicable Laws and, without limiting the generality of the
foregoing, that such documents do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made (other
than with respect to any information relating to and provided by MB or
any third party that is not an affiliate of Weyerhaeuser) and MB shall
provide all information regarding it necessary to do so.
(f) The provisions of this section 2.7 shall apply, mutatis mutandis, in
respect of the Debenture Meeting and the Debenture Circular.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of MB
MB represents and warrants to and in favour of the Weyerhaeuser
Parties as follows and acknowledges that the Weyerhaeuser Parties are
relying upon such representations and warranties in connection with the
matters contemplated by this Agreement:
(a) Organization.
(i) Each of MB and the Material Subsidiaries has been duly
incorporated or formed under all applicable Laws, is validly
subsisting and has full corporate or legal power and authority
to own its properties and conduct its businesses as currently
owned and conducted. All of the outstanding shares and other
ownership interests of the Material Subsidiaries which are held
directly or indirectly by MB are validly issued, fully paid and
non-assessable and all such shares and other ownership
interests are owned directly or indirectly by MB, free and
clear of all material liens, claims or encumbrances, except as
set forth in the MB Disclosure Letter or pursuant to
restrictions on transfers contained in constating documents,
and except as aforesaid there are no outstanding options,
rights, entitlements, understandings or commitments (contingent
or otherwise) regarding the right to acquire any such shares or
other ownership interests in any of the Material Subsidiaries.
MB has disclosed in the MB Disclosure Letter the names and
jurisdictions of incorporation of each of the Material
Subsidiaries.
(ii) Other than MB's interest in the MB Partially Owned Entity,
neither MB nor any Material Subsidiary has any minority
interest in any other corporation or entity, which minority
interest is material in relation to the consolidated financial
position of MB.
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(b) Capitalization. The authorized capital of MB consists of an unlimited
number of Class B preferred shares, issuable in series, and an
unlimited number of MB Common Shares. As of June 11, 1999 there were
972,369 Class B preferred shares, Series 8, issued and outstanding,
1,554,200 Class B preferred shares, Series 10, issued and outstanding
and 120,296,710 MB Common Shares issued and outstanding, and 7,700,000
MB Common Shares were reserved, in the aggregate, for issuance in
respect of the MB Options. As of June 11, 1999, MB had outstanding
$149,943,000 in principal amount of MB Convertible Debentures. As of
June 11, 1999, MB had outstanding MB Warrants entitling the holders
thereof to acquire for no consideration 552 MB Common Shares in the
aggregate. As of June 11, 1999, MB had outstanding options under the
MB Stock Option Plan permitting the holders thereof to purchase
5,448,138 MB Common Shares in the aggregate. As of June 11, 1999, MB
had granted phantom stock options representing the functional
equivalent of 2,023,731 MB Common Shares in the aggregate. As of June
11, 1999, MB had granted MB Target Stock Units representing the
functional equivalent of 1,664,191 MB Common Shares in the aggregate.
From time to time MB Common Shares are issued in accordance with the
MB Dividend Reinvestment Plan. Except as described in the preceding
sentences of this section 3.1(b) and in section 3.1(a)(i), there are
no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments (pre-emptive, contingent or
otherwise) obligating MB or any Material Subsidiary to issue or sell
any shares of MB or any of the Material Subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any
shares of MB, any Material Subsidiary or any other Person, nor is
there outstanding any stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the
book value, income or any other attribute of MB or any subsidiary.
Except as set forth in the MB Disclosure Letter, there have been no MB
Common Shares issued or purchased for cancellation since December 31,
1998. All outstanding MB Common Shares have been duly authorized and
are validly issued and outstanding as fully paid and non-assessable
shares, free of pre-emptive rights. Except as described in the
preceding sentences of this section 3.1(b), there are no outstanding
bonds, debentures or other evidences of indebtedness of MB or any
subsidiary having the right to vote (or that are convertible for or
exercisable into securities having the right to vote) with the holders
of the MB Common Shares on any matter. Except as set forth in the MB
Disclosure Letter, there are no outstanding contractual obligations of
MB or any of the Material Subsidiaries to repurchase, redeem or
otherwise acquire any of its outstanding securities or with respect to
the voting or disposition of any outstanding securities of any of the
Material Subsidiaries.
(c) Authority and No Violation.
(i) MB has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by MB and the
consummation by MB of the
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transactions contemplated by this Agreement have been duly
authorized by its Board of Directors and no other corporate
proceedings on its part are necessary to authorize this
Agreement, or the transactions contemplated hereby other than:
(A) with respect to the Circular, the Debenture Circular and
other matters relating solely thereto, including the
implementation of the Arrangement, the approval of the
Board of Directors of MB;
(B) with respect to the completion of the Arrangement, the
approval of the holders of the MB Common Shares; and
(C) with respect to the amendments to the trust indenture
governing the MB Convertible Debentures, the approval of
the holders of MB Convertible Debentures.
(ii) This Agreement has been duly executed and delivered by MB and
constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, and to general principles of
equity and to the fact that the Currency Act (Canada) precludes
a court in Canada from giving judgment in any currency other
than Canadian currency.
(iii) The Board of Directors of MB has (A) determined unanimously
that the Arrangement is fair to the holders of the MB Common
Shares and is in the best interests of MB, (B) received
separate opinions from RBC Dominion Securities Inc., J.P.
Morgan & Co. Incorporated and Salomon Smith Barney Inc. to the
effect that, as of the date of this Agreement, the Exchange
Ratio or the Arrangement is fair from a financial point of view
to the holders of the MB Common Shares and (C) determined
unanimously to recommend that the holders of the MB Common
Shares vote in favour of the Arrangement. MB is not subject to
a shareholder rights plan or "poison pill" or similar plan.
(iv) The approval of this Agreement, the execution and delivery by
MB of this Agreement and the performance by it of its
obligations hereunder and the completion of the Arrangement and
the transactions contemplated thereby, will not, except as
disclosed in the MB Disclosure Letter:
(A) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination, purchase or
sale rights or payment obligation under any provision of:
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(I) its or any Material Subsidiary's certificate of
incorporation, articles, by-laws or other charter
documents, including any unanimous shareholder
agreement or any other agreement or understanding
relating to ownership of shares or other interests
or to corporate governance with any party holding an
ownership interest in any Material Subsidiary;
(II) subject to obtaining the Appropriate Regulatory
Approvals relating to MB, any Laws, judgment or
decree except to the extent that the violation or
breach of, or failure to obtain any consent under,
any Laws, judgment or decree would not, individually
or in the aggregate, have a Material Adverse Effect
on MB ; or
(III) subject to obtaining the Appropriate Regulatory
Approvals relating to MB and except as would not,
individually or in the aggregate, have a Material
Adverse Effect on MB, any material contract,
agreement, license, franchise or permit to which MB
or any Material Subsidiary is party or by which it
is bound or subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of MB or any subsidiary, or cause any such
indebtedness to come due before its stated maturity or
cause any available credit of MB or any subsidiary to cease
to be available other than as would not, individually or in
the aggregate, have a Material Adverse Effect on MB;
(C) except as would not, individually or in the aggregate, have
a Material Adverse Effect on MB, result in the imposition
of any encumbrance, charge or lien upon any of its assets
or the assets of any Material Subsidiary, or restrict,
hinder, impair or limit the ability of MB or any Material
Subsidiary to carry on the business of MB or any Material
Subsidiary as and where it is now being carried on; or
(D) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming
due to any director or employee of MB or any subsidiary or
increase any benefits otherwise payable under any MB Plan or
result in the acceleration of time of payment or vesting of
any such benefits, including the time of exercise of stock
options.
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No consent, approval, order or authorization of, or
declaration or filing with, any Governmental Entity is
required to be obtained by MB and its subsidiaries in
connection with the execution and delivery of this
Agreement or the consummation by MB of the transactions
contemplated hereby other than (A) any approvals required
by the Interim Order, (B) the Final Order, (C) filings with
the Director under the CBCA, (D) the Appropriate Regulatory
Approvals relating to MB and (E) any other consents,
approvals, orders, authorizations, declarations or filings
of or with a Governmental Entity which, if not obtained,
would not, individually or in the aggregate, have a
Material Adverse Effect on MB.
(d) No Defaults. Subject to obtaining the Appropriate Regulatory Approvals
relating to MB and except as disclosed in the MB Disclosure Letter,
neither MB nor any of its subsidiaries is in default under, and there
exists no event, condition or occurrence which, after notice or lapse
of time or both, would constitute such a default under, any contract,
agreement, license or franchise to which it is a party which would, if
terminated due to such default, cause a Material Adverse Effect.
(e) Absence of Certain Changes or Events. Except as disclosed in the MB
Disclosure Letter or Publicly Disclosed by MB, from December 31, 1998
through to the date hereof each of MB and the Material Subsidiaries
has conducted its business only in the ordinary and regular course of
business consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to MB;
(ii) any damage, destruction or loss, whether covered by insurance
or not, that could reasonably be expected to have a Material
Adverse Effect on MB;
(iii) any redemption, repurchase or other acquisition of MB Common
Shares or MB Preferred Shares by MB or any declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to MB Common
Shares or MB Preferred Shares, other than dividends and
repurchases required by the terms of the MB Preferred Shares
and other than regular quarterly dividends on the MB Common
Shares and open market purchases of MB Common Shares under the
MB Employee Share Purchase Plans, in each case, in the
ordinary and regular course of business consistent with past
practice;
(iv) any material increase in or modification of the compensation
payable or to become payable by it to any of its directors or
officers, or any grant to any such director or officer of any
increase in severance or termination pay;
(v) any increase in or modification of any bonus, pension,
insurance or benefit arrangement (including the granting of
stock options, restricted stock awards or stock appreciation
rights) made to, for or with any of its directors or officers;
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(vi) any acquisition or sale of its property or assets aggregating
10% or more of MB's total consolidated property and assets as
at December 31, 1998 other than in the ordinary and regular
course of business consistent with past practice;
(vii) any entering into, amendment of, relinquishment, termination
or non-renewal by it of any material contract, agreement,
license, franchise, lease transaction, commitment or other
right or obligation, other than in the ordinary and regular
course of business consistent with past practice;
(viii) any resolution to approve a split, combination or
reclassification of any of its outstanding shares;
(ix) any change in its accounting methods, principles or practices;
or
(x) any agreement or arrangement to take any action which, if
taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement
materially untrue or incorrect as of the date when made.
(f) Employment Matters.
(i) Except as set forth in the management information circular
prepared in connection with the Annual Meeting of MB held on
April 21, 1999 or the MB Disclosure Letter, neither MB nor any
Material Subsidiary is a party to any written or oral policy,
agreement, obligation or understanding providing for severance
or termination payments to, or any employment agreement with,
any director or officer.
(ii) Except as set forth in the MB Disclosure Letter, neither MB
nor any Material Subsidiary is a party to any collective
bargaining agreement nor subject to any application for
certification or, to the knowledge of MB, threatened or
apparent union-organizing campaigns for employees not covered
under a collective bargaining agreement nor are there any
current, pending or, to the knowledge of MB, threatened
strikes or lockouts at MB or any Material Subsidiary that
would, individually or in the aggregate, have a Material
Adverse Effect on MB.
(iii) Neither MB nor any Material Subsidiary is subject to any claim
for wrongful dismissal, constructive dismissal or any other
tort claim, actual or, to the knowledge of MB, threatened, or
any litigation, actual or, to the knowledge of MB, threatened,
relating to employment or termination of employment of
employees or independent contractors, other than those claims
or such litigation as would, individually or in the aggregate,
not have a Material Adverse Effect on MB.
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(iv) MB and all Material Subsidiaries have operated in accordance with all
applicable Laws with respect to employment and labour, including,
but not limited to, employment and labour standards, occupational
health and safety, employment equity, pay equity, workers'
compensation, human rights and labour relations and there are no
current, pending or, to the knowledge of MB, threatened proceedings
before any board or tribunal with respect to any of the above areas,
other than where the failure to so operate or such proceedings
which, individually or in the aggregate, would not have a
Material Adverse Effect on MB.
(g) Financial Statements. The audited consolidated financial statements
for MB as at and for each of the 12-month periods ended December 31, 1998,
1997 and 1996 and the unaudited consolidated financial statements for the
3-month period ended March 31, 1999 have been prepared in accordance with
Canadian generally accepted accounting principles (subject, in the case of
such unaudited financial statements, to the absence of notes and to year-
end adjustments), the requirements of applicable Governmental Entities and
applicable securities Laws; such financial statements present fairly, in
all material respects, the consolidated financial position and results of
operations of MB and its subsidiaries as of the respective dates thereof
and for the respective periods covered thereby, subject, in the case of
such unaudited financial statements, to year-end adjustments.
(h) Books and Records. The books, records and accounts of MB and its
subsidiaries, in all material respects, (i) have been maintained in
accordance with good business practices on a basis consistent with prior
years, (ii) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of MB and its
subsidiaries and (iii) accurately and fairly reflect the basis for the MB
consolidated financial statements. MB has devised and maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; and (ii) transactions are recorded as necessary
(A) to permit preparation of financial statements in conformity with
Canadian generally accepted accounting principles or any other criteria
applicable to such statements and (B) to maintain accountability for
assets.
(i) Litigation, Etc. Except as set forth in the MB Disclosure Letter or
Publicly Disclosed by MB, there is no claim, action, proceeding or
investigation (including any native land claims) pending or, to the
knowledge of MB, threatened against MB or any Material Subsidiary
before any court or Governmental Entity that, if adversely determined,
would reasonably be expected to have a Material Adverse Effect on MB,
or prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Arrangement. Neither MB nor any
Material Subsidiary, nor their respective assets and properties, is
subject to any outstanding judgment, order, writ, injunction or decree
that has had or is reasonably likely to have a Material Adverse Effect
on MB or that would prevent
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or materially delay consummation of the transactions contemplated by
this Agreement or the Arrangement.
(j) Environmental. Except for any matters that, individually or in the
aggregate, would not have a Material Adverse Effect on MB:
(i) all operations of MB and its Material Subsidiaries have been
conducted, and are now, in compliance with all Environmental
Laws;
(ii) MB and its Material Subsidiaries are in possession of, and in
compliance with, all permits, authorizations, certificates,
registrations, approvals and consents necessary under
Environmental Laws to own, lease and operate their properties
and to conduct their respective businesses as they are now
being conducted or as proposed to be conducted (collectively
the "Environmental Permits"); and
(iii) except as set forth in the MB Disclosure Letter, neither MB
nor any Material Subsidiary is aware of, or is subject to:
(A) any Environmental Laws which requires or may require any
work, repairs, construction, change in business practices
or operations, or expenditures, including capital
expenditures for facility upgrades, environmental
investigation and remediation expenditures, or any other
such expenditures;
(B) any written demand or written notice with respect to the
breach of or liability under any Environmental Laws
applicable to MB or any subsidiary, including any
regulations respecting the use, storage, treatment,
transportation or disposition (including disposal or
arranging for disposal) of Hazardous Substances;
(C) any written demand or written notice with respect to
liability, by contract or operation of applicable Laws,
under Environmental Laws applicable to MB or any current or
former subsidiary or any of their respective predecessor
entities, divisions or any formerly owned, leased or
operated properties or assets of the foregoing, including
liability with respect to the presence, release or
discharge of Hazardous Substances; or
(D) any changes in the terms or conditions of any Environmental
Permits or any renewal, modification, revocation,
reissuance, alteration, transfer or amendment of such
Environmental Permits, or any review by, or approval of,
any Governmental Entity of such Environmental Permits that
are required in connection with the execution or delivery
of this Agreement, the consummation of the
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transactions contemplated hereby or the continuation of
business of MB or any subsidiaries following such
consummation.
(k) Tax Matters. Except as set forth in the MB Disclosure Letter:
(i) MB and each of its subsidiaries have filed, or caused to be
filed, all material Tax Returns required to be filed by them
(all of which returns were correct and complete in all
material respects) and have paid, or caused to be paid, all
material amounts of Taxes shown to be due and payable thereon,
and MB's most recently published financial statements contain
an adequate provision in accordance with generally accepted
accounting principles for all material amounts of Taxes
payable in respect of each period covered by such financial
statements and all prior periods to the extent such Taxes have
not been paid, whether or not due and whether or not shown as
being due on any Tax Returns. MB and each of its subsidiaries
have made adequate provision in accordance with generally
accepted accounting principles in their books and records for
any material amounts of Taxes accruing in respect of any
accounting period which has ended subsequent to the period
covered by such financial statements.
(ii) Neither MB nor any subsidiary has received any written notification
that any issues involving a material amount of Taxes have been
raised (and are currently pending) by Revenue Canada, the United
States Internal Revenue Service or any other taxing authority,
including, without limitation, any sales tax authority, in
connection with any of the Tax Returns referred to above and no
waivers of statutes of limitations have been given or requested
with respect to MB or any Material Subsidiary. All liability of
MB and the Material Subsidiaries for income taxes has been
assessed for all fiscal years up to and including the fiscal year
ended December 31, 1993. To the best of the knowledge of MB,
there are no proposed in writing (but unassessed) additional Taxes
involving a material amount of Taxes and none has been asserted in
writing. No Tax liens have been filed for material amounts of Taxes
other than for Taxes not yet due and payable. Neither MB nor any
of its subsidiaries (i) has made an election to be treated as a
"consenting corporation" under Section 341(f) of the United States
Internal Revenue Code (the "Code") or (ii) is a party to any Tax
sharing or other similar agreement or arrangement of any nature
with any other person (other than MB or any of its subsidiaries)
pursuant to which MB or any of its subsidiaries has or could have
any material liabilities in respect of Taxes, other than any
liability arising under an agreement providing for the sale or
other disposition of property by MB or any of its subsidiaries.
MB has not made an election under Section 897(i) of the Code to be
treated as a domestic corporation for purposes of Sections 897,
1445 and 6039C of the Code. With respect to the immediately
preceding five-year period, MB has neither received nor
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prepared any written reports analyzing the status of MacMillan
Bloedel (U.S.A.) Inc. as a United States real property holding
corporation within the meaning of Section 897 of the Code.
With respect to the immediately preceding fiveyear period, MB
has not undertaken a substantive analysis of MacMillan Bloedel
(U.S.A.) Inc.'s status as a United States real property
holding corporation within the meaning of Section 897 of the
Code.
(iii) "Tax" and "Taxes" means, with respect to any entity, all
income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits
or selected items of income, earnings or profits) and all
capital taxes, gross receipts taxes, environmental taxes,
sales taxes, use taxes, ad valorem taxes, value added taxes,
transfer taxes, franchise taxes, license taxes, withholding
taxes, payroll taxes, employment taxes, Canada or Quebec
Pension Plan premiums, excise, severance, social security
premiums, workers' compensation premiums, unemployment
insurance or compensation premiums, stamp taxes, occupation
taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax,
customs duties or other taxes, fees, imports, assessments or
charges of any kind whatsoever, together with any interest and
any penalties or additional amounts imposed by any taxing
authority (domestic or foreign) on such entity, and any
interest, penalties, additional taxes and additions to tax
imposed with respect to the foregoing. For purposes of this
section 3.1(k), the term "material amount of Taxes" shall mean
an amount of Taxes that is material to MB and its subsidiaries
taken as a whole.
(l) Pension and Employee Benefits.
(i) MB has made available to Weyerhaeuser a list of all employee
benefit, health, welfare, supplemental unemployment benefit,
bonus, pension, profit sharing, deferred compensation, stock
compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability and similar
plans or arrangements or practices, whether written or oral,
which are maintained by MB and/or a Material Subsidiary
(collectively referred to as the "MB Plans"). The MB
Disclosure Letter states which of the MB Plans constitute
"employee pension benefit plans" (as defined in section 3(2)
of the United States Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) or "employee welfare benefit
plans" (as defined in section 3(1) of ERISA).
(ii) No step has been taken, no event has occurred and no condition
or circumstance exists that has resulted in or could
reasonably be expected to result in any MB Plan being ordered
or required to be terminated or wound up in whole or in part
or having its registration under applicable Laws refused or
revoked, or being placed under the administration of any
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trustee or receiver or regulatory authority or being required
to pay any material Taxes, fees, penalties or levies under
applicable Laws. There are no actions, suits, claims (other
than routine claims for payment of benefits in the ordinary
course), trials, demands, investigations, arbitrations or
other proceedings which are pending or threatened in respect
of any of the MB Plans or their assets which individually or
in the aggregate would have a Material Adverse Effect on MB.
(iii) MB has made available to Weyerhaeuser true, correct and
complete copies of all of the MB Plans as amended (or, in the
case of any unwritten MB Plan, a description thereof) together
with all related documentation including, without limitation,
funding agreements, actuarial reports, funding and financial
information returns and statements with respect to each MB
Plan, and current plan summaries, booklets and personnel
manuals. MB has made available to Weyerhaeuser a true and
complete copy of the most recent annual report on Form 5500
filed with the United States Internal Revenue Service with
respect to each MB Plan in respect of which such a report was
required.
(iv) Other than as disclosed in the MB Disclosure Letter, all of
the MB Plans are and have been established, registered,
qualified, invested and administered, in all material
respects, in accordance with all applicable Laws, and in
accordance with their terms and the terms of agreements
between MB and/or a subsidiary, as the case may be, and their
respective employees. To the knowledge of MB, no fact or
circumstance exists that could adversely affect the existing
tax status of a MB Plan.
(v) All obligations of MB or a Material Subsidiary regarding the
MB Plans have been satisfied in all material respects. All
contributions or premiums required to be made by MB and/or a
Material Subsidiary, as the case may be, under the terms of
each MB Plan or by applicable Laws have been made in a timely
fashion in accordance with applicable Laws and the terms of
the MB Plans.
(vi) Other than as set forth in the MB Disclosure Letter or
Publicly Disclosed by MB, each MB Plan is fully insured or
fully funded and in good standing with such regulatory
authorities as may be applicable and, as of the date hereof,
no notice of underfunding, noncompliance, failure to be in
good standing or otherwise has been received by MB or its
subsidiaries from any such regulatory authority.
(vii) There have been no improper withdrawals, applications or
transfers of assets from any MB Plan or the trusts or other
funding media relating thereto that remain outstanding and
unremedied, and neither MB, nor any Material Subsidiary, nor
any of their respective agents has been in breach
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of any fiduciary obligation with respect to the administration
of the MB Plans or the trusts or other funding media relating
thereto.
(viii) No insurance policy or any other contract or agreement
affecting any MB Plan requires or permits a retroactive
increase in premiums or payments due thereunder.
(ix) All MB Plans intended to be tax-qualified in the United States
have been the subject of determination letters from the United
States Internal Revenue Service to the effect that such MB
Plans are qualified and exempt from United States Federal
income taxes under sections 401(a) and 501(a), respectively,
of the Code, and no such determination letter has been revoked
nor, to the knowledge of MB, has revocation been threatened,
nor has any such MB Plan been amended since the date of its
most recent determination letter or application therefor in
any respect that would adversely affect its qualification or
materially increase its costs and, to the knowledge of MB,
nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such
plan.
(x) Except as set forth in the MB Disclosure Letter, no amount
that could be received (whether in cash or property or the
vesting of property) as a result of the transactions
contemplated by this Agreement or the Arrangement by any
employee, officer or director of MB or any of its affiliates
who is a "disqualified individual" (as such term is defined in
proposed United States Treasury Regulation Section 1.280G-1)
under any employment, severance or termination agreement,
other compensation arrangement or MB Plan currently in effect
will fail to be deductible for United States federal income
tax purposes by virtue of Section 280G of the Code.
(xi) Except as set forth in the MB Disclosure Letter, none of the
MB Plans is a "multiemployer plan" within the meaning of
section 4001(a)(3) of ERISA, nor has MB or any Material
Subsidiary been obligated to contribute to any such
multiemployer plan at any time within the past five years.
(xii) Except as set forth in the MB Disclosure Letter, none of the
MB Plans provides for payment of a benefit, the increase of a
benefit amount, the payment of a contingent benefit or the
acceleration of the payment or vesting of a benefit by reason
of the execution of or the consummation of the transactions
contemplated by this Agreement or the Arrangement.
(m) Reports. MB has filed with the OSC and the SEC true and complete
copies of all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 1997 (such
forms, reports, schedules, statements and other documents, including
any financial statements or other documents, including any schedules
included therein, are referred to as the "MB Documents"). The MB
Documents at the time filed (i) did not contain any misrepresentation
(as defined
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in the Securities Act) and (ii) complied in all material respects with
the requirements of applicable securities Laws. MB has not filed any
confidential material change report with the OSC or any other
securities authority or regulator or any stock exchange or other
self-regulatory authority which at the date hereof remains
confidential.
(n) Compliance with Laws. Except as disclosed in the MB Disclosure Letter
or Publicly Disclosed by MB, MB and the Material Subsidiaries have
complied with and are not in violation of any applicable Laws, orders,
judgments and decrees other than non-compliance or violations which
would not, individually or in the aggregate, have a Material Adverse
Effect on MB. Without limiting the generality of the foregoing, all
securities of MB (including, all options, rights or other convertible
or exchangeable securities) have been issued in compliance, in all
material respects, with all applicable securities Laws and all
securities to be issued upon exercise of any such options, rights and
other convertible or exchangeable securities will be issued in
compliance with all applicable securities Laws.
(o) Restrictions on Business Activities. Except as set forth in the MB
Disclosure Letter or Publicly Disclosed by MB, there is no agreement,
judgment, injunction, order or decree binding upon MB or any Material
Subsidiary that has or could reasonably be expected to have the effect
of prohibiting, restricting or materially impairing any business
practice of MB or any Material Subsidiary, any acquisition of property
by MB or any Material Subsidiary or the conduct of business by MB or
any Material Subsidiary as currently conducted other than such
agreements, judgments, injunctions, orders or decrees which would not,
individually or in the aggregate, have a Material Adverse Effect on
MB.
(p) Material Customers. There is no single customer of MB or its
subsidiaries, the loss of which would have a Material Adverse Effect
on MB.
(q) Intellectual Property. Except as set forth in the MB Disclosure
Letter, MB and its subsidiaries own, or are validly licensed or
otherwise have the right to use, all patents, patent rights, trade-
marks, trade names, service marks, copyrights, know how and other
proprietary intellectual property rights that are material to the
conduct of the business, as presently conducted, of MB and its
subsidiaries taken as a whole.
(r) Insurance. MB has policies of insurance in force as of the date
hereof naming MB as an insured which, having regard to the nature of
such risk and the relative cost of obtaining insurance, MB believes
are reasonable.
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(s) Property. Except as disclosed in the MB Disclosure Letter, MB and
each Material Subsidiary have good and sufficient title to the real
property interests including, fee simple estate of and in real
property, leases, easements, rights of way, permits or licences from
land owners or authorities permitting the use of land by MB or such
Material Subsidiary, necessary to permit the operation of its
businesses as presently owned and conducted except for such failure of
title that would individually or in the aggregate not have a Material
Adverse Effect on MB.
(t) Licences, Etc. Except as disclosed in the MB Disclosure Letter, MB
and each Material Subsidiary owns, possesses, or has obtained and is
in compliance with, all licences, permits, certificates, orders,
grants and other authorizations of or from any Governmental Entity
necessary to conduct its businesses as now conducted or as proposed to
be conducted except for such failure that would individually or in the
aggregate not have a Material Adverse Effect on MB.
(u) Registration Rights. No holder of securities issued by MB has any
right to compel MB to register or otherwise qualify such securities
for public sale in Canada or the United States.
(v) Pooling. As at the date hereof, neither MB nor, to its knowledge, any
of its "affiliates" (as defined in SEC Accounting Series Release 130
and 135 - Risk Sharing in Business Combinations Accounted for as
Pooling of Interests (as codified in Financial Reporting Policy 201
and SEC Staff Accounting Bulletins 65 and 76)) has taken or agreed to
take any action that would prevent Weyerhaeuser from accounting for
the business combination to be effected by the Plan of Arrangement as
a pooling-ofinterests under United States generally accepted
accounting principles.
(w) Year 2000 Compliance.
(i) Except as set forth in the MB Disclosure Letter, MB expects
the computer systems of MB and each of its Material
Subsidiaries to be Year 2000 Compliant (as defined below) by
July 1, 1999. The best current estimates of MB of required
direct capital expenditures (not including internal costs and
employee time and resources) to be Year 2000 Compliant are an
amount not to exceed $15 million. To the knowledge of MB, any
failure on the part of the customers of and suppliers to MB
and the Material Subsidiaries to be Year 2000 Compliant by
December 31, 1999, will not, individually or in the aggregate,
have a Material Adverse Effect on MB.
(ii) The term "Year 2000 Compliant", with respect to a computer
system or software program, means that such computer system or
program: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-
related data for dates earlier and later than January 1, 2000;
(ii) has the ability to provide date recognition for any data
element without limitation; (iii) has the ability to function
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automatically into and beyond the year 2000 without human
intervention and without any change in operations associated
with the advent of the year 2000; (iv) has the ability to
interpret data, dates and time correctly into and beyond the
year 2000; (v) has the ability not to produce noncompliance in
existing data, nor otherwise corrupt such data, into and
beyond the year 2000; (vi) has the ability to process
correctly after January 1, 2000, data containing dates before
that date; and (vii) has the ability to recognize all "leap
year" dates, including February 29, 2000.
3.2 Representations and Warranties of the Weyerhaeuser Parties
The Weyerhaeuser Parties jointly and severally represent and warrant
to and in favour of MB as follows and acknowledge that MB is relying upon
such representations and warranties in connection with the matters
contemplated by this Agreement:
(a) Organization. Each of the Weyerhaeuser Parties and the Weyerhaeuser
Material Subsidiaries has been duly incorporated or formed under all
applicable Laws, is validly subsisting and has full corporate or legal
power and authority to own its properties and conduct its businesses
as currently owned and conducted. All of the outstanding shares of
capital stock and other ownership interests of Weyerhaeuser's
subsidiaries which are held directly or indirectly by Weyerhaeuser are
validly issued, fully paid and non-assessable and all such shares and
other ownership interests are owned directly or indirectly by
Weyerhaeuser, free and clear of all material liens, claims or
encumbrances except as disclosed by Weyerhaeuser to MB or pursuant to
restrictions on transfer contained in constating documents, and there
are no outstanding options, rights, entitlements, understandings or
commitments (pre-emptive, contingent or otherwise) regarding the right
to acquire any such shares of capital stock or other ownership
interests in any of its subsidiaries.
(b) Capitalization. The authorized capital of Weyerhaeuser consists of
7,000,000 shares of undesignated preferred stock, U.S.$1.00 par value
per share, issuable in series, of which none were issued and
outstanding at December 27, 1998, 40,000,000 shares of undesignated
preference stock, U.S.$1.00 par value per share, issuable in series,
of which none were issued and outstanding at December 27, 1998, and
400,000,000 Weyerhaeuser Common Shares. As of April 30, 1999, there
were 200,605,977 Weyerhaeuser Common Shares issued and outstanding.
Except for employee stock options pursuant to employee compensation
plans, there are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments (contingent or
otherwise) obligating Weyerhaeuser to issue or sell any shares or
securities or obligations of any kind convertible into or exchangeable
for any shares. All outstanding Weyerhaeuser Common Shares have been
duly authorized and are validly issued and outstanding as fully paid
and non-assessable shares, free of preemptive rights. There are no
outstanding bonds, debentures or other evidences of indebtedness of
Weyerhaeuser having the right to vote (or that are convertible for or
exercisable into securities having the right to
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vote) with the holders of the Weyerhaeuser Common Shares on any
matter. Other than under employee stock option plans, there are no
outstanding contractual obligations of Weyerhaeuser to repurchase,
redeem or otherwise acquire any of its outstanding securities or with
respect to the voting or disposition of any outstanding securities of
any of its subsidiaries.
