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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 15, 1996
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WILLAMETTE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Oregon
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-3730
(COMMISSION FILE NO.)
93-0312940
(IRS EMPLOYER IDENTIFICATION NO.)
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(503) 227-5581
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 12, 1996, the registrant entered into an agreement (the
"Cavenham Agreement") with Cavenham Energy Resources Inc., Cavenham Forest
Industries Inc. and Hanson Natural Resources Company (collectively "Cavenham")
providing for the sale by Cavenham and the purchase by the registrant of
approximately 1,088,000 acres of timberland and related assets used in
Cavenham's timber, wood products, and energy business in the Pacific Northwest
and in North and Southwest Louisiana for $1,588,000,000. Pursuant to the
Cavenham Agreement, the registrant deposited $50,000,000 in escrow to be
applied to the payment of the purchase price when the transaction was
consummated.
In April 1996, the registrant entered into separate agreements (the
"Designee Agreements") with Crown Pacific Limited Partnership ("Crown"), John
Hancock Mutual Life Insurance Company ("Hancock") and Temple-Inland Forest
Products Corporation ("Temple") providing for the purchase by them (each a
"Designee") of an aggregate of approximately 542,000 acres of the timberland
and related assets covered by the Cavenham Agreement for an aggregate price of
$641,000,000.
The Designee Agreements with Crown and Temple provided that the
transactions contemplated by such agreements would be consummated concurrently
with the consummation of the Cavenham Agreement. The Designee Agreement with
Hancock provided for the division of the timberland covered by the agreement
into parcels with the purchase and sale of at least one parcel to be
consummated concurrently with the consummation of the Cavenham Agreement and
the purchase and sale of the remaining parcels (the "Contract Parcels") to be
consummated by November 14, 1997. Hancock's obligation to purchase the
Contract Parcels is subject to its ability to secure client funding for the
purchases, which it has agreed to make diligent and sustained efforts to
obtain, and to certain other conditions.
On May 15, 1996, the transactions contemplated by the Cavenham
Agreement and the Designee Agreements were simultaneously consummated,
resulting in the purchase by the registrant from Hanson Natural Resources
Company of approximately 602,000 acres of timberland in the Pacific Northwest
and North Louisiana, a sawmill in Warrenton, Oregon, inventories and other
assets for approximately $1,144,860,000. The timberland acquired by the
registrant includes Contract Parcels aggregating approximately 56,000 acres in
Oregon which are to be conveyed to Hancock for approximately $197,860,000 plus
certain expenses incurred by the registrant. Accordingly, after giving effect
to the sale of the Contract Parcels, the registrant will have acquired 546,000
acres of timberland and related assets for approximately $947,000,000.
Pursuant to the Cavenham Agreement, the registrant assumed
Cavenham's environmental and other liabilities relating to the assets covered
by the Cavenham Agreement other than accounts payable, obligations for
borrowed money and specified excluded liabilities. Pursuant to the Designee
Agreements, each Designee assumed and indemnified the registrant against such
liabilities relating to the assets purchased by such Designee.
The registrant intends to continue to use the assets it acquired
from Cavenham for the purposes for which such assets were used by Cavenham.
The registrant funded the $50,000,000 deposit from its cash
resources and from the proceeds of a loan of $25,000,000 on March 13, 1996,
from First Interstate Bank of Oregon, N.A. The registrant funded the balance
of the purchase price from the proceeds of a loan of $1,100,000,000 on May 15,
1996, under a credit agreement (the "Credit Agreement") dated as of May 10,
1996, among the registrant; and Bank of America National Trust and Savings
Association; Abn Amro Bank N.V.; Morgan Guaranty Trust Company of New York;
Nationsbank, N.A.; Wachovia Bank of Georgia, N.A.; Deutsche Bank AG; First
Interstate Bank of Oregon, N.A.; Mellon Bank, N.A.; PNC Bank, National
Association; Royal Bank of Canada; Toronto Dominion (Texas), Inc.; The Bank of
New York; The Bank of Nova Scotia; Banque Paribas; Credit Lyonnais; The
Industrial Bank of Japan, Limited; The Northern Trust Company; Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland"; The Sanwa Bank,
Limited; Societe Generale; and United States National Bank of Oregon
(collectively, "Banks").
The Credit Agreement sets forth the terms of a revolving loan and a
term loan provided to the registrant by Banks. The revolving loan provides
for borrowings of up to $1,000,000,000 in principal amount, matures on May 15,
2001, and at May 28, 1996, had an outstanding principal balance of
$500,000,000. The term loan is in the principal amount of $600,000,000 and
matures on May 15, 1998. Both loans bear interest at either a Base Rate or a
LIBO Rate, as defined in the Credit Agreement and selected by the registrant.
The interest rates are subject to periodic adjustment. At May 28, 1996, the
weighted average interest rates per annum for indebtedness outstanding under
the revolving loan and the term loan were 5.75% and 5.72%, respectively. The
Credit Agreement contains certain restrictions on the registrant's activities
which include, among other things, restrictions relating to sales and lease
backs, mergers, sales of assets not in the ordinary course of business, and
encumbrances on the registrant's property. The Credit Agreement also provides
that the registrant will not permit (i) its Consolidated Interest Coverage
Ratio, as defined, for any period of four consecutive fiscal quarters to be
less than 1.5 to 1.0; (ii) its Consolidated Funded Debt, as defined, to exceed
60% of its Consolidated Funded Debt plus its consolidated net worth until the
earlier of (A) March 31, 1997, and (B) the repayment of the term loan; and
(iii) its Consolidated Funded Debt to thereafter exceed 55% of its
Consolidated Funded Debt plus its consolidated net worth. Reference should be
made to the copy of the Credit Agreement filed as an exhibit to this report
for a complete description of its terms.
The purchase prices under the Cavenham Agreement and the Designee
Agreements were determined by arm's length negotiations between the parties
based on the market value of the assets purchased and sold. Such prices are
subject to post-closing adjustments to reflect the effect of certain of
Cavenham's operations during a period preceding May 15, 1996.
Pursuant to the Designee Agreement with Hancock, on May 15, 1996,
the registrant and Hancock entered into:
1. An agreement (the "Management Agreement") providing for the
management of the Contract Parcels by a Hancock subsidiary until such parcels
are purchased by Hancock or Hancock's right to purchase such parcels expires.
During the period a Contract Parcel is subject to the Management Agreement,
the net cash income, as defined, from such parcel is credited against the
purchase price for the parcel. The Hancock subsidiary and a subsidiary of the
registrant are also parties to the Management Agreement.
2. An agreement (the "Right of First Offer Agreement") providing
that Hancock will not sell or transfer to a third party any tract of the
timberland it acquires pursuant to its Designee Agreement, other than certain
exempt sales and transfers, without first offering to sell such tract to the
registrant at the price and on terms at which Hancock proposes to sell or
transfer such tract to the third party. If the registrant does not accept an
offer and the tract is thereafter sold to the third party as permitted by the
Right of First Offer Agreement, the registrant's rights under the Right of
First Offer Agreement terminate with respect to such tract. The Right of
First Offer Agreement expires on May 15, 2121.
3. An agreement (the "Timber Supply Agreement") providing that
Hancock will offer to sell to the registrant 25 percent of various categories
of the logs harvested from the timberland subject to the Right of First Offer
Agreement at a price equal to the highest sales price at which Hancock is
selling logs pursuant to its open market bidding procedures to unaffiliated
customers. The Timber Supply Agreement expires on June 30, 2001.
The above descriptions of the Cavenham Agreement, the Designee
Agreements, the Management Agreement, the Right of First Offer Agreement, and
the Timber Supply Agreement are summaries and do not purport to be complete.
Reference should be made to the copies of such agreements filed as exhibits to
this report for a complete description of their respective terms.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
None (pursuant to a waiver by the staff dated March 28,
1996).
(b) Pro Forma Financial Information.
It is impractical at this time to provide the required
pro forma financial information with respect to the
acquisition described in Item 2. The registrant
expects to file such pro forma financial information as
an amendment to this report on June 10, 1996.
(c) Exhibits.
The exhibits to this report are listed in the
accompanying index to exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Willamette Industries, Inc.
(Registrant)
By /s/J. A. Parsons
J. A. Parsons
Executive Vice President and
Chief Financial Officer
Dated: May 29, 1996
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
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2.1 Asset sale, purchase and transfer
agreement dated March 12, 1996,
between Hanson Natural Resources
Company, Cavenham Energy Resources
Inc., Cavenham Forest Industries Inc.
and the registrant.*
2.2 Asset sale, purchase and transfer
agreement dated April 11, 1996,
between the registrant and Crown
Pacific Limited Partnership.*
2.3 Asset sale, purchase and transfer
agreement dated April 23, 1996,
between the registrant and Temple-
Inland Forest Products Corporation.*
2.4 Asset sale, purchase and transfer
agreement dated April 26, 1996,
between the registrant and John
Hancock Mutual Life Insurance
Company, together with Addendum No. 1
thereto dated May 13, 1996.*
2.5 Management agreement dated May 15,
1996, among the registrant, John
Hancock Mutual Life Insurance
Company, Willamette Columbia Timber
Co. and Hancock Natural Resource
Group, Inc.*
2.6 Right of first offer agreement dated
May 15, 1996, between the registrant
and John Hancock Mutual Life
Insurance Company.*
2.7 Timber supply agreement dated May 15,
1996, between the registrant and John
Hancock Mutual Life Insurance
Company.*
4 Credit agreement dated as of May 10,
1996, among the registrant, Bank of
America National Trust and Savings
Association, Abn Amro Bank N.V.,
Morgan Guaranty Trust Company of New
York, Nationsbank, N.A., Wachovia
Bank of Georgia, N.A., and other
financial institutions parties
thereto.
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*The schedules (or similar attachments) to this exhibit have been omitted.
Such schedules are listed at the end of the exhibit and copies thereof will be
furnished supplementally to the Commission upon request.
<PAGE>
Exhibit 2.1
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
This Asset Sale, Purchase and Transfer Agreement (this "Agreement") is made as
of this 12th day of March, 1996, between Hanson Natural Resources Company, a
Delaware general partnership ("Hanson"), and Cavenham Energy Resources Inc., a
Delaware corporation ("CERI"), and Cavenham Forest Industries Inc., a Delaware
corporation ("CFII") (Hanson, CERI and CFII are collectively called "Seller"),
and Willamette Industries, Inc., an Oregon corporation ("Buyer").
RECITALS:
A. Hanson, through its Cavenham Forest Industries Division and Cavenham
Energy Resources Division, currently owns or leases certain assets which are
used in the conduct of Hanson's timber, wood products and energy business
located in Oregon, and Washington (the "Northwest Business") and Southwest
Louisiana and North Louisiana (the "Remaining Louisiana Businesses").
B. Prior to the Closing Date, Hanson may: (i) transfer to CFII all of its
assets (except its mineral assets) in the Northwest Business and the Remaining
Louisiana Businesses, and (ii) transfer to CERI all of its mineral assets in
the Northwest Business and the Remaining Louisiana Businesses, and (iii)
transfer to CFII and CERI, respectively, all rights, liabilities and
obligations of Hanson with respect to the assets transferred to them; and CFII
and CERI will assume all rights, liabilities and obligations of Hanson with
respect to the assets transferred to them. Notwithstanding the foregoing
transfers, Hanson shall be bound by the covenants made by and obligations
imposed on Seller in this Agreement and shall be entitled to exercise the
rights granted to Seller in this Agreement. Notwithstanding the foregoing
transfers, Hanson, CERI, and CFII shall each execute all of the documents
listed in Section 3.4 (a) and (b) at the Closing.
C. Seller and Buyer desire to enter into this Agreement pursuant to which
Seller agrees to sell and transfer and Buyer agrees to buy and accept from
Seller substantially all of the assets of the Northwest Business and Remaining
Louisiana Businesses, and Buyer agrees to assume certain of the liabilities
and obligations of the Northwest Business and Remaining Louisiana Businesses.
It is therefore agreed as follows:
Definitions. As used herein, the following terms shall have the following
meanings:
A. Assets. The term "Assets" shall mean all of the rights, properties, and
assets used in the conduct of the Northwest Business and Remaining Louisiana
Businesses (including, without limitation, the real and personal property,
Mineral Rights, Mill Facilities, Chipper Facility, Contracts, and other items
and leases described in Sections 1.1, 1.2, 1.3, and 1.4), but excluding the
Excluded Assets.
B. Contracts. The term "Contracts" shall mean the contracts and leases
(except for the long term leases described in Section 1.3) which are described
in Sections 1.1 and 1.2 and 1.4.
C. Closing. The term "Closing" or "Closing Date" shall have the meaning
ascribed to it in Section 3.1.
D. Closing Date Payment. The term "Closing Date Payment" shall have the
meaning ascribed to it in Section 2.1(b).
E. Deposit. The term "Deposit" shall mean the initial sum paid by Buyer
pursuant to Section 2.1(a).
F. Excluded Assets. The term "Excluded Assets" shall mean the assets
excluded in Section 1.5.
G. Material Adverse Effect. The term "Material Adverse Effect" shall mean
events which have an adverse effect in the aggregate which, measured in
dollars, exceeds the sum of $15,000,000.
H. Material Contract. The term "Material Contract" shall have the meaning
ascribed to it in Section 6.3.
I. Proration Date. The term "Proration Date" shall mean the specific date
set for Closing in Section 3.1, or any subsequent date set for Closing,
provided that the actual date of Closing occurs within five (5) business days
after said date set for Closing.
J. Timberland Properties. The term "Timberland Properties" shall mean the
real property and real property interests described in Section 1.1(a).
K. Louisiana Transitional/Transactional Definitions. To the extent this
Agreement is describing Assets located in Louisiana, or rights therein, or to
the extent the internal laws of Louisiana govern this Agreement: the terms
"real property", "real estate" and words of similar import shall include
immovable property; the term "personal property" and words of similar import
shall include movable property; and the term "easements" and word of similar
import shall include servitudes.
L. Affiliate of Seller. The term "Affiliate of Seller" shall mean (i) any
individual, partnership, corporation, or other entity or person which is owned
or controlled directly or indirectly by Hanson plc; (ii) any other individual,
partnership, corporation, or other entity or person which controls or is
controlled by or under common control with Seller; and (iii) any officer,
director, partner, or owner of 10 percent or greater equity or voting interest
in any such other corporation, partnership, or other entity or person.
M. Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
N. Designee. The term "Designee" shall mean a person designated by Buyer to
whom particular Assets are to be transferred by Seller at Closing. Buyer
shall specify each Designee and Assets to be transferred to such Designee to
Seller at least fifteen (15) business days in advance of Closing for purposes
of the conveyance instruments described in Section 3.4, and shall specify each
potential Designee and Assets to be transferred to such Designee to Seller
within three (3) weeks of mutual execution of this Agreement for purposes of
requesting consents for assignments of Contract, permits, licenses, and Long
Term Leases. Buyer may designate one or more of its subsidiaries and up to
three additional persons or entities as Designees.
O. Agreement. The term "Agreement" shall mean this instrument and all
Schedules and Exhibits attached hereto.
1. Sale, Purchase and Transfer of Assets.
Subject to the terms and conditions of this Agreement, at the Closing
referred to herein, Seller agrees to sell, transfer and assign and Buyer
agrees to purchase and accept on the terms stated herein, all of Seller's
right, title and interest in and to the Assets, including, without limitation,
the following:
<PAGE>
1.1 Real Property (Timberland Properties).
(a). Timberland. Those certain parcels of real property, owned by
Seller situated in the states of Oregon and Washington and in Southwest
Louisiana and North Louisiana and described on Schedule 1.1 (a), together with
all timber of all species, standing, dead or down, pulpwood, all felled and
bucked logs, trees, shrubs and reproduction thereon as of the Closing Date,
the ("Timberland" or "Timberland Properties"), excepting therefrom changes
therein prior to Closing pursuant to Section 5 as a result of conduct of the
Northwest Business and Remaining Louisiana Businesses, and subject to the
provisions of Section 1.10 with respect to the Wauna Acreage described in
Section 1.10.
(b). INTENTIONALLY LEFT BLANK
(c). Buildings, Improvements and Easements. All buildings and
improvements, all roads, bridges, permits, servitudes, and easements, owned or
leased by Seller or which Seller has a right to use and on or appurtenant to
the Timberland Properties, including those described on Schedule 1.1(c).
(d). Related Facilities. All sorting yards, log booms, offices,
and rock pits, owned or leased by Seller and associated with the Timberland
Properties, whether or not located on the Timberland Properties, including
those described on Schedule 1.1 (d), and including the Chipper Facility, as
defined in, and subject to the provisions of, Section 1.9.
(e). Other Rights. All other contracts and rights specifically
relating to the Timberland Properties and operations thereon including, but
not limited to, contracts, contract rights, leases, servitudes, permits,
licenses, notifications, approvals and authorizations of governmental bodies,
including those described on Schedule 1.1 (e), to the extent assignable.
(f). Water Rights. All water rights owned by Seller relating to
and appurtenant to the Timberland Properties.
(g). Mineral Rights. All minerals, including without express or
implied limitation, oil, gas, and hydrocarbon and geothermal resources in
which Seller has an interest whether or not related to such Timberland
Properties in the states of Oregon and Washington and in North Louisiana and
Southwest Louisiana, including those Mineral Rights listed on Schedule 1.1 (g)
(the "Mineral Rights").
1.2 Mill Facilities. The sawmill properties, shops, and offices,
including all of the real property and related facilities, owned or leased by
Seller, including those identified or listed on Schedule 1.2, and all rights,
permits, licenses and contracts relating thereto to the extent assignable,
together with all inventory of logs and other raw materials, work-in-process,
finished goods, parts, scrap, wrapping, operation supplies and packaging items
and finished goods used or to be used exclusively or primarily in the
Northwest Business or Remaining Louisiana Businesses (including any in-transit
goods, except for such goods as have been purchased by customers of Seller and
are being held, stored or retained for such customers) (the "Mill
Facilities").