(c) Authority and No Violation.
(i) Each of the Weyerhaeuser Parties has the requisite corporate
power and authority to enter into this Agreement, the Support
Agreement and the Voting and Exchange Trust Agreement and to
perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Support
Agreement and the Voting and Exchange Trust Agreement by each
of the Weyerhaeuser Parties and the consummation by each of
the Weyerhaeuser Parties of the transactions contemplated by
this Agreement, the Support Agreement and the Voting and
Exchange Trust Agreement have been duly authorized by its
respective Board of Directors and no other corporate
proceedings on its part are necessary to authorize this
Agreement, the Support Agreement and the Voting and Exchange
Trust Agreement or the transactions contemplated hereby or
thereby.
(ii) This Agreement has been duly executed and delivered by each of
the Weyerhaeuser Parties and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency and other
applicable Laws affecting creditors' rights generally, and to
general principles of equity. Each of the Support Agreement
and the Voting and Exchange Trust Agreement will be duly
executed and delivered by each of the Weyerhaeuser Parties
party thereto and, when so executed and delivered, will
constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, and to general principles of
equity.
(iii) The approval of this Agreement, the Support Agreement and the
Voting and Exchange Trust Agreement, the execution and
delivery by each of the Weyerhaeuser Parties of this
Agreement, the Support Agreement and the Voting and Exchange
Trust Agreement and the performance by it of its obligations
hereunder and thereunder and the completion of the Arrangement
and the transactions contemplated thereby, will not:
(A) result in a violation or breach of, require any consent to
be obtained under or give rise to any termination, purchase
or sale rights or payment obligation under any provision
of:
(I) its or any Weyerhaeuser Material Subsidiary's
certificate of incorporation, articles, by-laws or
other charter
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documents, including any unanimous
shareholder agreement or any other agreement or
understanding relating to ownership of shares or
other interests or to corporate governance with any
party holding an ownership interest in any
Weyerhaeuser Material Subsidiary;
(II) subject to obtaining the Appropriate Regulatory
Approvals relating to the Weyerhaeuser Parties, any
Laws, judgment or decree except to the extent that
the violation or breach of, or failure to obtain any
consent under, any Laws, judgment or decree would
not, individually or in the aggregate, have a
Material Adverse Effect on Weyerhaeuser; or
(III) subject to obtaining the Appropriate Regulatory
Approvals relating to the Weyerhaeuser Parties and
except as would not, individually or in the
aggregate, have a Material Adverse Effect on
Weyerhaeuser, any material contract, agreement,
license, franchise or permit to which it is party or
by which it is bound or is subject or is the
beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of any Weyerhaeuser Party or any Weyerhaeuser
Material Subsidiary, or cause such indebtedness to come due
before its stated maturity or cause any available credit of
any Weyerhaeuser Party or any Weyerhaeuser Material
Subsidiary to cease to be available; or
(C) except as would not, individually or in the aggregate, have
a Material Adverse Effect on Weyerhaeuser, result in the
imposition of any encumbrance, charge or lien upon any of
its assets, or restrict, hinder, impair or limit its
ability to carry on its business as and where it is now
being carried on.
No consent, approval, order or authorization of, or declaration or filing
with, any Governmental Entity is required to be obtained by any of the
Weyerhaeuser Parties or the Weyerhaeuser Material Subsidiaries in
connection with the execution and delivery of this Agreement, the Support
Agreement and the Voting and Exchange Trust Agreement or the consummation
by any of the Weyerhaeuser Parties of the transactions contemplated hereby
or thereby other than (A) the Appropriate Regulatory Approvals relating to
the Weyerhaeuser Parties, (B) any filings required in connection with the
creation and issue of the Special Voting Share, (C) any approval required
in connection with the amendment of the articles of Weysub to create the
Exchangeable Shares and (D) any other consents,
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approvals, orders, authorizations, declarations or filings of or with a
Governmental Entity which, if not obtained, would not, individually or in
the aggregate, have a Material Adverse Effect on Weyerhaeuser.
(d) Absence of Certain Changes or Events. Except as Publicly Disclosed by
Weyerhaeuser, since December 31, 1998 through to the date hereof each
of the Weyerhaeuser Parties and each Weyerhaeuser Material Subsidiary
has conducted its business only in the ordinary and regular course of
business consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to Weyerhaeuser;
(ii) any agreement or arrangement to take any action which, if
taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement
materially untrue or incorrect as of the date when made;
(iii) any resolution to approve a split, combination or
reclassification of the Weyerhaeuser Common Shares; or
(iv) any material change in its accounting methods, principles or
practices.
(e) Financial Statements. The audited consolidated financial statements
for Weyerhaeuser as at and for each of the 12-month periods ended on
the last Sunday of December 1998, 1997 and 1996 and the unaudited
consolidated financial statements for the thirteen weeks ended March
28, 1999 have been prepared in accordance with United States generally
accepted accounting principles, the requirements of applicable
Governmental Entities and applicable securities Laws; such financial
statements present fairly, in all material respects, the consolidated
financial position and results of operations of Weyerhaeuser and its
subsidiaries as of the respective dates thereof and for the respective
periods covered thereby.
(f) Reports. Weyerhaeuser has filed with the SEC true and complete copies
of all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1997, and such documents,
at the time filed, (i) did not contain any misrepresentation (as
defined in the 1933 Act) and (ii) complied in all material respects
with the requirements of applicable securities Laws. Weyerhaeuser has
not filed any confidential material change report with the SEC or any
other securities authority or regulator or any stock exchange or other
selfregulatory authority which at the date hereof remains
confidential.
(g) Pooling. As of the date hereof, none of the Weyerhaeuser Parties nor,
to their respective knowledge, any of their respective "affiliates"
(as defined in SEC Accounting Series Release 130 and 135 - Risk
Sharing in Business Combinations Accounted for as Pooling of Interests
(as codified in Financial Reporting Policy 201 and SEC Staff
Accounting Bulletins 65 and 76)) has taken or agreed to take
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any action that would prevent Weyerhaeuser from accounting for the
business combination to be effected by the Plan of Arrangement as a
pooling-of-interests under United States generally accepted accounting
principles.
(h) Exchangeable Shares. The Exchangeable Shares to be issued in
connection with the Arrangement will be duly and validly issued by
Weysub on the Effective Date as fully paid and nonassessable shares.
(i) Weyerhaeuser Common Shares. The Weyerhaeuser Common Shares to be
issued pursuant to the Arrangement or upon the exchange from time to
time of the Exchangeable Shares or upon the exercise from time to time
of the Replacement Options will, in all cases, be duly and validly
issued by Weyerhaeuser on their respective dates of issue as fully
paid and nonassessable shares.
(j) Compliance with Laws. Except as disclosed in writing by Weyerhaeuser
to MB or Publicly Disclosed by Weyerhaeuser, Weyerhaeuser and the
Weyerhaeuser Material Subsidiaries have complied with and are not in
violation of any applicable Laws, orders, judgments and decrees other
than non-compliance or violations which would not, individually or in
the aggregate, have a Material Adverse Effect on Weyerhaeuser.
Without limiting the generality of the foregoing, all securities of
Weyerhaeuser (including all options, rights or other convertible or
exchangeable securities) have been issued in compliance in all
material respects with all applicable securities Laws and all
securities to be issued upon exercise of any such options, rights and
other convertible or exchangeable securities will be issued in
compliance with all applicable securities Laws.
(k) Litigation, Etc. Except as disclosed in writing by Weyerhaeuser to MB
or Publicly Disclosed by Weyerhaeuser, there is no claim, action,
proceeding or investigation (including any native land claims) pending
or, to the knowledge of Weyerhaeuser, threatened against Weyerhaeuser
or any Weyerhaeuser Material Subsidiary before any court or
Governmental Entity that, if adversely determined, would reasonably be
expected to have a Material Adverse Effect on Weyerhaeuser, or prevent
or materially delay consummation of the transactions contemplated by
this Agreement or the Arrangement. Neither Weyerhaeuser nor any
Weyerhaeuser Material Subsidiary, nor their respective assets and
properties, is subject to any outstanding judgment, order, writ,
injunction or decree that has had or is reasonably likely to have a
Material Adverse Effect on Weyerhaeuser or that would prevent or
materially delay consummation of the transactions contemplated by this
Agreement or the Arrangement.
(l) Tax Matters. Except as disclosed in writing by Weyerhaeuser to MB or
Publicly Disclosed by Weyerhaeuser:
(i) Weyerhaeuser and each of its subsidiaries have timely filed,
or caused to be filed, all material Tax Returns required to be
filed by them (all of which returns were correct and complete
in all material respects) and have paid,
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or caused to be paid, all material amounts of Taxes shown to
be due and payable thereon, and Weyerhaeuser's most recently
published financial statements contain an adequate provision
in accordance with generally accepted accounting principles
for all material amounts of Taxes payable in respect of each
period covered by such financial statements and all prior
periods to the extent such Taxes have not been paid, whether
or not due and whether or not shown as being due on any Tax
Returns. Weyerhaeuser and each of its subsidiaries have made
adequate provision in accordance with generally accepted
accounting principles in their respective books and records
for any Taxes accruing in respect of any accounting period
which has ended subsequent to the period covered by such
financial statements.
(ii) Neither Weyerhaeuser nor any subsidiary has received any
written notification that any issues involving a material
amount of Taxes have been raised (and are currently pending)
by Revenue Canada, the United States Internal Revenue Service
or any other taxing authority, including, without limitation,
any sales tax authority, in connection with any of the Tax
Returns referred to above and no waivers of statutes of
limitations have been given or requested with respect to
Weyerhaeuser or any subsidiary. All liability of Weyerhaeuser
and the Weyerhaeuser Material Subsidiaries for income taxes
has been assessed for all fiscal years up to and including the
fiscal year ended December 31, 1993. To the best of the
knowledge of Weyerhaeuser, there are no proposed (but
unassessed) additional Taxes involving a material amount of
Taxes and none has been asserted in writing. No Tax liens have
been filed other than for Taxes not yet due and payable.
Neither Weyerhaeuser nor any of its subsidiaries (i) has made
an election to be treated as a "consenting corporation" under
Section 341(f) of the Code or (ii) is a party to any Tax
sharing or other similar agreement or arrangement of any
nature with any other person (other than MB or any of its
subsidiaries) pursuant to which Weyerhaeuser or any of its
subsidiaries has or could have any material liabilities in
respect of Taxes. Weyerhaeuser has not made an election under
Section 897(i) of the Code to be treated as a domestic
corporation for purposes of Sections 897, 1445 and 6039C of
the Code.
(m) Environmental. Except for matters that, individually or in the
aggregate, would not have a Material Adverse Effect on Weyerhaeuser:
(i) all operations of Weyerhaeuser and the Weyerhaeuser Material
Subsidiaries have been conducted, and are now, in compliance
with all Environmental Laws; and
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(ii) Weyerhaeuser and the Weyerhaeuser Material Subsidiaries are in
possession of, and in compliance with, all permits,
authorizations, certificates, registrations, approvals and
consents necessary under Environmental Laws to own, lease and
operate their properties and conduct their respective
businesses as they are now being conducted or as proposed to
be conducted.
(n) Year 2000 Compliance. Weyerhaeuser has conducted a comprehensive
inventory to identify whether its information technology and manufacturing
systems are Year 2000 Compliant. Weyerhaeuser currently estimates that the
overall cost of making its internal systems Year 2000 Compliant, including
costs to be capitalized, will not exceed US$100 million.
3.3 Survival
For greater certainty, the representations and warranties of MB and
each Weyerhaeuser Party contained herein shall survive the execution and
delivery of this Agreement and shall terminate on the earlier of the
termination of this Agreement in accordance with its terms and the
Effective Time. Any investigation by a party hereto and its advisors shall
not mitigate, diminish or affect the representations and warranties of
another party to this Agreement.
The parties hereto acknowledge and agree that no representation or
warranty is made by MB with respect to (i) the effect of the transactions
contemplated by this Agreement or any actions or circumstances in
connection therewith on the MB Partially-Owned Entity or any existing
agreements of MB or its affiliates relating to the MB Partially-Owned
Entity or its affiliates or (ii) any actions taken or claims made by the
MB Partially-Owned Entity or its affiliates resulting from or with
respect to (x) the existence or performance of this Agreement or the
transactions contemplated hereby or (y) the actions of the parties in
connection herewith.
ARTICLE 4
COVENANTS
4.1 Retention of Goodwill
During the Pre-Effective Date Period, MB will, subject to the fact
that a transaction involving its businesses is contemplated hereby,
continue to carry on the business of MB and its subsidiaries in a manner
consistent with prior practice, working to preserve the attendant goodwill
of such entities and to contribute to retention of that goodwill to and
after the Effective Date, but subject to the following provisions of this
Article 4. The following provisions of this Article 4 are intended to be
in furtherance of this general commitment.
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4.2 Material Commitments
Subject to applicable Law and the other provisions of this Agreement,
during the Pre-Effective Date Period, MB and its subsidiaries will consult
on an ongoing basis with senior officers of Weyerhaeuser in order that the
representatives of Weyerhaeuser will become more familiar with the
philosophy and techniques of MB and its subsidiaries, as well as with their
business and financial affairs and in order to provide experience as a
basis for ongoing relationships following the Effective Date.
4.3 Covenants of MB
(a) MB covenants and agrees that, until the Effective Date or the earlier
termination of this Agreement in accordance with Article 6, except (i) with
the consent of Weyerhaeuser on behalf of the Weyerhaeuser Parties to any
deviation therefrom, which shall not be unreasonably withheld; (ii) with
respect to any matters which were disclosed in the MB Disclosure Letter; or
(iii) with respect to any matter contemplated by this Agreement or the Plan
of Arrangement, including the transactions involving the businesses of MB
and Weyerhaeuser contemplated hereby, MB will, and will cause its
subsidiaries to:
(i) carry on its business in, and only in, the ordinary and
regular course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business,
use all reasonable efforts to preserve intact its present
business organization and keep available the services of its
present officers and employees and others having business
dealings with it to the end that its goodwill and business
shall be maintained;
(ii) not commence to undertake a substantial expansion of its
business facilities or an expansion that is out of the
ordinary and regular course of business consistent with prior
practice in light of current market and economic conditions;
(iii) not split, combine or reclassify any of the outstanding shares
of MB nor declare, set aside or pay any dividends on or make
any other distributions on or in respect of the outstanding
shares of MB, other than normal and customary quarterly
dividends on the MB Common Shares and the dividends required
by the terms of the MB Preferred Shares;
(iv) not amend the articles or by-laws of MB or materially amend
the articles or by-laws of any subsidiary;
(v) not sell, pledge, encumber, allot, reserve, set aside or issue,
authorize or propose the sale, pledge, encumbrance, allotment,
reservation, setting aside or issuance of, or purchase or redeem or
propose the purchase or redemption of, any shares in its capital
stock or of any subsidiary thereof or any class of securities
convertible or exchangeable into, or rights,
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warrants or options to acquire, any such shares or other
convertible or exchangeable securities, except for (a)
transactions between two or more wholly-owned MB subsidiaries
or between a wholly-owned subsidiary of MB and MB, (b) the
issuance of MB Common Shares pursuant to fully vested MB
Options granted prior to the date hereof, (c) the issuance of
MB Common Shares pursuant to the conversion by the holders of
MB Convertible Debentures or the exercise of MB Warrants, (d)
any purchase of MB Preferred Shares as required by the terms
thereof, (e) any redemption of the MB Convertible Debentures
requested by Weyerhaeuser in accordance with the terms of this
Agreement, (f) the issuance of MB Common Shares pursuant to
the MB Dividend Reinvestment Plan and (g) the issuance of
additional options in the ordinary course of business
consistent with past practice under the MB Stock Option Plan
representing up to a maximum of 1,000,000 MB Common Shares and
the issuance of MB Common Shares in respect thereof;
(vi) not, whether through its Board of Directors or otherwise,
accelerate the vesting of any unvested MB Options or
accelerate the release of, or the expiry date of any hold
period relating to, any MB Common Shares held in the MB
Employee Share Purchase Plans, or otherwise amend, vary or
modify such Plans or the MB Stock Option Plan;
(vii) not reorganize, amalgamate or merge MB or any of its
subsidiaries with any other Person, nor acquire or agree to
acquire by amalgamating, merging or consolidating with,
purchasing substantially all of the assets of or otherwise,
any business of any corporation, partnership, association or
other business organization or division thereof, which
acquisition would be material to its business or financial
condition on a consolidated basis (other than relating to
transactions between two or more wholly-owned MB subsidiaries
or between a whollyowned subsidiary of MB and MB);
(viii) except with respect to the sale of assets of MB or any
subsidiary in the ordinary and regular course of business
consistent with past practice, not sell, pledge, encumber,
lease or otherwise dispose of any material assets (other than
relating to transactions between two or more wholly-owned MB
subsidiaries or between a wholly-owned subsidiary of MB and
MB);
(ix) not guarantee the payment of material indebtedness or incur
material indebtedness for money borrowed or issue or sell any
debt securities except in the ordinary and regular course of
business consistent with past practice;
(x) carry out the terms of the Interim Order and the Final Order
applicable to it and use its reasonable efforts to comply
promptly with all requirements which applicable Laws may
impose on MB or its subsidiaries with respect to the
transactions contemplated hereby and by the Arrangement;
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(xi) not, and cause each of its subsidiaries not:
(A) other than in the usual, ordinary and regular course of
business and consistent with past practice or pursuant to
existing employment, pension, supplemental pension,
termination, compensation arrangements or policies, enter
into or materially modify any employment, severance,
collective bargaining or similar agreements, policies or
arrangements with, or grant any material bonuses, salary
increases, stock options, pension or supplemental pension
benefits, profit sharing, retirement allowances, deferred
compensation, incentive compensation, severance or
termination pay to, or make any loan to, any officers or
directors of it; or
(B) other than in the usual, ordinary and regular course of
business and consistent with past practice or pursuant to
existing employment, pension, supplemental pension,
termination, compensation arrangements or policies, in the
case of employees who are not officers or directors, take
any action with respect to the entering into or modifying
of any material employment, severance, collective
bargaining or similar agreements, policies or arrangements
or with respect to the grant of any material bonuses,
salary increases, stock options, pension or supplemental
pension benefits, profit sharing, retirement allowances,
deferred compensation, incentive compensation, severance or
termination pay or any other form of compensation or profit
sharing or with respect to any increase of benefits
payable;
(xii) not, except in the usual, ordinary and regular course of
business and consistent with past practice: (A) satisfy or
settle any claims or liabilities prior to the same being due,
except such as have been reserved against in the financial
statements of MB and its subsidiaries or disclosed in the MB
Disclosure Letter, which are, individually or in the
aggregate, material; (B) grant any waiver, exercise any option
or relinquish any contractual rights which are, individually
or in the aggregate, material; or (C) enter into any interest
rate, currency or commodity swaps, hedges or other similar
financial instruments;
(xiii) use its reasonable commercial efforts (or cause each of its
subsidiaries to use reasonable commercial efforts) to cause
its current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and reinsurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies
for substantially similar premiums are in full force and
effect;
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(xiv) not, and will cause its subsidiaries not to, settle or
compromise any claim brought by any present, former or
purported holder of any of its securities in connection with
the transactions contemplated by this Agreement or the
Arrangement prior to the Effective Date;
(xv) except in the usual, ordinary and regular course of business
and consistent with past practice or as required by applicable
Laws, not, and will cause its subsidiaries not to, enter into
or modify in any material respect any contract, agreement,
commitment or arrangement which new contract or series of
related new contracts or modification to an existing contract
or series of related existing contracts would have a Material
Adverse Effect on MB;
(xvi) incur or commit to capital expenditures prior to the Effective
Date only in the ordinary course consistent with past practice
and not, in any event, exceeding $20 million, individually or
in the aggregate;
(xvii) not make any changes to existing accounting practices relating
to MB or any subsidiary except as required by Law or required
by generally accepted accounting principles or make any
material tax election inconsistent with past practice; and
(xviii) promptly advise Weyerhaeuser orally and, if then requested, in
writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of MB contained in this Agreement (except any such
representation or warranty which speaks as of a date prior
to the occurrence of such event), if made on or as of the
date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(B) of any Material Adverse Change in respect of MB; and
(C) of any material breach by MB of any covenant or agreement
contained in this Agreement;
(b) MB shall and shall cause its subsidiaries to perform all obligations
required or desirable to be performed by MB or any of its
subsidiaries under this Agreement, co-operate with Weyerhaeuser in
connection therewith, and do all such other acts and things as may be
necessary or desirable in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated in this
Agreement and, without limiting the generality of the foregoing, MB
shall and where appropriate shall cause its subsidiaries to:
(i) use all reasonable efforts to obtain the approvals of holders
of MB Common Shares to the Arrangement, subject, however, to
the exercise by the Board of Directors of MB of its fiduciary
duties as provided herein;
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(ii) apply for and use all reasonable efforts to obtain all
Appropriate Regulatory Approvals relating to MB or any of its
subsidiaries and, in doing so, to keep Weyerhaeuser reasonably
informed as to the status of the proceedings related to
obtaining the Appropriate Regulatory Approvals, including, but
not limited to, providing Weyerhaeuser with copies of all
related applications and notifications, in draft form, in
order for Weyerhaeuser to provide its reasonable comments;
(iii) apply for and use all reasonable efforts to obtain the Interim
Order and the Final Order;
(iv) defend all lawsuits or other legal, regulatory or other
proceedings challenging or affecting this Agreement or the
consummation of the transactions contemplated hereby;
(v) use its reasonable efforts to have lifted or rescinded any
injunction or restraining order or other order which may
adversely affect the ability of the parties to consummate the
transactions contemplated hereby;
(vi) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from MB or any
of its subsidiaries;
(vii) use its reasonable efforts to obtain all necessary waivers,
consents and approvals required to be obtained by MB or a
subsidiary from other parties to loan agreements, leases or
other contracts; and
(viii) use its reasonable efforts to ensure that MB's affiliates (for
the purposes of Rule 145 under the 1933 Act) execute and
deliver to Weyerhaeuser, on or prior to the date that is 30
days prior to the Effective Date, an Affiliate's Letter; and
(c) MB shall not take or agree to take any action which would be
reasonably expected to prevent the business combination to be effected
by the Plan of Arrangement from qualifying for pooling-of-interest
accounting treatment under United States generally accepted accounting
principles. MB shall use its reasonable efforts to take such actions
as may be necessary to permit the business combination to be effected
by the Plan of Arrangement to qualify for pooling-of-interests
accounting treatment under United States generally accepted accounting
principles.
4.4 Covenants of the Weyerhaeuser Parties
Each of the Weyerhaeuser Parties hereby jointly and severally
covenants and agrees (and, if applicable, cause its subsidiaries):
(a) to perform all obligations required or desirable to be performed by it
under this Agreement, co-operate with MB in connection therewith, and to
do all such other acts and things as may be necessary or desirable in order
to consummate and
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make effective, as soon as reasonably practicable, the transactions
contemplated by this Agreement and, without limiting the generality of
the foregoing, to:
(i) apply for and use all reasonable efforts to obtain all
Appropriate Regulatory Approvals relating to the Weyerhaeuser
Parties, and, in doing so, to keep MB reasonably informed as
to the status of the proceedings related to obtaining the
Appropriate Regulatory Approvals, including, but not limited
to, providing MB with copies of all related applications and
notifications, in draft form, in order for MB to provide its
reasonable comments;
(ii) defend all lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or affecting
this Agreement or the consummation of the transactions
contemplated hereby;
(iii) use all reasonable efforts to have lifted or rescinded any
injunction or restraining order or other order relating to the
Weyerhaeuser Parties which may adversely affect the ability of
the parties to consummate the transactions contemplated
hereby;
(iv) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the
Weyerhaeuser Parties or their subsidiaries;
(v) cause the articles of Weysub to be amended to, among other
things, create the Exchangeable Shares; and
(vi) cause Weyerhaeuser to reserve a sufficient number of
Weyerhaeuser Common Shares for issuance upon the completion of
the Arrangement and the exchange from time to time of
Exchangeable Shares and the exercise from time to time of
Replacement Options;
(b) to use all reasonable efforts to (i) cause the Exchangeable Shares to
be listed and posted for trading on The Toronto Stock Exchange by the
Effective Date and (ii) to ensure that Weysub remains a "public
corporation" within the meaning of the Income Tax Act (Canada) for so
long as there are Exchangeable Shares outstanding (other than those
Exchangeable Shares held by Weyerhaeuser or any of its affiliates);
(c) carry out the terms of the Interim Order and Final Order applicable to
it and use its reasonable efforts to comply promptly with all
requirements which applicable Laws may impose on Weyerhaeuser or its
subsidiaries with respect to the transactions contemplated hereby and
by the Arrangement;
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(d) in connection with the consummation of the transactions contemplated
hereby and by the Arrangement, use its reasonable efforts to obtain
all necessary waivers, consents and approvals required to be obtained
by Weyerhaeuser or a subsidiary of Weyerhaeuser from other parties to
loan agreements, leases or other contracts;
(e) use its reasonable efforts to ensure that Weyerhaeuser's affiliates
(for the purposes of Rule 145 under the 1933 Act) execute and deliver
to MB, on or prior to the date that is 30 days prior to the Effective
Date, an Affiliate's Letter;
(f) if the holders of MB Convertible Debentures approve the amendments to
the terms of the trust indenture governing the MB Convertible
Debentures as proposed in the Debenture Circular, to make the
appropriate adjustments in accordance with the terms of the MB
Convertible Debentures with respect to the shares, securities or other
property that the holders of the MB Convertible Debentures will be
entitled to receive upon conversion of the MB Convertible Debentures
after the Effective Date such that after the Effective Date, the
holders of the MB Convertible Debentures will be entitled to convert
their MB Convertible Debentures into Exchangeable Shares on the same
basis as if they had converted the MB Convertible Debentures into MB
Common Shares prior to the Effective Date and each such MB Common
Share had been exchanged for a number of Exchangeable Shares equal to
the Exchange Ratio and Weyerhaeuser shall become a co-obligor with
respect to, or fully and unconditionally guarantee the payment of all
amounts due under, the MB Convertible Debentures;
(g) at or prior to the Effective Time, Weyerhaeuser shall use its best
efforts to cause one of the current directors of MB to become a
director of Weyerhaeuser whose term expires no earlier than 2002;
(h) until the Effective Date or the earlier termination of this Agreement
in accordance with Article 6, except (i) with the consent of MB to any
deviation therefrom, which shall not be unreasonably withheld; (ii)
with respect to any matters which were disclosed by Weyerhaeuser to MB
in writing; or (iii) with respect to any matter contemplated by this
Agreement or the Plan of Arrangement, including the transactions
involving the businesses of MB and Weyerhaeuser contemplated hereby,
Weyerhaeuser will:
(i) not split, combine or reclassify any of the outstanding shares
of Weyerhaeuser nor declare, set aside or pay any dividends on
or make any other distributions on or in respect of the
outstanding shares of Weyerhaeuser, other than normal and
customary quarterly dividend on Weyerhaeuser Common Shares;
(ii) not make any changes to existing accounting practices related
to Weyerhaeuser except as required by a change in United
States generally accepted accounting practice or by applicable
Law;
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(iii) not reorganize, amalgamate or merge Weyerhaeuser with any
other Person, nor acquire by amalgamating, merging or
consolidating with, purchasing a majority of the voting
securities or substantially all of the assets of or otherwise,
any business or Person which acquisition would reasonably be
expected to materially delay the transactions contemplated
hereby;
(iv) promptly advise MB orally and, if then requested, in writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of Weyerhaeuser contained in this Agreement (except any
such representation or warranty which speaks as of a date
prior to the occurrence of such event), if made on or as of
the date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(B) of any Material Adverse Change in respect of Weyerhaeuser;
and
(C) of any material breach by Weyerhaeuser of any covenant or
agreement contained in this Agreement; and
(i) the Weyerhaeuser Parties shall not take any action which may
jeopardize the exchange of the MB Common Shares by holders of
the MB Common Shares resident in Canada for the purposes of
the Income Tax Act (Canada) from being treated on a tax-free
basis for holders who are otherwise eligible for such treatment.
4.5 Covenants Regarding Non-Solicitation
(a) Subject to section 4.6, MB shall not, directly or indirectly,
through any officer, director, employee, representative or agent of MB or
any of its subsidiaries, (i) solicit, initiate or knowingly encourage
(including by way of furnishing information or entering into any form of
agreement, arrangement or understanding) the initiation of any inquiries or
proposals regarding an Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal, (iii)
withdraw or modify in a manner adverse to Weyerhaeuser the approval of the
Board of Directors of MB of the transactions contemplated hereby, (iv)
approve or recommend any Acquisition Proposal or (v) enter into any
agreement, arrangement or understanding related to any Acquisition
Proposal. Notwithstanding the preceding part of this section 4.5(a) and any
other provision of this Agreement, nothing shall prevent the Board of
Directors of MB prior to the issuance of the Final Order from considering,
participating in any discussions or negotiations, or entering into a
confidentiality agreement and providing information pursuant to section
4.5(c), regarding an unsolicited bona fide written Acquisition Proposal
that did not otherwise result from a breach of this section 4.5 and that
the Board of Directors of MB
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determines in good faith, after consultation with financial advisors
and outside counsel, is reasonably likely to result in a Superior
Proposal; provided, however, that prior to taking such action, the
Board of Directors must receive advice of outside counsel that it is
appropriate that the Board of Directors of MB take such action in
order to discharge properly its fiduciary duties. MB shall not
consider, negotiate, accept, approve or recommend an Acquisition
Proposal after the date of the issuance of the Final Order. MB shall,
and shall cause the officers, directors, employees, representatives
and agents of MB and its subsidiaries to, cease immediately all
discussions and negotiations regarding any proposal that constitutes,
or may reasonably be expected to lead to, an Acquisition Proposal.
(b) MB shall promptly notify Weyerhaeuser, at first orally and then in
writing, of any Acquisition Proposal and any inquiry that could lead
to an Acquisition Proposal, or any amendments to the foregoing, or any
request for non-public information relating to MB or any Material
Subsidiary in connection with an Acquisition Proposal or for access to
the properties, books or records of MB or any Material Subsidiary by
any Person that informs MB or such Material Subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice
shall include a description of the material terms and conditions of
any proposal, the identity of the Person making such proposal, inquiry
or contact and provide such other details of the proposal, inquiry or
contact as Weyerhaeuser may reasonably request. MB shall (i) keep
Weyerhaeuser fully informed of the status including any change to the
material terms of any such Acquisition Proposal or inquiry and (ii)
provide to Weyerhaeuser as soon as practicable after receipt or
delivery thereof with copies of all correspondence and other written
material sent or provided to MB or any Material Subsidiary from any
Person in connection with any Acquisition Proposal sent or provided
by MB to any Person in connection with any Acquisition Proposal.
(c) If MB receives a request for material non-public information from a
Person who has made an unsolicited bona fide written Acquisition
Proposal and MB is permitted, as contemplated under the second
sentence of Section 4.5(a), to negotiate the terms of such Acquisition
Proposal, then, and only in such case, the Board of Directors of MB
may, subject to the execution by such Person of a confidentiality
agreement containing a standstill provision substantially similar to
that contained in the confidentiality agreement then in effect between
MB and Weyerhaeuser, provide such Person with access to information
regarding MB; provided, however, that the Person making the
Acquisition Proposal shall not be precluded under such confidentiality
agreement from making the Acquisition Proposal (but not any material
amendment thereto) and provided further that MB sends a copy of any
such confidentiality agreement to Weyerhaeuser promptly upon its
execution and Weyerhaeuser is provided with a list of or copies of the
information provided to such Person and immediately provided with
access to similar information to which such person was provided.
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(d) MB shall ensure that its officers, directors and employees and its
subsidiaries and their officers, directors and employees and any
financial advisors or other advisors or representatives retained by it
are aware of the provisions of this section 4.5, and it shall be
responsible for any breach of this section 4.5 by its officers,
directors, employees, financial advisors or other advisors or
representatives.
(e) Notwithstanding section 4.5(a)(iii), the Board of Directors of MB may
withdraw or modify in a manner adverse to Weyerhaeuser the approval of
the Board of Directors of MB of the transactions contemplated hereby
if a Specified Weyerhaeuser Event has occurred and is continuing.
4.6 Notice by MB of Superior Proposal Determination
Notwithstanding sections 4.5(a), (b), (d) and (e), MB may accept,
approve, recommend or enter into any agreement, understanding or
arrangement in respect of a Superior Proposal if, and only if, (i) it has
provided Weyerhaeuser with a copy of the Superior Proposal document, (ii)
five Business Days shall have elapsed from the later of the date
Weyerhaeuser received written notice advising Weyerhaeuser that MB's Board
of Directors has resolved, subject only to compliance with this section 4.6
and termination of this Agreement, to accept, approve, recommend or enter
into an agreement in respect of such Superior Proposal, specifying the
terms and conditions of such Superior Proposal and identifying the Person
making such Superior Proposal, and the date Weyerhaeuser received a copy of
such Superior Proposal and (iii) it has previously or concurrently will
have (A) paid to Weyerhaeuser the break fee, if any, payable under section
6.4 and (B) terminated this Agreement pursuant to section 6.3. Any
information provided by MB to Weyerhaeuser pursuant to this section 4.6 or
pursuant to section 4.5 shall constitute "Information" under section
4.7(b).
During such five Business Day period, MB agrees that Weyerhaeuser
shall have the right, but not the obligation, to offer to amend the terms
of this Agreement. The Board of Directors of MB will review any offer by
Weyerhaeuser to amend the terms of this Agreement in good faith in order to
determine, in its discretion in the exercise of its fiduciary duties,
whether Weyerhaeuser's offer upon acceptance by MB would result in such
Superior Proposal ceasing to be a Superior Proposal. If the Board of
Directors of MB so determines, it will enter into an amended agreement with
Weyerhaeuser reflecting Weyerhaeuser's amended proposal. If the Board of
Directors of MB continues to believe, in good faith and after consultation
with financial advisors and outside counsel, that such Superior Proposal
remains a Superior Proposal and therefore rejects Weyerhaeuser's amended
proposal, MB may terminate this Agreement pursuant to section 6.3(c)(iv);
provided, however, that MB must concurrently pay to Weyerhaeuser the break
fee payable, if any, to Weyerhaeuser under section 6.4 and must
concurrently with termination enter into a definitive agreement with
respect to such Acquisition Proposal. MB acknowledges and agrees that
payment of the break fee, if any, payable under section 6.4 is a condition
to valid termination of this Agreement under section 6.3(c)(iv) and this
section 4.6.
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MB also acknowledges and agrees that each successive modification of
any Acquisition Proposal shall constitute a new Acquisition Proposal for
purposes of the requirement under clause (ii) of this section 4.6 to
initiate an additional five Business Day notice period.
4.7 Access to Information
(a) Subject to sections 4.7(b) and (c) and applicable Laws, upon
reasonable notice, MB shall (and shall cause each of its subsidiaries to)
afford Weyerhaeuser's officers, employees, counsel, accountants and other
authorized representatives and advisors ("Representatives") access, during
normal business hours from the date hereof and until the earlier of the
Effective Date or the termination of this Agreement, to its properties,
books, contracts and records as well as to its management personnel, and,
during such period, MB shall (and shall cause each of its subsidiaries to)
furnish promptly to Weyerhaeuser all information concerning MB's business,
properties and personnel as Weyerhaeuser may reasonably request. Nothing
in the foregoing shall require MB to disclose information subject to a
written confidentiality agreement with third parties or customer-specific
or competitively sensitive information relating to areas or projects where
Weyerhaeuser is in direct competition with MB. Subject to sections 4.7(b)
and (c) and applicable laws, upon reasonable notice, Weyerhaeuser shall
afford MB's Representatives access, upon reasonable notice and during
normal business hours from the date hereof and until the earlier of the
Effective Date or the termination of this Agreement, to such of
Weyerhaeuser's management personnel as Weyerhaeuser may determine, acting
reasonably, and, during such period, Weyerhaeuser shall furnish promptly to
MB all information respecting material changes in Weyerhaeuser's business,
properties and personnel as MB may reasonably request.
(b) In accordance with the Confidentiality Agreement, each of Weyerhaeuser
and MB acknowledges that certain information provided to it under section
4.7(a) above will be non-public and/or proprietary in nature (the
"Information"). Except as permitted below, each of Weyerhaeuser and MB
will keep Information confidential and will not, without the prior written
consent of the other, disclose it, in any manner whatsoever, in whole or in
part, to any other Person, and will not use it for any purpose other than
to evaluate the transactions contemplated by this Agreement. Each of
Weyerhaeuser and MB will make all reasonable, necessary and appropriate
efforts to safeguard the Information from disclosure to anyone other than
as permitted hereby and to control the copies, extracts or reproductions
made of the Information. The Information may be provided to the
Representatives of each of Weyerhaeuser and MB who require access to the
same to assist it in proceeding in good faith with the transactions
contemplated by this Agreement and whose assistance is required for such
purposes, provided that it has first informed such Representatives to whom
Information is provided that the Representative has the same obligations,
including as to confidentiality, restricted use and otherwise, that it has
with respect to such Information. This provision shall not apply to such
portions of the Information that: (i) are or become
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generally available to the public otherwise than as a result of
disclosure by a party or its Representatives; or (ii) become available
to a party on a non-confidential basis from a source other than,
directly or indirectly, the other party or its Representatives,
provided that such source is not to the knowledge of the first party,
upon reasonable inquiry, prohibited from transmitting the Information
by a contractual, legal or fiduciary obligation; (iii) were known to a
party or were in its possession on a non-confidential basis prior to
being disclosed to it by the other party or by someone on its behalf;
or (iv) are required by applicable Laws or court order to be
disclosed. The provisions of this section 4.7(b) shall survive the
termination of this Agreement.
(c) The parties acknowledge that certain Information may be competitively
sensitive and that disclosure thereof shall be limited to that which
is reasonably necessary for the purpose of (i) preparing submissions
or applications in order to obtain the Appropriate Regulatory
Approvals, (ii) preparing the Circular, (iii) avoiding conflicts and
(iv) integrating the operations of Weyerhaeuser and MB.
4.8 Closing Matters
Each of the Weyerhaeuser Parties and MB shall deliver, at the closing
of the transactions contemplated hereby, such customary certificates,
resolutions and other closing documents as may be required by the other
parties hereto, acting reasonably.
4.9 Indemnification
(a) Weyerhaeuser agrees that all rights to indemnification or exculpation
now existing in favour of the directors or officers of MB or any
subsidiary as provided in its articles of incorporation or by-laws in
effect on the date hereof shall survive the Arrangement and shall
continue in full force and effect for a period of not less than six
years from the Effective Time and Weyerhaeuser hereby assumes,
effective upon consummation of the Arrangement, all such liability
with respect to any matters arising prior to the Effective Time.
(b) There shall be maintained in effect, for not less than six years from
the Effective Time, coverage equivalent to that in effect under the current
policies of the directors' and officers' liability insurance maintained by
MB or any of its subsidiaries, as the case may be, which is no less
advantageous, and with no gaps or lapses in coverages with respect to
matters occurring prior to the Effective Time.
4.10 Employment Agreements and Related Matters
Weyerhaeuser covenants and agrees, and after the Effective Time will
cause MB or any of its subsidiaries, as the case may be, and any successor
to MB to agree, to:
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(a) honour and comply with the terms of those existing employment and
severance agreements of MB or any of its subsidiaries, as the case may
be, which MB has disclosed in the MB Disclosure Letter;
(b) for a period of one year it will deal with any employees of MB or any
of its subsidiaries, as the case may be, whose employment may be
terminated after the Effective Date in a fair and equitable manner
consistent with the existing termination policies of MB or any of its
subsidiaries, as the case may be, as disclosed in the MB Disclosure
Letter;
(c) for at least two years following the Effective Time, provide Affected
Employees, taken as a whole, of MB and its subsidiaries, for as long as
such Affected Employees remain employed during such two year period,
employee benefits which, in the aggregate, are comparable to those offered
(i) pursuant to MB or its subsidiaries' employee benefit plans, programs,
policies and arrangements as provided to such Affected Employees
immediately prior to the Effective Time and previously made available to
Weyerhaeuser or (ii) pursuant to employee benefit plans, programs, policies
or arrangements maintained by Weyerhaeuser or any subsidiary of
Weyerhaeuser providing coverage and benefits which, in the aggregate, are
no less favourable than those provided from time to time after the
Effective Time to employees of Weyerhaeuser or its subsidiaries who are
similarly situated, in terms of their positions and geographic locations to
such Affected Employees; "Affected Employees" means individuals who are
actively employed by MB or any of its subsidiaries as of the Effective Time
who remain employed with Weyerhaeuser or any subsidiary of Weyerhaeuser.
For at least two years following the Effective Time, Weyerhaeuser shall
continue to provide to eligible Affected Retirees post retirement benefits
(other than pensions) which, in the aggregate, are comparable to those
offered (i) pursuant to MB Plans applicable to such Affected Retirees,
taken as a whole, each as in effect on the date hereof and previously
described to Weyerhaeuser, or (ii) pursuant to employee benefit plans,
programs, polices or arrangements maintained by Weyerhaeuser or any
subsidiary of Weyerhaeuser providing post retirement coverage and benefits
(other than pensions) which, in the aggregate, are no less favourable than
those provided to former employees of Weyerhaeuser or its subsidiaries who
were similarly situated, in terms of their positions and geographic
locations, to such Affected Retirees prior to their retirement; "Affected
Retirees" means former employees of MB or its subsidiaries (and employees
of MB or its subsidiaries whose employment terminates prior to the
Effective Time);
(d) give Affected Employees full credit for purposes of eligibility,
vesting, benefit accrual (including benefit accrual under any defined
benefit pension plans, provided that a participant's benefit under any such
defined benefit pension plan may be offset by such participant's accrued
benefit under the MB defined benefit pension plan) and determination of the
level of benefits under any employee benefit plans or arrangements
maintained by Weyerhaeuser or any subsidiary of Weyerhaeuser
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in which such Affected Employees begin participation within two years
after the Effective Time, for such Affected Employee's service with MB
or any subsidiary of MB to the same extent recognized by MB
immediately prior to the Effective Time and previously disclosed to
Weyerhaeuser; provided, however, that in no event shall Weyerhaeuser
be required to increase the benefit accrued by any Affected Employee
as of the Effective Time with respect to their service for MB or its
subsidiaries prior to the Effective Time in an amount which would be
greater than the benefit that such Affected Employee would have
accrued under the MB defined benefit pension plan (as in effect as of
the date hereof) had they continued to participate thereunder
following the Effective Time through their date of termination of
employment;
(e) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare
benefit plans that such employee may be eligible to participate within
two years after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such Affected
Employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees
immediately prior to the Effective Time and previously described to
Weyerhaeuser; and
(f) provide Affected Employees with credit for any co-payments and
deductibles paid by such Affected Employees during the calendar year
in which the Effective Time occurs in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that
such Affected Employees are eligible to participate in after the
Effective Time and previously described to Weyerhaeuser.
Nothing herein shall be construed as (i) requiring Weyerhaeuser to
continue the employment of any Affected Employee following the Effective
Time, (ii) limiting Weyerhaeuser's ability to amend, modify or terminate
any individual employee benefit plan or arrangement of MB, Weyerhaeuser or
any of their respective subsidiaries, or (iii) requiring Weyerhaeuser to
maintain any particular level of employee benefits for any individual
employee following the Effective Time so long as clause (ii) of Section
4.10(c) is complied with.
4.11 Redemption of MB Convertible Debentures
In the event of a failure to obtain the required vote from the holders
of MB Convertible Debentures at the Debenture Meeting, Weyerhaeuser shall
have the right to require MB to redeem the MB Convertible Debentures in
accordance with their terms. Weyerhaeuser shall deliver a written notice
to MB on the exercise of such right by Weyerhaeuser. Upon receipt of such
notice by MB, MB covenants to deliver a redemption notice (specifying a 30-
day redemption period) to and redeem the MB Convertible Debentures from the
holders of the MB Convertible Debentures, provided that at the time of
receipt of such written notice by MB a Specified Weyerhaeuser Event has not
occurred and is continuing and MB and Weyerhaeuser agree, acting
reasonably, that all of the conditions in Article 5 in this Agreement are
capable of being satisfied prior to the Drop Dead Date. Notwithstanding
any other provision of this Agreement,
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any act by MB to redeem such MB Convertible Debentures as a result of the
exercise of such right by Weyerhaeuser shall be deemed not to breach or
violate or fail to satisfy any representation, warranty, covenant or
condition contained in this Agreement.
4.12 Prohibition on Voluntary Liquidation
The Weyerhaeuser Parties shall not, and agree to cause Weyerhaeuser
Newco to not, take any action relating to a voluntary liquidation,
dissolution or winding-up of Weysub or Weyerhaeuser Newco, as the case may
be, prior to the Redemption Date (as defined in the Plan of Arrangement).
4.13 Non-Application of Covenants
The parties hereto agree that no covenant of MB in this Agreement
shall be deemed to have been breached as a result of any action taken or
omitted to be taken by MB or its affiliates as may be required under any
existing agreements of MB or its affiliates relating to the MB Partially-
Owned Entity or its affiliates.
ARTICLE 5
CONDITIONS
5.1 Mutual Conditions Precedent
The respective obligations of the parties hereto to complete the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Effective Date, of the following
conditions precedent, each of which may only be waived by the mutual
consent of Weyerhaeuser, on behalf of the Weyerhaeuser Parties, and MB:
(a) the Arrangement shall have been approved at the MB Meeting by not less
than two-thirds of the votes cast by the holders of MB Common Shares who
are represented at the MB Meeting;
(b) the Arrangement shall have been approved at the MB Meeting in
accordance with any conditions in addition to those set out in section
5.1(a) which may be imposed by the Interim Order;
(c) the Interim Order and the Final Order shall each have been obtained in
form and terms satisfactory to each of MB and Weyerhaeuser, acting
reasonably, and shall not have been set aside or modified in a manner
unacceptable to such parties on appeal or otherwise;
(d) the Form S-3 shall have become effective under the 1933 Act and shall
not be the subject of any stop order or proceedings seeking a stop
order, and Weyerhaeuser shall have received all United States state
securities or "blue sky" authorizations necessary to issue the
Weyerhaeuser Common Shares;
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(e) there shall not be in force any order or decree restraining or
enjoining the consummation of the transactions contemplated by this
Agreement and there shall be no proceeding (other than an appeal made
in connection with the Arrangement), of a judicial or administrative
nature or otherwise, brought by a Governmental Entity in progress or
threatened that relates to or results from the transactions
contemplated by this Agreement that would, if successful, result in an
order or ruling that would preclude completion of the transactions
contemplated by this Agreement in accordance with the terms hereof or
would otherwise be inconsistent with the Appropriate Regulatory
Approvals which have been obtained;
(f) this Agreement shall not have been terminated pursuant to Article 6;
(g) the Exchangeable Shares issuable pursuant to the Arrangement shall
have been conditionally approved for listing on The Toronto Stock
Exchange, subject to the filing of required documentation, and the
Weyerhaeuser Common Shares issuable pursuant to the Arrangement, upon
exchange of the Exchangeable Shares from time to time and upon
exercise of the Replacement Options from time to time shall have been
approved for listing on The New York Stock Exchange, subject to notice
of issuance; and
(h) all consents, waivers, permits, orders and approvals of any
Governmental Entity (including the Appropriate Regulatory Approvals), and
the expiry of any waiting periods, in connection with, or required to
permit, the consummation of the Arrangement, the failure of which to obtain
or the non-expiry of which would constitute a criminal offense, or would
have a Material Adverse Effect on Weyerhaeuser or MB, as the case may be,
shall have been obtained or received on terms that will not have a Material
Adverse Effect on Weyerhaeuser and/or MB; there shall not be pending or
threatened any suit, action or proceeding by any Governmental Entity, in
each case that has a reasonable likelihood of success, (i) seeking to
prohibit or restrict the acquisition by Weyerhaeuser or any of its
subsidiaries of any MB Common Shares, seeking to restrain or prohibit the
consummation of the Plan of Arrangement or seeking to obtain from MB or
Weyerhaeuser any damages that are material in relation to MB and its
subsidiaries taken as a whole, (ii) seeking to prohibit or materially limit
the ownership or operation by Weyerhaeuser or any of its subsidiaries of
any material portion of the business or assets of MB or any of its
subsidiaries or to compel Weyerhaeuser or any of its subsidiaries to
dispose of or hold separate any material portion of the business or assets
of MB or any of its subsidiaries, as a result of the Plan of Arrangement,
(iii) seeking to impose limitations on the ability of Weyerhaeuser or any
of its subsidiaries to acquire or hold, or exercise full rights of
ownership of, any MB Common Shares, including the right to vote the MB
Common Shares purchased by it on all matters properly presented to the
shareholders of MB, (iv) seeking to prohibit Weyerhaeuser or any of its
subsidiaries from effectively controlling in any material respect the
business or operations of MB and its Material Subsidiaries or (v) which
otherwise is reasonably likely to have a
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Material Adverse Effect on MB or Weyerhaeuser; provided that a
reduction of up to 5% of the allowable annual cut available under MB
or its subsidiaries' Crown timber tenures, as provided in the Forest
Act (British Columbia), directly resulting from the completion of the
Arrangement shall be deemed not to have a Material Adverse Effect on
Weyerhaeuser or MB or give rise to any other remedy under this
Agreement.
5.2 Additional Conditions Precedent to the Obligations of the Weyerhaeuser
Parties
The obligations of the Weyerhaeuser Parties to complete the
transactions contemplated by this Agreement shall also be subject to the
fulfillment of each of the following conditions precedent (each of which
is for the Weyerhaeuser Parties' exclusive benefit and may be waived by
Weyerhaeuser on behalf of the Weyerhaeuser Parties):
(a) all covenants of MB under this Agreement to be performed on or before
the Effective Date shall have been duly performed by MB in all
material respects;
(b) the representations and warranties of MB shall be true and correct in
all material respects as of the Effective Date as if made on and as of
such date (except to the extent such representations and warranties
speak as of an earlier date, in which event such representations and
warranties shall be true and correct in all material respects as of
such earlier date, or except as affected by transactions contemplated
or permitted by this Agreement) and the Weyerhaeuser Parties shall
have received a certificate of MB addressed to the Weyerhaeuser
Parties and dated the Effective Date, signed on behalf of MB by two
senior executive officers of MB, confirming the same as at the
Effective Date;
(c) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to MB;
(d) the Board of Directors of MB shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by MB and the subsidiaries to permit the consummation of the
Arrangement; and
(e) if Weyerhaeuser has delivered the notice referred to in section 4.11,
the period set out in the redemption notice sent to holders of MB
Convertible Debentures shall have expired.
The Weyerhaeuser Parties may not rely on the failure to satisfy any of
the above conditions precedent as a basis for non-compliance by the
Weyerhaeuser Parties with their obligations under this Agreement if the
condition precedent would have been satisfied but for a material default by
the Weyerhaeuser Parties in complying with their obligations hereunder.
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5.3 Additional Conditions Precedent to the Obligations of MB
The obligations of MB to complete the transactions contemplated by
this Agreement shall also be subject to the following conditions precedent
(each of which is for the exclusive benefit of MB and may be waived by MB):
(a) all covenants of the Weyerhaeuser Parties under this Agreement to
be performed on or before the Effective Date shall have been duly
performed by the Weyerhaeuser Parties in all material respects;
(b) all representations and warranties of the Weyerhaeuser Parties under
this Agreement shall be true and correct in all material respects as
of the Effective Date as if made on and as of such date (except to the
extent such representations and warranties speak as of an earlier
date, in which event such representations and warranties shall be true
and correct in all material respects as of such earlier date, or
except as affected by transactions contemplated or permitted by this
Agreement) and MB shall have received a certificate of each of the
Weyerhaeuser Parties addressed to MB and dated the Effective Date,
signed on behalf of each of the Weyerhaeuser Parties by two senior
executive officers of the relevant Weyerhaeuser Party, confirming the
same as at the Effective Date;
(c) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to Weyerhaeuser; and
(d) the Boards of Directors of the Weyerhaeuser Parties shall have adopted
all necessary resolutions, and all other necessary corporate action
shall have been taken by the Weyerhaeuser Parties to permit the
consummation of the Arrangement and the issue of the Exchangeable
Shares contemplated thereby and the issue of Weyerhaeuser Common
Shares pursuant to the Arrangement and upon the exchange from time to
time of the Exchangeable Shares and the exercise from time to time of
the Replacement Options.
MB may not rely on the failure to satisfy any of the above conditions
precedent as a basis for noncompliance by MB with its obligations under
this Agreement if the condition precedent would have been satisfied but for
a material default by MB in complying with its obligations hereunder.
5.4 Notice and Cure Provisions
The Weyerhaeuser Parties and MB will give prompt notice to the other
of the occurrence, or failure to occur, at any time from the date hereof
until the Effective Date, of any event or state of facts which occurrence
or failure would, or would be likely to:
(a) cause any of the representations or warranties of the other party
contained herein to be untrue or inaccurate in any material respect on
the date hereof or on the Effective Date; or
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(b) result in the failure in any material respect to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by the other hereunder prior to the Effective Date.
Neither the Weyerhaeuser Parties nor MB may elect not to complete the
transactions contemplated hereby pursuant to the conditions precedent
contained in sections 5.1, 5.2 and 5.3, or exercise any termination right
arising therefrom, unless forthwith and in any event prior to the filing of
the Final Order for acceptance by the Director, the Weyerhaeuser Parties or
MB, as the case may be, have delivered a written notice to the other
specifying in reasonable detail all breaches of covenants, representations
and warranties or other matters which the Weyerhaeuser Parties or MB, as
the case may be, are asserting as the basis for the non-fulfillment of the
applicable condition precedent or the exercise of the termination right, as
the case may be. If any such notice is delivered, provided that the
Weyerhaeuser Parties or MB, as the case may be, are proceeding diligently
to cure such matter, if such matter is susceptible to being cured, the
other may not terminate this Agreement as a result thereof until the later
of November 30, 1999 and the expiration of a period of 30 days from such
notice. If such notice has been delivered prior to the date of the MB
Meeting, such meeting shall be postponed until the expiry of such period.
If such notice has been delivered prior to the making of the application
for the Final Order or the filing of the Articles of Arrangement with the
Director, such application and such filing shall be postponed until the
expiry of such period. For greater certainty, in the event that such
matter is cured within the time period referred to herein, this Agreement
may not be terminated.
5.5 Satisfaction of Conditions
The conditions precedent set out in sections 5.1, 5.2 and 5.3 shall be
conclusively deemed to have been satisfied, waived or released when, with
the agreement of Weyerhaeuser and MB, a certificate of arrangement in
respect of the Arrangement is issued by the Director.
The parties hereto agree that no condition to the obligation of the
Weyerhaeuser Parties to complete the transactions contemplated by this
Agreement set forth in Section 5.2(a), (b) or (c) shall be deemed not to
have been satisfied as a result of any occurrence or circumstance directly
or indirectly related to (i) the effect of the existence or performance of
this Agreement or the transactions contemplated hereby on any existing
agreements of MB or its affiliates relating to the MB Partially-Owned
Entity or its affiliates or MB's relations with such persons or (ii) any
action taken or claim made by the MB Partially-Owned Entity or its
affiliates resulting from or with respect to (x) the existence or
performance of this Agreement or the transactions contemplated hereby, or
(y) the actions of the parties in connection herewith.
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ARTICLE 6
AMENDMENT AND TERMINATION
6.1 Amendment
This Agreement may, at any time and from time to time before or after
the holding of the MB Meeting but not later than the Effective Date, be
amended by mutual written agreement of the parties hereto, and any such
amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties;
(b) waive any inaccuracies or modify any representation contained herein
or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify performance of any of the obligations of the
parties; and
(d) waive compliance with or modify any conditions precedent herein
contained; provided, however, that any such change, waiver or
modification does not invalidate any required security holder approval
of the Arrangement.
6.2 Mutual Understanding Regarding Amendments
(a) The parties will continue, from and after the date hereof and through
and including the Effective Date, to use their respective reasonable
efforts to maximize present and future financial and tax planning
opportunities for the shareholders of MB, and for Weyerhaeuser and for MB
as and to the extent that the same shall not prejudice any party or its
security holders. The parties will ensure that such planning activities do
not impede the progress of the Arrangement in any material way.
(b) The parties agree that if the Weyerhaeuser Parties or MB, as the case
may be, propose any amendment or amendments to this Agreement or to
the Plan of Arrangement, the other will act reasonably in considering
such amendment and if the other and its shareholders are not
prejudiced by reason of any such amendment the other will co-operate
in a reasonable fashion with the Weyerhaeuser Parties or MB, as the
case may be, so that such amendment can be effected subject to
applicable Laws and the rights of the security holders.
6.3 Termination
(a) If any condition contained in sections 5.1 or 5.2 is not satisfied at
or before the Effective Date to the satisfaction of the Weyerhaeuser
Parties, then Weyerhaeuser on behalf of the Weyerhaeuser Parties may by
notice to MB terminate this Agreement and the obligations of the parties
hereunder except as otherwise herein provided, but without detracting from
the rights of the Weyerhaeuser Parties
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arising from any breach by MB but for which the condition would have
been satisfied.
(b) If any condition contained in sections 5.1 or 5.3 is not satisfied at
or before the Effective Date to the satisfaction of MB, then MB may by
notice to Weyerhaeuser on behalf of the Weyerhaeuser Parties terminate
this Agreement and the obligations of the parties hereunder except as
otherwise herein provided, but without detracting from the rights of
MB arising from any breach by the Weyerhaeuser Parties but for which
the condition would have been satisfied.
(c) This Agreement may:
(i) be terminated by the mutual agreement of MB and the
Weyerhaeuser Parties (without further action on the part of
MB's shareholders if terminated after the holding of the MB
Meeting);
(ii) be terminated by either MB or Weyerhaeuser, if there shall be passed
any law or regulation that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or if
any injunction, order or decree enjoining Weyerhaeuser or MB from
consummating the transactions contemplated by this Agreement is
entered and such injunction, order or decree shall become final
and non-appealable;
(iii) be terminated by Weyerhaeuser if (A) the Board of Directors of
MB shall have failed to recommend or withdrawn or modified or
changed in a manner adverse to Weyerhaeuser its approval or
recommendation of this Agreement or the Arrangement or shall
have recommended an Acquisition Proposal or (B) through the
fault of MB (whether by commission or omission), this
Arrangement is not, prior to 14 days prior to the Drop Dead
Date, submitted for the approval of the MB Shareholders at the
MB Meeting;
(iv) be terminated by MB in order to enter into a definitive
written agreement with respect to a Superior Proposal, subject
to compliance with section 4.6 and the payment of any fee
required to be paid pursuant to section 6.4(a); or
(v) be terminated by MB or Weyerhaeuser if MB shareholder approval
shall not have been obtained by reason of the failure to
obtain the required vote at the MB Meeting; in each case,
prior to the Effective Date.
(d) If the Effective Date does not occur on or prior to the Drop Dead
Date, then this Agreement shall terminate.
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(e) If this Agreement is terminated in accordance with the foregoing
provisions of this section 6.3, no party shall have any further
liability to perform its obligations hereunder except as provided in
section 6.4 and as otherwise contemplated hereby, and provided that,
subject to section 6.5, neither the termination of this Agreement nor
anything contained in this section 6.3(e) shall relieve any party from
any liability for any breach by it of this Agreement, including from
any inaccuracy in its representations and warranties and any non-
performance by it of its covenants made herein.
6.4 Break Fee
(a) If:
(i) MB shall terminate this Agreement pursuant to section
6.3(c)(iv), unless at the time of such termination, a
Specified Weyerhaeuser Event has occurred and is continuing;
(ii) Weyerhaeuser shall terminate this Agreement pursuant to
section 6.3(c)(iii), unless at the time of such failure to
recommend, withdrawal or adverse modification or change, or
recommendation of an Acquisition Proposal, a Specified
Weyerhaeuser Event has occurred and is continuing; or
(iii) either MB or Weyerhaeuser shall terminate this Agreement
pursuant to section 6.3(c)(v) in circumstances where MB
shareholder approval has not been obtained at the MB Meeting,
and (x) a bona fide Acquisition Proposal has been made by any
person other than a Weyerhaeuser Party prior to the MB Meeting
and not withdrawn more than five days prior to the vote of the
MB Shareholders and (y) MB enters into an agreement with
respect to an Acquisition Proposal, or an Acquisition Proposal
is consummated, after the date hereof and prior to the
expiration of 18 months following termination of this
Agreement, unless at the time of the MB Meeting a Specified
Weyerhaeuser Event has occurred and is continuing;
then in any such case MB shall pay to Weyerhaeuser US$92,000,000 in
immediately available funds to an account designated by Weyerhaeuser.
Such payment shall be due (A) in the case of a termination specified
in clause (i), prior to the termination of this Agreement, (B) in the
case of a termination specified in clause (ii), within five Business
Days after written notice of termination by Weyerhaeuser or (C) in the
case of a termination specified in clause (iii), at or prior to the
earlier of the entering into of the agreement and the consummation of
the transaction referred to therein. MB shall not be obligated to
make more than one payment pursuant to this section 6.4(a).
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(b) If the holders of the MB Common Shares shall fail to approve the
Arrangement (unless a Specified Weyerhaeuser Event has occurred and is
continuing) at the MB Meeting, then at 11:00 a.m., Seattle time, on
the first Business Day following the MB Meeting, MB shall pay to
Weyerhaeuser US$5,000,000 as payment in full of the Weyerhaeuser
Parties' out-of-pocket costs and expenses in connection with the
transaction contemplated by this Agreement in immediately available
funds to an account designated by Weyerhaeuser. Any payment due under
section 6.4(a) shall be reduced dollar-for-dollar by any payment
previously made under this section 6.4(b).
(c) Weyerhaeuser shall not be entitled to any break fee under Section
6.4(a)(iii) if (A) the Acquisition Proposal referred to in clause (x)
thereof does not relate solely to the Packaging Business, (B) the
Acquisition Proposal referred to in clause (y) thereof does relate
solely to the Packaging Business and (C) the Acquisition Proposal
referred to in clause (y) thereof was not made by the Person who made
the Acquisition Proposal referred to in clause (x) thereof or any
Person related to or acting in concert with such Person.