1.3 Long Term Leases. Seller is the lessee under those long term timber
leases (the "Long Term Leases") which grant to Seller the right to grow and
harvest timber on the lands described in said leases in Southwest Louisiana,
subject to the terms and conditions of said leases. All of said leases are
described on the attached Schedule 1.3. At Closing, Seller will assign to
Buyer all of its rights under said leases, and Buyer will assume Seller's
obligations under the leases, and will fully perform Seller's obligations
thereunder. The attached Schedule 1.3 also indicates those leases which may
be assigned by Seller without the consent of the lessor and those that require
the consent of the lessor. Should any one or more of the lessors identified
on the attached Schedule 1.3 be unwilling to consent to the assignment of that
lease, the inability of Seller to assign that lease shall not be considered a
breach of this Agreement. The Purchase Price shall be adjusted, after
Closing, to reflect any reduction in the value of the Assets resulting from
Seller's inability to assign said lease because such consent is not obtained
or for any other reason, and Subsection 2.1(d), including the provisions
relating to the amount of the Deposit payable at Closing, shall apply. Should
Seller and Buyer be unable to agree upon the amount of said reduction within
10 days following the Closing Date, the issue shall then be resolved by
arbitration pursuant to Section 9.2 of this Agreement; provided, that
notwithstanding Section 9.2 and Section 12.3, for purposes of this Section 1.3
the arbitration shall be conducted in Bogalusa, Louisiana, in accordance with
the rules of the American Arbitration Association and the provisions of
Louisiana law relating to arbitration, as said rules and laws are in effect on
the date of this Agreement; the appointment of the arbitrator shall ultimately
be made by the 22nd Judicial District Court in and for the Parish of
Washington, Louisiana; proceedings to enter a judgment with respect to any
award rendered hereunder shall be undertaken in accordance with the law of the
State of Louisiana, including the conflicts of laws provisions thereof; and
Louisiana law shall govern.
1.4 Personal Property.
All of the personal property of the Northwest Business and Remaining
Louisiana Businesses, except personal property which is an Excluded Asset as
described in Section 1.5, shall be transferred, sold and assigned to Buyer,
including, without limitation, the following:
(a). Records. Seller's land management and other records relating
to the Timberland Properties, Mill Facilities, Chipper Facility, Mineral
Rights, Long Term Leases and other Assets which, in the reasonable judgment
and discretion of Seller, are segregated or segregable by Seller from the
overall records of Seller, including but not limited to management unit maps,
aerial photographs, timber cruises, Seller's GIS and forest inventory systems
for the Northwest Business and related hardware and software, road and gate
records, operational records and leases, easements, deeds, licenses, survey
and survey notes, information relating to oil, gas, and mineral activities,
permits, approvals and authorizations of governmental agencies held by Seller
in connection with the Timberland Properties, Mill Facilities, Chipper
Facility, Mineral Rights, Long Term Leases and other Assets. The records
shall also include all files and documents relating to customers, suppliers
and contractors directly related to the Timberland Properties, Mill
Facilities, Chipper Facility, Mineral Rights, Long Term Leases and other
Assets which, in the reasonable judgment and discretion of Seller, are
segregated or segregable from all other business records, files, books and
documents of Seller.
(b). Mobile Equipment, Machinery and Equipment. The mobile
equipment, machinery, equipment, tools, fixtures and furniture used by Seller
exclusively or primarily in connection with the Northwest Business and
Remaining Louisiana Businesses, including those listed on Schedule 1.4(b), as
such items listed thereon may have been sold, replaced, deleted or added in
the ordinary course of business, together with certificates of title for motor
vehicles which are licensed and owned by Seller.
(c). Office Supplies. The office supplies and forms, packaging
materials and similar miscellaneous tangible personal property used by Seller
exclusively or primarily in connection with the Northwest Business and
Remaining Louisiana Businesses, except such supplies which are marked or
identifiable with the logo, mark or trademark of Seller or Hanson's general
partners.
(d). Contracts. All rights and obligations under those
instruments not related to real property, including the contracts, leases,
permits and licenses described on Schedule 1.4(d), to the extent the same are
assignable, including sales orders and commitments, purchase orders and
commitments, agreements and contracts of Seller which relate to work or
services to be performed for or at the Northwest Business or Remaining
Louisiana Businesses or the Assets.
1.5 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Seller is selling, assigning, transferring or
conveying to Buyer all of the assets owned or leased by Seller used in the
Northwest Business and Remaining Louisiana Businesses, except the following
assets, rights and properties which are owned or leased by Seller and which
shall be specifically excluded from the transactions contemplated by this
Agreement, notwithstanding anything to the contrary elsewhere in this
Agreement ("Excluded Assets"):
(a). all of Seller's bank accounts, depository accounts, lockbox
and other accounts and deposit books and all cash therein, and all other cash,
cash equivalents, and securities, including securities of Affiliates of
Seller, whether or not related to the Northwest Business and Remaining
Louisiana Businesses;
(b). pension, retirement savings or other funded employee benefit
plan assets of Seller or the Northwest Business and Remaining Louisiana
Businesses including the Cavenham Forest Industries Inc. Retirement Plan for
Salaried Employees and the Cavenham Forest Industries Inc. Retirement Plan for
Hourly Employees;
(c). tax refunds, security deposits and pledges and releases
thereof, bonds and undertakings and releases thereof, all prepaid and deferred
items (including prepaid rent and other prepaid expenses) and other credits,
reimbursements and refunds to be made by third parties to Seller attributable
in each case to periods prior to the Closing Date, whether such credits,
reimbursements and refunds occur before or after the Closing Date;
(d). accounts receivables reflected on Seller's books for goods
invoiced, shipped, or delivered, and advance payments generated or incurred by
or in connection with the Northwest Business and Remaining Louisiana
Businesses (including allowances for deductions from remittances, employee
advances, rebates, receivables, deposits on bids) and other receivables and
claims including claims against third parties which arise from acts or events
occurring prior to the Closing Date;
(e). minute books, stock ledger records and related corporate
records and partnership records of the Seller, or Affiliates of Seller,
including GOSL Acquisition Corp. and Hanson Export Ltd., formerly Cavenham
Forest Export Ltd., and all trade marks, trade names, and logos owned by
Seller, or Hanson's general partners, and intellectual property (except the
GIS and forest inventory systems for the Northwest Business); provided that
Buyer need not remove any such trademarks, trade names and logos from the
inventory included in the Assets or, for a period of thirty (30) days after
the Closing Date, from other Assets;
(f). any insurance policies, premiums, refunds and proceeds
relating to the Northwest Business and Remaining Louisiana Businesses;
(g). all leased or owned vehicles assigned to Non-
transferred Employees; provided, that Seller will not assign such vehicles to
Non-transferred Employees after February 1, 1996, except in the ordinary
course of Seller's Northwest Business and Remaining Louisiana Businesses; and
(h). all of Seller's personal property, rights and interests
which are related primarily to the headquarters or partnership or corporate
management of the Northwest Business and Remaining Louisiana Businesses,
including but not limited to the leased office located at 1800 SW First
Avenue, #500, Portland, Oregon, together with all office equipment, and
machinery, fixtures, furniture, office supplies, all computer hardware,
software (but not the hardware and software constituting the GIS system and
the forest inventory system for the Northwest Business), peripherals, computer
programs and supplies, and computer licenses relating to the foregoing items,
and all other similar personal property, rights and interests located at
McComb, Mississippi, or elsewhere which is related primarily to the
headquarters or partnership or corporate management of the Northwest Business
and Remaining Louisiana Businesses, including that property listed on Schedule
1.5 (h).
(i). all personal property which is owned by a third party
but not leased by Seller which is in the custody of Seller, together with all
other non-operating assets owned by any Affiliate of Seller which may be held
by Seller.
(j). all real and personal property which is owned, leased
or used by Seller or Affiliates of Seller and its environmental staff in
connection with the environmental clean up and management of the former
treated wood products operations of Crown Zellerbach and Cavenham Forest
Industries Inc., including such personal property located at Columbia,
Mississippi, and all real and personal property located at Urania, Louisiana,
Mobile, Alabama, Gulfport, Mississippi, Sallisaw, Oklahoma and Lyman (near
Gulfport), Mississippi; and all contract, rights, permits and agreements
related to the treated wood products business.
(k). all real, personal, mixed, movable and immovable
property of any kind related to or used primarily in the Southeast Louisiana
and Mississippi Business of Seller which has been sold to Weyerhauser Company
pursuant to that Asset Sale, Purchase and Transfer Agreement dated as of
February 23, 1996.
(l). all log export contracts for the Northwest Business and
Remaining Louisiana Businesses (if any).
1.6 Assignment of Contracts.
(a). Contracts Assignable Without Consent. Seller agrees to
assign or cause to be assigned to Buyer or a Designee, as of the Closing, all
of the rights of Seller under the Contracts that are assignable without
consent of any third party and Buyer shall assume, as of the Closing, all
obligations of Seller thereunder which arise before, at or after Closing.
(b). Seller to Use Reasonable Efforts. Anything in this
Agreement to the contrary notwithstanding, Seller shall not be obligated to
sell, assign, transfer or convey or cause to be sold, assigned, transferred or
conveyed to Buyer or a Designee, if applicable, any of its rights in and to
any of the Contracts without first obtaining all necessary approvals, consents
or waivers. Seller shall use all reasonable efforts, and Buyer shall
reasonably cooperate with Seller, to obtain all necessary approvals, consents
or waivers, or to resolve any impracticalities of transfer necessary to assign
or convey to Buyer or a Designee, if applicable, each such Contract as soon as
practicable; provided, however, that neither Seller nor Buyer shall be
obligated to pay any consideration therefor except for filing fees and other
ordinary administrative charges which shall be paid by Seller to the third
party from whom such approval, consent or waiver is requested. Such
approvals, consents, and waivers shall be in favor of both Buyer and, if
applicable, a Designee. In the event Seller obtains consent to assignment of
a Contract prior to the Closing, Buyer shall assume, as of Closing, all
obligations of Seller thereunder which arise before, at or after the Closing,
as though no consent was required.
(c). If Waivers or Consents Cannot be Obtained. To the
extent that any of the approvals, consents or waivers referred to in Section
1.6(b) have not been obtained by Seller as of the Closing, or until the
impracticalities of transfer are resolved, Seller shall, during the remaining
term of such Contracts, use all reasonable efforts to (i) obtain the consent
of any such third party with the filing fees and ordinary administrative
charges payable to such third party to be split equally by the parties; (ii)
cooperate with Buyer in any reasonable and lawful arrangements designed to
provide the benefits of such Contracts to Buyer or a Designee, if applicable,
so long as Buyer fully cooperates with Seller in such arrangements; and (iii)
enforce, at the request of Buyer and at the expense and for the account of
Buyer, any rights of Seller arising from such Contracts against such issuer
thereof or the other party or parties thereto (including the right to elect to
terminate any such Contracts in accordance with the terms thereof upon the
request of, and indemnification from, Buyer).
(d). Non-assignability. To the extent that any Contract or
any claim, right or benefit arising thereunder or resulting therefrom is not
capable of being sold, assigned, transferred or conveyed without the approval,
consent or waiver of the issuer thereof or the other party thereto, or any
third person (including a government or governmental unit), or if such sale,
assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this Agreement shall
not constitute a sale, assignment, transfer or conveyance thereof, or an
attempted assignment, transfer or conveyance thereof.
1.7 Transferring Permits and Licenses. Seller will assign,
transfer or convey, or cause to be assigned, transferred or conveyed to Buyer
or a Designee, if applicable, at the Closing those permits and licenses,
including those described in Schedules 1.1 (c) and (e), 1.2, and 1.4 (d) which
are held or used by the Seller in connection with the Assets and which can be
assigned without having to obtain the consent of any third party with respect
thereto. Seller will cooperate with Buyer in obtaining any third party
consents necessary to the assignment or transfer of any other permits or
licenses used or held by Seller in connection with the Assets which are so
assignable or transferable; however, neither Seller nor Buyer shall be
obligated to pay any consideration therefor except for filing fees and other
ordinary administrative charges which shall be paid by Buyer to the third
party from whom such approval, consent or waiver is requested. Buyer shall
assume, as of Closing, all obligations of Seller arising prior to, at or after
Closing under those permits and licenses which can be transferred without
having to obtain the consent of any third party and those permits and licenses
for which consent to transfer is obtained prior to Closing. Subsequent to the
Closing, to the extent permitted by law, upon ninety (90) days prior written
notice, Seller shall have the right to cancel any permits or licenses or any
bonds, guarantees or undertakings by Seller applicable to the Assets or the
Northwest Business and Remaining Louisiana Businesses to the extent such are
not so assigned or transferred to Buyer or to a Designee pursuant to this
Section 1.7.
1.8. Liabilities Assumed by Buyer; Liabilities Not Assumed by
Buyer.
(a). Assumed Liabilities. Except as expressly provided in
Subsection 1.8(b), Buyer shall, effective as of the Closing and without any
further responsibility or liability of or recourse to Seller, or its
directors, shareholders, officers, partners, employees, agents, consultants,
representatives, successors, transferees or assignees, absolutely and
irrevocably assume and shall be liable and responsible for the claims,
liabilities, and obligations of Seller with respect to the Timberland
Properties, Mill Facilities, Chipper Facility, Mineral Rights, Long Term
Leases and the Northwest Business and Remaining Louisiana Businesses, whether
or not disclosed to Buyer, and whether or not occurring or arising prior to,
at or after Closing, except as expressly set forth in Section 1.8(b) and
except to the extent to which Seller indemnifies Buyer as expressly set forth
in Section 10.1(a); and nothing in this Section 1.8(a) shall diminish Buyer's
rights in Section 8.11.
Without limiting the foregoing, Buyer shall assume the following:
(i). Buyer shall assume the Long Term Leases described
on Schedule 1.3, and all other Contracts assigned to Buyer or a Designee
pursuant to Section 1.6, and permits and licenses assigned to Buyer or a
Designee pursuant to Section 1.7;
(ii). Buyer shall assume all matters disclosed to
Buyer in Schedules 6.3 through 6.6;
(iii). Buyer shall assume the employee matters that
are set forth in Section 11 as Buyer's responsibility;
(iv). Buyer shall assume the long term "fiber supply
agreements" which encumber certain of the Timberland Properties and related
facilities, including the Northwest Pulp Log Supply Agreement, as modified and
amended; the Northwest Whole Log Wood Chip Supply Agreement (Cathlamet), as
modified; and the Northwest Chipper Agreement; and
(v). Buyer shall assume all undertakings of, and
liabilities and obligations assumed by, CFII, and all indemnity obligations of
CFII, if any, to Crown Zellerbach Corporation and its successors and assigns
relating to all environmental conditions arising from ownership, possession,
use, or conduct of business and operations of the Indemnification Properties
(as defined in Section 6.7(e) of this Agreement), which undertakings,
liabilities, obligations, and indemnity obligations are contemplated in that
certain Transaction Agreement dated December 14, 1985, by and between James
River Corporation of Virginia and Crown Zellerbach Corporation and are more
specifically set forth in that certain Undertaking dated as of May 2, 1986, by
CFII in favor of Crown Zellerbach Corporation (the Transaction Agreement and
Undertaking are collectively referred to herein as "Transaction
Agreement/Undertaking").
At Closing, the parties shall execute an Assignment,
Acceptance, and Assumption Agreement in the form attached hereto as Schedule
1.8 to evidence the foregoing matters to be assumed by Buyer, in addition to
the more specific instruments of assignment and assumption described in this
Agreement.
(b). Excluded Liabilities. Notwithstanding anything to the
contrary in this Agreement, the following liabilities and obligations
("Excluded Liabilities") of Seller or the Northwest Business and Remaining
Louisiana Businesses shall not be assigned to Buyer nor assumed by Buyer:
(i) all liabilities and obligations related to the
Excluded Assets;
(ii) trade accounts payable for items purchased and
delivered as of the Closing Date, and all accrued expenses of the type set
forth on Schedule 1.8(b)(ii) attached hereto which are, or under generally
accepted accounting principles should be, accrued at Closing;
(iii) all liabilities and obligations for taxes,
except for assessments and real estate taxes which shall be prorated on the
Proration Date as provided in this Agreement, and except for the deferred ad
valorem taxes because of classification of all or a portion of the Timberland
Properties as farmland, grazing land, or timberland;
(iv) all liabilities and obligations of Seller to any
Affiliate of Seller, except the conveyance of approximately 160 acres in
Columbia County to Richard Dahlin as noted in the Real Estate Plan, and any
other matters listed on Schedule 1.8(b)(iv) attached hereto;
(v) any liabilities or obligations to or with respect
to employees of Seller, except for the obligations and liabilities to be
assumed by Buyer pursuant to Section 11;
(vi) any obligations for borrowed funds; the term
"borrowed funds" shall not be construed to include purchase money contracts
and similar security interests for personal property;
(vii) all bodily injury claims occurring on or in
connection with the Assets prior to Closing and all product liability claims
arising from sale or operation of the Assets prior to Closing;
(viii) any matters retained by Seller pursuant to
Section 8.2(c); and
(ix) all undertakings of, and liabilities and
obligations assumed by, CFII, and all indemnity obligations of CFII,
contemplated by or set forth in the Transaction Agreement/Undertaking, except
for the undertakings, assumed liabilities and obligations, and indemnity
obligations described in Section 1.8(a)(v) of this Agreement.
1.9 Right of First Refusal on Cathlamet Chipper Facility and Site.
Seller owns a chipper facility and site ("Chipper Facility") near Cathlamet,
Washington. As described in the Northwest Chipper Agreement, Seller is
obligated to offer the successor of Crown Zellerbach Corporation ("James
River") the right of first refusal to purchase the Chipper Facility. Buyer
agrees to execute and deliver to Seller, within five (5) days of execution of
this Agreement, an offer to purchase the Chipper Facility, which offer shall
be in the form attached hereto as Schedule 1.9. It is agreed that if James
River exercises its right to purchase the Chipper Facility, then the Chipper
Facility shall become an Excluded Asset as described in Section 1.5, and the
Purchase Price shall be reduced by the amount which James River is obligated
to pay to Seller (the "Chipper Facility Price"). If the right of James River
to purchase the Chipper Facility expires unexercised prior to the Closing
Date, then the Chipper Facility shall be included in the Assets and the
Purchase Price shall not be adjusted. If on the Closing Date the right of
James River to purchase the Chipper Facility has not expired or been
exercised, then the Purchase Price shall be reduced by the Chipper Facility
Price and the Chipper Facility shall be withheld from sale. If after the
Closing Date such right expires unexercised, then the Buyer agrees to purchase
and Seller agrees to sell the Chipper Facility, subject to the applicable
fiber agreements, for the Chipper Facility Price and on the terms contained in
the offer attached hereto.
1.10 Right of First Refusal on Wauna Acreage. Seller owns
approximately 259.07 acres of real property near the James River pulp and
paper plant at Wauna, Oregon, described in Schedule 1.10 attached hereto
("Wauna Acreage"). Seller is obligated to offer the successor of Crown
Zellerbach Corporation ("James River") the right of first refusal to purchase
the Wauna Acreage. Buyer agrees to execute and deliver to Seller, within five
(5) days of execution of this Agreement, an offer to purchase the Wauna
Acreage, which offer shall be in the form attached hereto as Schedule 1.10.
It is agreed that if James River exercises its right to purchase the Wauna
Acreage, then the Wauna Acreage shall become an Excluded Asset as described in
Section 1.5, and the Purchase Price shall be reduced by the amount which James
River is obligated to pay to Seller (the "Wauna Acreage Price"). If the right
of James River to purchase the Wauna Acreage expires unexercised prior to the
Closing Date, then the Wauna Acreage shall be included in the Assets and the
Purchase Price shall not be adjusted. If on the Closing Date the right of
James River has not expired or been exercised, then the Purchase Price shall
be reduced by the Wauna Acreage Price and the Wauna Acreage shall be withheld
from sale. If after the Closing Date such right expires unexercised, then
Buyer agrees to purchase and Seller agrees to sell the Wauna Acreage, subject
to the applicable fiber agreements, if any, for the Wauna Acreage Price and on
the terms contained in the offer attached hereto.
2. Purchase Price. Subject to adjustment in accordance with the
provisions of this Agreement, the purchase price for the Assets ("Purchase
Price") shall be One Billion Five Hundred Eighty Eight Million Dollars
($1,588,000,000). The Purchase Price shall be payable as provided in Section
2.1.
2.1 Payment of Purchase Price.
(a). Deposit. As an earnest money deposit, refundable to
Buyer only as specified in this Agreement, Buyer agrees to deposit the sum of
Fifty Million Dollars ($50,000,000) in cash or immediately available federal
funds ("Deposit") in an interest bearing escrow trust account with Chicago
Title Insurance Company ( herein "Chicago Title" or "Escrow Agent") at First
Interstate Bank of Washington, N.A., in Seattle, Washington, in accordance
with the Escrow Agreement attached hereto as Schedule 2.1(a) which Buyer and
Seller have executed concurrently herewith. The Deposit will be made by Buyer
on the same day the Escrow Agent signs the Escrow Agreement and so notifies
Buyer, unless the Escrow Agent signs the Escrow Agreement after 11:00 am PST
on such day, in which event the Deposit will be made by Buyer on the next
business day. The Escrow Agent shall cause investment of the Deposit in
accordance with the Escrow Agreement. Interest on the Deposit shall be for
the account of Buyer unless Buyer defaults as described in Section 9.
(b). Except as provided in Section 2.1(d) of this Agreement,
at the Closing, Escrow Agent shall pay the Deposit to Seller and the interest
thereon to Buyer, and Buyer shall pay to Seller the balance of the Purchase
Price (the "Closing Date Payment"), by wire transfer of immediately available
funds to the Escrow Agent's escrow trust account at Chemical Bank, New York,
New York ("Seller's Bank"), which transfer shall have been received by
Seller's Bank no later than 9:00 am PDT on the Closing Date. Upon
confirmation to Buyer by the Escrow Agent and/or First American Title
Insurance Company ("First American") that the deeds and assignments of the
Long Term Leases described in Section 3.4 have been recorded, the Escrow Agent
shall deliver the Closing Date Payment to Seller.
(c). If Buyer is legally obligated to Close and if the
Closing Date Payment is not received by Seller's Bank by 9:00 am PDT on the
Closing Date, Seller may, at its option, either exercise the Seller's remedies
described in Section 9 by reason of Buyer's default, or may accept late
payment of the Closing Date Payment which shall, in such event, be accompanied
by payment of an amount determined by computing simple interest on the amount
of that payment at the rate of interest announced publicly by Chemical Bank in
New York, New York from time to time as its "Prime Rate" (on the basis of a
360-day year) from the Closing Date to the date of payment; provided that
Seller shall accept late payment (with interest) if the Closing Date Payment
is received by Seller's Bank within twenty-four (24) hours of the time it was
due. For purpose of this subsection (c), if the Closing Date Payment is
received by Seller's Bank on the Closing Date after 9:00 am PDT, the Closing
Date Payment shall be deemed to have been paid one day after (but within
twenty-four (24) hours of) the Closing Date.
(d). If, at the Closing, the parties have not resolved the
Purchase Price reduction as contemplated in Section 1.3, the adverse financial
impact in excess of fifteen million dollars ($15,000,000) as contemplated in
Section 8.6, or the Price Adjustment Items or Price Adjustment Notice as
contemplated in Section 8.11, through arbitration or otherwise, then the
parties shall proceed to Close as scheduled; provided, that the only amounts
to be paid to Seller at Closing shall be the Closing Date Payment plus the
portion, if any, of the Deposit that exceeds the amount of the reduction, as
alleged by Buyer, that is then unresolved. The remainder of the Deposit shall
continue to be held by the Escrow Agent until the earlier of mutual agreement
of the parties or the arbitrator's decision. Within two (2) business days of
said mutual agreement or arbitrator's decision, the Escrow Agent will deliver
the remainder of the Deposit to Buyer or Seller, in accordance with said
mutual agreement or arbitrator's decision, and interest on the portion of the
Deposit held by the Escrow Agent that accrues after the Closing Date shall be
paid to Buyer in the proportion that any overpayment returned to Buyer bears
to the amount of the portion of the Deposit retained, and the balance of such
interest shall be paid to Seller; and if the remainder of the Deposit is
insufficient to reimburse Buyer for its overpayment in the Purchase Price,
Seller shall pay Buyer the remaining amount due to Buyer within two (2)
business days of said mutual agreement or arbitrator's decision.
3. Closing.
3.1 Date of Closing. The Closing shall take place at the offices
of Ater Wynne Hewitt Dodson & Skerritt, 222 SW Columbia, Suite 1800, Portland,
Oregon or at such other place as the parties may agree in writing, on May 15,
1996, unless another time and date are mutually designated by Seller and
Buyer. The foregoing date is the date on which the Seller's deed(s) to Buyer
and any Designees are to be recorded immediately prior to the delivery of the
Purchase Price to Seller and is referred to in this Agreement as the "Closing"
or "Closing Date". Seller shall deliver possession of the Assets to Buyer on
the Closing Date.
3.2 Hart-Scott Rodino Act. Promptly upon execution of this
Agreement, the Buyer and Seller shall prepare all necessary documentation and
perform all other necessary actions to complete all necessary filings under
the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each party agrees to use its best efforts to complete its initial
filing within fourteen (14) days of execution of this Agreement and to respond
to any request for additional information within twenty (20) days of receipt
of the request. In the event the waiting period (which term includes the
extension period) under the HSR Act has not expired by the Closing Date set
forth in Section 3.1, the Closing Date shall be delayed until five (5)
business days after expiration of the waiting period; provided, that Seller,
in its sole discretion, may terminate this Agreement if the waiting period has
not expired or been terminated within 115 calendar days following the date on
which Seller completes its initial filing, and Buyer, in its sole discretion,
may terminate this Agreement if the waiting period has not expired or been
terminated within 180 calendar days of the date on which Buyer completes its
initial filing. If the Agreement is terminated by either party as provided in
this Section 3.2, Seller shall refund or cause to be refunded to Buyer the
Deposit and any interest thereon.
3.3 Execution and Deposit of Documents Prior to Closing. At least
five (5) business days prior to the Closing Date, each of the parties, as
applicable, shall execute and deposit with the Escrow Agent all of the
documents listed in Section 3.4 below which are to be recorded or filed on the
Closing Date. Each of the parties, as applicable, shall execute and deliver
to the other party all remaining documents listed in Subsection 3.4 below on
the Closing Date.
3.4 Documents to be Delivered by Seller . At or prior to the
Closing, Seller shall deliver, or cause to be delivered, the following:
(a). documents of transfer, bills of sale, certificates of
title and other instruments of transfer, dated the Closing Date, transferring
to Buyer and any Designees title to the Assets. With respect to the
Timberland described on Schedule 1.1(a) (including the buildings, improvements
and other appurtenant interests described in Section 1.1(c) and (d)) and the
real property on which the Mill Facilities and Chipper Facility are located,
title shall be transferred in the form of the deed(s) attached hereto as
Schedule 3.4 (a); with respect to the Mineral Rights described in Schedule 1.1
(g), transfer shall be accomplished through mineral quit claim deeds and other
instruments of transfer without warranty; with respect to all personal
property, title shall be transferred by Bill of Sale in the form attached
hereto as Schedule 3.4(a)(a); and with respect to the Long Term Leases to be
transferred pursuant to Section 1.3, title shall be transferred in the form of
the assignment attached hereto as Schedule 3.4(a)(a)(a), together with
documents evidencing the consent of the lessor.
(b). documents evidencing the assignment and assumption of
the Contracts to Buyer or a Designee (together with any third-party consents
required for such transfers) and the assignment and assumption of any permits
and licenses (together with any third-party consents required for such
transfers) not transferred pursuant to Section 3.4(a), and the Assignment,
Acceptance, and Assumption Agreement described in Section 1.8;
(c). a copy of the written consent of the general partners
of Hanson authorized by resolutions of the boards of directors of Hanson's
general partners, and copies of the resolutions of the boards of directors of
each other Seller authorizing the execution, delivery and performance of this
Agreement by Hanson and each other Seller and a certificate of the secretary
or assistant secretary of Hanson's general partners and each other Seller,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect and, with respect to CERI and CFII, that their
respective shareholders have approved the transactions contemplated by this
Agreement;
(d). the affidavits of Seller required by Section 1445
(b)(2) of the Code and by local taxing authorities, and any other documents
required of Seller to transfer the Assets in accordance with this Agreement;
and
(e). satisfaction, releases or terminations of the liens and
encumbrances referred to in Section 3.6.
3.5 Documents to be Delivered by Buyer. At or prior to the
Closing Date, Buyer shall deliver the following:
(a). documents evidencing the assignment and assumption of
all Contracts and the assignment and assumption of all permits and licenses
transferred by Seller to Buyer pursuant to Section 3.4(a) and (b), and the
Bill of Sale, and Assignment, Acceptance, and Assumption Agreement described
in Section 1.8;
(b). a copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer, and a certificate of its secretary or assistant secretary, dated the
Closing Date, that such resolutions were duly adopted and are in full force
and effect;
(c). the affidavits, if any, of Buyer required by local
taxing authorities, including the affidavits specified in Section 8.8 (b), and
any other documents required of Buyer to transfer the Assets in accordance
with this Agreement.
3.6 Satisfaction of Liens and Encumbrances. At or prior to the
Closing Date, Seller shall pay in full all liens and encumbrances for borrowed
funds, income tax liens, and judgement liens on the Assets owned by Seller.
At or prior to the Closing Date, Seller shall pay all delinquent property
taxes on the Assets which are owned by Seller; provided, however, that Buyer
shall assume sole responsibility, as of Closing, for any ad valorem taxes
which are deferred because of farm or grazing or forest use or classification.
3.7 Transfer Taxes; Prorations. Any recording fees, transfer
taxes, or sales taxes payable as a result of the sale of the Assets shall be
paid by Seller. Escrow fees shall be split equally between the parties. Real
estate taxes, assessments for public improvements, and all other fees and
assessments related to the Assets and rent for the Long Term Leases shall be
prorated as of the Proration Date.
4. Title Insurance. Seller has delivered to Buyer evidence of title in
the form of draft title reports and title commitments ("Title Reports"), as
appropriate, covering the Timberland Properties and Mill Facilities and
Chipper Facility referred to in Schedules 1.1(a), 1.1(d), and 1.2, copies of
which are attached hereto as Schedule 4; Seller and Buyer acknowledge that the
Title Reports may be revised, corrected, and supplemented by Chicago Title or
First American, as the case may be, between the date of this Agreement and the
Closing Date, as contemplated in Section 5(c) and, with respect to the Title
Reports for the Northwest Timberland Properties and Mill Facilities and
Chipper Facility, as contemplated in the letters from Rosalee Merritt to
Malcolm Newkirk, copies of which are included in Schedule 4 as part of the
Title Reports. In the event that Chicago Title and/or First American are not
prepared to issue at Closing to Buyer or a Designee, as applicable, owner's
policies of title insurance insuring title in the Timberland and Mill
Facilities and Chipper Facility in Buyer or such Designee, subject only to the
exceptions set forth in the Title Reports , as those Title Reports may have
been revised, corrected, and supplemented by Chicago Title and/or First
American as set forth above, but with no reductions, in excess of five hundred
(500) acres in the aggregate, in the acreage vested in Seller, and subject to
the printed exceptions contained in such Title Reports, then Buyer shall have
the rights set forth in Section 8.11 with respect to the additional reductions
in acreage and additional material encumbrances to be added as exceptions to
title. In the event First American is not prepared to issue at Closing a
leasehold policy of title insurance insuring in Buyer or a Designee, as
applicable, the lessee's interest under each Long Term Lease (subject to
exceptions and objections contained in such policy), Buyer shall have the
rights set forth in Section 1.3 for Seller's inability to assign such Long
Term Lease. If Chicago Title or First American is not prepared to issue such
owner's policies on the Closing Date for reasons other than additional
reductions in acreage or additional exceptions to title, either Buyer or
Seller may delay Closing until Chicago Title or First American or another
title insurance company is prepared to issue such owner's policies. At
Closing Buyer or the Designee, as applicable, shall purchase, at its own
expense, such owner's policies; provided, Buyer and its Designees may elect
not to purchase title insurance if Buyer so notifies Seller in writing on or
before May 1, 1996.
5. Conduct of the Seller's Northwest and Remaining Louisiana Businesses
Pending Closing.
(a) Between the date hereof and the Closing Date, Seller shall
continue to operate the Northwest Business and Remaining Louisiana Businesses
in the ordinary course and in a manner reasonably consistent with its present
operating plan which establishes a maximum volume of harvest or stumpage sales
for harvest ("Maximum Volume") through the Closing Date ("Operating Plan"), a
copy of which is attached hereto as Schedule 5(a); provided, that Seller will
not enter into log export contracts that provide for delivery of logs after
Closing in recognition of the fact that Buyer will not export logs, and this
change of conduct by Seller may modify Seller's ordinary course and Operating
Plan but shall not affect the Maximum Volume set forth on Schedule 5(a).
Subject to the foregoing, Seller shall continue to harvest, or sell stumpage
for harvest, timber standing, lying, and situated upon the Timberland
Properties described in Schedule 1.1 (a) and on Long Term Leases described in
Section 1.3, and operate the Mill Facilities and Chipper Facility and
Northwest Business and Remaining Louisiana Businesses. Seller shall continue
its various silvicultural practices consistent with its past practices, from
the date hereof until the Closing Date. Seller shall have on hand, as of the
close of business on the day preceding the date the Closing actually occurs,
inventories valued at eight million dollars ($8,000,000.00), such
determination of value to be made on a basis consistent with the Seller's
prior practice.
(b) The Purchase Price shall be increased or decreased by the
difference between the actual harvest (including stumpage sales for harvest)
and the Maximum Volume pursuant to the formula ("Harvesting Formula") attached
hereto as Schedule 5(b), as of the date the Closing actually occurs, but such
difference between actual harvest and the Maximum Volume shall not be
considered a breach by Seller of this Agreement. The Purchase Price shall
also be increased or decreased by the amount by which the value of Seller's
inventories, on hand as of the close of business on the day preceding the date
the Closing actually occurs; if such value is more than eight million dollars
($8,000,000), the Purchase Price shall be increased by the difference and if
such value is less than eight million dollars ($8,000,000), the Purchase Price
shall be decreased by the difference. Any such shortfall or excess of
inventories on hand shall not be considered a breach by Seller of this
Agreement. Adjustments, if any, to the Purchase Price in this Subsection (b)
shall be made within fifteen (15) days of the date the Closing actually
occurs, and each party agrees to pay to the other the adjusted amount, as
applicable, without interest within said fifteen (15) days.
(c) Seller will not take any action, (i) the result of which will
be to create a Material Adverse Effect on the value of the Assets, or (ii)
which is both not reasonably consistent with its Operating Plan and not in the
ordinary course of business, except as otherwise set forth in this Section 5.
Seller may, but is not obligated, to continue, in the ordinary course of
business, to grant and obtain easements, rights of way and other similar
rights to the Timberland Properties, to grant options to or lease additional
Mineral Rights, and to purchase or sell or exchange additional real properties
or interests therein consistent with its present plan ("Real Estate Plan"), a
copy of which is attached hereto as Schedule 5(c). In the event Seller sells
any additional real properties or interests therein or grants options to or
leases additional Mineral Rights, other than those identified in the Real
Estate Plan, the Purchase Price shall be reduced by an amount equal to the
proceeds of any such sales, options, or leases, but Seller will not be deemed
in breach of this Agreement. Seller shall promptly notify Buyer of the grant
or obtaining of any easement, right of way or other similar right, any
additional option to or lease of Mineral Rights, and any such purchase, sale
or exchange; and if the transaction involves more than two hundred fifty
thousand dollars ($250,000.00), Seller shall obtain Buyer's prior written
consent to the transaction, which consent shall not be unreasonably withheld.