6.5 Effect of Break Fee Payment
For greater certainty, the parties hereto agree that if MB pays to
Weyerhaeuser amounts required by section 6.4(a) as a result of the
occurrence of any of the events referenced in section 6.4(a), the
Weyerhaeuser Parties shall have no other remedy for any breach of this
Agreement by MB.
6.6 Remedies
Subject to section 6.5, the parties hereto acknowledge and agree that
an award of money damages would be inadequate for any breach of this
Agreement by any party or its representatives and any such breach would
cause the non-breaching party irreparable harm. Accordingly, the parties
hereto agree that, in the event of any breach or threatened breach of this
Agreement by one of the parties, the non-breaching party will also be
entitled, without the requirement of posting a bond or other security, to
equitable relief, including injunctive relief and specific performance.
Such remedies will not be the exclusive remedies for any breach of this
Agreement but will be in addition to all other remedies available at law or
equity to each of the parties.
ARTICLE 7
GENERAL
7.1 Notices
All notices and other communications which may or are required to be
given pursuant to any provision of this Agreement shall be given or made in
writing and shall be deemed to be validly given if served personally or by
telecopy, in each case addressed to the particular party at:
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(a) If to MB, at:
MacMillan Bloedel Limited
925 West Georgia Street
Vancouver, BC V6C 3C2
Attention: Mr. Bruce Kulla, Vice President and General Counsel
Telecopier No.: (604) 687-2314
with a copy to:
Stikeman, Elliott
Box 85, Commerce Court West
199 Bay Street, 53rd Floor
Toronto, Ontario
M5L 1B9
Attention: Mr. John Stransman
Telecopier No.: (416) 947-0866
(b) If to a Weyerhaeuser Party, at:
Weyerhaeuser Company
33663 Weyerhaeuser Way South
Federal Way, WA 98003
Attention: Mr. Robert A. Dowdy, Vice President and General Counsel
Telecopier No.: (253) 924-3253
with a copy to:
Blake, Cassels & Graydon
Box 25, Commerce Court West
199 Bay Street, 28th Floor
Toronto, Ontario
M5L 1A9
Attention: Mr. Alan Bell
Telecopier No.: (416) 863-2653
or at such other address of which any party may, from time to time, advise
the other parties by notice in writing given in accordance with the
foregoing. The date of receipt of any such notice shall be deemed to be
the date of delivery or telecopying thereof.
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7.2 Assignment
No party hereto may assign its rights or obligations under this
Agreement or the Arrangement.
7.3 Binding Effect
This Agreement and the Arrangement shall be binding upon and shall
enure to the benefit of the parties hereto and their respective successors
and no third party shall have any rights hereunder.
7.4 Waiver and Modification
MB and the Weyerhaeuser Parties may waive or consent to the
modification of, in whole or in part, any inaccuracy of any representation
or warranty made to them hereunder or in any document to be delivered
pursuant hereto and may waive or consent to the modification of any of the
covenants herein contained for their respective benefit or waive or consent
to the modification of any of the obligations of the other parties hereto.
Any waiver or consent to the modification of any of the provisions of this
Agreement, to be effective, must be in writing executed by the party
granting such waiver or consent.
7.5 No Personal Liability
(a) No director or officer of any Weyerhaeuser Party shall have any
personal liability whatsoever to MB under this Agreement, or any other
document delivered in connection with the Arrangement on behalf of a
Weyerhaeuser Party.
(b) No director or officer of MB shall have any personal liability
whatsoever to any Weyerhaeuser Party under this Agreement, or any
other document delivered in connection with the Arrangement on behalf
of MB.
7.6 Further Assurances
Each party hereto shall, from time to time, and at all times
hereafter, at the request of the other parties hereto, but without further
consideration, do all such further acts and execute and deliver all such
further documents and instruments as shall be reasonably required in order
to fully perform and carry out the terms and intent hereof.
7.7 Expenses
(a) Subject to section 6.4, the parties agree that all out-of-pocket
expenses of the parties relating to the Arrangement and the
transactions contemplated hereby, including legal fees, accounting
fees, financial advisory fees, regulatory filing fees, all
disbursements of advisors and printing and mailing costs, shall be
paid by the party incurring such expenses.
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(b) MB represents and warrants to the Weyerhaeuser Parties that, except
for any amounts owing to RBC Dominion Securities Inc., J.P. Morgan &
Co. Incorporated and Salomon Smith Barney Inc. by MB pursuant to and
in accordance with the terms of written and executed agreements
existing as at the date hereof and disclosed to the Weyerhaeuser
Parties on or prior to the date hereof, no broker, finder or
investment banker is or will be entitled to any brokerage, finder's or
other fee or commission from MB or any subsidiary of MB in connection
with the transactions contemplated hereby or by the Arrangement.
7.8 Consultation
Weyerhaeuser and MB agree to consult with each other as to the general
nature of any news releases or public statements with respect to this
Agreement or the Arrangement, and to use their respective reasonable
efforts not to issue any news releases or public statements inconsistent
with the results of such consultations. Subject to applicable Laws, each
party shall use its reasonable efforts to enable the other parties to
review and comment on all such news releases prior to the release thereof.
The parties agree to issue jointly a news release with respect to this
Arrangement as soon as practicable following the execution of this
Agreement. Weyerhaeuser and MB also agree to consult with each other in
preparing and making any filings and communications in connection with any
Appropriate Regulatory Approvals.
7.9 Governing Laws
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada
applicable therein and shall be treated in all respects as a British
Columbia contract. Each party hereby irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia in respect
of all matters arising under or in relation to this Agreement.
7.10 Time of Essence
Time shall be of the essence in this Agreement.
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7.11 Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the date first written above.
WEYERHAEUSER COMPANY
By: /s/ Steven R. Rogel
-------------------
Chairman, President & Chief
Executive Officer
By:
-------------------
586476 B.C. LTD.
By: /s/ Steven R. Rogel
-------------------
Director
By:
-------------------
MACMILLAN BLOEDEL LIMITED
By: /s/ W. T. Stephens
-------------------
By:
-------------------
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SCHEDULE B
APPROPRIATE REGULATORY APPROVALS
Canada
. expiration or earlier termination of the waiting period under Part IX
of the Competition Act (Canada) and receipt of an advance ruling
certificate ("ARC") pursuant to the Competition Act (Canada) or, in
the alternative to an ARC, a no-action letter from the Commissioner of
Competition
. determination by the Minister responsible for Investment Canada under
the Investment Canada Act that the Arrangement is of "net benefit to
Canada" for purposes of such Act
. exemption orders from the provincial securities regulators from the
registration and prospectus requirements with respect to the
Exchangeable Share structure
. approval of the relevant Canadian stock exchange(s) regarding the
conditional listing of the Exchangeable Shares
. approvals in respect of all material tree farm licences, forest
resource licences, forest resource processing facility licences,
forest management agreements, timber permits and timber licences,
including, without limitation, the consent of the Minister of Forests
for British Columbia to the change of control of MB resulting from the
completion of the Arrangement.
United States and Other
. expiration or earlier termination of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976
. effectiveness of the registration statement on Form S-3 regarding the
Weyerhaeuser Common Shares
. approval of The New York Stock Exchange regarding the listing of the
Weyerhaeuser Common Shares subject to official notice of issuance
. approvals in respect of all material tree farm licenses, timber
permits and timber licenses.
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SCHEDULE D
PLAN OF ARRANGEMENT UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have
the respective meanings set out below and grammatical variations of such
terms shall have corresponding meanings:
"Arrangement" means an arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in this Plan of
Arrangement, subject to any amendments or variations thereto made in
accordance with section 6.1 of the Merger Agreement or Article 6 or
made at the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution of the MB
Shareholders, to be substantially in the form and content of Schedule
C annexed to the Merger Agreement;
"Articles of Arrangement" means the articles of arrangement of MB in
respect of the Arrangement that are required by the CBCA to be sent to
the Director after the Final Order is made;
"Business Day" means any day on which commercial banks are generally
open for business in Seattle, Washington and Vancouver, British
Columbia, other than a Saturday, a Sunday or a day observed as a
holiday in Seattle, Washington under the laws of the State of
Washington or the federal laws of the United States of America or in
Vancouver, British Columbia under the laws of the Province of British
Columbia or the federal laws of Canada;
"CBCA" means the Canada Business Corporations Act as now in effect and
as may be amended from time to time prior to the Effective Date;
"Certificate" means the certificate of arrangement giving effect to
the Arrangement, issued pursuant to subsection 192(7) of the CBCA
after the Articles of Arrangement have been filed;
"Circular" means the notice of the MB Meeting and accompanying
management information circular, including all schedules and exhibits
thereto, to be sent to holders of MB Common Shares and MB Options in
connection with the MB Meeting;
"Court" means the Supreme Court of British Columbia;
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"Current Market Price" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
"Depositary" means at its offices set out in the Letter of Transmittal
and Election Form;
"Director" mean the Director appointed pursuant to section 260 of the
CBCA;
"Dissent Rights" has the meaning set out in section 3.1;
"Dissenting Shareholder" means a holder of MB Common Shares who
dissents in respect of the Arrangement in strict compliance with the
Dissent Rights;
"Dividend Amount" has the meaning ascribed thereto in section 5.1(a);
"Drop Dead Date" means February 15, 2000, or such later date as may be
mutually agreed by the parties to the Merger Agreement;
"Effective Date" means the date shown on the Certificate, provided
that such date occurs on or prior to the Drop Dead Date;
"Effective Time" means 12:01 a.m. on the Effective Date;
"Election Deadline" means 5:00 p.m. (local time) at the place of
deposit on the date which is two Business Days prior to the date of
the MB Meeting;
"Exchange Ratio" means 0.28, subject to adjustment, if any, as
provided herein;
"Exchangeable Elected Share" means any MB Common Share that the holder
shall have elected, in a duly completed Letter of Transmittal and
Election Form deposited with the Depositary no later than the Election
Deadline, to transfer to Weysub under the Arrangement for a fraction
of an Exchangeable Share or that is deemed to be an Exchangeable
Elected Share pursuant to section 2.2(c);
"Exchangeable Shares" means the non-voting exchangeable shares in the
capital of Weysub, having substantially the rights, privileges,
restrictions and conditions set out in the Exchangeable Share
Provisions;
"Exchangeable Share Provisions" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares,
which rights, privileges, restrictions and conditions shall be
substantially as set out in Appendix 1 hereto;
"Final Order" means the final order of the Court approving the
Arrangement as such order may be amended by the Court at any time
prior to the Effective Date or, if appealed, then, unless such appeal
is withdrawn or denied, as affirmed;
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"Government Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the
account of any of the foregoing;
"Interim Order" means the interim order of the Court, as the same may
be amended, in respect of the Arrangement, as contemplated by section
2.3 of the Merger Agreement;
"ITA" means the Income Tax Act (Canada), as amended; "Letter of
Transmittal and Election Form" means the letter of transmittal and
election form for use by holders of MB Common Shares, in the form
accompanying the Circular;
"Liquidation Call Purchase Price" has the meaning ascribed thereto in
section 5.1(a);
"Liquidation Call Right" has the meaning ascribed thereto in section
5.1(a);
"Liquidation Date" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
"MB" means MacMillan Bloedel Limited, a corporation existing under the
laws of Canada;
"MB Common Shares" means the outstanding common shares in the capital
of MB;
"MB Meeting" means the special meeting of MB Shareholders, including
any adjournment thereof, to be called and held in accordance with the
Interim Order to consider the Arrangement;
"MB Options" means the MB Common Share purchase options granted under
MB Stock Option Plan, as amended, and under separate agreements with
three senior officers of MB, and being outstanding and unexercised on
the Effective Date;
"MB Shareholders" means the holders of MB Common Shares, MB Options
and MB Warrants, collectively;
"MB Stock Option Plan" means MB's Senior Management Stock Option Plan
instituted February 10, 1997;
"MB Warrants" means the bearer warrants of MB exercisable for MB
Common Share and being outstanding and unexercised on the Effective
Date;
"Meeting Date" means the date of the MB Meeting;
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"Merger Agreement" means the agreement made the 20th day of June, 1999
among Weyerhaeuser, Weysub and MB, as amended, supplemented and/or
restated in accordance therewith prior to the Effective Date,
providing for, among other things, the Arrangement;
"NYSE" means the New York Stock Exchange, Inc.;
"Person" includes any individual, firm, partnership, joint venture,
venture capital fund, limited liability company, unlimited liability
company, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;
"Redemption Call Purchase Price" has the meaning ascribed thereto in
section 5.2(a);
"Redemption Call Right" has the meaning ascribed thereto in section
5.2(a);
"Redemption Date" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"Replacement Option" has the meaning ascribed thereto in section
2.2(d);
"Special Voting Share" means the share of Weyerhaeuser Special Voting
Preferred Stock having substantially the rights, privileges,
restrictions and conditions described in the Voting and Exchange Trust
Agreement;
"Transfer Agent" has the meaning ascribed thereto in section 5.1(b);
"Trustee" means the trustee to be chosen by Weyerhaeuser and MB,
acting reasonably, to act as trustee under the Voting and Exchange
Trust Agreement, being a corporation organized and existing under the
laws of Canada and authorized to carry on the business of a trust
company in all the provinces of Canada, and any successor trustee
appointed under the Voting and Exchange Trust Agreement;
"Voting and Exchange Trust Agreement" means an agreement to be made
between Weyerhaeuser, Weysub and the Trustee in connection with the
Plan of Arrangement substantially in the form and content of Schedule
F annexed to the Merger Agreement, with such changes thereto as the
parties to the Merger Agreement, acting reasonably, may agree;
"Weyerhaeuser" means Weyerhaeuser Company, a corporation existing
under the laws of the State of Washington;
"Weyerhaeuser Common Shares" means the shares of common stock in the
capital of Weyerhaeuser;
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"Weyerhaeuser Control Transaction" has the meaning ascribed thereto in
the Exchangeable Share Provisions;
"Weyerhaeuser Elected Share" means any MB Common Share that the holder
shall have elected, in a duly completed Letter of Transmittal and
Election Form deposited with the Depositary no later than the Election
Deadline, to transfer to Weysub under the Arrangement for a fraction
of a Weyerhaeuser Common Share, or that is deemed to be a Weyerhaeuser
Elected Share pursuant to section 2.3(a);
"Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under
the laws of the Province of British Columbia and being a wholly-owned
subsidiary of Weyerhaeuser; and
"Weysub" means 586476 B.C. Ltd., a company existing under the laws of
the Province of British Columbia and being a subsidiary of
Weyerhaeuser Newco.
1.2 Sections and Headings
The division of this Plan of Arrangement into sections and the
insertion of headings are for reference purposes only and shall not affect
the interpretation of this Plan of Arrangement. Unless otherwise indicated,
any reference in this Plan of Arrangement to a section or an exhibit refers
to the specified section of or exhibit to this Plan of Arrangement.
1.3 Number, Gender and Persons
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular number include the plural and vice versa and
words importing any gender include all genders.
ARTICLE 2
ARRANGEMENT
2.1 Binding Effect
This Plan of Arrangement will become effective at, and be binding at
and after, the Effective Time on (i) MB, (ii) Weyerhaeuser, Weyerhaeuser
Newco and Weysub, (iii) all holders of MB Common Shares, (iv) all holders
of Exchangeable Shares, and (v) all holders of MB Warrants.
2.2 Arrangement
Commencing at the Effective Time, the following shall occur and shall
be deemed to occur in the following order without any further act or
formality:
(a) each Weyerhaeuser Elected Share will be transferred by the holder
thereof, without any act or formality on its part, to Weysub in
exchange for that number of fully paid and non-assessable
Weyerhaeuser Common Shares equal to the
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Exchange Ratio, and the name of each such holder will be removed
from the register of holders of MB Common Shares and added to the
register of holders of Weyerhaeuser Common Shares and Weysub will
be recorded as the registered holder of such MB Common Shares so
exchanged and will be deemed to be the legal and beneficial owner
thereof;
(b) each Exchangeable Elected Share will be transferred by the holder
thereof, without any act or formality on its part, to Weysub in
exchange for that number of fully paid and non-assessable
Exchangeable Shares equal to the Exchange Ratio, and the name of
each such holder will be removed from the register of holders of
MB Common Shares and added to the register of holders of
Exchangeable Shares and Weysub will be recorded as the registered
holder of such MB Common Shares so exchanged and will be deemed
to be the legal and beneficial owner of such MB Common Shares and
MB Warrants;
(c) each MB Common Share in respect of which no election has been made by
the holder thereof, or in respect of which an effective election has
not been made, (other than (i) MB Common Shares held by Dissenting
Shareholders who are ultimately entitled to be paid the fair value of
the MB Common Shares held by them and (ii) MB Common Shares held by
Weyerhaeuser or any subsidiary or affiliate thereof which shall not
be exchanged under this Arrangement and shall remain outstanding as
MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate
thereof) and each MB Warrant, as the case may be, will be deemed to
be an Exchangeable Elected Share and will be transferred by the
holder thereof, without any act or formality on its part, to Weysub
in exchange for that number of fully paid and non-assessable
Exchangeable Shares equal to the Exchange Ratio, and the name of
each such holder of MB Common Shares will be removed from the register
of holders of MB Common Shares and added to the register of holders of
Exchangeable Shares and Weysub will be recorded as the registered
holder of such MB Common Shares so exchanged and will be deemed to be
the legal and beneficial owner of such MB Common Shares and MB
Warrants; provided that, notwithstanding the foregoing, each MB Common
Share in respect of which no election has been made, or in respect
of which an effective election has not been made, held by a holder
who is not a resident of Canada for the purposes of the ITA (other
than (i) MB Common Shares held by Dissenting Shareholders who are
ultimately entitled to be paid the fair value of the MB Common Shares
held by them and (ii) MB Common Shares held by Weyerhaeuser or any
subsidiary or affiliate thereof which shall not be exchanged under
the Arrangement and shall remain outstanding as MB Common Shares held
by Weyerhaeuser or any subsidiary or affiliate thereof) will be
deemed to be a Weyerhaeuser Elected Share and will be transferred by
the holder thereof, without any act or formality on his part, to
Weysub in exchange for that number of fully paid and non-assessable
Weyerhaeuser Common Shares equal to the Exchange Ratio, and the name
of each such holder will be removed from the register of holders of
MB Common Shares and added to the register of holders of Weyerhaeuser
Common Shares and Weysub will be recorded as the registered
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holder of such MB Common Shares so exchanged and will be deemed
to be the legal and beneficial owner thereof;
(d) each MB Option shall be exchanged for an option (a "Replacement
Option") to purchase a number of Weyerhaeuser Common Shares equal
to the product of the Exchange Ratio multiplied by the number of
MB Common Shares subject to such MB Option. Such Replacement
Option shall provide for an exercise price per Weyerhaeuser
Common Share equal to the exercise price per share of such MB
Option immediately prior to the Effective Time divided by the
Exchange Ratio. If the foregoing calculation results in a
Replacement Option being exercisable for a fraction of a
Weyerhaeuser Common Share, then the number of Weyerhaeuser Common
Shares subject to such Replacement Option shall be rounded down
to the next whole number of Weyerhaeuser Common Shares and the
total exercise price for the Replacement Option will be reduced
by the exercise price of the fractional Weyerhaeuser Common
Share. Subject to Appendix 2 hereto, the term to expiry,
conditions to and manner of exercising, vesting schedule, and all
other terms and conditions of such Replacement Option will
otherwise be unchanged, and any document or agreement previously
evidencing an MB Option shall thereafter evidence and be deemed
to evidence such Replacement Option; and
(e) Weyerhaeuser shall issue to and deposit with the Trustee the
Special Voting Share, in consideration of the payment to
Weyerhaeuser of U.S. $1, to be thereafter held of record by the
Trustee as trustee for and on behalf of, and for the use and
benefit of, the holders of the Exchangeable Shares in accordance
with the Voting and Exchange Trust Agreement.
2.3 Elections
(a) Each Person who, at or prior to the Election Deadline, is a
holder of record of MB Common Shares will be entitled, with
respect to all or a portion of such shares, to make an election
at or prior to the Election Deadline to receive Exchangeable
Shares or Weyerhaeuser Common Shares, or a combination thereof,
in exchange for such holder's MB Common Shares on the basis set
forth herein and in the Letter of Transmittal and Election Form;
provided that, notwithstanding anything to the contrary herein,
holders of MB Common Shares who are not residents of Canada for
the purposes of the ITA will not be entitled to elect to receive
Exchangeable Shares, and any such election otherwise made by any
such holder shall be and be deemed to be an election to receive a
Weyerhaeuser Elected Share.
(b) Holders of MB Common Shares who are residents of Canada for the
purposes of the ITA, other than any such holder who is exempt from tax
under the ITA, and who have elected to receive Exchangeable Shares
shall be entitled to make an income tax election pursuant to
subsection 85(l) of the ITA or, if the holder is a partnership,
subsection 85(2) of the ITA (and in each case, where applicable, the
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analogous provisions of provincial income tax law) with respect
to the transfer of their MB Common Shares to Weysub by providing
two signed copies of the necessary prescribed election forms to
the Depositary within 90 days following the Effective Date, duly
completed with the details of the number of shares transferred
and the applicable agreed amounts for the purposes of such
elections. Thereafter, subject to the election forms being
correct and complete and complying with the provisions of the ITA
(or applicable provincial income tax law), the forms will be
signed by Weysub and returned to such holders of MB Common Shares
or MB Warrants, as the case may be, within 30 days after the
receipt thereof by the Depositary for filing with Revenue Canada
(or the applicable provincial taxing authority). Weysub will not
be responsible for the proper completion of any election form
and, except for Weysub's obligation to return duly completed
election forms which are received by the Depositary within 90
days of the Effective Date, within 30 days after the receipt
thereof by the Depositary, Weysub will not be responsible for any
taxes, interest or penalties resulting from the failure by a
holder of MB Common Shares or MB Warrants, as the case may be, to
properly complete or file the election forms in the form and
manner and within the time prescribed by the ITA (or any
applicable provincial legislation). In its sole discretion,
Weysub may choose to sign and return an election form received
more than 90 days following the Effective Date, but Weysub will
have no obligation to do so.
2.4 Adjustments to Exchange Ratio
The Exchange Ratio shall be adjusted to reflect fully the effect of
any stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Weyerhaeuser Common Shares or
MB Common Shares other than stock dividends paid in lieu of ordinary course
dividends), reorganization, recapitalization or other like change with
respect to Weyerhaeuser Common Shares or MB Common Shares occurring after
the date of the Merger Agreement and prior to the Effective Time.
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent
Holders of MB Common Shares may exercise rights of dissent with
respect to such shares pursuant to and in the manner set forth in section
190 of the CBCA and this section 3.1 (the "Dissent Rights") in connection
with the Arrangement; provided that, notwithstanding subsection 190(5) of
the CBCA, the written objection to the Arrangement Resolution referred to
in subsection 190(5) of the CBCA must be received by MB not later than
5:00 p.m. (Vancouver time) on the Business Day preceding the MB Meeting.
Holders of MB Common Shares who duly exercise such rights of dissent and
who:
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(a) are ultimately determined to be entitled to be paid fair value
for their MB Common Shares shall be deemed to have transferred
such MB Common Shares and to Weysub, to the extent the fair value
therefor is paid by Weysub, and to MB, to the extent the fair
value therefor is paid by MB, and, in the case of MB Common
Shares so transferred to MB such shares shall be cancelled as of
the Effective Date; or
(b) are ultimately determined not to be entitled, for any reason, to
be paid fair value for their MB Common Shares shall be deemed to
have participated in the Arrangement on the same basis as a non-
dissenting holder of MB Common Shares and shall receive
Exchangeable Shares or Weyerhaeuser Common Shares on the basis
determined in accordance with section 2.2(c),
but in no case shall Weyerhaeuser, Weysub, Weyerhaeuser Newco, MB or any
other Person be required to recognize such holders as holders of MB Common
Shares after the Effective Time, and the names of such holders of MB Common
Shares shall be deleted from the registers of holders of MB Common Shares
at the Effective Time.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 Issuance of Certificates Representing Exchangeable Shares
At or promptly after the Effective Time, Weysub shall deposit with the
Depositary, for the benefit of the holders of MB Common Shares or MB
Warrants who will receive Exchangeable Shares in connection with the
Arrangement, certificates representing that number of whole Exchangeable
Shares to be delivered pursuant to section 2.2 upon the exchange of MB
Common Shares or MB Warrants. Upon surrender to the Depositary for
cancellation of a certificate which immediately prior to the Effective Time
represented one or more MB Common Shares or MB Warrants, as the case may
be, that were exchanged for one or more Exchangeable Shares under the
Arrangement, together with such other documents and instruments as would
have been required to effect the transfer of the shares formerly
represented by such certificate under the CBCA and the by-laws of MB and
such additional documents and instruments as the Depositary may reasonably
require, the holder of such surrendered certificate shall be entitled to
receive in exchange therefor, and the Depositary shall deliver to such
holder, a certificate representing that number (rounded down to the nearest
whole number) of Exchangeable Shares which such holder has the right to
receive (together with any dividends or distributions with respect thereto
pursuant to section 4.3 and any cash in lieu of fractional Exchangeable
Shares pursuant to section 4.4), and the certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of MB
Common Shares that is not registered in the transfer records of MB, a
certificate representing the proper number of Exchangeable Shares may be
issued to the transferee if the certificate representing such MB Common
Shares is presented to the Depositary, accompanied by all documents
required to evidence and effect such transfer. Until surrendered as
contemplated by this section 4.1, each certificate which immediately prior
to the Effective Time represented MB Common Shares or MB Warrants, as the
case may be, that were exchanged for Exchangeable Shares shall be deemed at
all times after the Effective Time to
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represent only the right to receive upon such surrender (i) the certificate
representing Exchangeable Shares as contemplated by this section 4.1, (ii)
a cash payment in lieu of any fractional Exchangeable Shares as
contemplated by section 4.4 and (iii) any dividends or distributions with a
record date after the Effective Time theretofore paid or payable with
respect to Exchangeable Shares as contemplated by section 4.3.
4.2 Exchange of Certificates for Weyerhaeuser Common Shares
At or promptly after the Effective Time, Weysub shall deposit with the
Depositary, for the benefit of the holders of MB Common Shares in
connection with the Arrangement, certificates representing the Weyerhaeuser
Common Shares delivered pursuant to section 2.2 in exchange for outstanding
MB Common Shares. Upon surrender to the Depositary for cancellation of a
certificate which immediately prior to the Effective Time represented
outstanding MB Common Shares that were exchanged for Weyerhaeuser Common
Shares, together with such other documents and instruments as would have
been required to effect the transfer of the shares formerly represented by
such certificate under the CBCA and the by-laws of MB and such additional
documents and instruments as the Depositary may reasonably require, the
holder of such surrendered certificate shall be entitled to receive in
exchange therefor, and the Depositary shall deliver to such holder, a
certificate representing that number (rounded down to the nearest whole
number) of Weyerhaeuser Common Shares which such holder has the right to
receive (together with any dividends or distributions with respect thereto
pursuant to section 4.3 and any cash in lieu of fractional Weyerhaeuser
Common Shares pursuant to section 4.4), and the certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of
MB Common Shares which is not registered in the transfer records of MB, a
certificate representing the proper number of Weyerhaeuser Common Shares
may be issued to the transferee if the certificate representing such MB
Common Shares is presented to the Depositary, accompanied by all documents
required to evidence and effect such transfer. Until surrendered as
contemplated by this section 4.2, each certificate which immediately prior
to the Effective Time represented one or more outstanding MB Common Shares
that were exchanged for Weyerhaeuser Common Shares shall be deemed at all
times after the Effective Time to represent only the right to receive upon
such surrender (i) the certificate representing Weyerhaeuser Common Shares
as contemplated by this section 4.2, (ii) a cash payment in lieu of any
fractional Weyerhaeuser Common Shares as contemplated by section 4.4 and
(iii) any dividends or distributions with a record date after the Effective
Time theretofore paid or payable with respect to Weyerhaeuser Common Shares
as contemplated by section 4.3.
4.3 Distributions with Respect to Unsurrendered Certificates
No dividends or other distributions declared or made after the
Effective Time with respect to Exchangeable Shares or Weyerhaeuser Common
Shares with a record date after the Effective Time shall be paid to the
holder of any unsurrendered certificate which immediately prior to the
Effective Time represented outstanding MB Common Shares or MB Warrants that
were exchanged pursuant to section 2.2, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to section 4.4
and no interest shall be earned or payable on these proceeds, unless and
until the holder of record of such certificate shall surrender such
certificate in accordance with section 4.1 or 4.2. Subject to applicable
law, at the time of such
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surrender of any such certificate (or, in the case of clause (iii) below,
at the appropriate payment date), there shall be paid to the record holder
of the certificates representing whole MB Common Shares or MB Warrants, as
the case may be, without interest, (i) the amount of any cash payable in
lieu of a fractional Exchangeable Share or Weyerhaeuser Common Share to
which such holder is entitled pursuant to section 4.4, (ii) the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole Exchangeable Share or
Weyerhaeuser Common Share, s the case may be, and (iii) on the appropriate
payment date, the amount of dividends or other distributions with a record
date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole Exchangeable
Share or Weyerhaeuser Common Share, as the case may be.
4.4 No Fractional Shares
No certificates representing fractional Exchangeable Shares or
fractional Weyerhaeuser Common Shares shall be issued upon the surrender
for exchange of certificates pursuant to section 4.1 or 4.2 and no
dividend, stock split or other change in the capital structure of Weysub
shall relate to any such fractional security and such fractional interests
shall not entitle the owner thereof to exercise any rights as a security
holder of Weysub. In lieu of any such fractional securities:
(a) each Person otherwise entitled to a fractional interest in an
Exchangeable Share will receive a cash payment equal to such
Person's pro rata portion of the net proceeds after expenses
received by the Depositary upon the sale of whole shares
representing an accumulation of all fractional interests in
Exchangeable Shares to which all such Persons would otherwise be
entitled. The Depositary will sell such Exchangeable Shares by
private sale (including by way of sale through the facilities of
any stock exchange upon which the Exchangeable Shares are then
listed) as soon as reasonably practicable following the Effective
Date. The aggregate net proceeds after expenses of such sale will
be distributed by the Depositary, pro rata in relation to the
respective fractions, among the Persons otherwise entitled to
receive fractional interests in Exchangeable Shares; and
(b) each Person otherwise entitled to a fractional interest in a
Weyerhaeuser Common Share will receive a cash payment equal to
such Person's pro rata portion of the net proceeds after expenses
received by the Depositary upon the sale of whole shares
representing an accumulation of all fractional interests in
Weyerhaeuser Common Shares to which all such Persons would
otherwise be entitled. The Depositary will sell such Weyerhaeuser
Common Shares on the NYSE as soon as reasonably practicable
following the Effective Date. The aggregate net proceeds after
expenses of such sale will be distributed by the Depositary, pro
rata in relation to the respective fractions, among the Persons
otherwise entitled to receive fractional interests in
Weyerhaeuser Common Shares.