For purposes of Section 4, the Title Reports shall be revised or deemed
revised to reflect such transactions.
(d) Notwithstanding the foregoing, the parties agree that, if the
Closing Date is extended beyond May 15, 1996, Seller shall be deemed to be
operating the Northwest Business and Remaining Louisiana Businesses in the
ordinary course of business from May 16, 1996, to the date the Closing
actually occurs, with respect to the activities described below if Seller:
(i) meets its obligations under the "fiber supply agreements" described in
Section 1.8(a)(iv) and operates the Chipper Facility as necessary with respect
to those agreements, and (ii) continues its harvest of timber at a level that
is between fifty percent (50%) and one hundred percent (100 %) of the level in
the Operating Plan, and (iii) operates with at least two (2) shifts at the
Mill Facility in Warrenton, Oregon, subject to curtailment by chip or residual
customers or market conditions, and (iv) continues road maintenance and road
construction as necessary to prevent substantial deterioration from the
condition of the roads as of May 15, 1996, and as necessary to meet the needs
of Seller's harvest activities, and (v) continues silvicultural and
reforestation activities in Oregon and Washington as required by the forest
practices acts of said states and in Louisiana in accordance with good
management practices.
6. Representations of Seller. Seller represents to Buyer that:
6.1 Organization, Standing and Authority. Hanson is a general
partnership organized, existing, and in good standing under the laws of the
State of Delaware. Each of CERI and CFII is a corporation organized,
existing, and in good standing under the laws of the State of Delaware.
Seller has full power and authority to enter into and perform this Agreement.
Seller is not a "foreign person" within the meaning of Section 1445 of the
Code.
6.2 Authorization of Agreement; Authority. The execution,
delivery and performance of this Agreement by Seller has been duly authorized
by all necessary corporate and partnership action of Seller, and this
Agreement constitutes the valid and binding obligation of Seller, enforceable
against each of Hanson, CERI and CFII in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The execution, delivery and performance of this Agreement
by Seller will not (a) violate or conflict with Hanson's partnership power and
authority or with CERI's and CFII's corporate power and authority; (b)
constitute a violation of any law, regulation, order, writ, judgment,
injunction or decree applicable to Seller; or (c) subject to the receipt of
appropriate consents as specified in this Agreement as of the Closing Date and
subject to the provisions of Section 1.6(d), conflict with, or result in the
breach of the provisions of, or constitute a default under, any agreement,
license, permit or other instrument to which Seller is a party or is bound or
by which the Assets are bound. Except as required by the HSR Act, no consent,
approval or authorization of any governmental authority is required on the
part of Seller in connection with the execution, delivery and performance of
this Agreement.
6.3 Material Contracts. All of the Material Contracts which are
to be transferred to Buyer at Closing and which relate to the Northwest
Business and Remaining Louisiana Businesses are listed on Schedule 6.3 or
Schedule 4, and all of the Long Term Leases which relate to the Remaining
Louisiana Businesses are listed on Schedule 1.3. Except as disclosed in
Schedule 6.3 or Schedule 4 said Material Contracts have not been further
modified, or amended, and except as disclosed in Schedule 1.3 said Long Term
Leases have not been further modified, and amended; and to the best of
Seller's knowledge, neither Seller nor any party thereto is in default of any
material term in said Material Contracts or Long Term Leases, and true and
complete copies, including applicable amendments, of said Material Contracts
and Long Term Leases have been made available to Buyer for review prior to
execution of this Agreement. A Material Contract shall mean a Contract which
involves payments, performance of services or delivery of goods by or to
Seller after the Closing Date in an amount or value of two hundred fifty
thousand dollars ($250,000.00) or more.
6.4 Litigation; Compliance with Laws. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Seller's knowledge, threatened, that question the validity of this
Agreement or any action taken or to be taken by Seller in connection with this
Agreement. Except as set forth on Schedule 6.4, there is no claim,
litigation, proceeding or governmental investigation pending or, to the best
of Seller's knowledge, threatened, or any order, injunction or decree
outstanding which, if decided unfavorably, would cause Buyer to incur loss or
damage in excess of one hundred thousand dollars ($100,000.00); except as
disclosed on Schedule 6.4, to the best of Seller's knowledge Seller has
received no written notice from a governmental authority of a material
violation of law relating to the Timberland or Mill Facilities or Chipper
Facility or Northwest Business or Remaining Louisiana Businesses which has not
or will not have been resolved by Seller prior to Closing.
6.5 Personal Property. Seller has, or will have on the Closing
Date, good and marketable title (which includes leasehold title if applicable)
to the personal property to be transferred to Buyer on the Closing Date
pursuant to Section 1.4, subject to equipment leases, purchase money
contracts, and similar security interests to be assumed by Buyer pursuant to
Section 1.8.
6.6 Environmental Conditions. Except as disclosed on Schedule
6.6, to the best of Seller's knowledge there are no environmental conditions
on the Indemnification Properties (as defined in Section 6.7(e)) that would
cause Buyer to incur more than one hundred thousand dollars ($100,000) in loss
or damage for each such environmental condition. The foregoing representation
by Seller specifically includes no representation whatsoever with respect to
the real property in North Louisiana and Southwest Louisiana (including the
Long Term Leases), regarding the effects created by oil and gas operations.
6.7 Disclaimer of Warranties and Representations From Seller; AS
IS; Indemnity
(a). Personal Property. Except as otherwise expressly set
forth in this Agreement, this Agreement is executed, and the personal property
will be transferred, without any warranty of title, either express or implied,
and without any express or implied warranty or representation as to the
merchantability or fitness for any purpose of any of the equipment or other
personal property included in the Assets, and without any other express or
implied warranty or representation whatsoever.
(b). Real Property. Except as otherwise expressly set
forth in this Agreement, this Agreement is executed, and the real property
including Timberland Properties, Mill Facilities, Chipper Facility, and
Mineral Rights and Long Term Leases will be transferred, without any warranty
of title, either express or implied, except warranties (if any) contained in
the deed(s) conveying the real property included in the Assets, and without
any express or implied warranty or representation as to the merchantability of
any of the real property included in the Assets, acreage, legal access,
operations or encroachments or any other condition affecting the Assets.
(c). Condition of Property. Except as otherwise expressly
set forth in this Agreement, Buyer agrees to purchase the Timberland
Properties, Mill Facilities, Chipper Facility, Mineral Rights, Long Term
Leases, personal property, mobile equipment, machinery and equipment and all
other Assets "as is", "where is" and with all faults. The Buyer certifies by
execution hereof that it has had an opportunity to inspect the Timberland
Properties, Mill Facilities, Chipper Facility, and Mineral Rights and Long
Term Leases and other Assets (including the surface and subsurface of any real
property) prior to executing this Agreement; that Buyer either has inspected
or waived its right to inspect the Timberland Properties, Mill Facilities,
Chipper Facility, and Mineral Rights and Long Term Leases and other Assets for
all purposes and satisfied itself as to its physical condition, both surface
and subsurface, including but not limited to conditions specifically related
to the presence, release or disposal of hazardous substances, but without
limiting Buyer's rights under Section 8.11; that it has not relied upon any
information delivered by Seller or its agents concerning the Timberland
Properties, Mill Facilities, Chipper Facility, and Mineral Rights and Long
Term Leases and other Assets; and that it is relying upon its own examination
of the Timberland Properties, Mill Facilities, Chipper Facility, and Mineral
Rights and Long Term Leases and all other Assets in entering into and in
consummating this Agreement. Buyer further acknowledges and agrees that,
except as otherwise expressly set forth in this Agreement, neither Seller nor
its agents have made any representations, warranties or covenants whatsoever
with respect to the quantity or quality of the timber, the acreage, tax
status, legal access, encroachment or physical condition of the Timberland
Properties, Mill Facilities, Chipper Facility, and Mineral Rights and Long
Term Leases, nor, except as expressly set forth in this Agreement, have they
made any representations, warranties, or covenants whatsoever concerning the
presence, release or disposal of hazardous substances thereon.
(d). Disclaimer. Except as otherwise expressly set forth
in this Agreement, the transaction contemplated hereby shall be without any
express, implied, statutory or other warranty or representation as to the
condition, quantity, quality, fitness for particular purpose, freedom from
redhibitory vices or defects, conformity to models or samples of materials or
merchantability of any of the Assets, their fitness for any purpose, and
without any other express, implied, statutory or other warranty or
representation whatsoever. In addition, except as otherwise expressly set
forth in this Agreement, Seller makes no warranty or representation, express,
implied, statutory or otherwise, as to the accuracy or completeness of any
data, reports, records, projections information or materials now, heretofore
or hereafter furnished or made available to the Buyer in connection with this
Agreement including, without limitation, any description of the Assets,
pricing assumptions, or the environmental condition of the Assets or the
portions affected by the Endangered Species Act or any other materials
furnished or made available to Buyer by Seller or its agents or
representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made
available to Buyer are provided to Buyer as a convenience, and shall not
create or give rise to any liability of or against Seller; and any reliance on
or use of the same shall be at Buyer's sole risk.
Buyer expressly waives the warranty of fitness for intended
purposes or guarantee against hidden or latent redhibitory vices under
Louisiana law, including Louisiana Civil Code Articles 2520 through 2548, and
the warranty imposed by Louisiana Civil Code Articles 2475; waives all rights
in redhibition pursuant to Louisiana Civil Code Article 2520, et seq;
acknowledges that this express waiver shall be considered a material and
integral part of this Agreement and the consideration thereof; and
acknowledges that this waiver has been brought to its attention and explained
in detail and that it has voluntarily and knowingly consented to this waiver
or warranty of fitness and/or warranty against redhibitory vices and defects
for the Assets, if the Assets or any part thereof are located in Louisiana.
(e) Waiver of Claims and Indemnity. Without limiting the
generality of any other provision in this Section 6.7, except as otherwise
expressly set forth in this Agreement, Buyer assumes any and all liabilities,
past, present, or future, of "Sellers" as defined below, relating to hazardous
substances or materials, wastes, toxics, pollutants, solid wastes, or
contaminants, including without limitation liabilities arising under any
current or future legal requirement pertaining thereto, which are based upon
the ownership or operation of the Assets. Except as otherwise expressly set
forth in this Agreement, Buyer assumes the risk that hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants may be
present in, on or under the Timberland Properties, Mill Facilities, Chipper
Facility, Long Term Leases, Mineral Rights or other Assets, and hereby waives,
releases, and discharges forever Seller, Hanson's general partners, Affiliates
of Seller, Seller's successors and assigns, and their respective shareholders,
directors, officers, employees, and agents (in this Section 6.7(e)
collectively referred to as "Sellers") from any and all present or future
claims or demands, and any and all damages, loss, injury, liability, claims or
costs, including fines, penalties judgements, claims for contribution, and
cost recovery actions, arising from or in any way related to the condition,
operation, or use of the Timberland Properties, Mill Facilities, Chipper
Facility, Long Term Leases, Mineral Rights or other Assets or the presence of
any hazardous substances or materials, wastes, toxics, pollutants, solid
wastes, or contaminants in, on or under the Timberland Properties, Mill
Facilities, Chipper Facility, Long Term Leases, Mineral Rights or other
Assets; provided, however, that to the extent such waiver, release, or
discharge will prejudice Buyer's rights to pursue third parties (not including
Affiliates of Seller) who have indemnified or insured Seller (or any of the
three Sellers) for some or all of the foregoing matters, Buyer shall not, and
shall not be deemed to, have waived, released, or discharged "Sellers" for the
sole purpose of pursuing such third parties. Except as otherwise expressly
set forth in this Agreement, Buyer hereby indemnifies, holds harmless, and
agrees to defend "Sellers" from and against any and all present or future
claims or demands, including claims and demands asserted by any Designee, and
any and all damages, losses, liabilities, injuries, fines, penalties,
judgments, claims for contribution, and cost recovery actions, and consultant
fees, expert witness fees, costs and expenses (including attorney's fees
incurred by Seller in the case of matters involving third parties) arising
from or in any way related to the presence of any hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants in, on or
under the (i) Timberland, (ii) real property constituting a part of the Mill
Facilities or Chipper Facility, (iii) Mineral Rights, (iv) Long Term Leases,
and (v) other real property constituting a part of other Assets (collectively,
the Indemnification Properties"). This indemnity specifically includes the
obligation of Buyer to remove, remediate, reimburse or take other actions
required by law concerning any hazardous substances or materials, wastes,
toxics, pollutants, solid wastes, or contaminants in, on or under the
Indemnification Properties. Nothing herein shall limit Buyer's right, in good
faith, to contest any action, request or requirement of any governmental
agency provided that such action is taken at Buyer's sole cost, risk and
expense. The provisions of this Section 6.7(e) shall not include, or create
any obligation of Buyer with respect to any contractual obligation of
"Sellers" or Seller's predecessors except as provided in Section 1.8(a)(v) or
as disclosed on any Schedule attached to this Agreement, are solely for the
benefit of "Sellers", and shall not be construed to be for the benefit of any
third party or to constitute a waiver or release of rights against any third
party. Seller hereby assigns to Buyer all rights and claims which Seller may
now or hereafter have against third parties relating to any matter for which
Buyer indemnifies "Sellers". The provisions of this Section 6.7(e) and
Section 1.8(a)(v) are intended to exclusively set forth Buyer's obligations
under this Agreement with respect to assumption, waiver, release, discharge,
and indemnification of environmental matters, and the provisions of Section
10.1(b) and Section 1.8(a) (other than Section 1.8(a)(v)) shall not apply to
such obligations of Buyer.
7. Representations of Buyer. Buyer represents to Seller as follows:
7.1 Buyer's Organization. Buyer is a corporation organized,
existing and in good standing under the laws of Oregon and has the full
corporate power and authority to enter into and to perform this Agreement.
Buyer is qualified to do business and is in good standing in the states of
Washington and Louisiana.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action of Buyer, and this Agreement constitutes the valid
and binding obligation of Buyer enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights in general and subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
7.3 Consents of Third Parties. The execution, delivery and
performance of this Agreement by Buyer will not (a) violate or conflict with
the articles of incorporation or by-laws of Buyer; or (b) constitute a
violation of any law, regulation, order, writ, judgment, injunction or decree
applicable to Buyer. Except as required by the HSR Act, no consent, approval
or authorization of any governmental authority is required on the part of
Buyer in connection with the execution, delivery and performance of this
Agreement.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken
or to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or decree
outstanding, against the Buyer that, if adversely determined, would have a
material effect upon Buyer's ability to perform its obligations under this
Agreement.
7.5 Financing. Buyer will have, on the Closing Date, all funds
necessary to pay the Purchase Price and related fees and expenses, and has, or
will have on the Closing Date, the financial capacity to perform all of its
other obligations under this Agreement.
8. Further Agreements of the Parties.
8.1 Access to Information. Buyer and each Designee (subject to
Section 8.7) shall have access to information, in the possession of Seller,
relating to the Timberland Properties, the Mill Facilities, Chipper Facility,
the Mineral Rights and the Long Term Leases and other Assets for due diligence
investigation purposes and to facilitate an orderly transition in the
management of those Assets in anticipation of Closing. In addition, Seller
will make available to Buyer and each Designee its financial statements and
shall cooperate and instruct Seller's independent auditors to cooperate, at
Buyer's expense, in preparing the financial statement of the Northwest
Business and Remaining Louisiana Businesses which Buyer will, or such Designee
may, be required to file with the Securities Exchange Commission.
8.2 Notice of Changes and Events.
(a). Each party shall promptly notify the other party in
writing, and furnish to such party any information that such party may
reasonably request, with respect to the occurrence of any event or the
existence of any state of facts that would (i) result in the party's
representations and warranties not being true if they were made at any time
prior to or as of the Closing Date, or (ii) impair the party's ability to
perform its obligations under this Agreement.
(b). Seller agrees to update and bring current all
Schedules attached to this Agreement prior to the Closing Date. Any such
updated Schedule shall be for informational purposes only and shall not affect
the rights and obligations of the parties as set forth in this Agreement.
(c). Notwithstanding anything to the contrary in this
Agreement, Seller shall have the right, in its sole discretion, to retain any
claim, obligation, or liability that may otherwise be transferred to or
assumed by Buyer in this Agreement. Seller may, without limitation, exercise
this right by omitting or deleting a claim, liability, or obligation on one or
more of the Schedules attached to this Agreement. If Seller exercises this
right, Seller shall provide written notice to Buyer of the claim, liability,
or obligation that Seller shall retain within thirty (30) days of Seller's
receipt of written notice of said claim, liability, or obligation.
8.3 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred
in connection with this Agreement and in connection with all obligations
required to be performed by each of them under this Agreement.
8.4 Publicity. Buyer and Seller shall consult with each other
before issuing any public announcement or press release concerning the
transactions contemplated by this Agreement and, except as may be required by
applicable law or regulation or rule of any stock exchange or organized
securities market on which the securities of Buyer or Seller's parent are
listed or traded, will not make a public announcement or issue a press release
prior to such consultation. If Buyer or Seller are so required to make a
public announcement or issue a press release such party shall use its best
efforts to inform the other party hereto prior to making or issuing it.
8.5 Preservation of Records.
(a). Buyer agrees that, without expense to Seller, Buyer or
one or more Designees (i) shall preserve and keep the records relating to the
Timberland Properties, Mill Facilities, Chipper Facility, Mineral Rights, Long
Term Leases and other Assets delivered to it by Seller for a period of six (6)
years from the Closing and (b) shall give Seller reasonable access to such
records and to personnel during regular business hours if needed for any bona
fide purpose, provided such access shall be at Seller's cost and expense,
including reimbursement of Buyer's or any affected Designee's extraordinary
costs, if any, of providing such access.