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4.5 Lost Certificates
In the event any certificate which immediately prior to the Effective
Time represented one or more outstanding MB Common Shares or MB Warrants
that were exchanged pursuant to section 2.2 shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate to be lost, stolen or destroyed, the Depositary
will issue in exchange for such lost, stolen or destroyed certificate, cash
and/or one or more certificates representing one or more Exchangeable
Shares or Weyerhaeuser Common Shares (and any dividends or distributions
with respect thereto and any cash pursuant to section 4.4) deliverable in
accordance with such holder's Letter of Transmittal and Election Form.
When authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the Person to whom certificates representing Exchangeable
Shares or Weyerhaeuser Common Shares are to be issued shall, as a condition
precedent to the issuance thereof, give a bond satisfactory to Weysub,
Weyerhaeuser and their respective transfer agents in such sum as Weysub or
Weyerhaeuser may direct or otherwise indemnify Weysub and Weyerhaeuser in a
manner satisfactory to Weysub and Weyerhaeuser against any claim that may
be made against Weysub or Weyerhaeuser with respect to the certificate
alleged to have been lost, stolen or destroyed.
4.6 Extinction of Rights
Any certificate which immediately prior to the Effective Time
represented outstanding MB Common Shares or MB Warrants that were exchanged
pursuant to section 2.2 that is not deposited with all other instruments
required by section 4.1 or 4.2 on or prior to the date of the notice
referred to in section 7.2 of the Exchangeable Share Provisions shall cease
to represent a claim or interest of any kind or nature as a shareholder of
Weysub or Weyerhaeuser. On such date, the Exchangeable Shares or
Weyerhaeuser Common Shares (or cash in lieu of fractional interests
therein, as provided in section 4.4) to which the former registered holder
of the certificate referred to in the preceding sentence was ultimately
entitled shall be deemed to have been surrendered for no consideration to
Weysub or Weyerhaeuser, as the case may be, together with all entitlements
to dividends, distributions and interest in respect thereof held for such
former registered holder. None of Weyerhaeuser, Weysub, Weyerhaeuser Newco
or the Depositary shall be liable to any person in respect of any
Weyerhaeuser Common Shares or Exchangeable Shares (or dividends,
distributions and interest in respect thereof) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
4.7 Withholding Rights
Weysub, Weyerhaeuser Newco, Weyerhaeuser and the Depositary shall be
entitled to deduct and withhold from any dividend or consideration
otherwise payable to any holder of MB Common Shares, MB Warrants,
Weyerhaeuser Common Shares or Exchangeable Shares such amounts as Weysub,
Weyerhaeuser Newco, Weyerhaeuser or the Depositary is required or permitted
to deduct and withhold with respect to such payment under the ITA, the
United States Internal Revenue Code of 1986 or any provision of provincial,
state, local or foreign tax law, in each case, as amended. To the extent
that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to the holder of the shares in
respect of which such deduction and withholding was made, provided that
such
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withheld amounts are actually remitted to the appropriate taxing authority.
To the extent that the amount so required or permitted to be deducted or
withheld from any payment to a holder exceeds the cash portion of the
consideration otherwise payable to the holder, Weysub, Weyerhaeuser Newco,
Weyerhaeuser and the Depositary are hereby authorized to sell or otherwise
dispose of such portion of the consideration as is necessary to provide
sufficient funds to Weysub, Weyerhaeuser Newco, Weyerhaeuser or the
Depositary, as the case may be, to enable it to comply with such deduction
or withholding requirement and Weysub, Weyerhaeuser Newco, Weyerhaeuser or
the Depositary shall notify the holder thereof and remit any unapplied
balance of the net proceeds of such sale.
ARTICLE 5
CERTAIN RIGHTS OF WEYERHAEUSER NEWCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 Weyerhaeuser Newco Liquidation Call Right
(a) Weyerhaeuser Newco shall have the overriding right (the
"Liquidation Call Right"), in the event of and notwithstanding
the proposed liquidation, dissolution or winding-up of Weysub
pursuant to Article 5 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders of
Exchangeable Shares (other than any holder of Exchangeable Shares
which is an affiliate of Weyerhaeuser) on the Liquidation Date
all but not less than all of the Exchangeable Shares held by each
such holder on payment by Weyerhaeuser Newco of an amount per
share (the "Liquidation Call Purchase Price") equal to the
Current Market Price of a Weyerhaeuser Common Share on the last
Business Day prior to the Liquidation Date, which shall be
satisfied in full by Weyerhaeuser Newco causing to be delivered
to such holder one Weyerhaeuser Common Share, plus, to the extent
not paid by Weysub, an additional amount equivalent to the full
amount of all declared and unpaid dividends on each such
Exchangeable Share held by such holder on any dividend record
date which occurred prior to the date of purchase by Weyerhaeuser
Newco (the "Dividend Amount"). In the event of the exercise of
the Liquidation Call Right by Weyerhaeuser Newco, each holder
shall be obligated to sell all the Exchangeable Shares held by
the holder to Weyerhaeuser Newco on the Liquidation Date on
payment by Weyerhaeuser Newco to the holder of the Liquidation
Call Purchase Price for each such share, and Weysub shall have no
obligation to redeem such shares so purchased by Weyerhaeuser
Newco.
(b) To exercise the Liquidation Call Right, Weyerhaeuser Newco must
notify Weysub's transfer agent (the "Transfer Agent"), as agent
for the holders of Exchangeable Shares, and Weysub of
Weyerhaeuser Newco's intention to exercise such right at least 45
days before the Liquidation Date in the case of a voluntary
liquidation, dissolution or winding-up of Weysub and at least
five Business Days before the Liquidation Date in the case of an
involuntary liquidation, dissolution or winding-up of Weysub. The
Transfer Agent will notify the holders of Exchangeable Shares as
to whether or not Weyerhaeuser Newco
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has exercised the Liquidation Call Right forthwith after the
expiry of the period during which the same may be exercised by
Weyerhaeuser Newco. If Weyerhaeuser Newco exercises the
Liquidation Call Right, then on the Liquidation Date Weyerhaeuser
Newco will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal
to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Weyerhaeuser Newco
shall deposit with the Transfer Agent, on or before the
Liquidation Date, certificates representing the aggregate number
of Weyerhaeuser Common Shares deliverable by Weyerhaeuser Newco
and a cheque or cheques of Weyerhaeuser Newco payable at par at
any branch of the bankers of Weyerhaeuser Newco representing the
aggregate Dividend Amount in payment of the total Liquidation
Call Purchase Price, less any amounts withheld pursuant to
section 4.7 hereof. Provided that Weyerhaeuser Newco has complied
with the immediately preceding sentence, on and after the
Liquidation Date the rights of each holder of Exchangeable Shares
will be limited to receiving such holder's proportionate part of
the total Liquidation Call Purchase Price payable by Weyerhaeuser
Newco upon presentation and surrender by the holder of
certificates representing the Exchangeable Shares held by such
holder and the holder shall on and after the Liquidation Date be
considered and deemed for all purposes to be the holder of the
Weyerhaeuser Common Shares to which it is entitled. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer
of Exchangeable Shares under the Company Act (British Columbia)
and the by-laws of Weysub and such additional documents and
instruments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall be
entitled to receive in exchange therefor, and the Transfer Agent
on behalf of Weyerhaeuser Newco shall deliver to such holder,
certificates representing the Weyerhaeuser Common Shares to which
the holder is entitled and a cheque or cheques of Weyerhaeuser
Newco payable at par at any branch of the bankers of Weyerhaeuser
Newco in payment of the remaining portion, if any, of the total
Liquidation Call Purchase Price, less any amounts withheld
pursuant to section 4.7 hereof. If Weyerhaeuser Newco does not
exercise the Liquidation Call Right in the manner described
above, on the Liquidation Date the holders of the Exchangeable
Shares will be entitled to receive in exchange therefor the
liquidation price otherwise payable by Weysub in connection with
the liquidation, dissolution or winding-up of Weysub pursuant to
Article 5 of the Exchangeable Share Provisions.
5.2 Weyerhaeuser Newco Redemption Call Right
In addition to Weyerhaeuser Newco's rights contained in the
Exchangeable Share Provisions, including, without limitation, the
Retraction Call Right (as defined in the
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Exchangeable Share Provisions), Weyerhaeuser Newco shall have the
following rights in respect of the Exchangeable Shares:
(a) Weyerhaeuser Newco shall have the overriding right (the "Redemption
Call Right"), notwithstanding the proposed redemption of the
Exchangeable Shares by Weysub pursuant to Article 7 of the
Exchangeable Share Provisions, to purchase from all but not less than
all of the holders of Exchangeable Shares (other than any holder of
Exchangeable Shares which is an affiliate of Weyerhaeuser) on the
Redemption Date all but not less than all of the Exchangeable Shares
held by each such holder on payment by Weyerhaeuser to each holder of
an amount per Exchangeable Share (the "Redemption Call Purchase
Price") equal to the Current Market Price of a Weyerhaeuser Common
Share on the last Business Day prior to the Redemption Date, which
shall be satisfied in full by Weyerhaeuser Newco causing to be
delivered to such holder one Weyerhaeuser Common Share, plus the
Dividend Amount. In the event of the exercise of the Redemption Call
Right by Weyerhaeuser Newco, each holder shall be obligated to sell
all the Exchangeable Shares held by the holder to Weyerhaeuser Newco
on the Redemption Date on payment by Weyerhaeuser Newco to the holder
of the Redemption Call Purchase Price for each such share, and Weysub
shall have no obligation to redeem such shares so purchased by
Weyerhaeuser Newco.
(b) To exercise the Redemption Call Right, Weyerhaeuser Newco must
notify the Transfer Agent, as agent for the holders of
Exchangeable Shares, and Weysub of Weyerhaeuser Newco's intention
to exercise such right at least 60 days before the Redemption
Date, except in the case of a redemption occurring as a result of
a Weyerhaeuser Control Transaction, an Exchangeable Share Voting
Event or an Exempt Exchangeable Share Voting Event (each as
defined in the Exchangeable Share Provisions), in which case
Weyerhaeuser Newco shall so notify the Transfer Agent and Weysub
on or before the Redemption Date. The Transfer Agent will notify
the holders of the Exchangeable Shares as to whether or not
Weyerhaeuser Newco has exercised the Redemption Call Right
forthwith after the expiry of the period during which the same
may be exercised by Weyerhaeuser Newco. If Weyerhaeuser Newco
exercises the Redemption Call Right, on the Redemption Date
Weyerhaeuser Newco will purchase and the holders will sell all of
the Exchangeable Shares then outstanding for a price per share
equal to the Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Weyerhaeuser Newco
shall deposit with the Transfer Agent, on or before the
Redemption Date, certificates representing the aggregate number
of Weyerhaeuser Common Shares deliverable by Weyerhaeuser Newco
and a cheque or cheques of Weyerhaeuser Newco payable at par at
any branch of the bankers of Weyerhaeuser Newco representing the
aggregate Dividend Amount in payment of the total Redemption Call
Purchase Price, less any amounts withheld pursuant to section 4.7
hereof. Provided that Weyerhaeuser Newco has complied with the
immediately preceding sentence, on
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and after the Redemption Date the rights of each holder of
Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price
payable by Weyerhaeuser Newco upon presentation and surrender by
the holder of certificates representing the Exchangeable Shares
held by such holder and the holder shall on and after the
Redemption Date be considered and deemed for all purposes to be
the holder of the Weyerhaeuser Common Shares to which it is
entitled. Upon surrender to the Transfer Agent of a certificate
or certificates representing Exchangeable Shares, together with
such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the Company Act (British
Columbia) and the by-laws of Weysub and such additional documents
and instruments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall be
entitled to receive in exchange therefor, and the Transfer Agent
on behalf of Weyerhaeuser Newco shall deliver to such holder,
certificates representing the Weyerhaeuser Common Shares to which
the holder is entitled and a cheque or cheques of Weyerhaeuser
Newco payable at par at any branch of the bankers of Weyerhaeuser
Newco in payment of the remaining portion, if any, of the total
Redemption Call Purchase Price, less any amounts withheld
pursuant to section 4.7 hereof. If Weyerhaeuser Newco does not
exercise the Redemption Call Right in the manner described above,
on the Redemption Date the holders of the Exchangeable Shares
will be entitled to receive in exchange therefor the redemption
price otherwise payable by Weysub in connection with the
redemption of the Exchangeable Shares pursuant to Article 7 of
the Exchangeable Share Provisions.
ARTICLE 6
AMENDMENTS
6.1 Amendments to Plan of Arrangement
MB reserves the right to amend, modify and/or supplement this Plan of
Arrangement at any time and from time to time prior to the Effective Date,
provided that each such amendment, modification and/or supplement must be
(i) set out in writing, (ii) approved by Weyerhaeuser, (iii) filed with the
Court and, if made following the MB Meeting, approved by the Court and (iv)
communicated to holders of MB Common Shares and MB Warrants if and as
required by the Court.
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by MB at any time prior to the MB Meeting (provided that
Weyerhaeuser shall have consented thereto) with or without any other prior
notice or communication, and if so proposed and accepted by the Persons
voting at the MB Meeting (other than as may be required under the Interim
Order), shall become part of this Plan of Arrangement for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the MB Meeting shall be effective
only if (i) it is consented to
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by each of MB and Weyerhaeuser and (ii) if required by the Court, it is
consented to by holders of the MB Common Shares or MB Warrants voting in
the manner directed by the Court.
Any amendment, modification or supplement to this Plan of Arrangement
may be made following the Effective Date unilaterally by Weyerhaeuser,
provided that it concerns a matter which, in the reasonable opinion of
Weyerhaeuser, is of an administrative nature required to better give effect
to the implementation of this Plan of Arrangement and is not adverse to the
financial or economic interests of any holder of MB Common Shares or MB
Warrants.
ARTICLE 7
FURTHER ASSURANCES
7.1 Notwithstanding that the transactions and events set out herein shall
occur and be deemed to occur in the order set out in this Plan of
Arrangement without any further act or formality, each of the parties to
the Merger Agreement shall make, do and execute, or cause to be made, done
and executed, all such further acts, deeds, agreements, transfers,
assurances, instruments or documents as may reasonably be required by any
of them in order further to document or evidence any of the transactions or
events set out herein.
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APPENDIX 1 TO THE PLAN OF ARRANGEMENT
PROVISIONS
ATTACHING TO THE
EXCHANGEABLE SHARES
The Exchangeable Shares shall have the following rights, privileges,
restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these share provisions:
"Act" means the Company Act (British Columbia), as amended;
"affiliate" has the meaning ascribed thereto in the Securities Act;
"Arrangement" means an arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in the Plan of
Arrangement, to which plan these share provisions are attached as
Appendix 1 and which Plan of Arrangement (other than Appendix 1
thereto) is attached to these share provisions as Exhibit A, subject
to any amendments or variations thereto made in accordance with
Article 6 of the Plan of Arrangement or made at the direction of the
Court in the Final Order;
"Board of Directors" means the Board of Directors of the Company;
"Business Day" means any day on which commercial banks are generally
open for business in Seattle, Washington and Vancouver, British
Columbia, other than a Saturday, a Sunday or a day observed as a
holiday in Seattle, Washington under the laws of the State of
Washington or the federal laws of the United States of America or in
Vancouver, British Columbia under the laws of the Province of British
Columbia or the federal laws of Canada;
"CBCA" means Canada Business Corporations Act as now in effect and as
may be amended from time to time prior to the Effective Date;
"Canadian Dollar Equivalent" means in respect of an amount expressed
in a currency other than Canadian dollars (the "Foreign Currency
Amount") at any date the product obtained by multiplying:
(a) the Foreign Currency Amount by,
(b) the noon spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported by the Bank of
Canada or, in the event such spot
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exchange rate is not available, such spot exchange rate on such
date for such foreign currency expressed in Canadian dollars as
may be deemed by the Board of Directors to be appropriate for
such purpose;
"Common Shares" means the common shares in the capital of the Company;
"Company" means 586476 B.C. Ltd., a company existing under the Company
Act;
"Current Market Price" means, in respect of a Weyerhaeuser Common
Share on any date, the Canadian Dollar Equivalent of the average of
the closing bid and asked prices of Weyerhaeuser Common Shares during
a period of 20 consecutive trading days ending not more than three
trading days before such date on the NYSE, or, if the Weyerhaeuser
Common Shares are not then quoted on the NYSE, on such other stock
exchange or automated quotation system on which the Weyerhaeuser
Common Shares are listed or quoted, as the case may be, as may be
selected by the Board of Directors for such purpose; provided,
however, that if in the opinion of the Board of Directors the public
distribution or trading activity of Weyerhaeuser Common Shares during
such period does not create a market which reflects the fair market
value of an Weyerhaeuser Common Share, then the Current Market Price
of a Weyerhaeuser Common Share shall be determined by the Board of
Directors, in good faith and in its sole discretion, and provided
further that any such selection, opinion or determination by the Board
of Directors shall be conclusive and binding;
"Dividend Amount" has the meaning ascribed thereto in section 6.3 of
these share provisions;
"Director" means the Director appointed pursuant to section 260 of the
CBCA;
"Drop Dead Date" means February 15, 2000, or such later date as may be
mutually agreed by the parties to the Merger Agreement;
"Effective Date" means the date shown on the certificate of
arrangement to be issued by the Director under the CBCA giving effect
to the Arrangement provided that such date occurs on or prior to the
Drop Dead Date;
"Exchangeable Shares" mean the non-voting exchangeable shares in the
capital of the Company, having the rights, privileges, restrictions
and conditions set forth herein;
"Exchangeable Share Voting Event" means any matter in respect of which
holders of Exchangeable Shares are entitled to vote as members of the
Company, other than an Exempt Exchangeable Share Voting Event, and,
for greater certainty, excluding any matter in respect of which
holders of Exchangeable Shares are entitled to vote (or instruct the
Trustee to vote) in their capacity as Beneficiaries under (and as that
term is defined in) the Voting and Exchange Trust Agreement;
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"Exempt Exchangeable Share Voting Event" means any matter in respect
of which holders of Exchangeable Shares are entitled to vote as
members of the Company in order to approve or disapprove, as
applicable, any change to, or in the rights of the holders of, the
Exchangeable Shares, where the approval or disapproval, as applicable,
of such change would be required to maintain the equivalence of the
Exchangeable Shares and the Weyerhaeuser Common Shares;
"Governmental Entity" means any (a) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, commission, board, bureau or agency, domestic or
foreign, (b) any subdivision, agent, commission, board, or authority
of any of the foregoing, or (c) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or
for the account of any of the foregoing;
"Liquidation Amount" has the meaning ascribed thereto in section 5.1
of these share provisions;
"Liquidation Call Right" has the meaning ascribed thereto in the Plan
of Arrangement;
"Liquidation Date" has the meaning ascribed thereto in section 5.1 of
these share provisions;
"Merger Agreement" means the agreement made the 20th day of June, 1999
among Weyerhaeuser, the Company and MacMillan Bloedel Limited, as
amended, supplemented and/or restated in accordance therewith prior to
the Effective Date, providing for, among other things, the
Arrangement;
"NYSE" means the New York Stock Exchange, Inc.;
"Person" includes any individual, firm, partnership, joint venture,
venture capital fund, limited liability company, unlimited liability
company, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement substantially in
the form and content of Schedule D annexed to the Merger Agreement and
any amendments or variations thereto made in accordance with section
6.1 of the Merger Agreement or Article 6 of the Plan of Arrangement or
made at the direction of the Court in the Final Order;
"Purchase Price" has the meaning ascribed thereto in section 6.3 of
these share provisions;
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"Redemption Call Purchase Price" has the meaning ascribed thereto in
the Plan of Arrangement;
"Redemption Call Right" has the meaning ascribed thereto in the Plan
of Arrangement;
"Redemption Date" means the date, if any, established by the Board of
Directors for the redemption by the Company of all but not less than
all of the outstanding Exchangeable Shares pursuant to Article 7 of
these share provisions, which date shall be no earlier than December
31, 2007, unless:
(a) there are fewer than 1,000,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Weyerhaeuser and its
affiliates, and as such number of shares may be adjusted as
deemed appropriate by the Board of Directors to give effect to
any subdivision or consolidation of or stock dividend on the
Exchangeable Shares, any issue or distribution of rights to
acquire Exchangeable Shares or securities exchangeable for or
convertible into Exchangeable Shares, any issue or distribution
of other securities or rights or evidences of indebtedness or
assets, or any other capital reorganization or other transaction
affecting the Exchangeable Shares), in which case the Board of
Directors may accelerate such redemption date to such date prior
to December 31, 2007 as they may determine, upon at least 60
days' prior written notice to the registered holders of the
Exchangeable Shares;
(b) a Weyerhaeuser Control Transaction occurs, in which case,
provided that the Board of Directors determines, in good faith
and in its sole discretion, that it is not reasonably practicable
to substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such Weyerhaeuser Control
Transaction and that the redemption of all but not less than all
of the outstanding Exchangeable Shares is necessary to enable the
completion of such Weyerhaeuser Control Transaction in accordance
with its terms, the Board of Directors may accelerate such
redemption date to such date prior to December 31, 2007 as they
may determine, upon such number of days' prior written notice to
the registered holders of the Exchangeable Shares as the Board of
Directors may determine to be reasonably practicable in such
circumstances;
(c) an Exchangeable Share Voting Event is proposed, in which case,
provided that the Board of Directors has determined, in good
faith and in its sole discretion, that it is not reasonably
practicable to accomplish the business purpose intended by the
Exchangeable Share Voting Event, which business purpose must be
bona fide and not for the primary purpose of causing the
occurrence of a Redemption Date, in any other commercially
reasonable manner that does not result in an Exchangeable Share
Voting Event, the redemption date shall be the Business Day prior
to the record date for any meeting or vote of the holders of the
Exchangeable Shares to consider the Exchangeable Share Voting
Event and the Board of Directors shall give such number of days'
prior written notice of such redemption to the registered holders
of the Exchangeable Shares as the Board of Directors may
determine to be reasonably practicable in such circumstances; or
(d) an Exempt Exchange Share Voting Event is proposed and the
holders of the Exchangeable Shares fail to take the necessary
action at a meeting or other vote of holders of Exchangeable
Shares, to approve or disapprove, as applicable, the Exempt
Exchangeable Share Voting Event, in which case the redemption
date shall be the Business Day following the day on which the
holders of the Exchangeable Shares failed to take such action and
the Board of Directors shall give such number of days' prior
written notice of such redemption
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to the registered holders of the Exchangeable Shares as the Board
of Directors may determine to be reasonably practicable in such
circumstances,
provided, however, that the accidental failure or omission to give any
notice of redemption under clauses (a), (b), (c) or (d) above to less
than 10% of such holders of Exchangeable Shares shall not affect the
validity of any such redemption;
"Redemption Price" has the meaning ascribed thereto in section 7.1 of
these share provisions;
"Retracted Shares" has the meaning ascribed thereto in section 6.1(a)
of these share provisions;
"Retraction Call Right" has the meaning ascribed thereto in section
6.1(c) of these share provisions;
"Retraction Date" has the meaning ascribed thereto in section 6.1(b)
of these share provisions;
"Retraction Price" has the meaning ascribed thereto in section 6.1 of
these share provisions;
"Retraction Request" has the meaning ascribed thereto in section 6.1
of these share provisions;
"Securities Act" means the Securities Act (Ontario) and the rules,
regulations and policies made thereunder, as now in effect and as they
may be amended from time to time prior to the Effective Date;
"Support Agreement" means the agreement made between Weyerhaeuser,
Weyerhaeuser Newco and the Company substantially in the form and
content of Schedule E annexed to the Merger Agreement, with such
changes thereto as the parties to the Support Agreement, acting
reasonably, may agree, a copy of which is available at the records
office of the Company;
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"Transfer Agent" means or such other Person as may from time to time
be appointed by the Company as the registrar and transfer agent for
the Exchangeable Shares;
"Trustee" means the trustee chosen by Weyerhaeuser and MB, acting
reasonably, to act as trustee under the Voting and Exchange Trust
Agreement, being a corporation organized and existing under the laws
of Canada and authorized to carry on the business of a trust company
in all the provinces of Canada, and any successor trustee appointed
under the Voting and Exchange Trust Agreement;
"Voting and Exchange Trust Agreement" means the agreement made between
Weyerhaeuser, the Company and the Trustee in connection with the Plan
of Arrangement substantially in the form and content of Schedule F
annexed to the Merger Agreement with such changes thereto as the
parties to the Merger Agreement, acting reasonably, may agree;
"Weyerhaeuser" means Weyerhaeuser Company, a corporation existing
under the laws of the State of Washington;
"Weyerhaeuser Common Shares" mean the shares of common stock in the
capital of Weyerhaeuser and any other securities into which such
shares may be changed;
"Weyerhaeuser Control Transaction" means any merger, amalgamation,
tender offer, material sale of shares or rights or interests therein
or thereto or similar transactions involving Weyerhaeuser, or any
proposal to do so;
"Weyerhaeuser Dividend Declaration Date" means the date on which the
Board of Directors of Weyerhaeuser declares any dividend on the
Weyerhaeuser Common Shares;
"Weyerhaeuser Newco" means 586474 B.C. Ltd. a company existing under
the Company Act and being a wholly-owned subsidiary of Weyerhaeuser;
and
"Weyerhaeuser Newco Call Notice" has the meaning ascribed thereto in
section 6.3 of these share provisions.
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<PAGE>
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the
Common Shares and the Preference Shares and any other shares ranking junior
to the Exchangeable Shares with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company, among its members for the
purpose of winding up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each Weyerhaeuser
Dividend Declaration Date, declare a dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the Weyerhaeuser
Common Shares, in an amount in cash for each Exchangeable Share
in U.S. dollars, or the Canadian Dollar Equivalent thereof on the
Weyerhaeuser Dividend Declaration Date, in each case,
corresponding to the cash dividend declared on each Weyerhaeuser
Common Share;
(b) in the case of a stock dividend declared on the Weyerhaeuser
Common Shares to be paid in Weyerhaeuser Common Shares by the
issue by the Company of such number of Exchangeable Shares for
each Exchangeable Share as is equal to the number of Weyerhaeuser
Common Shares to be paid on each Weyerhaeuser Common Share; or
(c) in the case of a dividend declared on the Weyerhaeuser Common
Shares in property other than cash or Weyerhaeuser Common Shares,
in such type and amount of property for each Exchangeable Share
as is the same as or economically equivalent to (to be determined
by the Board of Directors as contemplated by section 3.5 hereof)
the type and amount of property declared as a dividend on each
Weyerhaeuser Common Share. Such dividends shall be paid out of
money, assets or property of the Company properly applicable to
the payment of dividends, or out of authorized but unissued
shares of the Company, as applicable.
3.2 Cheques of the Company payable at par at any branch of the bankers of
the Company shall be issued in respect of any cash dividends contemplated
by section 3.1 (a) hereof and the sending of such a cheque to each holder
of an Exchangeable Share shall satisfy the cash dividend represented
thereby unless the cheque is not paid on presentation. Certificates
registered in the name of the registered holder of Exchangeable Shares
shall be issued
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or transferred in respect of any stock dividends contemplated by section
3.1 (b) hereof and the sending of such a certificate to each holder of an
Exchangeable Share shall satisfy the stock dividend represented thereby.
Such other type and amount of property in respect of any dividends
contemplated by section 3.1 (c) hereof shall be issued, distributed or
transferred by the Company in such manner as it shall determine and the
issuance, distribution or transfer thereof by the Company to each holder of
an Exchangeable Share shall satisfy the dividend represented thereby. No
holder of an Exchangeable Share shall be entitled to recover by action or
other legal process against the Company any dividend that is represented by
a cheque that has not been duly presented to the Company's bankers for
payment or that otherwise remains unclaimed for a period of six years from
the date on which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any
dividend declared on the Exchangeable Shares under section 3.1 hereof shall
be the same dates as the record date and payment date, respectively, for
the corresponding dividend declared on the Weyerhaeuser Common Shares.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under section 3.1 hereof the dividends are not paid in full on all
of the Exchangeable Shares then outstanding, any such dividends that remain
unpaid shall be paid on a subsequent date or dates determined by the Board
of Directors on which the Company shall have sufficient moneys, assets or
property properly applicable to the payment of such dividends.
3.5 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of section 3.1 hereof,
and each such determination shall be conclusive and binding on the Company
and its members. In making each such determination, the following factors
shall, without excluding other factors determined by the Board of Directors
to be relevant, be considered by the Board of Directors:
(a) in the case of any stock dividend or other distribution payable
in Weyerhaeuser Common Shares, the number of such shares issued
in proportion to the number of Weyerhaeuser Common Shares
previously outstanding;
(b) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Weyerhaeuser
Common Shares (or securities exchangeable for or convertible into
or carrying rights to acquire Weyerhaeuser Common Shares), the
relationship between the exercise price of each such right,
option or warrant and the Current Market Price;
(c) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities
of Weyerhaeuser of any class other than Weyerhaeuser Common
Shares, any rights, options or warrants other than those referred
to in section 3.5(b) above, any evidences of indebtedness of
Weyerhaeuser or any assets of Weyerhaeuser) the relationship
between the fair market value (as determined by the Board of
Directors in the manner above
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<PAGE>
contemplated) of such property to be issued or distributed with
respect to each outstanding Weyerhaeuser Common Share and the
Current Market Price; and
(d) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences
to holders of Weyerhaeuser Common Shares as a result of
differences between taxation laws of Canada and the United States
(except for any differing consequences arising as a result of
differing marginal taxation rates and without regard to the
individual circumstances of holders of Exchangeable Shares).
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Company
shall not at any time without, but may at any time with, the approval of
the holders of the Exchangeable Shares given as specified in section 10.2
of these share provisions:
(a) pay any dividends on the Common Shares or the Preference Shares
or any other shares ranking junior to the Exchangeable Shares,
other than stock dividends payable in Common Shares or Preference
Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or Preference Shares or any other shares ranking
junior to the Exchangeable Shares;
(c) redeem or purchase any other shares of the Company ranking
equally with the Exchangeable Shares with respect to the payment
of dividends or on any liquidation distribution; or
(d) issue any Exchangeable Shares or any other shares of the Company
ranking equally with, or superior to, the Exchangeable Shares
other than by way of stock dividends to the holders of such
Exchangeable Shares.
The restrictions in sections 4.1(a), (b), (c) and (d) above shall not
apply if all dividends on the outstanding Exchangeable Shares corresponding
to dividends declared and paid to date on the Weyerhaeuser Common Shares
shall have been declared and paid on the Exchangeable Shares.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Company or any other distribution of the assets of the Company among its
members for the purpose of winding up
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its affairs, a holder of Exchangeable Shares shall be entitled, subject to
applicable law, to receive from the assets of the Company in respect of
each Exchangeable Share held by such holder on the effective date (the
"Liquidation Date") of such liquidation, dissolution or winding-up, before
any distribution of any part of the assets of the Company among the holders
of the Common Shares or any other shares ranking junior to the Exchangeable
Shares, an amount per share equal to the Current Market Price of a
Weyerhaeuser Common Share on the last Business Day prior to the Liquidation
Date (the "Liquidation Amount"), which shall be satisfied in full by the
Company causing to be delivered to such holder one Weyerhaeuser Common
Share, together with all declared and unpaid dividends on each such
Exchangeable Share held by such holder on any dividend record date which
occurred prior to the Liquidation Date.
5.2 On or promptly after the Liquidation Date, and subject to the exercise
by Weyerhaeuser Newco of the Liquidation Call Right, the Company shall
cause to be delivered to the holders of the Exchangeable Shares the
Liquidation Amount for each such Exchangeable Share upon presentation and
surrender of the certificates representing such Exchangeable Shares,
together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the Company Act and the
Articles of the Company and such additional documents and instruments as
the Transfer Agent may reasonably require, at the registered office of the
Company or at any office of the Transfer Agent as may be specified by the
Company by notice to the holders of the Exchangeable Shares. Payment of
the total Liquidation Amount for such Exchangeable Shares shall be made by
delivery to each holder, at the address of the holder recorded in the
register of members of the Company for the Exchangeable Shares or by
holding for pick-up by the holder at the registered office of the Company
or at any office of the Transfer Agent as may be specified by the Company
by notice to the holders of Exchangeable Shares, on behalf of the Company
of certificates representing Weyerhaeuser Common Shares (which shares shall
be duly issued as fully paid and non-assessable and shall be free and clear
of any lien, claim or encumbrance) and a cheque of the Company payable at
par at any branch of the bankers of the Company in respect of the remaining
portion, if any, of the total Liquidation Amount (in each case less any
amounts withheld on account of tax required to be deducted and withheld
therefrom). On and after the Liquidation Date, the holders of the
Exchangeable Shares shall cease to be holders of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of holders in
respect thereof, other than the right to receive their proportionate part
of the total Liquidation Amount, unless payment of the total Liquidation
Amount for such Exchangeable Shares shall not be made upon presentation and
surrender of share certificates in accordance with the foregoing
provisions, in which case the rights of the holders shall remain unaffected
until the total Liquidation Amount has been paid in the manner hereinbefore
provided. The Company shall have the right at any time after the
Liquidation Date to deposit or cause to be deposited the total Liquidation
Amount in respect of the Exchangeable Shares represented by certificates
that have not at the Liquidation Date been surrendered by the holders
thereof in a custodial account with any chartered bank or trust company in
Canada. Upon such deposit being made, the rights of the holders of
Exchangeable Shares after such deposit shall be limited to receiving their
proportionate part of the total Liquidation Amount (in each case less any
amounts withheld on account of tax required to be deducted and withheld
therefrom) for such Exchangeable Shares so deposited, against
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<PAGE>
presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all
purposes to be holders of the Weyerhaeuser Common Shares delivered to them
or the custodian on their behalf.
5.3 After the Company has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share
pursuant to section 5.1 of these share provisions, such holders shall not
be entitled to share in any further distribution of the assets of the
Company.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject
to the exercise by Weyerhaeuser Newco of the Retraction Call Right and
otherwise upon compliance with the provisions of this Article 6, to require
the Company to redeem any or all of the Exchangeable Shares registered in
the name of such holder for an amount per share equal to the Current Market
Price of a Weyerhaeuser Common Share on the last Business Day prior to the
Retraction Date (the "Retraction Price"), which shall be satisfied in full
by the Company causing to be delivered to such holder one Weyerhaeuser
Common Share for each Exchangeable Share presented and surrendered by the
holder, together with, on the payment date therefor, the full amount of all
declared and unpaid dividends on any such Exchangeable Share held by such
holder on any dividend record date which occurred prior to the Retraction
Date. To effect such redemption, the holder shall present and surrender at
the registered office of the Company or at any office of the Transfer Agent
as may be specified by the Company by notice to the holders of Exchangeable
Shares the certificate or certificates representing the Exchangeable Shares
which the holder desires to have the Company redeem, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Company Act and the Articles of the Company
and such additional documents and instruments as the Transfer Agent may
reasonably require, and together with a duly executed statement (the
"Retraction Request") in the form of Schedule A hereto or in such other
form as may be acceptable to the Company:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such
certificate or certificates (the "Retracted Shares") redeemed by
the Company;
(b) stating the Business Day on which the holder desires to have the
Company redeem the Retracted Shares (the "Retraction Date"),
provided that the Retraction Date shall be not less than 10
Business Days nor more than 15 Business Days after the date on
which the Retraction Request is received by the Company and
further provided that, in the event that no such Business Day is
specified by the holder in the Retraction Request, the Retraction
Date shall be
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<PAGE>
deemed to be the 15th Business Day after the date on which the
Retraction Request is received by the Company; and
(c) acknowledging the overriding right (the "Retraction Call Right")
of Weyerhaeuser Newco to purchase all but not less than all the
Retracted Shares directly from the holder and that the Retraction
Request shall be deemed to be a revocable offer by the holder to
sell the Retracted Shares to Weyerhaeuser Newco in accordance
with the Retraction Call Right on the terms and conditions set
out in section 6.3 below.
6.2 Subject to the exercise by Weyerhaeuser Newco of the Retraction Call
Right, upon receipt by the Company or the Transfer Agent in the manner
specified in section 6.1 hereof of a certificate or certificates
representing the number of Retracted Shares, together with a Retraction
Request, and provided that the Retraction Request is not revoked by the
holder in the manner specified in section 6.7, the Company shall redeem the
Retracted Shares effective at the close of business on the Retraction Date
and shall cause to be delivered to such holder the total Retraction Price
with respect to such shares, provided that all declared and unpaid
dividends for which the record date has occurred prior to the Retraction
Date shall be paid on the payment date for such dividends. If only a part
of the Exchangeable Shares represented by any certificate is redeemed (or
purchased by Weyerhaeuser Newco pursuant to the Retraction Call Right), a
new certificate for the balance of such Exchangeable Shares shall be issued
to the holder at the expense of the Company.
6.3 Upon receipt by the Company of a Retraction Request, the Company shall
immediately notify Weyerhaeuser Newco thereof and shall provide to
Weyerhaeuser Newco a copy of the Retraction Notice. In order to exercise
the Retraction Call Right, Weyerhaeuser Newco must notify the Company of
its determination to do so (the "Weyerhaeuser Newco Call Notice") within
five Business Days of notification to Weyerhaeuser Newco by the Company of
the receipt by the Company of the Retraction Request. If Weyerhaeuser
Newco does not so notify the Company within such five Business Day period,
the Company will notify the holder as soon as possible thereafter that
Weyerhaeuser Newco will not exercise the Retraction Call Right. If
Weyerhaeuser Newco delivers the Weyerhaeuser Newco Call Notice within such
five Business Day period, and provided that the Retraction Request is not
revoked by the holder in the manner specified in section 6.7, the
Retraction Request shall thereupon be considered only to be an offer by the
holder to sell the Retracted Shares to Weyerhaeuser Newco in accordance
with the Retraction Call Right. In such event, the Company shall not
redeem the Retracted Shares and Weyerhaeuser Newco shall purchase from such
holder and such holder shall sell to Weyerhaeuser Newco on the Retraction
Date the Retracted Shares for a purchase price (the "Purchase Price") per
share equal to the Retraction Price per share, plus, on the designated
payment date therefor, to the extent not paid by the Company on the
designated payment date therefor, an additional amount equivalent to the
full amount of all declared and unpaid dividends on those Retracted Shares
held by such holder on any dividend record date which occurred prior to the
Retraction Date (the "Dividend Amount"). For the purposes of completing a
purchase pursuant to the Retraction Call Right, Weyerhaeuser Newco shall
deposit with the Transfer
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<PAGE>
Agent, on or before the Retraction Date, certificates representing
Weyerhaeuser Common Shares and a cheque or cheques of Weyerhaeuser Newco
payable at par at any branch of the bankers of Weyerhaeuser Newco
representing the aggregate Dividend Amount, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. Provided
that Weyerhaeuser Newco has complied with the immediately preceding
sentence, the closing of the purchase and sale of the Retracted Shares
pursuant to the Retraction Call Right shall be deemed to have occurred as
at the close of business on the Retraction Date and, for greater certainty,
no redemption by the Company of such Retracted Shares shall take place on
the Retraction Date. In the event that Weyerhaeuser Newco does not deliver
a Weyerhaeuser Newco Call Notice within such five Business Day period, and
provided that the Retraction Request is not revoked by the holder in the
manner specified in section 6.7, the Company shall redeem the Retracted
Shares on the Retraction Date and in the manner otherwise contemplated in
this Article 6.
6.4 The Company or Weyerhaeuser Newco, as the case may be, shall deliver
or cause the Transfer Agent to deliver to the relevant holder, at the
address of the holder recorded in the register of members of the Company
for the Exchangeable Shares or at the address specified in the holder's
Retraction Request or by holding for pick-up by the holder at the
registered office of the Company or at any office of the Transfer Agent as
may be specified by the Company by notice to the holders of Exchangeable
Shares, certificates representing the Weyerhaeuser Common Shares (which
shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim or encumbrance) registered in the name of
the holder or in such other name as the holder may request, and, if
applicable and on or before the payment date therefor, a cheque payable at
par at any branch of the bankers of the Company or Weyerhaeuser Newco, as
applicable, representing the aggregate Dividend Amount, in payment of the
total Retraction Price or the total Purchase Price, as the case may be, in
each case, less any amounts withheld on account of tax required to be
deducted and withheld therefrom, and such delivery of such certificates and
cheques on behalf of the Company or by Weyerhaeuser Newco, as the case may
be, or by the Transfer Agent shall be deemed to be payment of and shall
satisfy and discharge all liability for the total Retraction Price or total
Purchase Price, as the case may be, to the extent that the same is
represented by such share certificates and cheques (plus any tax deducted
and withheld therefrom and remitted to the proper tax authority).
6.5 On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted Shares
and shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive his proportionate part of
the total Retraction Price or total Purchase Price, as the case may be,
unless upon presentation and surrender of certificates in accordance with
the foregoing provisions, payment of the total Retraction Price or the
total Purchase Price, as the case may be, shall not be made as provided in
section 6.4, in which case the rights of such holder shall remain
unaffected until the total Retraction Price or the total Purchase Price, as
the case may be, has been paid in the manner hereinbefore provided. On and
after the close of business on the Retraction Date, provided that
presentation and surrender of certificates and payment of the total
Retraction Price or the total Purchase Price, as the case may be, has been
made in accordance with the foregoing provisions, the holder of the
Retracted Shares so redeemed by the
Company or purchased by
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<PAGE>
Weyerhaeuser Newco shall thereafter be considered and deemed for all
purposes to be a holder of the Weyerhaeuser Common Shares delivered to it.
6.6 Notwithstanding any other provision of this Article 6, the Company
shall not be obligated to redeem Retracted Shares specified by a holder in
a Retraction Request to the extent that such redemption of Retracted Shares
would be contrary to solvency requirements or other provisions of
applicable law. If the Company believes that on any Retraction Date it
would not be permitted by any of such provisions to redeem the Retracted
Shares tendered for redemption on such date, and provided that Weyerhaeuser
Newco shall not have exercised the Retraction Call Right with respect to
the Retracted Shares, the Company shall only be obligated to redeem
Retracted Shares specified by a holder in a Retraction Request to the
extent of the maximum number that may be so redeemed (rounded down to a
whole number of shares) as would not be contrary to such provisions and
shall notify the holder at least two Business Days prior to the Retraction
Date as to the number of Retracted Shares which will not be redeemed by the
Company. In any case in which the redemption by the Company of Retracted
Shares would be contrary to solvency requirements or other provisions of
applicable law, the Company shall redeem Retracted Shares in accordance
with section 6.2 of these share provisions on a pro rata basis and shall
issue to each holder of Retracted Shares a new certificate, at the expense
of the Company, representing the Retracted Shares not redeemed by the
Company pursuant to section 6.2 hereof. Provided that the Retraction
Request is not revoked by the holder in the manner specified in section
6.7, the holder of any such Retracted Shares not redeemed by the Company
pursuant to section 6.2 of these share provisions as a result of solvency
requirements or other provisions of applicable law shall be deemed by
giving the Retraction Request to require Weyerhaeuser to purchase such
Retracted Shares from such holder on the Retraction Date or as soon as
practicable thereafter on payment by Weyerhaeuser to such holder of the
Purchase Price for each such Retracted Share, all as more specifically
provided in the Voting and Exchange Trust Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Company before the close of business on the Business Day
immediately preceding the Retraction Date, withdraw its Retraction Request,
in which event such Retraction Request shall be null and void and, for
greater certainty, the revocable offer constituted by the Retraction
Request to sell the Retracted Shares to Weyerhaeuser Newco shall be deemed
to have been revoked.
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ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY
7.1 Subject to applicable law, and provided Weyerhaeuser Newco has not
exercised the Redemption Call Right, the Company shall on the Redemption
Date redeem all but not less than all of the then outstanding Exchangeable
Shares for an amount per share equal to the Current Market Price of a
Weyerhaeuser Common Share on the last Business Day prior to the Redemption
Date (the "Redemption Price"), which shall be satisfied in full by the
Company causing to be delivered to each holder of Exchangeable Shares one
Weyerhaeuser Common Share for each Exchangeable Share held by such holder,
together with the full amount of all declared and unpaid dividends on each
such Exchangeable Share held by such holder on any dividend record date
which occurred prior to the Redemption Date.
7.2 In any case of a redemption of Exchangeable Shares under this Article
7, the Company shall, at least 60 days before the Redemption Date (other
than a Redemption Date established in connection with a Weyerhaeuser
Control Transaction, an Exchangeable Share Voting Event or an Exempt
Exchangeable Share Voting Event), send or cause to be sent to each holder
of Exchangeable Shares a notice in writing of the redemption by the Company
or the purchase by Weyerhaeuser Newco under the Redemption Call Right, as
the case may be, of the Exchangeable Shares held by such holder. In the
case of a Redemption Date established in connection with a Weyerhaeuser
Control Transaction, an Exchangeable Share Voting Event and an Exempt
Exchangeable Share Voting Event, the written notice of redemption by the
Company or the purchase by Weyerhaeuser Newco under the Redemption Call
Right will be sent on or before the Redemption Date, on as many days prior
written notice as may be determined by the Board of Directors of the
Company to be reasonably practicable in the circumstances. In any such
case, such notice shall set out the formula for determining the Redemption
Price or the Redemption Call Purchase Price, as the case may be, the
Redemption Date and, if applicable, particulars of the Redemption Call
Right.
7.3 On or after the Redemption Date and subject to the exercise by
Weyerhaeuser Newco of the Redemption Call Right, the Company shall cause to
be delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share, together with the full
amount of all declared and unpaid dividends on each such Exchangeable Share
held by such holder on any dividend record date which occurred prior to the
Redemption Date, upon presentation and surrender at the registered office
of the Company or at any office of the Transfer Agent as may be specified
by the Company in such notice of the certificates representing such
Exchangeable Shares, together with such other documents and instruments as
may be required to effect a transfer of Exchangeable Shares under the
Company Act and the Articles of the Company and such additional documents
and instruments as the Transfer Agent may reasonably require. Payment of
the total Redemption Price for such Exchangeable Shares, together with
payment of such dividends, shall be made by delivery to each holder, at the
address of the holder recorded in the register of members of the Company or
by holding for pick-up by the holder at the registered office of the
Company or at any office of the Transfer Agent as may be specified by the
Company in such notice, on behalf of the
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Company of certificates representing Weyerhaeuser Common Shares (which
shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim or encumbrance) and, if applicable, a
cheque of the Company payable at par at any branch of the bankers of the
Company in payment of any such dividends, in each case, less any amounts
withheld on account of tax required to be deducted and withheld therefrom.
On and after the Redemption Date, the holders of the Exchangeable Shares
called for redemption shall cease to be holders of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of holders in
respect thereof, other than the right to receive their proportionate part
of the total Redemption Price and any such dividends, unless payment of the
total Redemption Price and any such dividends for such Exchangeable Shares
shall not be made upon presentation and surrender of certificates in
accordance with the foregoing provisions, in which case the rights of the
holders shall remain unaffected until the total Redemption Price and any
such dividends have been paid in the manner hereinbefore provided. The
Company shall have the right at any time after the sending of notice of its
intention to redeem the Exchangeable Shares as aforesaid to deposit or
cause to be deposited the total Redemption Price for and the full amount of
such dividends on (except as provided in the preceding sentence)
the Exchangeable Shares so called for redemption, or of such of the said
Exchangeable Shares represented by certificates that have not at the date
of such deposit been surrendered by the holders thereof in connection with
such redemption, in a custodial account with any chartered bank or trust
company in Canada named in such notice, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. Upon the
later of such deposit being made and the Redemption Date, the Exchangeable
Shares in respect whereof such deposit shall have been made shall be
redeemed and the rights of the holders thereof after such deposit or
Redemption Date, as the case may be, shall be limited to receiving their
proportionate part of the total Redemption Price and such dividends for
such Exchangeable Shares so deposited, against presentation and surrender
of the said certificates held by them, respectively, in accordance with the
foregoing provisions. Upon such payment or deposit of the total Redemption
Price and the full amount of such dividends, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all
purposes to be holders of the Weyerhaeuser Common Shares delivered to them
or the custodian on their behalf.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law, the Company may at any time and from time
to time purchase for cancellation all or any part of the outstanding
Exchangeable Shares at any price by tender to all the holders of record of
Exchangeable Shares then outstanding or through the facilities of any stock
exchange on which the Exchangeable Shares are listed or quoted at any price
per share together with an amount equal to all declared and unpaid
dividends thereon for which the record date has occurred prior to the date
of purchase. If in response to an invitation for tenders under the
provisions of this section 8.1, more Exchangeable Shares are tendered at a
price or prices acceptable to the Company than the Company is prepared to
purchase, the Exchangeable Shares to be purchased by the Company shall be
purchased as nearly as may be pro rata according to the number of shares
tendered by each holder who submits a tender to the
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Company, provided that when shares are tendered at different prices, the
pro rating shall be effected (disregarding fractions) only with respect to
the shares tendered at the price at which more shares were tendered than
the Company is prepared to purchase after the Company has purchased all the
shares tendered at lower prices. If part only of the Exchangeable Shares
represented by any certificate shall be purchased, a new certificate for
the balance of such shares shall be issued at the expense of the Company.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10 hereof, the
holders of the Exchangeable Shares shall not be entitled as such to receive
notice of or to attend any meeting of the members of the Company or to vote
at any such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add
to, change or remove any right, privilege, restriction or condition
attaching to the Exchangeable Shares or any other matter requiring the
approval or consent of the holders of the Exchangeable Shares shall be
deemed to have been sufficiently given if it shall have been given in
accordance with applicable law subject to a minimum requirement that such
approval be evidenced by resolution passed by not less than three-fourths
of the votes cast on such resolution at a meeting of holders of
Exchangeable Shares duly called and held at which the holders of at least
25% of the outstanding Exchangeable Shares at that time are present or
represented by proxy; provided that if at any such meeting the holders of
at least 25% of the outstanding Exchangeable Shares at that time are not
present or represented by proxy within one-half hour after the time
appointed for such meeting, then the meeting shall be adjourned to such
date not less than five days thereafter and to such time and place as may
be designated by the Chairman of such meeting. At such adjourned meeting
the holders of Exchangeable Shares present or represented by proxy thereat
may transact the business for which the meeting was originally called and a
resolution passed thereat by the affirmative vote of not less than three-
fourths of the votes cast on such resolution at such meeting shall
constitute the approval or consent of the holders of the Exchangeable
Shares.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF WEYERHAEUSER COMMON SHARES
11.1 Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that Weyerhaeuser will not without the prior
approval of the Company
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and the prior approval of the holders of the Exchangeable Shares given in
accordance with section 10.2 of these share provisions:
(a) issue or distribute Weyerhaeuser Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire Weyerhaeuser Common Shares) to the holders of all or
substantially all of the then outstanding Weyerhaeuser Common
Shares by way of stock dividend or other distribution, other than
an issue of Weyerhaeuser Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire Weyerhaeuser Common Shares) to holders of Weyerhaeuser
Common Shares who exercise an option to receive dividends in
Weyerhaeuser Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Weyerhaeuser
Common Shares) in lieu of receiving cash dividends;
(b) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding Weyerhaeuser
Common Shares entitling them to subscribe for or to purchase
Weyerhaeuser Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Weyerhaeuser
Common Shares); or
(c) issue or distribute to the holders of all or substantially all of
the then outstanding Weyerhaeuser Common Shares:
(i) shares or securities of Weyerhaeuser of any class other
than Weyerhaeuser Common Shares (other than shares
convertible into or exchangeable for or carrying rights to
acquire Weyerhaeuser Common Shares);
(ii) rights, options or warrants other than those referred to in
section 11.1(b) above;
(iii) evidences of indebtedness of Weyerhaeuser; or
(iv) assets of Weyerhaeuser,
unless the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other assets is
issued or distributed simultaneously to holders of the Exchangeable Shares.
11.2 Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Weyerhaeuser will not without the
prior approval of the Company and the prior approval of the holders of the
Exchangeable Shares given in accordance with section 10.2 of these share
provisions:
(a) subdivide, redivide or change the then outstanding Weyerhaeuser
Common Shares into a greater number of Weyerhaeuser Common
Shares;
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(b) reduce, combine, consolidate or change the then outstanding
Weyerhaeuser Common Shares into a lesser number of Weyerhaeuser
Common Shares; or
(c) reclassify or otherwise change the Weyerhaeuser Common Shares or
effect an amalgamation, merger, reorganization or other
transaction affecting the Weyerhaeuser Common Shares,
unless the same or an economically equivalent change shall simultaneously
be made to, or in, the rights of the holders of the Exchangeable Shares.
The Support Agreement further provides, in part, that the aforesaid
provisions of the Support Agreement shall not be changed without the
approval of the holders of the Exchangeable Shares given in accordance with
section 10.2 of these share provisions.
ARTICLE 12
ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT
12.1 The Company will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure
performance and compliance by Weyerhaeuser, Weyerhaeuser Newco and the
Company with all provisions of the Support Agreement applicable to
Weyerhaeuser, Weyerhaeuser Newco and the Company, respectively, in
accordance with the terms thereof including, without limitation, taking all
such actions and doing all such things as shall be necessary or advisable
to enforce to the fullest extent possible for the direct benefit of the
Company all rights and benefits in favour of the Company under or pursuant
to such agreement.
12.2 The Company shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations
under, the Support Agreement without the approval of the holders of the
Exchangeable Shares given in accordance with section 10.2 of these share
provisions other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purposes of:
(a) adding to the covenants of the other parties to such agreement
for the protection of the Company or the holders of the
Exchangeable Shares thereunder;
(b) making such provisions or modifications not inconsistent with
such agreement as may be necessary or desirable with respect to
matters or questions arising thereunder which, in the good faith
opinion of the Board of Directors, it may be expedient to make,
provided that the Board of Directors shall be of the good faith
opinion, after consultation with counsel, that such provisions
and modifications will not be prejudicial to the interests of the
holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement which, on
the advice of counsel to the Company, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
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manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after consultation
with counsel, that such changes or corrections will not be
prejudicial to the interests of the holders of the Exchangeable
Shares.
ARTICLE 13
LEGEND; CALL RIGHTS
13.1 The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the
Plan of Arrangement relating to the Liquidation Call Right and the
Redemption Call Right, and the Voting and Exchange Trust Agreement
(including the provisions with respect to the voting rights, exchange right
and automatic exchange thereunder).
13.2 Each holder of an Exchangeable Share, whether of record or beneficial,
by virtue of becoming and being such a holder shall be deemed to
acknowledge each of the Liquidation Call Right, the Retraction Call Right
and the Redemption Call Right, in each case, in favour of Weyerhaeuser
Newco, and the overriding nature thereof in connection with the
liquidation, dissolution or winding-up of the Company or the retraction or
redemption of Exchangeable Shares, as the case may be, and to be bound
thereby in favour of Weyerhaeuser Newco as therein provided.
ARTICLE 14
NOTICES
14.1 Any notice, request or other communication to be given to the Company
by a holder of Exchangeable Shares shall be in writing and shall be valid
and effective if given by mail (postage prepaid) or by telecopy or by
delivery to the registered office of the Company and addressed to the
attention of the President of the Company. Any such notice, request or
other communication, if given by mail, telecopy or delivery, shall only be
deemed to have been given and received upon actual receipt thereof by the
Company.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to
the Company or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Company or the retraction or redemption of Exchangeable Shares shall be
made by registered mail (postage prepaid) or by delivery to the registered
office of the Company or to such office of the Transfer Agent as may be
specified by the Company, in each case, addressed to the attention of the
President of the Company. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective
upon actual receipt thereof by the Company or the Transfer Agent, as the
case may be. Any such presentation and surrender of certificates made by
registered mail shall be at the sole risk of the holder mailing the same.
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14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Company shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by
delivery to the address of the holder recorded in the register of members
of the Company or, in the event of the address of any such holder not being
so recorded, then at the last known address of such holder. Any such
notice, request or other communication, if given by mail, shall be deemed
to have been given and received on the third Business Day following the
date of mailing and, if given by delivery, shall be deemed to have been
given and received on the date of delivery. Accidental failure or omission
to give any notice, request or other communication to one or more holders
of Exchangeable Shares shall not invalidate or otherwise alter or affect
any action or proceeding to be taken by the Company pursuant thereto.
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APPENDIX 2 TO THE PLAN OF ARRANGEMENT
OPTIONS
Vesting Schedule
- ----------------
If the vesting schedule for an MB Option that has not vested on or prior to
the Effective Time is a function of the closing price of MB Common Shares
on The Toronto Stock Exchange, the vesting schedule for the Replacement
Option in respect thereof shall be a function of the closing price of the
Weyerhaeuser Common Shares on the NYSE and each specified dollar amount per
share referred to in the vesting schedule for such MB Option shall be
changed to an amount equal to such specified dollar amount divided by the
Exchange Ratio and multiplied by the noon spot exchange rate on the
Effective Date for Canadian dollars expressed in United States dollars as
reported by the Bank of Canada or, in the event such spot exchange rate is
not available, such spot exchange rate on such date for Canadian dollars
expressed in United States dollars as may be deemed by the Board of
Directors to be appropriate for such purpose.
Stock Appreciating Rights
- -------------------------
If an MB Option has a stock appreciation right granted pursuant to MB's
Senior Management Phantom Stock Plan connected to it, each Replacement
Option shall have a stock appreciation right connected to it, which shall
entitle the holder thereof to receive cash in an amount equal to the excess
of the closing price of the Weyerhaeuser Common Shares on the NYSE on the
trading day immediately preceding the date of the exercise of the stock
appreciation right over the option price provided in the related
Replacement Option.
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<PAGE>
SCHEDULE F
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT made as of the day of , 1999.
B E T W E E N:
WEYERHAEUSER COMPANY,
a corporation existing under the laws of the State of
Washington (hereinafter referred to as "Weyerhaeuser"),
OF THE FIRST PART,
- and -
586476 B.C. LTD.,
a company existing under the laws of the
Province of British Columbia
(hereinafter referred to as "Weysub"),
OF THE SECOND PART,
- and -
,
a trust company incorporated under the
laws of Canada (hereinafter referred to
as "Trustee"),
OF THE THIRD PART.
WHEREAS in connection with a merger agreement (the "Merger Agreement")
made June 20, 1999 among Weyerhaeuser, Weysub and MacMillan Bloedel Limited
("MB"), Weysub is to issue exchangeable shares (the "Exchangeable Shares")
to certain holders of securities of MB pursuant to the plan of arrangement
(the "Arrangement") and in certain other circumstances, all as contemplated
by the Merger Agreement;
AND WHEREAS pursuant to the Merger Agreement, Weyerhaeuser and Weysub
have agreed to execute a voting and exchange trust agreement substantially
in the form of this Agreement;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto covenant and agree as follows:
-F-1-
<PAGE>
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, the following terms shall have the following
meanings:
"Act" means the Company Act (British Columbia), as amended.
"Affiliate" of any person means any other person directly or
indirectly controlled by, or under control of, that person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control of"), as
applied to any person, means the possession by another person,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of that first mentioned person, whether
through the ownership of voting securities, by contract or otherwise.
"Arrangement" means the arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in the Plan of
Arrangement, subject to any amendments or variations thereto made in
accordance with Article 6 of the Plan of Arrangement or made at the
direction of the Court.
"Automatic Exchange Rights" means the benefit of the obligation of
Weyerhaeuser to effect the automatic exchange of Weyerhaeuser Common
Shares for Exchangeable Shares pursuant to section 5.12.
"Beneficiaries" means the registered holders from time to time of
Exchangeable Shares, other than Weyerhaeuser and its Affiliates.
"Beneficiary Votes" has the meaning ascribed thereto in section 4.2.
"Board of Directors" means the Board of Directors of Weysub.
"Business Day" means any day on which commercial banks are generally
open for business in Seattle, Washington and Vancouver, British
Columbia, other than a Saturday, a Sunday or a day observed as a
holiday in Seattle, Washington under the laws of the State of
Washington or the federal laws of the United States of America or in
Vancouver, British Columbia under the laws of the Province of British
Columbia or the federal laws of Canada.
"Canadian Dollar Equivalent" means, in respect of an amount expressed
in a currency other than Canadian dollars (the "Foreign Currency
Amount") at any date, the product obtained by multiplying (a) the
Foreign Currency Amount by (b) the noon spot exchange rate on such
date for such foreign currency expressed in Canadian dollars as
reported by the Bank of Canada or, in the event such spot exchange
rate is not available, such
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exchange rate on such date for such foreign currency expressed in
Canadian dollars as may be deemed by the Board of Directors to be
appropriate for such purpose.
"Current Market Price" means, in respect of a Weyerhaeuser Common
Share on any date, the Canadian Dollar Equivalent of the average of
the closing bid and asked prices of Weyerhaeuser Common Shares during
a period of 20 consecutive trading days ending not more than three
trading days before such date on the NYSE, or, if the Weyerhaeuser
Common Shares are not then quoted on the NYSE, on such other stock
exchange or automated quotation system on which the Weyerhaeuser
Common Shares are listed or, quoted, as the case may be, as may be
selected by the Board of Directors for such purpose; provided however,
that if in the opinion of the Board of Directors the public
distribution or trading activity of Weyerhaeuser Common Shares during
such period does not create a market which reflects the fair market
value of a Weyerhaeuser Common Share, then the Current Market Price of
a Weyerhaeuser Common Share shall be determined by the Board of
Directors, in good faith and in its sole discretion, and provided
further that any such selection, opinion or determination by the Board
of Directors shall be conclusive and binding.
"Exchange Right" has the meaning ascribed thereto in section 5.1.
"Exchangeable Shares" means a non-voting exchangeable share in the
capital of Weysub, having substantially the rights, privileges,
restrictions and conditions set out in Appendix I to the Plan of
Arrangement.
"Indemnified Parties" has the meaning ascribed thereto in section 9.1.
"Insolvency Event" means the institution by Weysub of any proceeding
to be adjudicated a bankrupt or insolvent or to be wound up, or the
consent of Weysub to the institution of bankruptcy, insolvency or
winding-up proceedings against it, or the filing of a petition, answer
or consent seeking dissolution or winding-up under any bankruptcy,
insolvency or analogous laws, including without limitation the
Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and
Insolvency Act (Canada), and the failure by Weysub to contest in good
faith any such proceedings commenced in respect of Weysub within 30
days of becoming aware thereof, or the consent by Weysub to the filing
of any such petition or to the appointment of a receiver, or the
making by Weysub of a general assignment for the benefit of creditors,
or the admission in writing by Weysub of its inability to pay its
debts generally as they become due, or Weysub not being permitted,
pursuant to solvency requirements of applicable law, to redeem any
Retracted Shares pursuant to section 6.6 of the Share Provisions.
"Liquidation Call Right" has the meaning ascribed thereto in the Plan
of Arrangement.
"Liquidation Event" has the meaning ascribed thereto in section
5.12(b).