(b). Seller agrees that, at it own expense, it (i) shall
preserve and keep the records relating to the Timberland Properties, Mill
Facilities, Chipper Facility, Mineral Rights, Long Term Leases, and other
Assets which were not transferred to Buyer pursuant to Section 1.4(a) and (ii)
shall give Buyer and Designees reasonable access to such records and to
personnel during regular business hours if needed for any bona fide purpose,
provided such access shall be at Buyer's cost and expense, including
reimbursement of Seller's extraordinary costs, if any, of providing such
access.
(c). Notwithstanding the expiration of the six (6) year
period in Subsection (a) above, Buyer agrees that neither Buyer nor any
Designee shall destroy the records described in Subsection (a) without first
giving Seller sixty (60) days advance written notice and an opportunity to
take custody of such records, at Seller's cost and expense, including
reimbursement of Buyer's or any affected Designee's extraordinary costs, if
any.
8.6 Casualty or Condemnation. In the event any uninsured loss or
damage occurs to the Assets after the date of this Agreement, but before
Closing, which has an adverse financial impact in excess of fifteen million
dollars ($15,000,000) on the value of the Assets, the parties shall reduce the
Purchase Price by the amount of the adverse financial impact in excess of
fifteen million dollars ($15,000,000). If the parties are unable to agree on
the amount of said reduction within seven (7) days of the occurrence of the
loss or damage, then the amount of reduction shall be resolved by arbitration
pursuant to Section 9.2; provided, however, that if said arbitration has not
been completed by the date set for Closing in Section 3.1, the parties shall
proceed to Close as scheduled, and Subsection 2.1(d) shall apply, including
the provisions relating to the amount of the Deposit payable at Closing. In
the event any insured loss, destruction, casualty or damage occurs to the
Assets after the date of this Agreement, but before Closing, or in the event
condemnation action is instituted on the Assets after the date of this
Agreement, but before Closing, then Seller shall assign to Buyer at Closing
all proceeds from such policies or condemnation action, and there shall be no
adjustment in the Purchase Price. Seller shall maintain its current casualty
policy and property damage insurance policy on the Mill Facility at Warrenton,
Oregon, and on the Chipper Facility through Closing.
8.7 Confidentiality. Hanson and Buyer have previously executed a
Confidentiality Agreement in the form attached hereto as Schedule 8.7.
Notwithstanding anything to the contrary in the Confidentiality Agreement, the
parties hereto covenant and agree that the terms and provisions of this
Agreement and all information and data obtained in connection with this
Agreement shall be treated as Evaluation Material in the Confidentiality
Agreement. Buyer shall require any third party which has not already executed
the Confidentiality Agreement and to which it intends to disclose any
information supplied under the Confidentiality Agreement or this Agreement to
countersign and assume all of the obligations and covenants of the
Confidentiality Agreement and deliver a copy of the Confidentiality Agreement
to Seller, prior to delivery of any information to such third party. If this
Agreement is terminated for any reason, the foregoing covenant shall survive
the termination; if this Agreement is not so terminated, then the foregoing
covenant shall be deemed terminated at Closing.
8.8 Allocation and Tax Matters.
(a). The Purchase Price shall be allocated among the Assets
in accordance with Schedule 8.8 attached hereto. Seller and Buyer agree to
complete IRS form 8594 consistently with the foregoing allocation and to
furnish each other with a copy of such form prepared in draft form within
forty five (45) days prior to the filing due date for such form. Within sixty
(60) days after the Closing, Buyer shall submit to Seller a proposed detailed
allocation schedule which is in all respects consistent with Schedule 8.8.
Thereafter, Buyer and Seller shall use their respective best efforts to
promptly agree to a final detailed schedule. Neither Seller nor Buyer shall
file any tax return or take a position with any taxing authority that is
inconsistent with the foregoing allocation.
(b). For purposes of preparing Washington Real Estate
Excise Tax affidavits provided for in RCW 82.45.150 and computing the transfer
tax in Washington County, Oregon, the parties agree to use the market value
assessment as reflected on the county property tax rolls at the time of
Closing. Buyer has requested that Seller satisfy ORS 93.030 by stating that
the "actual consideration consists of or includes other property or value
given or promised, which is part of the consideration." Buyer agrees to
indemnify, defend, and hold harmless Seller from any investigation, claim,
liability, fine, or penalty arising from the foregoing method of computation
and compliance which Seller has used at Buyer's request. The Buyer agrees to
execute at Closing a Notice of Continuance, incorporated in the Real Estate
Excise Tax Affidavits provided for in RCW 82.45.150, continuing the forest
land classification or designation of that portion of the Timberland
Properties in the State of Washington so classified or designated as provided
in RCW 84.33.140.
8.9 Termination. This Agreement shall be terminated at any time
prior to the Closing:
(a). by mutual written agreement executed by Seller and
Buyer; or
(b). by either party if applicable law (including but not
limited to the HSR Act) prohibits the consummation of the sale and purchase of
the Assets pursuant to this Agreement or if, at the Closing Date, any action,
proceeding or investigation shall have been instituted or threatened in
writing by any governmental agency seeking to enjoin, restrain, prohibit,
impose material conditions upon or obtain substantial damages in respect of,
the transactions contemplated by this Agreement; or
(c). by either party as provided in Section 3.2.
Upon such termination, Escrow Agent shall deliver the
Deposit and any interest accrued thereon to Buyer, and neither of the parties
shall have any liability or further obligation arising out of this Agreement
except as expressly stated in this Agreement.
8.10 Access Pending Closing. Buyer and any Designee may, upon
reasonable notice to Seller, have access to the Timberland Properties, Mill
Facilities, Chipper Facility, real property described in the Long Term Leases,
and other Assets for purposes of conducting due diligence investigations and
preparing for transition of ownership, all in accordance with the terms and
conditions of the Access Agreement previously executed by Buyer and to be
executed by any such Designee, a copy of which is attached hereto as Schedule
8.10.
8.11 Buyer's Due Diligence.
(a). Buyer may conduct due diligence examinations during a
period commencing on the date hereof and ending at the close of business on
the day prior to the Closing Date (the "Due Diligence Period"). In the event
that Buyer makes a reasonable and objective determination that there are Price
Adjustment Items as defined in Section 8.11(d), Buyer will have the right, but
only during the Due Diligence Period, to notify Seller in writing, with
reasonable detail, of said Price Adjustment Items; provided, that no such
written notice given to Seller more than thirty (30) days after the date of
this Agreement shall include a Price Adjustment Item relating to environmental
matters.
(b). In the event Buyer makes a reasonable and objective
determination that there are Price Adjustment Items as defined in Section
8.11(d) which will have an aggregate adverse financial impact of at least the
First Threshold in the Price Adjustment Formula set forth in Section 8.11(e),
Buyer will have the right to deliver to Seller, but only during the Due
Diligence Period, a notice that Buyer is entitled to an adjustment in the
Purchase Price (the "Price Adjustment Notice"), provided that no Price
Adjustment Notice given more than thirty (30) days after the date of this
Agreement shall include a Price Adjustment Item relating to environmental
matters. The Price Adjustment Notice shall be accompanied by a schedule
setting forth in reasonable detail Buyer's computation of the dollar amount of
the Price Adjustment Items. Seller shall either accept the price adjustment
(including the appropriateness of the Price Adjustment Items listed therein)
provided for in the Price Adjustment Notice, in accordance with the Price
Adjustment Formula, or require that the price adjustment (including the
appropriateness of the Price Adjustment Items listed therein) be determined by
arbitration pursuant to Section 9.2. Seller shall be deemed to have elected
to require arbitration unless Seller, within ten (10) days after receipt of
the Price Adjustment Notice and at least five (5) business days prior to the
Closing Date, notifies Buyer that Seller accepts the Price Adjustment Notice.
If arbitration is required, Section 2.1(d) shall apply. If Seller accepts the
Price Adjustment Notice, the Purchase Price shall be reduced by the adverse
financial impact as set forth in the Price Adjustment Notice, in accordance
with the Price Adjustment Formula. If it is determined through arbitration
that the adverse financial impact is less than the First Threshold, there will
be no price adjustment, but the amount of financial impact so determined shall
be carried forward as a portion of the First Threshold in making the
calculations in Section 10.4(c). If the arbitrator determines that the
adverse financial impact is in excess of the First Threshold, the Purchase
Price shall be reduced in accordance with the Price Adjustment Formula. The
amount of financial impact so determined shall be carried forward as the
First, Second, or Third Threshold (as applicable) in making the calculations
in Section 10.4(c).
(c). If Buyer provides written notice of Price Adjustment
Items as provided in Subsection (a) above but does not deliver to Seller the
Price Adjustment Notice described in Subsection (b) above during the Due
Diligence Period, Buyer will have the right, within six (6) months after
Closing, to deliver to Seller a notice that Buyer is entitled to an adjustment
in the First Threshold for purpose of Section 10.4 (the "Post Closing
Adjustment Notice"). The Post Closing Adjustment Notice shall be accompanied
by a schedule setting forth in reasonable detail Buyer's computation of the
dollar amount of the Price Adjustment Items that provide the basis for the
Post Closing Adjustment Notice; provided however, the Post Closing Adjustment
Notice cannot allege an adverse financial impact greater than fifteen million
dollars ($15,000,000) (the First Threshold). Seller shall either accept the
adjustment (including the appropriateness of the Price Adjustment Items listed
therein) provided for in the Post Closing Adjustment Notice, in accordance
with the Price Adjustment Formula, or require that the adjustment (including
the appropriateness of the Price Adjustment Items listed therein) be
determined by arbitration pursuant to Section 9.2. Seller shall be deemed to
have elected to require arbitration unless Seller, within ten (10) days after
receipt of the Post Closing Adjustment Notice, notifies Buyer that Seller
accepts the Post Closing Adjustment Notice. The adjustment so determined in
this Subsection (c) shall not adjust the Purchase Price, but shall be carried
forward as a portion of the First Threshold in making the calculations in
Section 10.4(c).
(d). In determining the adverse financial impact for
purposes of Section 8.11(a), the following items shall be taken into account
as Price Adjustment Items:
(i) Failure of Seller to be vested in title in more
than five hundred (500) acres of the Timberland, in the aggregate, or to the
Mill Facilities or Chipper Facility described in the Title Reports attached to
this Agreement as Schedule 4, and the threshold provisions of Section 8.11
shall not apply to any such Price Adjustment Item (i.e., the Purchase Price
shall be reduced by the amount of the adverse financial impact of such Item),
nor shall the reduction in Purchase Price for such Item reduce the threshold
provisions of Section 10.4. As used in this Subsection (i), "vested in title"
means that the applicable Title Report states that the Seller (or any of the
three Sellers) is vested in title (without regard to exceptions or objections
noted in such Title Report).;
(ii) The existence of any exception to title on any
portion of the Timberland: (a) which was not shown on Schedule 4, and (b)
which was not disclosed on any other Schedule attached to this Agreement, and
(c) which materially interferes with the use thereof for the production and
harvesting of timber; provided that the threshold provisions of Section 8.11
shall not apply to such Price Adjustment Item if the exception to title was
created by Seller after the date of the applicable Title Report and was not
either created in the ordinary course or consented to by Buyer, nor shall the
reduction in Purchase Price for such Item reduce the threshold provisions of
Section 10.4.
(iii) The existence of any exception to title on the
Mill Facilities or Chipper Facility: (a) which was not shown on Schedule 4 for
Clatsop County or Wahkiakum County, respectively , and (b) which was not
disclosed on any other Schedule attached to this Agreement, and (c) which
materially interferes with the use of the Mill Facilities or Chipper Facility
for their intended purpose; provided that the threshold provisions of Section
8.11 shall not apply to such Price Adjustment Item if the exception to title
was created by Seller after January 1, 1996, and was not either created in the
ordinary course or consented to by Buyer, nor shall the reduction in Purchase
Price for such Item reduce the threshold provisions of Section 10.4.
(iv) The existence of any exception to title on
Seller's leasehold interest in any of the Long Term Leases assigned to Buyer:
(a) which would have been an exception to title on a Title Report if such
Reports had been prepared for the Long Term Leases, and (b) which was not
disclosed on any Schedule attached to this Agreement, and (c) which materially
interferes with the use thereof for the production and harvesting of timber;
provided that the threshold provisions of Section 8.11 shall not apply if the
exception to title was created by Seller after January 1, 1996, and was not
either created in the ordinary course of business or consented to by Buyer,
nor shall the reduction in Purchase Price for such Item reduce the threshold
provisions of Section 10.4.
(v) The presence of any hazardous substances or
materials, wastes, toxics, or contaminants in, on or under any of the
Indemnification Properties (but only for thirty (30) days after the date of
this Agreement and only to the extent they were not disclosed in Schedule
6.6); provided that with respect to the real property in North Louisiana and
Southwest Louisiana (including the Long Term Leases), the presence of any
hazardous substances or materials, wastes, toxics, or contaminants or any
other effects created by, resulting from or related to oil and gas operations
shall not be taken into account as Price Adjustment Items.
(vi) Any breach of representations of Seller in
Section 6 of this Agreement during the Due Diligence Period, but with respect
to Section 6.6, only if included in a Price Adjust Notice given within thirty
(30) days after the date of this Agreement; provided, that in determining the
adverse financial impact for breach of representations of Seller, any benefit
to Buyer caused by such breaches of representations of Seller and other
breaches of representations of Seller during the Due Diligence Period shall be
offset or taken into account.
(e). Price Adjustment Formula. As used in this Section
8.11 and in Section 10.4(b) and (c), the term "First Threshold" means fifteen
million dollars ($15,000,000); the term "Second Threshold" means twenty five
million dollars ($25,000,000); the term "Third Threshold" means thirty five
million dollars ($35,000,000). If the First Threshold, but not the Second
Threshold, is met, the Purchase Price shall be reduced by fifty percent (50%)
of the amount of the adverse financial impact in excess of the First
Threshold; and if the Second Threshold, but not the Third Threshold, is met,
the Purchase Price shall be additionally reduced by two-thirds of the amount
of the adverse financial impact in excess of the Second Threshold; and if the
Third Threshold is met, the Purchase Price shall be additionally reduced by
one hundred percent (100%) of the amount of the adverse financial impact in
excess of the Third Threshold.
9. Default; Remedies; Arbitration.
9.1 Default; Remedies. Time is of the essence of this Agreement.
If either party fails or refuses to carry out this Agreement according to its
terms, the other party shall be entitled to the remedies set forth below.
(a). Buyer's Default.
(i) Buyer's Failure to Complete Purchase. Except as
otherwise provided in this Agreement, in the event Buyer fails, without legal
excuse, to complete the purchase of the Assets pursuant to this Agreement, the
Deposit (and all interest accrued thereon) shall be forfeited to Seller as the
sole and exclusive remedy available to Seller for such failure.
(ii) Buyer's Other Defaults. Nothing in Subsection
9.1 (a) shall affect or limit Seller's rights with respect to any cause of
action arising from any other breach or default of the Agreement by Buyer.
(b). Seller's Default. Except as otherwise provided in
this Agreement, in the event Seller fails or refuses to complete the purchase
of the Assets or is otherwise in breach or default of its obligations in this
Agreement, Buyer shall be entitled to a refund of the Deposit (and all
interest accrued thereon) without prejudice to Buyer's right to terminate the
Agreement and/or pursue any and all remedies available at law or in equity by
reason of Seller's breach or default, including without limitation, specific
performance and damages for any failure by Seller to perform the obligations
to be performed by it from and after the date of this Agreement; provided,
however, that Buyer's sole remedy against Seller for Seller's breach of
Section 6 and the representations set forth therein shall be as set forth in
Section 8.11 and the indemnification by Seller of Buyer as set forth in
Section 10.
9.2 Arbitration. This Agreement shall not be subject to
termination except as specifically provided in this Agreement. Any question,
controversy or claim arising under or relating to this Agreement, including
without limitation any such matter pertaining to an alleged event having a
Material Adverse Effect or any adjustment of the Purchase Price, or for any
breach hereof, shall be settled by arbitration in accordance with the rules of
the American Arbitration Association and the provisions of the laws of the
State of Washington relating to arbitration, as said rules and laws are in
effect on the date of this Agreement. The arbitration shall be conducted in
Vancouver, Washington, by and before a single arbitrator, who is experienced
in the problem or problems in dispute, to be agreed upon by the Seller and
Buyer, or if they are unable to agree upon an arbitrator within ten (10) days
after written demand by either party for arbitration, then, at the written
request of either party, the arbitrator shall be appointed by the American
Arbitration Association, or failing such appointment, by the Superior Court in
and for the County of Clark, State of Washington. Proceedings to obtain a
judgment with respect to any award rendered hereunder shall be undertaken in
accordance with the law of the State of Washington including the conflicts of
laws provisions thereof.
Each party shall pay one-half of the arbitrator's fees and
expenses. Upon application to the arbitrator, the parties shall be entitled
to limited discovery, including only exchange of documents and only
depositions on such terms as the arbitrator may allow for purposes of fairness
and to reduce the overall time and expense of the arbitration.