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"Liquidation Event Effective Date" has the meaning ascribed thereto in
section 5.12(c).
"List" has the meaning ascribed thereto in section 4.6.
"Merger Agreement" means the agreement made June 20, 1999 among
Weyerhaeuser, Weysub and MB, as amended, supplemented and/or restated
in accordance therewith prior to the Effective Date, providing for,
among other things, the Arrangement.
"NYSE" means the New York Stock Exchange, Inc.
"Officer's Certificate" means, with respect to Weyerhaeuser or Weysub,
as the case may be, a certificate signed by any officer or director of
Weyerhaeuser or Weysub, as the case may be.
"person" includes any individual, firm, partnership, joint venture,
venture capital fund, limited liability company, unlimited liability
company, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, government body, syndicate
or other entity, whether or not having legal status.
"Plan of Arrangement" means the plan of arrangement substantially in
the form and content of Schedule D to the Merger Agreement and any
amendments or variations thereto made in accordance with section 6.1
of the Merger Agreement or Article 6 of the Plan of Arrangement or
made at the discretion of the Court.
"Redemption Call Right" has the meaning ascribed thereto in the Plan
of Arrangement.
"Retracted Shares" has the meaning ascribed thereto in section 5.7.
"Retraction Call Right" has the meaning ascribed thereto in the Share
Provisions.
"Share Provisions" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares.
"Support Agreement" means that certain support agreement made as of
even date herewith between Weysub, Weyerhaeuser Newco and Weyerhaeuser
substantially in the form and content of Schedule E to the Merger
Agreement, with such changes thereto as the parties to the Merger
Agreement, acting reasonably, may agree.
"Trust" means the trust created by this Agreement.
"Trust Estate" means the Weyerhaeuser Special Voting Share, any other
securities, the Exchange Right, the Automatic Exchange Rights and any
money or other property which may be held by the Trustee from time to
time pursuant to this Agreement.
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"Trustee" means and, subject to the provisions of Article 10, includes
any successor trustee.
"Voting Rights" means the voting rights attached to the Weyerhaeuser
Special Voting Share.
"Weyerhaeuser Affiliates" means Affiliates of Weyerhaeuser.
"Weyerhaeuser Common Share" means a share of common stock in the
capital of Weyerhaeuser.
"Weyerhaeuser Consent" has the meaning ascribed thereto in section
4.2.
"Weyerhaeuser Meeting" has the meaning ascribed thereto in section
4.2.
"Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under
the laws of the Province of British Columbia and being a wholly-owned
subsidiary of Weyerhaeuser.
"Weyerhaeuser Special Voting Share" means the one share of Special
Voting Preferred Stock of Weyerhaeuser issued in its own series which
entitles the holder of record to a number of votes at meetings of
holders of Weyerhaeuser Common Shares equal to the number of
Exchangeable Shares outstanding from time to time (other than
Exchangeable Shares held by Weyerhaeuser and Weyerhaeuser Affiliates),
which share is to be issued to, deposited with, and voted by, the
Trustee as described herein.
"Weyerhaeuser Successor" has the meaning ascribed thereto in section
11.1(a).
1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, sections and other
portions and the insertion of headings are for convenience of reference
only and should not affect the construction or interpretation of this
Agreement. Unless otherwise indicated, all references to an "Article" or
"section" followed by a number and/or a letter refer to the specified
Article or section of this Agreement. The terms "this Agreement",
"hereof", "herein" and "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, section or other portion
hereof and include any agreement or instrument supplementary or ancillary
hereto.
1.3 Number, Gender, etc.
Words importing the singular number only shall include the plural and
vice versa. Words importing any gender shall include all genders.
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1.4 Date for any Action
If any date on which any action is required to be taken under this
Agreement is not a Business Day, such action shall be required to be taken
on the next succeeding Business Day.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 Establishment of Trust
The purpose of this Agreement is to create the Trust for the benefit
of the Beneficiaries, as herein provided. The Trustee will hold the
Weyerhaeuser Special Voting Share in order to enable the Trustee to execute
the Voting Rights and will hold the Exchange Right and the Automatic
Exchange Rights in order to enable the Trustee to exercise such rights, in
each case as trustee for and on behalf of the Beneficiaries as provided in
this Agreement.
ARTICLE 3
WEYERHAEUSER SPECIAL VOTING SHARE
3.1 Issue and Ownership of the Weyerhaeuser Special Voting Share
Weyerhaeuser hereby issues to and deposits with the Trustee, the
Weyerhaeuser Special Voting Share to be hereafter held of record by the
Trustee as trustee for and on behalf of, and for the use and benefit of,
the Beneficiaries and in accordance with the provisions of this Agreement.
Weyerhaeuser hereby acknowledges receipt from the Trustee as trustee for
and on behalf of the Beneficiaries of good and valuable consideration (and
the adequacy thereof) for the issuance of the Weyerhaeuser Special Voting
Share by Weyerhaeuser to the Trustee. During the term of the Trust and
subject to the terms and conditions of this Agreement, the Trustee shall
possess and be vested with full legal ownership of the Weyerhaeuser Special
Voting Share and shall be entitled to exercise all of the rights and powers
of an owner with respect to the Weyerhaeuser Special Voting Share provided
that the Trustee shall:
(a) hold the Weyerhaeuser Special Voting Share and the legal title
thereto as trustee solely for the use and benefit of the
Beneficiaries in accordance with the provisions of this
Agreement; and
(b) except as specifically authorized by this Agreement, have no
power or authority to sell, transfer, vote or otherwise deal in
or with the Weyerhaeuser Special Voting Share and the
Weyerhaeuser Special Voting Share shall not be used or disposed
of by the Trustee for any purpose other than the purposes for
which this Trust is created pursuant to this Agreement.
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3.2 Legended Share Certificates
Weysub will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Beneficiaries of their right to
instruct the Trustee with respect to the exercise of the Voting Rights in
respect of the Exchangeable Shares of the Beneficiaries.
3.3 Safe Keeping of Certificate
The certificate representing the Weyerhaeuser Special Voting Share
shall at all times be held in safe keeping by the Trustee.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 Voting Rights
The Trustee, as the holder of record of the Weyerhaeuser Special
Voting Share, shall be entitled to all of the Voting Rights, including the
right to vote in person or by proxy the Weyerhaeuser Special Voting Share
on any matters, questions, proposals or propositions whatsoever that may
properly come before the shareholders of Weyerhaeuser at a Weyerhaeuser
Meeting or in connection with a Weyerhaeuser Consent. The Voting Rights
shall be and remain vested in and exercised by the Trustee. Subject to
section 7.15:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from
Beneficiaries entitled to instruct the Trustee as to the voting
thereof at the time at which the Weyerhaeuser Meeting is held;
and
(b) to the extent that no instructions are received from a
Beneficiary with respect to the Voting Rights to which such
Beneficiary is entitled, the Trustee shall not exercise or permit
the exercise of such Voting Rights.
4.2 Number of Votes
With respect to all meetings of shareholders of Weyerhaeuser at which
holders of Weyerhaeuser Common Shares are entitled to vote (each, a
"Weyerhaeuser Meeting") and with respect to all written consents sought by
Weyerhaeuser from its shareholders including the holders of Weyerhaeuser
Common Shares (each, a "Weyerhaeuser Consent"), each Beneficiary shall be
entitled to instruct the Trustee to cast and exercise one of the votes
comprised in the Voting Rights for each Exchangeable Share owned of record
by such Beneficiary on the record date established by Weyerhaeuser or by
applicable law for such Weyerhaeuser Meeting or Weyerhaeuser Consent, as
the case may be (the "Beneficiary Votes"), in respect of each matter,
question, proposal or proposition to be voted on at such Weyerhaeuser
Meeting or in connection with such Weyerhaeuser Consent.
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4.3 Mailings to Shareholders
With respect to each Weyerhaeuser Meeting and Weyerhaeuser Consent,
the Trustee will mail or cause to be mailed (or otherwise communicate in
the same manner as Weyerhaeuser utilizes in communications to holders of
Weyerhaeuser Common Shares) to each of the Beneficiaries named in the List
referred to in section 4.6, such mailing or communication to commence on
the same day as the mailing or notice (or other communication) with respect
thereto is commenced by Weyerhaeuser to its shareholders:
(a) a copy of such notice, together with any related materials to be
provided to shareholders of Weyerhaeuser;
(b) a statement that such Beneficiary is entitled to instruct the
Trustee as to the exercise of the Beneficiary Votes with respect
to such Weyerhaeuser Meeting or Weyerhaeuser Consent or, pursuant
to section 4.7, to attend such Weyerhaeuser Meeting and to
exercise personally the Beneficiary Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Beneficiary or his designee to exercise
personally the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of
the management of Weyerhaeuser to exercise such Beneficiary
Votes;
(d) a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is
entitled will not be exercised;
(e) a form of direction whereby the Beneficiary may so direct and
instruct the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must
be received by the Trustee in order to be binding upon it, which
in the case of a Weyerhaeuser Meeting shall not be earlier than
the close of business on the second Business Day prior to such
meeting, and of the method for revoking or amending such
instructions.
For the purpose of determining Beneficiary Votes to which a
Beneficiary is entitled in respect of any Weyerhaeuser Meeting or
Weyerhaeuser Consent, the number of Exchangeable Shares owned of record by
the Beneficiary shall be determined at the close of business on the record
date established by Weyerhaeuser or by applicable law for purposes of
determining shareholders entitled to vote at such Weyerhaeuser Meeting.
Weyerhaeuser will notify the Trustee of any decision of the Board of
Directors of Weyerhaeuser with respect to the
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calling of any Weyerhaeuser Meeting and shall provide all necessary
information and materials to the Trustee in each case promptly and in any
event in sufficient time to enable the Trustee to perform its obligations
contemplated by this section 4.3.
4.4 Copies of Shareholder Information
Weyerhaeuser will deliver to the Trustee copies of all proxy materials
(including notices of Weyerhaeuser Meetings but excluding proxies to vote
Weyerhaeuser Common Shares), information statements, reports (including
without limitation, all interim and annual financial statements) and other
written communications that, in each case, are to be distributed from time
to time to holders of Weyerhaeuser Common Shares in sufficient quantities
and in sufficient time so as to enable the Trustee to send those materials
to each Beneficiary at the same time as such materials are first sent to
holders of Weyerhaeuser Common Shares. The Trustee will mail or otherwise
send to each Beneficiary, at the expense of Weyerhaeuser, copies of all
such materials (and all materials specifically directed to the
Beneficiaries or to the Trustee for the benefit of the Beneficiaries by
Weyerhaeuser) received by the Trustee from Weyerhaeuser contemporaneously
with the sending of such materials to holders of Weyerhaeuser Common
Shares. The Trustee will also make available for inspection by any
Beneficiary at the Trustee's principal corporate trust office in Vancouver
all proxy materials, information statements, reports and other written
communications that are:
(a) received by the Trustee as the registered holder of the
Weyerhaeuser Special Voting Share and made available by
Weyerhaeuser generally to the holders of Weyerhaeuser Common
Shares; or
(b) specifically directed to the Beneficiaries or to the Trustee for
the benefit of the Beneficiaries by Weyerhaeuser.
4.5 Other Materials
As soon as reasonably practicable after receipt by Weyerhaeuser or
shareholders of Weyerhaeuser (if such receipt is known by Weyerhaeuser) of
any material sent or given by or on behalf of a third party to holders of
Weyerhaeuser Common Shares generally, including without limitation,
dissident proxy and information circulars (and related information and
material) and tender and exchange offer circulars (and related information
and material), Weyerhaeuser shall use its reasonable efforts to obtain and
deliver to the Trustee copies thereof in sufficient quantities so as to
enable the Trustee to forward such material (unless the same has been
provided directly to Beneficiaries by such third party) to each Beneficiary
as soon as possible thereafter. Immediately upon receipt thereof, the
Trustee will mail or otherwise send to each Beneficiary, at the expense of
Weyerhaeuser, copies of all such materials received by the Trustee from
Weyerhaeuser. The Trustee will also make available for inspection by any
Beneficiary at the Trustee's principal corporate trust office in Vancouver
copies of all such materials.
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4.6 List of Persons Entitled to Vote
Weysub shall, (a) prior to each annual, general and special
Weyerhaeuser Meeting or the seeking of any Weyerhaeuser Consent and (b)
forthwith upon each request made at any time by the Trustee in writing,
prepare or cause to be prepared a list (a "List") of the names and
addresses of the Beneficiaries arranged in alphabetical order and showing
the number of Exchangeable Shares held of record by each such Beneficiary,
in each case at the close of business on the date specified by the Trustee
in such request or, in the case of a List prepared in connection with a
Weyerhaeuser Meeting or an Weyerhaeuser Consent, at the close of business
on the record date established by Weyerhaeuser or pursuant to applicable
law for determining the holders of Weyerhaeuser Common Shares entitled to
receive notice of and/or to vote at such Weyerhaeuser Meeting or to give
consent in connection with such Weyerhaeuser Consent. Each such List shall
be delivered to the Trustee promptly after receipt by Weysub of such
request or the record date for such meeting or seeking of consent, as the
case may be. Weyerhaeuser agrees to give Weysub notice (with a copy to the
Trustee) of the calling of any Weyerhaeuser Meeting or the seeking of any
Weyerhaeuser Consent, together with the record dates therefor, sufficiently
prior to the date of the calling of such meeting or seeking of such consent
so as to enable Weysub to perform its obligations under this section 4.6.
4.7 Entitlement to Direct Votes
Any Beneficiary named in a List prepared in connection with any
Weyerhaeuser Meeting or Weyerhaeuser Consent will be entitled (a) to
instruct the Trustee in the manner described in section 4.3 with respect to
the exercise of the Beneficiary Votes to which such Beneficiary is entitled
or (b) to attend such meeting and personally exercise thereat, as the proxy
of the Trustee, the Beneficiary Votes to which such Beneficiary is
entitled.
4.8 Voting by Trustee, and Attendance of Trustee Representative at Meeting
(a) In connection with each Weyerhaeuser Meeting and Weyerhaeuser
Consent, the Trustee shall exercise, either in person or by
proxy, in accordance with the instructions received from a
Beneficiary pursuant to section 4.3, the Beneficiary Votes as to
which such Beneficiary is entitled to direct the vote (or any
lesser number thereof as may be set forth in the instructions);
provided, however, that such written instructions are received by
the Trustee from the Beneficiary prior to the time and date fixed
by the Trustee for receipt of such instruction in the notice
given by the Trustee to the Beneficiary pursuant to section 4.3.
(b) The Trustee shall cause a representative who is empowered by it
to sign and deliver, on behalf of the Trustee, proxies for Voting
Rights to attend each Weyerhaeuser Meeting. Upon submission by a
Beneficiary (or its designee) of identification satisfactory to
the Trustee's representative, and at the Beneficiary's request,
such representative shall sign and deliver to such Beneficiary
(or its designee) a proxy to exercise personally the Beneficiary
Votes as to which such Beneficiary is otherwise entitled
hereunder to direct the vote, if such Beneficiary
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either (i) has not previously given the Trustee instructions
pursuant to section 4.3 in respect of such meeting or (ii)
submits to such representative written revocation of any such
previous instructions. At such meeting, the Beneficiary
exercising such Beneficiary Votes shall have the same rights as
the Trustee to speak at the meeting in favour of any matter,
question, proposal or proposition, to vote by way of ballot at
the meeting in respect of any matter, question, proposal or
proposition, and to vote at such meeting by way of a show of
hands in respect of any matter, question or proposition.
4.9 Distribution of Written Materials
Any written materials distributed by the Trustee pursuant to this
Agreement shall be sent by mail (or otherwise communicated in the same
manner as Weyerhaeuser utilizes in communications to holders of
Weyerhaeuser Common Shares) to each Beneficiary at its address as shown on
the books of Weysub. Weysub shall provide or cause to be provided to the
Trustee for this purpose, on a timely basis and without charge or other
expense:
(a) a current List; and
(b) upon the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this Agreement.
4.10 Termination of Voting Rights
All of the rights of a Beneficiary with respect to the Beneficiary
Votes exercisable in respect of the Exchangeable Shares held by such
Beneficiary, including the right to instruct the Trustee as to the voting
of or to vote personally such Beneficiary Votes, shall be deemed to be
surrendered by the Beneficiary to Weyerhaeuser or Weyerhaeuser Newco, as
the case may be, and such Beneficiary Votes and the Voting Rights
represented thereby shall cease immediately upon the delivery by such
holder to the Trustee of the certificates representing such Exchangeable
Shares in connection with the exercise by the Beneficiary of the Exchange
Right or the occurrence of the automatic exchange of Exchangeable Shares
for Weyerhaeuser Common Shares, as specified in Article 5 (unless, in
either case, Weyerhaeuser shall not have delivered the requisite
Weyerhaeuser Common Shares issuable in exchange therefor to the Trustee for
delivery to the Beneficiaries), or upon the redemption of Exchangeable
Shares pursuant to Article 6 or 7 of the Share Provisions, or upon the
effective date of the liquidation, dissolution or winding-up of Weysub
pursuant to Article 5 of the Share Provisions, or upon the purchase of
Exchangeable Shares from the holder thereof by Weyerhaeuser Newco pursuant
to the exercise by Weyerhaeuser Newco of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right.
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ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 Grant and Ownership of the Exchange Right
Weyerhaeuser hereby grants to the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Beneficiaries the right (the
"Exchange Right"), upon the occurrence and during the continuance of an
Insolvency Event, to require Weyerhaeuser to purchase from each or any
Beneficiary all or any part of the Exchangeable Shares held by the
Beneficiary and the Automatic Exchange Rights, all in accordance with the
provisions of this Agreement. Weyerhaeuser hereby acknowledges receipt
from the Trustee as trustee for and on behalf of the Beneficiaries of good
and valuable consideration (and the adequacy thereof) for the grant of the
Exchange Right and the Automatic Exchange Rights by Weyerhaeuser to the
Trustee. During the term of the Trust and subject to the terms and
conditions of this Agreement, the Trustee shall possess and be vested with
full legal ownership of the Exchange Right and the Automatic Exchange
Rights and shall be entitled to exercise all of the rights and powers of an
owner with respect to the Exchange Right and the Automatic Exchange Rights,
provided that the Trustee shall:
(a) hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of
the Beneficiaries in accordance with the provisions of this
Agreement; and
(b) except as specifically authorized by this Agreement, have no
power or authority to exercise or otherwise deal in or with the
Exchange Right or the Automatic Exchange Rights, and the Trustee
shall not exercise any such rights for any purpose other than the
purposes for which the Trust is created pursuant to this
Agreement.
5.2 Legended Share Certificates
Weysub will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Beneficiaries of:
(a) their right to instruct the Trustee with respect to the exercise
of the Exchange Right in respect of the Exchangeable Shares held
by a Beneficiary; and
(b) the Automatic Exchange Rights.
5.3 General Exercise of Exchange Right
The Exchange Right shall be and remain vested in and exercisable by
the Trustee. Subject to section 7.15, the Trustee shall exercise the
Exchange Right only on the basis of instructions received pursuant to this
Article 5 from Beneficiaries entitled to instruct the Trustee as to the
exercise thereof. To the extent that no instructions are received from a
Beneficiary with
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respect to the Exchange Right, the Trustee shall not exercise or permit the
exercise of the Exchange Right.
5.4 Purchase Price
The purchase price payable by Weyerhaeuser for each Exchangeable Share
to be purchased by Weyerhaeuser under the Exchange Right shall be an amount
per share equal to (a) the Current Market Price of a Weyerhaeuser Common
Share on the last Business Day prior to the day of closing of the purchase
and sale of such Exchangeable Share under the Exchange Right, which shall
be satisfied in full by Weyerhaeuser causing to be sent to such holder one
Weyerhaeuser Common Share, plus (b) to the extent not paid by Weysub, an
additional amount equivalent to the full amount of all declared and
unpaid dividends on each such Exchangeable Share held by such holder on any
dividend record date which occurred prior to the closing of the purchase
and sale. The purchase price for each such Exchangeable Share so purchased
may be satisfied only by Weyerhaeuser issuing and delivering or causing to
be delivered to the Trustee, on behalf of the relevant Beneficiary, one
Weyerhaeuser Common Share and on the applicable payment date a cheque for
the balance, if any, of the purchase price without interest (but less any
amounts withheld pursuant to section 5.13).
5.5 Exercise Instructions
Subject to the terms and conditions herein set forth, a Beneficiary
shall be entitled, upon the occurrence and during the continuance of an
Insolvency Event, to instruct the Trustee to exercise the Exchange Right
with respect to all or any part of the Exchangeable Shares registered in
the name of such Beneficiary on the books of Weysub. To cause the exercise
of the Exchange Right by the Trustee, the Beneficiary shall deliver to the
Trustee, in person or by certified or registered mail, as its principal
corporate trust office in Vancouver or at such other places in Canada as
the Trustee may from time to time designate by written notice to the
Beneficiaries, the certificates representing the Exchangeable Shares which
such Beneficiary desires Weyerhaeuser to purchase, duly endorsed in blank
for transfer, and accompanied by such other documents and instruments as
may be required to effect a transfer of Exchangeable Shares under the Act
and the by-laws of Weysub and such additional documents and instruments as
the Trustee may reasonably require together with (a) a duly completed form
of notice of exercise of the Exchange Right, contained on the reverse of or
attached to the Exchangeable Share certificates, stating (i) that the
Beneficiary thereby instructs the Trustee to exercise the Exchange Right so
as to require Weyerhaeuser to purchase from the Beneficiary the number of
Exchangeable Shares specified therein, (ii) that such Beneficiary has good
title to and owns all such Exchangeable Shares to be acquired by
Weyerhaeuser free and clear of all liens, claims and encumbrances, (iii)
the names in which the certificates representing Weyerhaeuser Common Shares
issuable in connection with the exercise of the Exchange Right are to be
issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered and (b) payment (or evidence satisfactory
to the Trustee, Weysub and Weyerhaeuser of payment) of the taxes (if any)
payable as contemplated by section 5.8 of this Agreement. If only a part
of the Exchangeable Shares represented by any certificate or certificates
delivered to the Trustee are to
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be purchased by Weyerhaeuser under the Exchange Right, a new certificate
for the balance of such Exchangeable Shares shall be issued to the holder
at the expense of Weysub.
5.6 Delivery of Weyerhaeuser Common Shares; Effect of Exercise
Promptly after the receipt of the certificates representing the
Exchangeable Shares which the Beneficiary desires Weyerhaeuser to purchase
under the Exchange Right, together with such documents and instruments of
transfer and a duly completed form of notice of exercise of the Exchange
Right (and payment of taxes, if any payable as contemplated by section 5.8
or evidence thereof), duly endorsed for transfer to Weyerhaeuser, the
Trustee shall notify Weyerhaeuser and Weysub of its receipt of the same,
which notice to Weyerhaeuser and Weysub shall constitute exercise of the
Exchange Right by the Trustee on behalf of the holder of such Exchangeable
Shares, and Weyerhaeuser shall promptly thereafter deliver or cause to be
delivered to the Trustee, for delivery to the Beneficiary of such
Exchangeable Shares (or to such other persons, if any, properly designated
by such Beneficiary) the number of Weyerhaeuser Common Shares issuable in
connection with the exercise of the Exchange Right, and on the applicable
payment date cheques for the balance, if any, of the total purchase price
therefor without interest (but less any amounts withheld pursuant to
section 5.13); provided, however, that no such delivery shall be made
unless and until the Beneficiary requesting the same shall have paid (or
provided evidence satisfactory to the Trustee, Weysub and Weyerhaeuser of
the payment of) the taxes (if any) payable as contemplated by section 5.8
of this Agreement. Immediately upon the giving of notice by the Trustee to
Weyerhaeuser and Weysub of the exercise of the Exchange Right as provided
in this section 5.6, the closing of the transaction of purchase and sale
contemplated by the Exchange Right shall be deemed to have occurred and the
holder of such Exchangeable Shares shall be deemed to have transferred to
Weyerhaeuser all of such holder's right, title and interest in and to such
Exchangeable Shares and the related interest in the Trust Estate and shall
cease to be a holder of such Exchangeable Shares and shall not be entitled
to exercise any of the rights of a holder in respect thereof, other than
the right to receive his proportionate part of the total purchase price
therefor, unless the requisite number of Weyerhaeuser Common Shares is not
allotted, issued and delivered by Weyerhaeuser to the Trustee within five
Business Days of the date of the giving of such notice by the Trustee, in
which case the rights of the Beneficiary shall remain unaffected until such
Weyerhaeuser Common Shares are so allotted, issued and delivered by
Weyerhaeuser. Upon delivery by Weyerhaeuser to the Trustee of such
Weyerhaeuser Common Shares, the Trustee shall deliver such Weyerhaeuser
Common Shares to such Beneficiary (or to such other persons, if any,
properly designated by such Beneficiary). Concurrently with such
Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary
shall be considered and deemed for all purposes to be the holder of the
Weyerhaeuser Common Shares delivered to it pursuant to the Exchange Right.
5.7 Exercise of Exchange Right Subsequent to Retraction
In the event that a Beneficiary has exercised its right under Article
6 of the Share Provisions to require Weysub to redeem any or all of the
Exchangeable Shares held by
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the Beneficiary (the "Retracted Shares") and is notified by Weysub pursuant
to section 6.6 of the Share Provisions that Weysub will not be permitted as
a result of solvency requirements of applicable law to redeem all such
Retracted Shares, and provided that Weyerhaeuser Newco shall not have
exercised the Retraction Call Right with respect to the Retracted Shares
and that the Beneficiary has not revoked the retraction request delivered
by the Beneficiary to Weysub pursuant to section 6.1 of the Share
Provisions, the retraction request will constitute and will be deemed to
constitute notice from the Beneficiary to the Trustee instructing the
Trustee to exercise the Exchange Right with respect to those Retracted
Shares that Weysub is unable to redeem. In any such event, Weysub hereby
agrees with the Trustee and in favour of the Beneficiary promptly to
forward or cause to be forwarded to the Trustee all relevant materials
delivered by the Beneficiary to Weysub or to the transfer agent of the
Exchangeable Shares (including without limitation, a copy of the retraction
request delivered pursuant to section 6.1 of the Share Provisions) in
connection with such proposed redemption of the Retracted Shares and the
Trustee will thereupon exercise the Exchange Right with respect to the
Retracted Shares that Weysub is not permitted to redeem and will require
Weyerhaeuser to purchase such shares in accordance with the provisions of
this Article 5.
5.8 Stamp or Other Transfer Taxes
Upon any sale of Exchangeable Shares to Weyerhaeuser pursuant to the
Exchange Right or the Automatic Exchange Rights, the share certificate or
certificates representing Weyerhaeuser Common Shares to be delivered in
connection with the payment of the total purchase price therefor shall be
issued in the name of the Beneficiary of the Exchangeable Shares so sold or
in such names as such Beneficiary may otherwise direct in writing without
charge to the holder of the Exchangeable Shares so sold; provided, however,
that such Beneficiary (a) shall pay (and none of Weyerhaeuser, Weysub or
the Trustee shall be required to pay) any documentary, stamp, transfer or
other taxes that may be payable in respect of any transfer involved in the
issuance or delivery of such shares to a person other than such Beneficiary
or (b) shall have evidenced to the satisfaction of the Trustee,
Weyerhaeuser and Weysub that such taxes, if any, have been paid.
5.9 Notice of Insolvency Event
As soon as practicable following the occurrence of an Insolvency Event
or any event that with the giving of notice or the passage of time or both
would be an Insolvency Event, Weysub and Weyerhaeuser shall give written
notice thereof to the Trustee. As soon as practicable following the
receipt of notice from Weysub and Weyerhaeuser of the occurrence of an
Insolvency Event, or upon the Trustee becoming aware of an Insolvency
Event, the Trustee will mail to each Beneficiary, at the expense of
Weyerhaeuser, a notice of such Insolvency Event, which notice shall contain
a brief statement of the rights of the Beneficiaries with respect to the
Exchange Right.
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5.10 Qualification of Weyerhaeuser Common Shares
Weyerhaeuser covenants that if any Weyerhaeuser Common Shares to be
issued and delivered pursuant to the Exchange Right or the Automatic
Exchange Rights require registration or qualification with or approval of
or the filing of any document, including any prospectus or similar
document, or the taking of any proceeding with or the obtaining of any
order, ruling or consent from any governmental or regulatory authority
under any Canadian or United States federal, provincial or state law or
regulation or pursuant to the rules and regulations of any regulatory
authority or the fulfillment of any other Canadian or United States
federal, provincial or state legal requirement before such shares may be
issued and delivered by Weyerhaeuser to the initial holder thereof or in
order that such shares may be freely traded thereafter (other than any
restrictions of general application on transfer by reason of a holder being
a "control person" of Weyerhaeuser for purposes of Canadian provincial
securities law or an "affiliate" of Weyerhaeuser for purposes of United
States federal or state securities law), Weyerhaeuser will in good faith
expeditiously take all such actions and do all such things as are necessary
or desirable to cause such Weyerhaeuser Common Shares to be and remain duly
registered, qualified or approved. Weyerhaeuser will in good faith
expeditiously take all such actions and do all such things as are
reasonably necessary or desirable to cause all Weyerhaeuser Common Shares
to be delivered pursuant to the Exchange Right or the Automatic Exchange
Rights to be listed, quoted or posted for trading on all stock exchanges
and quotation systems on which outstanding Weyerhaeuser Common Shares have
been listed by Weyerhaeuser and remain listed and are quoted or posted for
trading at such time.
5.11 Weyerhaeuser Common Shares
Weyerhaeuser hereby represents, warrants and covenants that the
Weyerhaeuser Common Shares issuable as described herein will be duly
authorized and validly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim or encumbrance.
5.12 Automatic Exchange on Liquidation of Weyerhaeuser
(a) Weyerhaeuser will give the Trustee notice of each of the
following events at the time set forth below:
(i) in the event of any determination by the Board of Directors
of Weyerhaeuser to institute voluntary liquidation,
dissolution or winding-up proceedings with respect to
Weyerhaeuser or to effect any other distribution of assets
of Weyerhaeuser among its shareholders for the purpose of
winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution,
winding-up or other distribution; and
(ii) as soon as practicable following the earlier of (A) receipt
by Weyerhaeuser of notice of, and (B) Weyerhaeuser
otherwise becoming aware of, any threatened or instituted
claim, suit, petition or other
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proceedings with respect to the involuntary liquidation,
dissolution or winding-up of Weyerhaeuser or to effect any
other distribution of assets of Weyerhaeuser among its
shareholders for the purpose of winding up its affairs, in
each case where Weyerhaeuser has failed to contest in good
faith any such proceeding commenced in respect of
Weyerhaeuser within 30 days of becoming aware thereof.
(b) As soon as practicable following receipt by the Trustee from
Weyerhaeuser of notice of any event (a "Liquidation Event")
contemplated by section 5.12 (a) (i) or 5.12 (a) (ii) above, the
Trustee will give notice thereof to the Beneficiaries. Such
notice shall include a brief description of the automatic
exchange of Exchangeable Shares for Weyerhaeuser Common Shares
provided for in section 5.12(c).
(c) In order that the Beneficiaries will be able to participate on a
pro rata basis with the holders of Weyerhaeuser Common Shares in
the distribution of assets of Weyerhaeuser in connection with a
Liquidation Event, on the fifth Business Day prior to the
effective date (the "Liquidation Event Effective Date") of a
Liquidation Event all of the then outstanding Exchangeable Shares
shall be automatically exchanged for Weyerhaeuser Common Shares.
To effect such automatic exchange, Weyerhaeuser shall purchase on
the fifth Business Day prior to the Liquidation Event Effective
Date each Exchangeable Share then outstanding and held by
Beneficiaries, and each Beneficiary shall sell the Exchangeable
Shares held by it at such time, for a purchase price per share
equal to (a) the Current Market Price of a Weyerhaeuser Common
Share on the fifth Business Day prior to the Liquidation Event
Effective Date, which shall be satisfied in full by Weyerhaeuser
issuing to the Beneficiary one Weyerhaeuser Common Share, and (b)
to the extent not paid by Weysub, an additional amount equivalent
to the full amount of all declared and unpaid dividends on each
such Exchangeable Share held by such holder on any dividend
record date which occurred prior to the date of the exchange.
(d) On the fifth Business Day prior to the Liquidation Event
Effective Date, the closing of the transaction of purchase and
sale contemplated by the automatic exchange of Exchangeable
Shares for Weyerhaeuser Common Shares shall be deemed to have
occurred, and each Beneficiary shall be deemed to have
transferred to Weyerhaeuser all of the Beneficiary's right, title
and interest in and to such Beneficiary's Exchangeable Shares and
the related interest in the Trust Estate and shall cease to be a
holder of such Exchangeable Shares and Weyerhaeuser shall issue
to the Beneficiary the Weyerhaeuser Common Shares issuable upon
the automatic exchange of Exchangeable Shares for Weyerhaeuser
Common Shares and on the applicable payment date shall deliver to
the Trustee for delivery to the Beneficiary a cheque for the
balance, if any, of the total purchase price for such
Exchangeable Shares without interest but less any
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amounts withheld pursuant to section 5.13. Concurrently with
such Beneficiary ceasing to be a holder of Exchangeable Shares,
the Beneficiary shall be considered and deemed for all purposes
to be the holder of the Weyerhaeuser Common Shares issued
pursuant to the automatic exchange of Exchangeable Shares for
Weyerhaeuser Common Shares and the certificates held by the
Beneficiary previously representing the Exchangeable Shares
exchanged by the Beneficiary with Weyerhaeuser pursuant to such
automatic exchange shall thereafter be deemed to represent
Weyerhaeuser Common Shares issued to the Beneficiary by
Weyerhaeuser pursuant to such automatic exchange. Upon the
request of a Beneficiary and the surrender by the Beneficiary of
Exchangeable Share certificates deemed to represent Weyerhaeuser
Common Shares, duly endorsed in blank and accompanied by such
instruments of transfer as Weyerhaeuser may reasonably require,
Weyerhaeuser shall deliver or cause to be delivered to the
Beneficiary certificates representing Weyerhaeuser Common Shares
of which the Beneficiary is the holder.
5.13 Withholding Rights
Weyerhaeuser, Weysub and the Trustee shall be entitled to deduct and
withhold from any consideration otherwise payable under this Agreement to
any holder of Exchangeable Shares or Weyerhaeuser Common Shares such
amounts as Weyerhaeuser, Weysub or the Trustee is required or permitted to
deduct and withhold with respect to such payment under the Income Tax Act
(Canada), the United States Internal Revenue Code of 1986 or any provision
of provincial, state, local or foreign tax law, in each case as amended or
succeeded. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes as having been paid to the holder
of the shares in respect of which such deduction and withholding was made,
provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a holder exceeds
the cash portion of the consideration otherwise payable to the holder,
Weyerhaeuser, Weysub and the Trustee are hereby authorized to sell or
otherwise dispose of such portion of the consideration as is necessary to
provide sufficient funds to Weyerhaeuser, Weysub or the Trustee, as the
case may be, to enable it to comply with such deduction or withholding
requirement and Weyerhaeuser, Weysub or the Trustee shall notify the holder
thereof and remit to such holder any unapplied balance of the net proceeds
of such sale. Weyerhaeuser represents and warrants that, based upon facts
currently known to it, it has no current intention, as at the date of this
Agreement, to deduct or withhold from any dividend paid to holders of
Exchangeable Shares any amounts under the United States Internal Revenue
Code of 1986.
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ARTICLE 6
RESTRICTIONS ON ISSUE OF WEYERHAEUSER SPECIAL VOTING STOCK
6.1 Issue of Additional Shares
During the term of this Agreement, Weyerhaeuser will not, without the
consent of the holders at the relevant time of Exchangeable Shares, given
in accordance with section 10.2 of the Share Provisions, issue any shares
of its Special Voting Stock in the same series as Weyerhaeuser Special
Voting Share.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 Powers and Duties of the Trustee
The rights, powers, duties and authorities of the Trustee under this
Agreement, in its capacity as Trustee of the Trust, shall include:
(a) receipt and deposit of the Weyerhaeuser Special Voting Share from
Weyerhaeuser as Trustee for and on behalf of the Beneficiaries
in accordance with the provisions of this Agreement;
(b) granting proxies and distributing materials to Beneficiaries as
provided in this Agreement;
(c) voting the Beneficiary Votes in accordance with the provisions of
this Agreement;
(d) receiving the grant of the Exchange Right and the Automatic
Exchange Rights from Weyerhaeuser as Trustee for and on behalf of
the Beneficiaries in accordance with the provisions of this
Agreement;
(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Rights, in each case in accordance with the
provisions of this Agreement, and in connection therewith
receiving from Beneficiaries Exchangeable Shares and other
requisite documents and distributing to such Beneficiaries
Weyerhaeuser Common Shares and cheques, if any, to which such
Beneficiaries are entitled upon the exercise of the Exchange
Right or pursuant to the Automatic Exchange Rights, as the case
may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this Agreement;
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(h) taking action on its own initiative or at the direction of a
Beneficiary or Beneficiaries to enforce the obligations of
Weyerhaeuser and Weysub under this Agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers, duties and authorities the
Trustee shall have (and is granted) such incidental and additional rights,
powers, duties and authority not in conflict with any of the provisions of
this Agreement as the Trustee, acting in good faith and in the reasonable
exercise of its discretion, may deem necessary, appropriate or desirable to
effect the purpose of the Trust. Any exercise of such discretionary
rights, powers, duties and authorities by the Trustee shall be final,
conclusive and binding upon all persons.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith and with a view to the best
interests of the Beneficiaries and shall exercise the care, diligence and
skill that a reasonably prudent trustee would exercise in comparable
circumstances.
7.2 No Conflict of Interest
The Trustee represents to Weyerhaeuser and Weysub that at the date of
execution and delivery of this Agreement there exists no material conflict
of interest in the role of the Trustee as a fiduciary hereunder and the
role of the Trustee in any other capacity. The Trustee shall, within 90
days after it becomes aware that such material conflict of interest exists,
either eliminate such material conflict of interest or resign in the manner
and with the effect specified in Article 10. If, notwithstanding the
foregoing provisions of this section 7.2, the Trustee has such a material
conflict of interest, the validity and enforceability of this Agreement
shall not be affected in any manner whatsoever by reason only of the
existence of such material conflict of interest. If the Trustee
contravenes the foregoing provisions of this section 7.2, any interested
party may apply to the Supreme Court of British Columbia for an order that
the Trustee be replaced as Trustee hereunder.
7.3 Dealings with Transfer Agents, Registrars, etc.
Weyerhaeuser and Weysub irrevocably authorize the Trustee, from time
to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Exchangeable Shares and
Weyerhaeuser Common Shares; and
(b) requisition, from time to time, (i) from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the
discharge of its duties and responsibilities under
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this Agreement and (ii) from the transfer agent of Weyerhaeuser
Common Shares, and any subsequent transfer agent of such shares,
the share certificates issuable upon the exercise from time to
time of the Exchange Right and pursuant to the Automatic Exchange
Rights.
Weyerhaeuser and Weysub irrevocably authorize their respective
registrars and transfer agents to comply with all such requests.
Weyerhaeuser covenants that it will supply its transfer agent with duly
executed share certificates for the purpose of completing the exercise from
time to time of the Exchange Right and the Automatic Exchange Rights.
7.4 Books and Records
The Trustee shall keep available for inspection by Weyerhaeuser and
Weysub at the Trustee's principal corporate trust office in Vancouver
correct and complete books and records of account relating to the Trust
created by this Agreement, including without limitation, all relevant data
relating to mailings and instructions to and from Beneficiaries and all
transactions pursuant to the Exchange Right and the Automatic Exchange
Rights. On or before , and on or before January 15th in every year
thereafter, so long as the Weyerhaeuser Special Voting Share is on deposit
with the Trustee, the Trustee shall transmit to Weyerhaeuser and Weysub a
brief report, dated as of the preceding December 31st, with respect to:
(a) the property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee
on behalf of Beneficiaries in consideration of the issuance by
Weyerhaeuser of Weyerhaeuser Common Shares in connection with the
Exchange Right, during the calendar year ended on such December
31st; and
(c) any action taken by the Trustee in the performance of its duties
under this Agreement which it had not previously reported and
which, in the Trustee's opinion, materially affects the Trust
Estate.
7.5 Income Tax Returns and Reports
The Trustee shall, to the extent necessary, prepare and file on behalf
of the Trust appropriate United States and Canadian income tax returns and
any other returns or reports as may be required by applicable law or
pursuant to the rules and regulations of any securities exchange or other
trading system through which the Exchangeable Shares are traded.
7.6 Indemnification Prior to Certain Actions by Trustee
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this Agreement at the request, order or
direction of any Beneficiary upon such Beneficiary furnishing to the
Trustee reasonable security or indemnity against the costs,
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expenses and liabilities which may be incurred by the Trustee therein or
thereby, provided that no Beneficiary shall be obligated to furnish to the
Trustee any such security or indemnity in connection with the exercise by
the Trustee of any of its rights, duties, powers and authorities with
respect to the Weyerhaeuser Special Voting Share pursuant to Article 4,
subject to section 7.15, and with respect to the Exchange Right pursuant to
Article 5, subject to section 7.15, and with respect to the Automatic
Exchange Rights pursuant to Article 5.
None of the provisions contained in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial
liability in the exercise of any of its rights, powers, duties, or
authorities unless funded, given security and indemnified as aforesaid.
7.7 Action of Beneficiaries
No Beneficiary shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this Agreement for
the purpose of enforcing any of its rights or for the execution of any
trust or power hereunder unless the Beneficiary has Trustee to take or
institute such action, suit or proceeding and furnished the Trustee with
the security or indemnity referred to in section 7.6 and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but
not otherwise, the Beneficiary shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken; it
being understood and intended that no one or more Beneficiaries shall have
any right in any manner whatsoever to affect, disturb or prejudice the
rights hereby created by any such action, or to enforce any right hereunder
or the Voting Rights, the Exchange Rights or the Automatic Exchange Rights
except subject to the conditions and in the manner herein provided, and
that all powers and trusts hereunder shall be exercised and all proceedings
at law shall be instituted, had and maintained by the Trustee, except only
as herein provided, and in any event for the equal benefit of all
Beneficiaries.
7.8 Reliance Upon Declarations
The Trustee shall not be considered to be in contravention of any its
rights, powers, duties and authorities hereunder if, when required, it acts
and relies in good faith upon statutory declarations, certificates,
opinions or reports furnished pursuant to the provisions hereof or required
by the Trustee to be furnished to it in the exercise of its rights, powers,
duties and authorities hereunder if such statutory declarations,
certificates, opinions or reports comply with the provisions of section
7.9, if applicable, and with any other applicable provisions of this
Agreement.
7.9 Evidence and Authority to Trustee
Weyerhaeuser and/or Weysub shall furnish to the Trustee evidence of
compliance with the conditions provided for in this Agreement relating to
any action or step required or permitted to be taken by Weyerhaeuser and/or
Weysub or the Trustee under this Agreement or as a result of any obligation
imposed under this Agreement, including, without limitation, in respect of
the Voting Rights or the Exchange Right or the Automatic Exchange Rights
and the taking of
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any other action to be taken by the Trustee at the request of or on the
application of Weyerhaeuser and/or Weysub promptly if and when:
(a) such evidence is required by any other section of this Agreement
to be furnished to the Trustee in accordance with the terms of
this section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives Weyerhaeuser and/or
Weysub written notice requiring it to furnish such evidence in
relation to any particular action or obligation specified in such
notice.
Such evidence shall consist of an Officer's Certificate of
Weyerhaeuser and/or Weysub or a statutory declaration or a certificate made
by persons entitled to sign an Officer's Certificate stating that any such
condition has been complied with in accordance with the terms of this
Agreement.
Whenever such evidence relates to a matter other than the Voting
Rights or the Exchange Right or the Automatic Exchange Rights or the taking
of any other action to be taken by the Trustee at the request or on the
application of Weyerhaeuser and/or Weysub, and except as otherwise
specifically provided herein, such evidence may consist of a report or
opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer,
engineer or other expert or any other person whose qualifications give
authority to a statement made by him, provided that if such report or
opinion is furnished by a director, officer or employee of Weyerhaeuser
and/or Weysub it shall be in the form of an Officer's Certificate or a
statutory declaration.
Each statutory declaration, Officer's Certificate, opinion or report
furnished to the Trustee as evidence of compliance with a condition
provided for in this Agreement shall include a statement by the person
giving the evidence:
(c) declaring that he has read and understands the provisions of this
Agreement relating to the condition in question;
(d) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration,
certificate, statement or opinion; and
(e) declaring that he has made such examination or investigation as
he believes is necessary to enable him to make the statements or
give the opinions contained or expressed therein.
7.10 Experts, Advisers and Agents
The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from any solicitor, attorney,
auditor, accountant, appraiser, valuer,
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engineer or other expert, whether retained by the Trustee or by
Weyerhaeuser and/or Weysub or otherwise, and may employ such
assistants as may be necessary to the proper discharge of its
powers and duties and determination of its rights hereunder and
may pay proper and reasonable compensation for all such legal and
other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services
performed for it (and shall be entitled to receive reasonable
remuneration for all services performed by it) in the discharge
of the trusts hereof and compensation for all disbursements,
costs and expenses made or incurred by it in the discharge of its
duties hereunder and in the management of the Trust.
7.11 Investment of Moneys Held by Trustee
Unless otherwise provided in this Agreement, any moneys held by or on
behalf of the Trustee which under the terms of this Agreement may or ought
to be invested or which may be on deposit with the Trustee or which may be
in the hands of the Trustee may be invested and reinvested in the name or
under the control of the Trustee in securities in which, under the laws of
the Province of Ontario, trustees are authorized to invest trust moneys,
provided that such securities are stated to mature within two years after
their purchase by the Trustee, and the Trustee shall so invest such moneys
on the written direction of Weysub. Pending the investment of any moneys
as hereinbefore provided, such moneys may be deposited in the name of the
Trustee in any chartered bank in Canada or, with the consent of Weysub, in
the deposit department of the Trustee or any other loan or trust company
authorized to accept deposits under the laws of Canada or any province
thereof at the rate of interest then current on similar deposits.
7.12 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts, rights, duties, powers and
authorities of this Agreement or otherwise in respect of the premises.
7.13 Trustee Not Bound to Act on Request
Except as in this Agreement otherwise specifically provided, the
Trustee shall not be bound to act in accordance with any direction or
request of Weyerhaeuser and/or Weysub or of the directors thereof until a
duly authenticated copy of the instrument or resolution containing such
direction or request shall have been delivered to the Trustee, and the
Trustee shall be empowered to act upon any such copy purporting to be
authenticated and believed by the Trustee to be genuine.
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7.14 Authority to Carry on Business
The Trustee represents to Weyerhaeuser and Weysub that at the date of
execution and delivery by it of this Agreement it is authorized to carry on
the business of a trust company in each of the Provinces of Canada but if,
notwithstanding the provisions of this section 7.14, it ceases to be so
authorized to carry on business, the validity and enforceability of this
Agreement and the Voting Rights, the Exchange Right and the Automatic
Exchange Rights shall not be affected in any manner whatsoever by reason
only of such event but the Trustee shall, within 90 days after ceasing to
be authorized to carry on the business of a trust company in any Province
of Canada, either become so authorized or resign in the manner and with the
effect specified in Article 10.
7.15 Conflicting Claims
If conflicting claims or demands are made or asserted with respect to
any interest of any Beneficiary in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Beneficiary in any
Exchangeable Shares, resulting in conflicting claims or demands being made
in connection with such interest, then the Trustee shall be entitled, at
its sole discretion, to refuse to recognize or to comply with any such
claims or demands. In so refusing, the Trustee may elect not to exercise
any Voting Rights, Exchange Rights or Automatic Exchange Rights subject to
such conflicting claims or demands and, in so doing, the Trustee shall not
be or become liable to any person on account of such election or its
failure or refusal to comply with any such conflicting claims or demands.
The Trustee shall be entitled to continue to refrain from acting and to
refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or Automatic Exchange Rights subject to
such conflicting claims or demands have been adjudicated by a
final judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right
or Automatic Exchange Rights subject to such conflicting claims
or demands have been conclusively settled by a valid written
agreement binding on all such adverse claimants, and the Trustee
shall have been furnished with an executed copy of such agreement
certified to be in full force and effect.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate to fully indemnify it as between all
conflicting claims or demands.
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7.16 Acceptance of Trust
The Trustee hereby accepts the Trust created and provided for by and
in this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and to hold all rights, privileges and benefits
conferred hereby and by law in trust for the various persons who shall from
time to time be Beneficiaries, subject to all the terms and conditions
herein set forth.
ARTICLE 8
COMPENSATION
8.1 Fees and Expenses of the Trustee
Weyerhaeuser and Weysub jointly and severally agree to pay the Trustee
reasonable compensation for all of the services rendered by it under this
Agreement and will reimburse the Trustee for all reasonable expenses
(including taxes other than taxes based on the net income of the Trustee)
and disbursements, including the cost and expense of any suit or litigation
of any character and any proceedings before any governmental agency
reasonably incurred by the Trustee in connection with its duties under this
Agreement; provided that Weyerhaeuser and Weysub shall have no obligation
to reimburse the Trustee for any expenses or disbursements paid, incurred
or suffered by the Trustee in any suit or litigation in which the Trustee
is determined to have acted in bad faith or with negligence, recklessness
or wilful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 Indemnification of the Trustee
Weyerhaeuser and Weysub jointly and severally agree to indemnify and
hold harmless the Trustee and each of its directors. officers and agents
appointed and acting in accordance with this Agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, reasonable
costs, penalties, fines and reasonable expenses (including reasonable
expenses of the Trustee's legal counsel) which, without fraud, negligence,
recklessness, wilful misconduct or bad faith on the part of such
Indemnified Party, may be paid, incurred or suffered by the Indemnified
Party by reason or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth in
this Agreement, or any written or oral instruction delivered to the Trustee
by Weyerhaeuser or Weysub pursuant hereto.
In no case shall Weyerhaeuser or Weysub be liable under this indemnity
for any claim against any of the Indemnified Parties unless Weyerhaeuser
and Weysub shall be notified by the Trustee of the written assertion of a
claim or of any action commenced against the Indemnified Parties, promptly
after any of the Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a summons or other
first legal process giving information as to the nature and basis of the
claim. Subject to (ii) below, Weyerhaeuser
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and Weysub shall be entitled to participate at their own expense in the
defence and, if Weyerhaeuser and Weysub so elect at any time after receipt
of such notice, either of them may assume the defence of any suit brought
to enforce any such claim. The Trustee shall have the right to employ
separate counsel in any such suit and participate in the defence thereof,
but the fees and expenses of such counsel shall be at the expense of the
Trustee unless: (i) the employment of such counsel has been authorized by
Weyerhaeuser or Weysub; or (ii) the named parties to any such suit include
both the Trustee and Weyerhaeuser or Weysub and the Trustee shall have been
advised by counsel acceptable to Weyerhaeuser or Weysub that there may be
one or more legal defences available to the Trustee that are different from
or in addition to those available to Weyerhaeuser or Weysub and that, in
the judgment of such counsel, would present a conflict of interest were a
joint representation to be undertaken (in which case Weyerhaeuser and
Weysub shall not have the right to assume the defence of such suit on
behalf of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee).
9.2 Limitation of Liability
The Trustee shall not be held liable for any loss which may occur by
reason of depreciation of the value of any part of the Trust Estate or any
loss incurred on any investment of funds pursuant to this Agreement, except
to the extent that such loss is attributable to the fraud, negligence,
recklessness, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 Resignation
The Trustee, or any trustee hereafter appointed, may at any time
resign by giving written notice of such resignation to Weyerhaeuser and
Weysub specifying the date on which it desires to resign, provided that
such notice shall not be given less than one month before such desired
resignation date unless Weyerhaeuser and Weysub otherwise agree and
provided further that such resignation shall not take effect until the date
of the appointment of a successor trustee and the acceptance of such
appointment by the successor trustee. Upon receiving such notice of
resignation, Weyerhaeuser and Weysub shall promptly appoint a successor
trustee, which shall be a corporation organized and existing under the laws
of Canada and authorized to carry on the business of a trust company in all
provinces of Canada, by written instrument in duplicate, one copy of which
shall be delivered to the resigning trustee and one copy to the successor
trustee.
10.2 Removal
The Trustee, or any trustee hereafter appointed, may (provided a
successor trustee is appointed) be removed at any time on not less than 30
days' prior notice by written instrument executed by Weyerhaeuser and
Weysub, in duplicate, one copy of which shall be delivered to the trustee
so removed and one copy to the successor trustee.
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10.3 Successor Trustee
Any successor trustee appointed as provided under this Agreement shall
execute, acknowledge and deliver to Weyerhaeuser and Weysub and to its
predecessor trustee an instrument accepting such appointment. Thereupon
the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with the like effect
as if originally named as trustee in this Agreement. However, on the
written request of Weyerhaeuser and Weysub or of the successor trustee, the
trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of this Agreement, execute and deliver an
instrument transferring to such successor trustee all the rights and powers
of the trustee so ceasing to act. Upon the request of any such successor
trustee, Weyerhaeuser, Weysub and such predecessor trustee shall execute
any and all instruments in writing for more fully and certainly vesting in
and confirming to such successor trustee all such rights and powers.
10.4 Notice of Successor Trustee
Upon acceptance of appointment by a successor trustee as provided
herein, Weyerhaeuser and Weysub shall cause to be mailed notice of the
succession of such trustee hereunder to each Beneficiary specified in a
List. If Weyerhaeuser or Weysub shall fail to cause such notice to be
mailed within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of Weyerhaeuser and Weysub.
ARTICLE 11
WEYERHAEUSER SUCCESSORS
11.1 Certain Requirements in Respect of Combination, etc.
Weyerhaeuser shall not consummate any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale,
lease or otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other person or, in
the case of a merger, of the continuing corporation resulting therefrom
unless, but may do so if:
(a) such other person or continuing corporation (herein called the
"Weyerhaeuser Successor"), by operation of law, becomes, without
more, bound by the terms and provisions of this Agreement or, if
not so bound, executes, prior to or contemporaneously with the
consummation of such transaction, a trust agreement supplemental
hereto and such other instruments (if any) as are satisfactory to
the Trustee, acting reasonably, and in the opinion of legal
counsel to the Trustee are reasonably necessary or advisable to
evidence the assumption by the Weyerhaeuser Successor of
liability for all moneys payable and property deliverable
hereunder and the covenant of such Weyerhaeuser Successor to pay
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and deliver or cause to be delivered the same and its agreement
to observe and perform all the covenants and obligations of
Weyerhaeuser under this Agreement; and
(b) such transaction shall, to the satisfaction of the Trustee,
acting reasonably, and in the opinion of legal counsel to the
Trustee, be upon such terms and conditions as substantially to
preserve and not to impair in any material respect any of the
rights, duties, powers and authorities of the Trustee or of the
Beneficiaries hereunder.
11.2 Vesting of Powers in Successor
Whenever the conditions of section 11.1 have been duly observed and
performed, the Trustee, Weyerhaeuser Successor and Weysub shall, if
required by section 11.1, execute and deliver the supplemental trust
agreement provided for in Article 12 and thereupon Weyerhaeuser Successor
shall possess and from time to time may exercise each and every right and
power of Weyerhaeuser under this Agreement in the name of Weyerhaeuser or
otherwise and any act or proceeding by any provision of this Agreement
required to be done or performed by the Board of Directors of Weyerhaeuser
or any officers of Weyerhaeuser may be done and performed with like force
and effect by the directors or officers of such Weyerhaeuser Successor.
11.3 Wholly-Owned Subsidiaries
Subject to section 4.12 of the Merger Agreement, nothing herein shall
be construed as preventing the amalgamation or merger of any wholly-owned
direct or indirect subsidiary of Weyerhaeuser with or into Weyerhaeuser or
the winding-up, liquidation or dissolution of any wholly-owned subsidiary
of Weyerhaeuser provided that all of the assets of such subsidiary are
transferred to Weyerhaeuser or another wholly-owned direct or indirect
subsidiary of Weyerhaeuser and any such transactions are expressly
permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 Amendments, Modifications, etc.
This trust agreement may not be amended or modified except by an
agreement in writing executed by Weyerhaeuser, Weysub and the Trustee and
approved by the Beneficiaries in accordance with section 10.2 of the Share
Provisions.
12.2 Ministerial Amendments
Notwithstanding the provisions of section 12.1, the parties to this
Agreement may in writing, at any time and from time to time, without the
approval of the Beneficiaries, amend or modify this Agreement for the
purposes of:
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(a) adding to the covenants of any or all parties hereto for the
protection of the Beneficiaries hereunder provided that the Board
of Directors of each of Weysub and Weyerhaeuser shall be of the
good faith opinion that such additions will not be prejudicial to
the rights or interests of the Beneficiaries;
(b) making such amendments or modifications not inconsistent with
this Agreement as may be necessary or desirable with respect to
matters or questions which, in the good faith opinion of the
Board of Directors of each of Weyerhaeuser and Weysub and in the
opinion of the Trustee, having in mind the best interests of the
Beneficiaries it may be expedient to make, provided that such
Boards of Directors and the Trustee shall be of the opinion that
such amendments and modifications will not be prejudicial to the
interests of the Beneficiaries; or
(c) making such changes or corrections which, on the advice of
counsel to Weyerhaeuser, Weysub and the Trustee, are required for
the purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error, provided that the Trustee and the Board of
Directors of each of Weyerhaeuser and Weysub shall be of the
opinion that such changes or corrections will not be prejudicial
to the rights and interests of the Beneficiaries.
12.3 Meeting to Consider Amendments
Weysub, at the request of Weyerhaeuser, shall call a meeting or
meetings of the Beneficiaries for the purpose of considering any proposed
amendment or modification requiring approval pursuant hereto. Any such
meeting or meetings shall be called and held in accordance with the by-laws
of Weysub, the Share Provisions and all applicable laws.
12.4 Changes in Capital of Weyerhaeuser and Weysub
At all times after the occurrence of any event contemplated pursuant
to section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of
which either Weyerhaeuser Common Shares or the Exchangeable Shares or both
are in any way changed, this Agreement shall forthwith be amended and
modified as necessary in order that it shall apply with full force and
effect, mutatis mutandis, to all new securities into which Weyerhaeuser
Common Shares or the Exchangeable Shares or both are so changed and the
parties hereto shall execute and deliver a supplemental trust agreement
giving effect to and evidencing such necessary amendments and
modifications.
12.5 Execution of Supplemental Trust Agreements
No amendment to or modification or waiver of any of the provisions of
this Agreement otherwise permitted hereunder shall be effective unless made
in writing and signed by all of the parties hereto. From time to time
Weysub (when authorized by a resolution of its Board of Directors),
Weyerhaeuser (when authorized by a resolution of its Board of Directors)
and the Trustee may, subject to the provisions of these presents, and they
shall, when so directed
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by these presents, execute and deliver by their proper officers, trust
agreements or other instruments supplemental hereto, which thereafter shall
form part hereof, for any one or more of the following purposes:
(a) evidencing the succession of Weyerhaeuser Successors and the
covenants of and obligations assumed by each such Weyerhaeuser
Successor in accordance with the provisions of Article 11 and the
successors of any successor trustee in accordance with the
provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Exchange
Right or the Automatic Exchange Rights which, in the opinion of
the Trustee, will not be prejudicial to the interests of the
Beneficiaries or are, in the opinion of counsel to the Trustee,
necessary or advisable in order to incorporate, reflect or comply
with any legislation the provisions of which apply to
Weyerhaeuser, Weysub, the Trustee or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of
this Agreement, including without limitation, to make or evidence
any amendment or modification to this Agreement as contemplated
hereby, provided that, in the opinion of the Trustee, the rights
of the Trustee and Beneficiaries will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 Term
The Trust created by this Agreement shall continue until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Beneficiary;
(b) each of Weyerhaeuser and Weysub elects in writing to terminate
the Trust and such termination is approved by the Beneficiaries
in accordance with section 10.2 of the Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants
of His Majesty King George VI of Canada and the United Kingdom of
Great Britain and Northern Ireland living on the date of the
creation of the Trust.
13.2 Survival of Agreement
This Agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by a
Beneficiary; provided, however, that the provisions of Articles 8 and 9
shall survive any such termination of this Agreement.
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<PAGE>
ARTICLE 14
GENERAL
14.1 Severability
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of
this Agreement shall not in any way be affected or impaired thereby and the
agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
14.2 Enurement
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns and to
the benefit of the Beneficiaries.
14.3 Notices to Parties
All notices and other communications between the parties hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in
like notice):
(a) if to Weyerhaeuser or Weysub, at:
Weyerhaeuser Company
33663 Weyerhaeuser Way South
Federal Way, WA 98003
Attention: Mr. Robert A. Dowdy, Vice President and General Counsel
Telecopier No.: (253) 924-3253
(b) if to the Trustee, at:
Attention:
Telecopier No.:
Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by telecopy
shall be deemed to have been given and received on the date of receipt
thereof unless such day is not a Business Day in which case it shall be
deemed to have been given and received upon the immediately following
Business Day.
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<PAGE>
14.4 Notice to Beneficiaries
Any and all notices to be given and any documents to be sent to any
Beneficiaries may be given or sent to the address of such Beneficiary shown
on the register of holders of Exchangeable Shares in any manner permitted
by the by-laws of Weysub from time to time in force in respect of notices
to shareholders and shall be deemed to be received (if given or sent in
such manner) at the time specified in such by-laws, the provisions of which
by-laws shall apply mutatis mutandis to notices or documents as aforesaid
sent to such Beneficiaries.
14.5 Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one
and the same instrument.
14.6 Jurisdiction
This Agreement shall be construed and enforced in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein.
14.7 Attornment
Each of the Trustee, Weyerhaeuser and Weysub agrees that any action or
proceeding arising out of or relating to this Agreement may be instituted
in the courts of British Columbia, waives any objection which it may have
now or hereafter to the venue of any such action or proceeding, irrevocably
submits to the jurisdiction of the said courts in any such action or
proceeding, agrees to be bound by any judgment of the said courts and not
to seek, and hereby waives, any review of the merits of any such judgment
by the courts of any other jurisdiction and Weyerhaeuser hereby appoints
Weysub at its registered office in the Province of British Columbia as
attorney for service of process.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
WEYERHAEUSER COMPANY
By:
---------------------------
Name:
Title:
586476 B.C. LTD.
By:
---------------------------
Name:
Title:
[TRUST COMPANY]
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
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