10. Indemnification and Related Matters.
10.1 Indemnification.
(a) Seller agrees to defend, indemnify and hold Buyer and
its parents, subsidiaries, affiliates, predecessors, successors and assigns
(and their respective officers, directors, employees and agents) harmless from
and against any and all loss, claims, liabilities, damages, costs and
expenses, including attorneys fees incurred with respect to third parties
("Damages") resulting from, based upon, or arising out of:
(i) all of the Excluded Liabilities set forth in
Section 1.8(b);
(ii) Subject to Section 10.4, and taking into account
any adjustments made for such breach in Section 8.11, breaches of Seller's
representations set forth in Section 6;
(iii) Subject to Section 10.4, claims of third parties
that are asserted after Closing, to the extent the basis of such claims arose
prior to Closing; provided, that this Subsection (iii) shall only apply to a
claim which will result in loss to Buyer in excess of $100,000; and provided
further, that the indemnity in this Subsection (iii) shall not apply at all to
matters disclosed on Schedule 6.4 or to matters covered by Section 8.11 or to
matters for which Buyer is indemnifying Seller as provided in this Agreement;
(iv) Subject to Section 10.4, permits, licenses, or
Contracts (which are not Material Contracts) assumed by Buyer pursuant to
Section 1.8 but which were not disclosed to Buyer in any Schedule attached to
this Agreement; provided, that this Subsection (iv) shall only apply to a
permit, license, or Contract: (a) which will require Buyer to pay more than
$100,000 in any twelve-month period, and (b) which will not expire and cannot
be terminated within twelve months of Closing without penalty, liability, or
premium, and (c) which provides no material benefit to Buyer;
(v) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
(b). Buyer agrees to save, defend, indemnify and hold
Seller and its general partners, parents, subsidiaries, affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against any loss, claims,
liabilities, damages, costs and expenses, including attorneys' fees incurred
with respect to third parties ("Damages") resulting from, based upon, or
arising out of:
(i) any breaches, occurring before, at or after
Closing, of Contracts, Long Term Leases, permits, licenses, and all other
agreements and obligations transferred or assigned to Buyer;
(ii) the operation, management or condition of the
Assets or Northwest Business or Remaining Louisiana Businesses, whether
arising before, at or after the Closing, excluding only those matters covered
by Section 10.1 (a)(i) above; and
(iii) all matters assumed by the Buyer pursuant to
any and all provisions of this Agreement or any related agreement.
(iv) all actions, claims, suits, proceedings,
demands, assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
Wherever this Agreement provides for Buyer's indemnification of Seller,
the term "Seller" shall mean each or all of CERI, CFII, and Hanson.
10.2 Determination of Damages; Claims. In calculating any
amounts payable to Buyer pursuant to Section 10.1 (a) or payable to Seller
pursuant to Section 10.1 (b), Seller or Buyer, as the case may be, shall
receive credit for (i) any reduction in tax liability as a result of the facts
giving rise to the claim for indemnification, and (ii) any insurance
recoveries.
10.3 Defense of Claims by Third Parties. If any claim is made
against Buyer or Seller that, if sustained, would give rise to a liability of
the other under this Agreement, Buyer or Seller, as the case may be, shall
promptly cause notice of the claim to be delivered to the other and shall
afford the other and its counsel, at the other's sole expense, the opportunity
to defend, with counsel reasonably satisfactory to the party against which
such claim is made, or settle the claim. If either party takes said
opportunity to settle the claim, such party shall obtain a release of the
other party in any settlement agreement with the third party.
10.4 Limitations on the Indemnification.
(a). With respect to Seller's indemnification of Buyer
pursuant to Subsections 10.1(a) (ii), (iii), and (iv), Buyer shall promptly
inform Seller in writing of each such matter, as and when Buyer becomes aware
of such matter, and shall keep complete and accurate records of actual damages
incurred by Buyer as a result thereof.
(b). Seller's indemnification of Buyer pursuant to Subsections
10.1(a) (ii), (iii), and (iv) shall not commence until Buyer has incurred
actual loss or damage, including, in the case of matters involving third
parties, costs and attorney's fees incurred by Buyer ("Actual Loss"), in the
aggregate, in excess of the First Threshold for the matters described in said
Subsections. Actual loss shall also include actual loss or damage suffered by
any Designee which would have been suffered by Buyer had all the Assets been
transferred to Buyer. After Buyer has incurred Actual Loss in excess of the
First Threshold but less than the Second Threshold, Seller's indemnification
of Buyer pursuant to Subsection 10.1(a) (ii), (iii), and (iv) shall obligate
Seller to compensate Buyer for fifty percent (50%) of Actual Loss incurred by
Buyer in excess of said First Threshold. After Buyer has incurred Actual Loss
in excess of the Second Threshold but less than the Third Threshold, Seller's
indemnification of Buyer pursuant to Subsection 10.1(a) (ii), (iii), and (iv)
shall obligate Seller to compensate Buyer for two-thirds (2/3) of Actual Loss
incurred by Buyer in excess of the Second Threshold. After Buyer has incurred
Actual Loss in excess of the Third Threshold, Seller's indemnification of
Buyer pursuant to Subsection 10.1(a) (ii), (iii), and (iv) shall obligate
Seller to compensate Buyer for one hundred percent (100%) of Actual Loss
incurred by Buyer in excess of the Third Threshold.
(c). In determining the Thresholds of Seller's
indemnification of Buyer in Subsection (b) above, there shall be taken into
account the amounts carried forward from the Thresholds attained pursuant to
Section 8.11(b) and (c). By way of example, if it is determined, by mutual
agreement or arbitration, that there is an adverse financial impact of
fourteen million dollars ($14,000,000) in Section 8.11(b) or (c), Buyer would
only have to incur Actual Loss of one million dollars ($1,000,000) to reach
the First Threshold in Subsection (b) above. By way of another example, if it
is determined that there is an adverse financial impact of thirty four million
dollars ($34,000,000) in Section 8.11(b), Buyer would only have to incur
Actual Loss of one million dollars ($1,000,000) to pass through the First and
Second Thresholds and reach the Third Threshold in Subsection (b) above.
(d) Notwithstanding anything to the contrary to this
Agreement, Seller shall not be obligated to indemnify Buyer on any claim for
indemnification submitted by Buyer to Seller after December 31, 1998, except
for matters arising under Section 10.1 (a)(i).
11. Employee Matters.
11.1 Definitions.
(a). Employees. The term "Employees" shall mean all of the
persons actively employed by Seller at the Northwest and Remaining Louisiana
Businesses in daily operations in hourly or salaried status immediately
preceding the Closing, and those persons identified in Schedule 11.2(f) as
employed by Seller in daily operation of the Business who are either a) on
disability, or b) on leave of absence. This does not include persons listed
in Schedule 11.1(a), which lists executive officers of Seller.
(b). Transferring Employees. All Employees, except
Bargaining Unit Employees, who apply for, are offered, and who accept
employment with Buyer on the Closing Date or within 90 days thereafter.
(c). Bargaining Unit Employee. Any Employee in an
operation of the Northwest Business who is covered by the terms of a
collective bargaining agreement between a labor organization and Seller
immediately prior to the Closing Date.
(d). List of Employees. Schedule 11.1(d) sets forth a true
and correct list of all Employees, together with their respective job titles,
hourly rates or base salary, date of birth, Social Security number, and most
recent date of hire (or credited service), as of ten (10) days prior to the
date of this Agreement, and will be updated to be true and correct as of ten
(10) days prior to the Closing Date.
11.2 Applications/Hiring.
(a). Within ten (10) days after the date this Agreement is
signed, Buyer will provide applications for employment to all Seller's
Employees, as defined in 11.1(d) above, provided that Buyer may also notify
Seller of positions which it may not wish to continue. Buyer and Seller will
cooperate in preparing Employee meetings.
(b). Employees from whom applications will be solicited by
Buyer will also be provided with a document or documents setting forth the
essential terms and conditions of employment under which Buyer intends to
operate the Assets. Buyer will consider applications from all Employees of
Seller who apply for employment under such terms and conditions of employment
pursuant to its normal hiring procedure. If applications acceptable to Buyer
are received from Seller's Salaried Employees, offers of employment shall be
extended within fifteen (15) working days of application receipt or as soon as
reasonably practical thereafter. Offers to other Employees who submit
application and who are acceptable to Buyer will be extended on or before the
Closing Date.
(c). Salaried Terms and Conditions. Solicitations of
Seller's salaried Employees who submit applications for employment with Buyer
will be made on terms and conditions of employment consistent with and
generally applicable to Buyer's salaried work force in positions of like
status and pay. However, in order to minimize Seller's severance cost, Buyer
agrees to offer employment to at least fifty-five (55) Salaried Employees (or
to such lesser number if such lesser number of Salaried Employees apply), and
that for those Salaried Employees offered employment, at least 85% will be
hired at 96% or more of their Base pay with Seller as listed in Schedule
11.1(d).
During the twelve (12) month period following Closing, Buyer
agrees to provide employment consideration in filling open positions in the
Portland metropolitan area (which are not filled from within) to the Employees
shown on Schedule 11.1(d) who are not offered employment prior to Closing.
(d). Nonunion Hourly Terms and Conditions. Solicitations
of Seller's nonunion hourly Employees who submit applications for employment
with Buyer will be made as Buyer may determine on terms and conditions of
employment consistent with their existing terms and conditions or terms and
conditions consistent with and generally applicable to Buyer's nonunion hourly
work force in positions of like status and pay in similar type operations of
Buyer in the same region or geographic proximity.
(e). Bargaining Unit Employees. Buyer does not accept or
assume the terms of any collective bargaining agreement of Seller. If, as a
result of processing applications under paragraph (b) above, a majority of the
Employees to whom Buyer extends offers of employment are from Seller's
bargaining unit, Buyer will recognize the current collective bargaining agent
of such Employees.
All Bargaining Unit Employees of the Northwest Business who
accept employment with the Buyer and who commence such employment immediately
after the Closing Date shall receive wages and benefits in accordance with the
terms of employment established by Buyer, or, assuming recognition of a
bargaining agent as described above, pursuant to any collective bargaining
agreements negotiated by Buyer and the bargaining agent of such Employees
after the Closing Date.
(f). Disabled Employees/Leave of Absences. Employees
identified in Schedule 11.2(f) who make application, are offered, and accept
employment must begin employment with Buyer no later than the first working
day of the sixth (6th) month following the month in which the Closing Date
occurs unless otherwise provided by law or extended by Buyer.
11.3 Employment Obligations of Seller and Buyer.
(a). Buyer's Obligations/Employment Claims.
(i) Subject to the provisions of Section 11.4 and
Section 11.5, Buyer agrees to assume all employment-related obligations
accruing on or after the Closing Date pertaining to Transferring Employees
including, without limitation, compensation for services performed for Buyer
(and related employment and withholding taxes); benefits accrued under any
Buyer-sponsored employee welfare or pension benefit plan (as defined under
ERISA Sections 3(1) and 3(2), respectively); benefits accrued under any other
employee benefit plan or arrangement of Buyer covering the Transferring
Employees; and workers' compensation benefits with respect to claims relating
to events occurring on or after the Closing Date or filed more than one-
hundred eighty (180) days after the Closing Date, regardless of date of
accident or illness.
(ii) Buyer will retain all liability for all claims,
losses, damages, and expenses (including, without limitation, reasonable
attorney's fees), and other liabilities and obligations relating to or arising
out of all unfair labor practice charges, wrongful termination litigation,
employment discrimination charges, severance claims, health and welfare
claims, retirement claims and any other claims related to employment and based
upon Buyer's conduct on or after the Closing Date which are filed within
applicable statutes of limitations.
(b). Seller's Obligation/Employment Claims.
(i) Subject to the provisions of Section 11.4 and
11.5, Seller agrees to assume all employment related obligations with respect
to all Employees accruing prior to the Closing Date including, without
limitation, compensation for services performed for Seller (and related
employment and withholding taxes); benefits accrued under any Seller sponsored
employee welfare or pension plan (as defined under ERISA Sections 3(1) and
3(2) respectively) covering the Employees or former Employees prior to or
after the Closing Date; benefits accrued under any other employee benefit plan
or arrangement of Seller covering the Employees or former Employees prior to
or after the Closing Date; and workers' compensation benefits with respect to
claims filed before the Closing Date or within one hundred eighty (180) days
after the Closing Date and relating to events occurring prior to the Closing
Date.
(ii) Seller will retain all liability for any and all
claims, losses, damages, and expenses (including, without limitation,
reasonable attorney's fees) and other liabilities and obligations relating to
or arising out of all unfair labor practice charges, wrongful termination
litigation, employment discrimination charges, severance claims, health and
welfare claims, asbestos claims, retirement claims, OSHA citations and any
other claims arising out of any employment and based upon Seller's conduct
occurring prior to the Closing Date including actions filed as of the Closing
Date or filed thereafter within applicable statutes of limitations.
(c). COBRA. Seller shall be responsible for the health
care coverage of any Employees as may be required by COBRA under affected
Seller Welfare Plans. After the Closing Date, Seller shall ensure that the
option of continuing health care coverage under the Seller Welfare Plans is
extended to the Employees to the extent required by COBRA. Buyer shall be
responsible for providing health care continuation coverage as required by
COBRA to any Transferring Employees terminated by Buyer after the Closing
Date.
(d). Vacation Obligations/Transferring Employees.
(i) Vacation earned as of May 1, 1996 and to be
taken in 1996 by Transferring Employees under Seller's vacation policy will be
credited to Transferring Employees on the Closing Date to the extent not then
taken. Buyer shall grant Transferring Employees time off with pay (vacation)
for this full credited amount, or pay in lieu of time off for any portion not
taken by December 31, 1996. Within fifteen (15) days after the actual date of
Closing Seller shall pay to Buyer the amount of such earned vacation pay
payable by Buyer to such Transferring Employees.
(ii) Vacation accruing in 1996 to be taken in 1997 by
Transferring Employees will be determined in accordance with Buyer's vacation
policy. In the application of Buyer's vacation policy, Buyer shall recognize
service of such Employees with Seller and its predecessors to the extent
Seller recognized such service under its vacation policy. Seller shall
provide Buyer, on or before the Closing Date, with a list of such recognized
service including the number of vacation weeks earned under Seller's Plan for
all Employees as of May 1, 1996. For those Transferring Employees who remain
in Buyer's employment until at least January 1, 1997, Buyer will accrue
vacation from January 1, 1996 notwithstanding the fact that the Transferring
Employees were not its Employees until after the Closing Date. For those who
do not remain in employment with Buyer until year end, vacation will accrue
1/12 pro rata for each completed calendar month of employment between the
Closing Date and December 31, 1996.
(e). Severance Pay Obligations.
(i) Seller assumes all severance pay obligations, if
any, for all Employees who are not hired by Buyer pursuant to Seller's
policies, plans, or agreements relating to severance from employment.
(ii) Any Salaried Transferring Employee hired by
Buyer who is terminated during the first six (6) months following the month in
which the Closing Date occurs, for reasons other than cause or misconduct,
shall receive severance pay from Buyer equal to that which he or she would
have received under Seller's severance pay policies as written on January 1,
1996, generally applicable to Seller's Employees in like positions and pay
status in the same amount which would have been payable had such Salaried
Transferring Employee not been hired by Buyer. Seller shall provide Buyer
with copies of its applicable policies as soon as reasonably practical after
signing of this Agreement.
(iii) Any Salaried Transferring Employee hired by
Buyer who is terminated by Buyer after the six (6) month period in (ii) above
or any other Transferring Employee will receive severance pay, if any, in
accordance with Buyer's severance pay policies uniformly applicable to other
Employees in positions of similar status and pay. In the application of such
policies, Buyer shall recognize the Transferring Employee's service with
Seller from his or her most recent date of hire with Seller.
11.4 Employee Benefits.
(a). All Transferring Employees of the Northwest or
Remaining Louisiana Businesses who accept employment with Buyer and commence
such employment immediately on the Closing Date will be, starting on the
Closing Date, covered by Buyer's existing employee benefit plans in accordance
with their terms and will be subject to Buyer's existing employment policies,
as applicable to Buyer's Employees who are similarly situated. Transferring
Employees shall be credited with their service with Seller from their most
recent date of hire for purposes of vesting, participation and eligibility
(but not benefit calculations, except as provided in Section 11.5(c)
pertaining to certain Salaried Employees), under Buyer's plans and policies,
as though such service had been with Buyer.
(b). With respect to Buyer medical coverage, there shall be
no waiting period for participation by Transferring Employees or their
dependents and they shall be credited with any deductibles satisfied under
Seller's medical plans for claims incurred during calendar year 1996 in
meeting the deductible requirements of Buyer's plans. Buyer will also waive
any preexisting condition restrictions under the Buyer Welfare Plans with
respect to Transferring Employees or their dependents.
(c). Buyer will provide no benefit coverage to a
Transferring Employee or his or her dependents to the extent that such person
has not reported to work and continues to be eligible by reason of disability
under the Seller Welfare Plans in accordance with their terms as in effect
immediately prior to the Closing Date.
(d). In particular, but without limitation, (i) claims for
medical, hospital or other health care expenses incurred by Transferring
Employees or their dependents on or after the Closing Date shall be covered
under the Buyer Welfare Plans, subject to the limitations thereof and claims
for such expenses incurred by Transferring Employees or their dependents prior
to the Closing Date shall be covered, subject to the limitations thereof (but
in accordance with the terms of this Agreement), under Seller's Welfare Plans;
(ii) claims of Transferring Employees or their dependents for life insurance,
accidental death and dismemberment and disability benefits with respect to
death, disability or other injury occurring on or after the Closing Date shall
be covered under Buyer's Welfare Plans, and claim for such benefits with
respect to death, disability or injury occurring prior to the Closing Date
shall be covered under Seller's plans (as applicable). The amount and type of
benefits payable in any case shall be determined in accordance with the terms
of the applicable Welfare Plan. Seller and Buyer acknowledge that certain
Transferring Employees who will have attained age 65 or age 55 and 5 years of
service for purposes of Seller's retiree medical plan as of the Closing Date
will be eligible to elect retiree medical coverage under Seller's retiree
medical plan, but only if they do so immediately after the Closing Date; that
such coverage requires payment of contributions in an amount determined by
Seller pursuant to Seller's retiree medical plan with respect to all
participants in such retiree plans and is secondary to active coverage under
Buyer's medical plans while the Transferring Employees are participating in
any of Buyer's medical plans which may cover such Employees.
11.5 Retirement Plan Matters.
(a). Seller Retirement Plans. "Seller Retirement Plans"
shall mean the Cavenham Forest Industries Inc. Retirement Plan for Hourly Paid
Employees and Cavenham Forest Industries Inc. Retirement Plan for Salaried
Employees.
(b). Vesting of Benefits. As of the Closing Date, all
Transferring Salaried Employees shall become fully vested in their accrued
benefits under the Seller Retirement Plans. Buyer will recognize past service
credited under the Seller's Retirement Plan for purposes of determining
vesting requirements under Buyer's Plan for Transferring Employees.
(c). Determination of Benefits/Payment of Supplement.
Seller will provide Buyer with a statement, within 180 days of Closing,
listing credited service and accrued benefits (expressed as a Single Life
Annuity) through the Closing Date as determined under Seller's Plan for
Salaried Employees (the "CSAB Statement"). Such accrued benefit amounts shall
be listed in the CSAB Statement for each Transferring Employee. The accrued
benefit amount shall be calculated by Seller's actuary, Hewitt Associates, in
consultation with Seller and Buyer (and, at Buyer's option, Buyer's actuary),
using assumptions shown on the CSAB Statement in conjunction with Seller's
current retirement plan formula. Buyer shall provide each Transferring
Salaried Employee, upon retirement, a supplemental retirement benefit under
its Salaried Retirement Plan, or under such other form of supplemental plan or
payment acceptable to Buyer, (a "Supplement") equal to:
(i) the age 62 Single Life Annuity amount, taking
into account the credited service listed in the CSAB Statement as applied to
the benefit formula of Buyer's Salaried Retirement Plan, using compensation
with Buyer at retirement, minus,
(ii) the amount of accrued benefit set forth in the
CSAB Statement for each such Transferred Salaried Employee.
If the Supplement is provided under Buyer's Salaried
Retirement Plan, such Supplement shall be adjusted pursuant to any options
elected by such Employee pursuant to such plan. If provided outside of
Buyer's Salaried Retirement Plan, such Supplement will be calculated on an
actuarial equivalent basis, using assumptions no less favorable than the
assumptions listed on Schedule 11.5(c) which are used by Seller in determining
the accrued benefit amount. Such Supplement shall be in addition to any
benefits earned by such Employees as a participant in Buyer's Salaried
Retirement Plan based upon their credited service with Buyer and compensation
from Buyer after the Closing Date.
(d). Hourly Retirement Plan. For hourly Transferring
Employees and Bargaining Unit Employees, Seller remains responsible for all
liabilities of the Cavenham Forest Industries Inc. Retirement Plan for Hourly
Paid Employees for benefits accrued as of the Closing Date. After the Closing
Date, Buyer will provide an appropriate Hourly Retirement Plan for all
Transferring Employees and an appropriate retirement plan for all Bargaining
Unit Employees consistent with Buyer's existing retirement plans covering
similarly situated Employee throughout the country. Buyer will credit
Transferring Employees with service since their most recent date of hire with
Seller for purposes of meeting the vesting requirements of Buyer's plan
covering such Employees.
11.6 Employee Payroll Information. Seller shall transfer to
Buyer copies of any records relating to withholding and payment of income and
unemployment taxes (federal, state and local) and FICA and FUTA taxes with
respect to wages paid to Employees hired by Buyer for the calendar year in
which the Closing occurs (including, without limitation, Forms W-4 and
Employee's Withholding Allowance Certificate). Buyer shall provide such
Employees with Forms W-2, Wage and Tax Statement, for the calendar year in
which the Closing occurs setting forth the wages paid and taxes withheld with
respect to such Employees for such calendar year by Seller and Buyer as
predecessor and successor Employees, respectively, as provided by Revenue
Procedure 84-77.
11.7 No Third-Party Beneficiary. This Agreement is being entered
into solely for the benefit of the parties hereto, and the parties do not
intend that any Employee or any other person shall be a third-party
beneficiary of the covenants by either Seller or Buyer contained in this
Agreement; provided, however, that any Transferring Salaried Employee shall
have the right to directly enforce the provisions of Section 11.5(c) against
Buyer, and if legal action is instituted in connection therewith, the
prevailing party shall be entitled to its reasonable attorney fees as set by
the court or courts at trial and on any appeal.
11.8 Labor Matters. As of the date hereof, but not as of the
Closing Date or any other date, except as set forth in Schedule 11.8,
(i) within the last two years the Seller has not experienced any material work
stoppage due to labor disagreements with respect to the Northwest or Remaining
Louisiana Businesses; (ii) Seller is a party to a collective bargaining
agreement relating to the Northwest Business; (iii) there is no unfair labor
practice charge or complaint against the Seller relating the Northwest and
Remaining Louisiana Businesses pending or, to the knowledge of the Seller,
threatened, before the National Labor Relations Board or other similar local
tribunal; (iv) there is no labor strike, request for representation, slowdown
or stoppage actually pending or to the knowledge of the Seller, threatened
against or affecting the Seller relating to the Northwest and Remaining
Louisiana Businesses; (v) to the knowledge of the Seller, no question
concerning representation as defined in the National Labor Relations Act is
pending or threatened against Seller respecting the Northwest and Remaining
Louisiana Businesses; and (vi) no arbitration proceeding arising out of or
under any collective bargaining agreement relating to the Northwest and
Remaining Louisiana Businesses is pending or, to the knowledge of the Seller,
is threatened.
11.9 Indemnification. Anything in this Agreement to the contrary
notwithstanding, the Buyer agrees to indemnify the Seller against and hold the
Seller harmless from any and all claims, losses, damages, expenses,obligations
and liabilities arising out of or otherwise in respect of any failure of the
Buyer to discharge their respective obligation under this Section 11.
Anything in this Agreement to the contrary notwithstanding, the Seller agrees
to indemnify the Buyer against and hold the Buyer harmless from any and all
claims, losses, damages, expenses, obligations and liabilities arising out of
or otherwise in respect of any failure of Seller to discharge their respective
obligation under this Section 11. This indemnity shall survive closing.
<PAGE>
12. Miscellaneous.
12.1 Finders. Buyer and Seller respectively represent and
warrant that they have not employed or utilized the services of any broker or
finder in connection with this Agreement or the transactions contemplated by
it. Seller shall indemnify and hold Buyer harmless from and against any and
all claims for brokers' commissions made by any third party as a result of
this Agreement and the transaction contemplated hereunder to the extent that
any such commission was incurred, or alleged to have been incurred, by,
through or under Seller. Buyer shall indemnify and hold Seller harmless from
and against any and all claims for brokers' commissions made by any third
party as a result of this Agreement and transactions contemplated hereunder to
the extent that any such commission was incurred, or alleged to have been
incurred, by, through or under Buyer.
12.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between
the parties with respect to those matters, and cannot be changed or terminated
orally.
12.3 Governing Law. Seller and Buyer each hereby consent to
personal jurisdiction in any action brought with respect to this Agreement and
the transactions contemplated hereunder in the State of Washington and to the
arbitration described in Section 9.2. Section 9.1 of this Agreement shall be
governed by and construed in accordance with the law of the State of
Washington generally, and RCW 64.04.005 specifically, without giving effect to
conflicts of law principles thereof. The balance of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington, including the conflicts of laws principles thereof.
12.4 Tables of Contents and Headings. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
<PAGE>
If to Buyer to:
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Attention: Chief Financial Officer
With a copy to:
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
Attention: J. Franklin Cable
If to Seller, to:
Cavenham Forest Industries Inc.
1800 SW First Avenue, Suite 500
Portland, OR 97201
Attention: President
With a copy to:
Cavenham Energy Resources Inc.
1800 SW First Avenue, Suite 500
Portland, OR 97201
Attention: President
With a copy to:
Hanson Natural Resources Company
1800 SW First Avenue, Suite 500
Portland, Oregon 97201
Attention: Co-President
With a copy to:
Hanson Industries
99 Wood Avenue South
Iselin, New Jersey 08830
Attention: General Counsel
With another copy to:
Cavenham Forest Industries Inc.
1800 SW First Avenue, Suite 500
Portland, OR 97201
Attention: General Counsel
12.6 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement which shall remain in full force and
effect.
12.7 Further Assurances and Assistance. Buyer and Seller agree
that each will execute and deliver to the other any and all documents, in
addition to those expressly provided for herein, that may be necessary or
appropriate to effectuate the provisions of this Agreement, whether before, at
or after the Closing. Seller agrees that, at any time and from time to time
after the Closing, it will execute and deliver to Buyer such further
assignments or other written assurances as Buyer may reasonably request to
perfect and protect Buyer's title to the Assets.
12.8 Survival. The terms, covenants, agreements, representations
and warranties contained in or made pursuant to this Agreement together with
all indemnities and undertakings contained herein shall survive the Closing,
subject to the time limits specified herein, if any, delivery of the Purchase
Price and delivery and/or recordation of the instruments of conveyances and
assignment, bills of sale, assignments of contract rights and other closing
documents, and shall not be deemed to have been merged in any of the documents
delivered at the Closing, irrespective of any investigation made by or on
behalf of any party.
12.9 Waiver. Any party may waive compliance by another with any
of the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in writing
and signed by the party waiving such provision.
12.10 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Except as expressly set forth in Section
11.7, nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this
Agreement, including any such person or entity asserting rights as a third
party beneficiary with respect to environmental matters. No assignment of
this Agreement or of any rights or obligation hereunder may be made by either
party (by operation of law or otherwise) without the prior written consent of
the other and any attempted assignment without the required consent shall be
void; provided, however, that no such consent shall be required of Buyer to
assign its rights under this Agreement to one or more Designees, but no such
assignment by Buyer of its rights or obligations hereunder shall relieve Buyer
of any of its obligations to Seller under this Agreement. Further, no such
consent shall be required of Seller to assign its rights or obligations under
this Agreement to one or more Affiliates of Seller, but no such assignment by
seller of its rights or obligations hereunder shall relieve Seller of any of
its obligations to Buyer hereunder.
12.11 Best Knowledge. As used in this Agreement "to the best of
Seller's knowledge" shall mean actual knowledge possessed by William B. Freck,
the Division General Counsel for Seller, David E. Harris, the Division Chief
Financial Officer of Seller, Richard E. Dahlin, the Division Vice President
for the Northwest Business, and Lee T. Alford, the Division Vice President for
the Remaining Louisiana Businesses, all of whom are executive officers of
Seller, and any of the forest managers or the mill manager of Seller; and "to
the best of Buyer's knowledge" shall mean actual knowledge possessed by any
executive officer or supervisory employee of Buyer.
12.12 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together shall
constitute one and the same Agreement.
12.13 No Recordation. Neither this Agreement nor a memorandum
hereof shall be recorded in any jurisdiction or public record.
12.14 Transitional Services. At the request of Buyer, Seller
will continue to provide accounting, payroll, and general administration
services to Buyer for a reasonable period of time after the Closing on a basis
consistent with past practice. At the request of Seller, Buyer will continue
to provide accounting, payroll, and general administration services to Seller
for a reasonable period of time after the Closing on a basis consistent with
past practice.
12.15 INTENTIONALLY LEFT BLANK
12.16 Notice of Reforestation Requirements. In accordance with
ORS 527.665, Schedule 12.16 is notice to Buyer of Seller's reforestation
requirements pursuant to the Oregon Forest Practices Act.
12.17 Buyer's Designees. Notwithstanding that Buyer's Designees
may be the "grantees" and "assignees" on conveyance instruments executed by
Seller pursuant to Section 3.4, Buyer's assumption of liabilities as provided
in Section 1.8(a) and in the instruments described in Section 3.4 shall in no
way be diminished; at Closing Buyer shall, at Seller's request, execute the
Bill of Sale, Assignment, Acceptance, and Assumption, and the assignments of
other Contracts, permits and licenses described in Section 3.4 for the Assets
to be transferred to Buyer's Designees, notwithstanding that the Designees
also execute such instruments for such Assets. With respect to Section 11,
Buyer shall cause each of its Designees, as applicable, to comply with all
obligations of Buyer under Section 11; provided, such Designee's terms and
conditions of employment (including vacation policies, severance policies, and
other benefit plans) shall be substituted for Buyer's terms and conditions of
employment (including vacation policies, severance policies, and other benefit
plans); and provided, further, that with respect to Section 11.5(c), if a
Designee does not have a defined benefit retirement plan, the Supplement (for
this purpose calculated by using Buyer's retirement plan formula and the
actuarial assumptions set forth on Schedule 11.5(c)) shall be provided to the
Transferring Employee hired by such Designee through an alternative form (such
as a single-life annuity or a lump sum payment of the present value of such
Supplement). Buyer shall indemnify, defend, and hold harmless Seller from all
claims, actions, suits, and liabilities arising from the Designees against
Seller by reason of this Agreement or the transactions contemplated herein;
provided, that Buyer may submit, on behalf of a Designee, any such claim,
action, suit, or liability that Buyer is entitled to submit under this
Agreement.
12.18 No Presumptions. This Agreement is a result of
negotiations between Seller and Buyer, both of whom are represented by counsel
of their choosing. No presumption shall exist in favor of either party
concerning the interpretation of the documents constituting this Agreement by
reason of which party drafted the documents.
12.19 Disclaimer Required by Oregon Statute. THE PROPERTY
DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT
PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND
REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR
SITING OF A RESIDENCE. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE
PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE
CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF
FIRE PROTECTION FOR STRUCTURES.
<PAGE>
12.20 Joint and Several Liability of Seller. Hanson, CERI, and
CFII are jointly and severally liable for the representations, warranties,
covenants and obligations of Seller in this Agreement.
Dated 3/12/96
SELLER: Cavenham Forest Industries Inc.,
a Delaware corporation
By: /s/ R. A. Carson
Title: President
SELLER: Cavenham Energy Resources Inc.,
a Delaware corporation
By: /s/ R. A. Carson
Title: President
Hanson Natural Resources Company
By Cavenham Forest Industries Inc.,
general partner
By: /s/ R. A. Carson
Title: President
BUYER: Willamette Industries, Inc.,
an Oregon corporation
By: /s/ Steven R. Rogel
Title: President & CEO
<PAGE>
SCHEDULES
Schedule 1.1(a) description of parcels of real property (Timberland)
Schedule 1.1(c) buildings, improvements, roads, bridges,
permits, and easements on or appurtenant to real
property
Schedule 1.1(d) related facilities
Schedule 1.1(e) other rights related to real property
Schedule 1.1(g) description of Mineral Rights held separate from
Timberland
Schedule 1.2 description of Mill Facilities, permits, rights,
contracts and licenses related thereto
Schedule 1.3 Long Term Leases
Schedule 1.4(b) mobile equipment, machinery, equipment,
tools, fixtures and furniture
Schedule 1.4(d) contracts (including service contracts,
sales and purchase orders and
commitments), leases, permits and
licenses not related to real property
Schedule 1.5(h) excluded personal property located at Portland office
or elsewhere
Schedule 1.8 form of Assignment, Acceptance, and
Assumption Agreement
Schedule 1.8(b)(ii) accrued expenses
Schedule 1.8(b)(iv) exceptions for Affiliates of Seller
Schedule 1.9 form of offer for Chipper Facility and Site for right
of first refusal
Schedule 1.10 form of offer for Wauna Acreage for right of first
refusal
Schedule 2.1(a) Escrow Agreement
Schedule 3.4(a) instruments of transfer to real property
Schedule 3.4(a)(a) form of bill of sale with indemnity
Schedule 3.4(a)(a)(a) form of assignment for Long Term Leases
Schedule 4. title reports and commitments
Schedule 5(a) operating plan
Schedule 5(b) harvesting formula
Schedule 5(c) real estate plan
Schedule 6.3 Material Contracts
Schedule 6.4 claims, litigation, proceedings,
governmental investigations
Schedule 6.6 environmental conditions
Schedule 8.7 confidentiality agreement
Schedule 8.8 allocation
Schedule 8.10 access agreement
Schedule 11.1(a) list of executive officers
Schedule 11.1(d) list of all Employees in Northwest Business and
Remaining Louisiana Businesses
Schedule 11.2(f) list of disabled employees/leave of
absences
Schedule 11.5(b) list of Transferring Salaried Employees credited
service
Schedule 11.5(c) actuarial assumptions
Schedule 11.8 labor matters
Schedule 12.16 reforestation requirements
<PAGE>
Exhibit 2.2
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
This Asset Sale, Purchase and Transfer Agreement (this "Agreement")
is made as of this 11th day of April, 1996, between Willamette Industries,
Inc., an Oregon corporation ("Seller") and Crown Pacific Limited Partnership,
a Delaware limited partnership ("Buyer").
RECITALS:
A. Seller and Hanson Natural Resources Company, a Delaware general
partnership ("Hanson"), Cavenham Energy Resources Inc., a Delaware corporation
("CERI"), and Cavenham Forest Industries Inc., a Delaware corporation ("CFII")
(Hanson, CERI and CFII are collectively called "Owner") have entered into an
agreement (the "Purchase Agreement") pursuant to which Owner has agreed to
sell and transfer and Seller has agreed to buy and accept from Owner
substantially all of the assets which are used in the conduct of Hanson's
timber, wood products and energy business located in Oregon, Washington,
Southwest Louisiana, and North Louisiana.
B. Seller has delivered to Buyer a copy of the Purchase Agreement
without Schedules.
C. Seller and Buyer desire to enter into this Agreement pursuant to
which Seller agrees to sell and transfer and Buyer agrees to buy and accept
from Seller certain timberland properties and related assets in the states of
Oregon and Washington.
D. Seller intends to sell certain other assets it acquires from Owner
to other purchasers ("Other Purchasers").
It is therefore agreed as follows:
Definitions. As used herein, the following terms shall have the
following meanings:
Assets - The term "Assets" shall mean the Timberland Properties,
Contracts, and other items and leases described in Sections 1.1 and 1.4, but
excluding the Excluded Assets.
Contracts - The term "Contracts" shall mean the contracts and
leases which are described in Sections 1.1 and 1.4.
Closing - The term "Closing" or "Closing Date" shall have the
meaning ascribed to it in Section 3.1.
Closing Date Payment - The term "Closing Date Payment" shall have
the meaning ascribed to it in Section 2.1(b).
Excluded Assets - The term "Excluded Assets" shall mean the assets
excluded in Section 1.5.
Material Adverse Effect - The term "Material Adverse Effect" shall
mean events which have an adverse effect in the aggregate which, measured in
dollars, exceeds the sum of $15,000,000.
Material Contract - The term "Material Contract" shall have the
meaning ascribed to it in Section 6.3.
Proration Date - The term "Proration Date" shall mean the specific
date set for Closing in Section 3.1, or any subsequent date set for Closing,
provided that the actual date of Closing occurs within five (5) business days
after said date set for Closing.
Timberland Properties - The term "Timberland Properties" shall mean
the real property and real property interests described in Section 1.1(a).
Affiliate of Owner - The term "Affiliate of Owner" shall mean (i)
any individual, partnership, corporation, or other entity or person which is
owned or controlled directly or indirectly by Hanson plc; (ii) any other
individual, partnership, corporation, or other entity or person which controls
or is controlled by or under common control with Owner; and (iii) any officer,
director, partner, or owner of 10 percent or greater equity or voting interest
in any such other corporation, partnership, or other entity or person.
Code - The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
Agreement - The term "Agreement" shall mean this instrument and all
Schedules and Exhibits attached hereto.
1. Sale, Purchase and Transfer of Assets.
Subject to the terms and conditions of this Agreement, at the Closing
referred to herein, Seller agrees to sell, transfer and assign or cause to be
sold, transferred and assigned, and Buyer agrees to purchase and accept on the
terms stated herein, all of Seller's right, title and interest in and to the
Assets, including, without limitation, the following:
1.1 Real Property (Timberland Properties).
(a) Timberland. Those certain parcels of real property, owned by
Owner situated in the states of Oregon and Washington and described on
Schedule 1.1 (a), together with all timber of all species, standing, dead or
down, pulpwood, all felled and bucked logs, trees, shrubs and reproduction
thereon as of the Closing Date, the ("Timberland" or "Timberland Properties"),
excepting therefrom changes therein prior to Closing pursuant to Section 5.
(b) Log Inventory. The log inventory situated in Port Angeles,
Washington.
(c) Buildings, Improvements and Easements. All buildings and
improvements, all roads, bridges, permits, servitudes, and easements, owned or
leased by Owner or which Owner has a right to use and on or appurtenant to the
Timberland Properties, including those described on Schedule 1.1 (c).
(d) Related Facilities. All sorting yards, log booms, offices,
and rock pits, owned or leased by Owner and associated with the Timberland
Properties, whether or not located on the Timberland Properties, including
those described on Schedule 1.1 (d).
(e) Other Rights. All other contracts and rights of Owner
specifically relating to the Timberland Properties and operations thereon
including, but not limited to, contracts, contract rights, leases, servitudes,
permits, licenses, notifications, approvals and authorizations of governmental
bodies, including those described on Schedule 1.1 (e), to the extent
assignable.
(f) Water Rights. All water rights owned by Owner relating to and
appurtenant to the Timberland Properties.
(g) Mineral Rights. All minerals, including without express or
implied limitation, oil, gas, and hydrocarbon and geothermal resources in
which Owner has an interest related to the Timberland Properties including
those Mineral Rights listed on Schedule 1.1 (g) (the "Mineral Rights").
1.2 INTENTIONALLY OMITTED
1.3 INTENTIONALLY OMITTED
1.4 Personal Property.
The following personal property related to the Timberland Properties:
(a) Records. Owner's land management and other records relating to
the Timberland Properties, Mineral Rights, and other Assets which, in the
reasonable judgment and discretion of Seller, are segregated or segregable by
Seller from the overall records to be acquired by Seller from Owner, including
but not limited to management unit maps, aerial photographs, timber cruises,
road and gate records, operational records and leases, easements, deeds,
licenses, survey and survey notes, information relating to oil, gas, and
mineral activities, permits, approvals and authorizations of governmental
agencies held by Owner in connection with the Timberland Properties, Mineral
Rights, and other Assets. The records shall also include all files and
documents relating to customers, suppliers and contractors directly related to
the Timberland Properties, Mineral Rights, and other Assets which, in the
reasonable judgment and discretion of Seller, are segregated or segregable
from all other business records, files, books and documents of Seller.
(b) Mobile Equipment, Machinery and Equipment. The mobile
equipment, machinery, equipment, tools, fixtures and furniture used by Owner
exclusively in connection with the Timberland Properties including those
listed on Schedule 1.4 (b), as such items listed thereon may have been sold,
replaced, deleted or added in the ordinary course of business, together with
certificates of title for motor vehicles constituting part of such equipment
which are licensed and owned by Owner.
(c) Office Supplies. The office supplies and forms, packaging
materials and similar miscellaneous tangible personal property used by Owner
exclusively in connection with the Timberland Properties except such supplies
which are marked or identifiable with the logo, mark or trademark of Owner or
Hanson's general partners.
(d) Contracts. All rights and obligations under those instruments
related to the operation of the Assets that are not related to real property,
including the contracts, leases, permits and licenses described on
Schedule 1.4 (d), to the extent the same are assignable, including sales
orders and commitments, purchase orders and commitments, agreements and
contracts of Owner which relate to work or services to be performed for or at
the Assets.
1.5 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Seller is selling, assigning, transferring or
conveying or causing to be sold, assigned, transferred or conveyed to Buyer
only the Timberland Properties and the assets related thereto that Seller has
the right to acquire from Owner pursuant to the Purchase Agreement. Rights,
assets, and properties which are retained by Owner pursuant to the Purchase
Agreement shall be specifically excluded from the transactions contemplated by
this Agreement, notwithstanding anything to the contrary elsewhere in this
Agreement ("Excluded Assets").
1.6 Assignment of Contracts.
(a) Contracts Assignable Without Consent. Seller agrees to assign
or cause to be assigned to Buyer as of the Closing, all of the rights of
Seller and Owner under the Contracts that are assignable without consent of
any third party and Buyer shall assume, as of the Closing, all obligations of
Seller and Owner thereunder which arise before, at or after Closing.
(b) Seller to Use Reasonable Efforts. Anything in this Agreement
to the contrary notwithstanding, Seller shall not be obligated to sell,
assign, transfer or convey or cause to be sold, assigned, transferred or
conveyed to Buyer any of its rights in and to any of the Contracts without
first obtaining all necessary approvals, consents or waivers. Seller shall
use all reasonable efforts, and Buyer shall reasonably cooperate with Seller,
to obtain all necessary approvals, consents or waivers, or to resolve any
impracticalities of transfer necessary to assign or convey to Buyer each such
Contract as soon as practicable; provided, however, that neither Seller nor
Buyer shall be obligated to pay any consideration therefor except for filing
fees and other ordinary administrative charges which shall be paid by Seller
to the third party from whom such approval, consent or waiver is requested.
In the event Seller obtains consent to assignment of a Contract prior to the
Closing, Buyer shall assume, as of Closing, all obligations of Seller and
Owner thereunder which arise before, at or after the Closing, as though no
consent was required.
(c) If Waivers or Consents Cannot be Obtained. To the extent that
any of the approvals, consents or waivers referred to in Section 1.6(b) have
not been obtained by Seller as of the Closing, or until the impracticalities
of transfer are resolved, Seller shall, during the remaining term of such
Contracts, use all reasonable efforts to (i) obtain the consent of any such
third party with the filing fees and ordinary administrative charges payable
to such third party to be split equally by the parties; (ii) cooperate with
Buyer in any reasonable and lawful arrangements designed to provide the
benefits of such Contracts to Buyer so long as Buyer fully cooperates with
Seller and Owner in such arrangements; and (iii) enforce, or cause to be
enforced, at the request of Buyer and at the expense and for the account of
Buyer, any rights of Seller or Owner arising from such Contracts against such
issuer thereof or the other party or parties thereto (including the right to
elect to terminate any such Contracts in accordance with the terms thereof
upon the request of, and indemnification of Seller and Owner from, Buyer).
(d) Non-assignability. To the extent that any Contract or any
claim, right or benefit arising thereunder or resulting therefrom is not
capable of being sold, assigned, transferred or conveyed without the approval,
consent or waiver of the issuer thereof or the other party thereto, or any
third person (including a government or governmental unit), or if such sale,
assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this Agreement shall
not constitute a sale, assignment, transfer or conveyance thereof, or an
attempted assignment, transfer or conveyance thereof.
1.7 Transferring Permits and Licenses. Seller will assign, transfer or
convey, or cause to be assigned, transferred or conveyed to Buyer at the
Closing those permits and licenses, including those described in Schedules 1.1
(c) and (e), and 1.4 (d) which are held or used by Owner in connection with
the Assets and which can be assigned without having to obtain the consent of
any third party with respect thereto. Seller will cooperate with Buyer in
obtaining any third party consents necessary to the assignment or transfer of
any other permits or licenses used or held by Seller or Owner in connection
with the Assets which are so assignable or transferable; however, neither
Seller nor Buyer shall be obligated to pay any consideration therefor except
for filing fees and other ordinary administrative charges which shall be paid
by Buyer to the third party from whom such approval, consent or waiver is
requested. Buyer shall assume, as of Closing, all obligations of Seller and
Owner arising prior to, at or after Closing under those permits and licenses
which can be transferred without having to obtain the consent of any third
party and those permits and licenses for which consent to transfer is obtained
prior to Closing. Subsequent to the Closing, to the extent permitted by law,
upon ninety (90) days prior written notice, Owner has the right to cancel any
permits or licenses or any bonds, guarantees or undertakings by Owner
applicable to the Assets to the extent such are not so assigned or transferred
to Seller pursuant to Section 1.7 of the Purchase Agreement to Buyer pursuant
to this Section 1.7.
1.8 Liabilities Assumed by Buyer; Liabilities Not Assumed by Buyer.
(a) Assumed Liabilities. Except as expressly provided in
Subsection 1.8(b), Buyer shall, effective as of the Closing and without any
further responsibility or liability of or recourse to Seller, or its
directors, shareholders, officers, partners, employees, agents, consultants,
representatives, successors, transferees or assignees, absolutely and
irrevocably assume and shall be liable and responsible for the claims,
liabilities, and obligations of Seller arising pursuant to the Purchase
Agreement and Owner with respect to the Timberland Properties, Mineral Rights,
and other Assets, whether or not disclosed to Buyer, and whether or not
occurring or arising prior to, at or after Closing, except as expressly set
forth in Section 1.8(b) and except to the extent to which Seller indemnifies
Buyer as expressly set forth in Section 10.1(a); and nothing in this Section
1.8(a) shall diminish Buyer's rights in Section 8.11.
Without limiting the foregoing, Buyer shall assume the following:
(i) Buyer shall assume all Contracts assigned to Buyer
pursuant to Section 1.6, and permits and licenses assigned to Buyer pursuant
to Section 1.7;
(ii) Buyer shall assume all matters disclosed to Buyer in
Schedules 6.3 through 6.6;
(iii) Buyer shall assume the employee matters that are set
forth in Section 11 as Buyer's responsibility; and
(iv) INTENTIONALLY OMITTED.
(v) Buyer shall assume all undertakings of, and liabilities
and obligations assumed by, CFII, and all indemnity obligations of CFII, if
any, to Crown Zellerbach Corporation and its successors and assigns relating
to all environmental conditions arising from ownership, possession, use, or
conduct of business and operations of the Indemnification Properties (as
defined in Section 6.7(e) of this Agreement), which undertakings, liabilities,
obligations, and indemnity obligations are contemplated in that certain
Transaction Agreement dated December 14, 1985, by and between James River
Corporation of Virginia and Crown Zellerbach Corporation and are more
specifically set forth in that certain Undertaking dated as of May 2, 1986, by
CFII in favor of Crown Zellerbach Corporation (the Transaction Agreement and
Undertaking are collectively referred to herein as "Transaction
Agreement/Undertaking").
At Closing, the parties shall execute an Assignment, Acceptance,
and Assumption Agreement in the form attached hereto as Schedule 1.8 to
evidence the foregoing matters to be assumed by Buyer, in addition to the more
specific instruments of assignment and assumption described in this Agreement.
(b) Excluded Liabilities. Notwithstanding anything to the
contrary in this Agreement, the following liabilities and obligations
("Excluded Liabilities") shall not be assigned to Buyer nor assumed by Buyer:
(i) all liabilities and obligations related to the Excluded
Assets;
(ii) trade accounts payable for items purchased and
delivered as of the Closing Date, and all accrued expenses of the type set
forth on Schedule 1.8 (b)(ii) attached hereto which are, or under generally
accepted accounting principles should be, accrued at Closing;
(iii) all liabilities and obligations for taxes, except for
assessments and real estate taxes which shall be prorated on the Proration
Date as provided in this Agreement, and except for the deferred ad valorem
taxes because of classification of all or a portion of the Timberland
Properties as farmland, grazing land, or timberland;
(iv) all liabilities and obligations of Owner to any
Affiliate of Owner, except for any matters listed on Schedule 1.8 (b)(iv)
attached hereto;
(v) any liabilities or obligations to or with respect to
employees of Seller or Owner, except for the obligations and liabilities to be
assumed by Buyer pursuant to Section 11;
(vi) any obligations for borrowed funds; the term "borrowed
funds" shall not be construed to include purchase money contracts and similar
security interests for personal property;
(vii) all bodily injury claims occurring on or in connection
with the Assets prior to Closing and all product liability claims arising from
sale or operation of the Assets prior to Closing;
(viii) any matters retained by Seller or Owner pursuant to
Section 8.2(c);
(ix) all undertakings of, and liabilities and obligations
assumed by, CFII, and all indemnity obligations of CFII, contemplated by or
set forth in the Transaction Agreement/Undertaking, except for the
undertakings, assumed liabilities and obligations, and indemnity obligations
described in Section 1.8(a)(v) of this Agreement; and
(x) liens and encumbrances to be satisfied by Owner as
provided in Section 3.6.
2. Purchase Price. Subject to adjustment in accordance with the
provisions of this Agreement, the purchase price for the Assets ("Purchase
Price") shall be Two Hundred Five Million Dollars ($205,000,000). The
Purchase Price shall be payable as provided in Section 2.1.
2.1 Payment of Purchase Price.
(a) INTENTIONALLY OMITTED.
(b) Buyer shall pay to Seller the entire Purchase Price (the
"Closing Date Payment"), by wire transfer of immediately available funds to
the escrow trust account established by Chicago Title Insurance Company
(herein "Chicago Title" or "Escrow Agent") at Chemical Bank, New York, New
York ("Owner's Bank"), which transfer shall have been received by Owner's Bank
no later than 8 a.m. PDT on the Closing Date. Upon confirmation to Buyer by
the Escrow Agent that the deeds described in Section 3.4 have been recorded,
the Escrow Agent shall deliver the Closing Date Payment to Seller or to
Seller's order.
(c) If Buyer is legally obligated to Close and if the Closing
Date Payment is not received by Owner's Bank by 8 a.m. PDT on the Closing
Date, Seller may, at its option, either exercise the Seller's remedies
described in Section 9 by reason of Buyer's default, or may accept late
payment of the Closing Date Payment which shall, in such event, be accompanied
by payment of an amount determined by computing simple interest on the amount
of that payment at the rate of interest announced publicly by Chemical Bank in
New York, New York from time to time as its "Prime Rate" (on the basis of a
360-day year) from the Closing Date to the date of payment. If the Closing
Date Payment is not received by Owner's Bank on the Closing Date by 8 a.m.
PDT, and if Seller elects to accept a late payment, the Closing Date Payment
shall be transferred to an account to be designated by Seller.
(d) If, at the Closing, the parties have not resolved the Purchase
Price reduction as contemplated in Section 8.6, or the Price Adjustment Items
or Price Adjustment Notice as contemplated in Section 8.11, then the parties
shall proceed to Close as scheduled and the amount to be paid to Seller at
Closing shall be the Closing Date Payment. Seller shall reimburse Buyer for
any overpayment in the Purchase Price within three (3) business days of
resolution of the amount of the Purchase Price reduction.
3. Closing.
3.1 Date of Closing. The Closing shall take place concurrently with the
closing under the Purchase Agreement at the offices of Ater Wynne Hewitt
Dodson & Skerritt, 222 SW Columbia, Suite 1800, Portland, Oregon, or at such
other place as the parties may agree in writing, on May 15, 1996, unless
another time and date are mutually designated by Seller and Owner. The
foregoing date is the date on which Owner's deed(s) to Buyer are to be
recorded immediately prior to the delivery of the Purchase Price to Seller and
is referred to in this Agreement as the "Closing" or "Closing Date". Seller
shall deliver possession of the Assets to Buyer on the Closing Date. Seller
shall have no obligation to consummate the Closing if for any reason the
closing under the Purchase Agreement does not occur.
3.2 Hart-Scott Rodino Act. Buyer and Seller have prepared all necessary
documentation and performed all other necessary actions to complete all
necessary filings under the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). Each party agrees to respond to any request
for additional information within twenty (20) days of receipt of the request.
In the event the waiting period (which term includes the extension period)
under the HSR Act has not expired by the Closing Date set forth in Section
3.1, the Closing Date shall be delayed until five (5) business days after
expiration of the waiting period; provided, that Seller, in its sole
discretion, may terminate this Agreement (i) if the waiting period has not
expired or been terminated prior to the closing under the Purchase Agreement
within 115 calendar days following the date on which Seller completes its
initial filing, or (ii) if Owner terminates the Purchase Agreement pursuant to
Section 3.2 thereof, and Buyer, in its sole discretion, may terminate this
Agreement if the waiting period has not expired or been terminated within 180
calendar days of the date on which Buyer completes its initial filing.
3.3 Execution and Deposit of Documents Prior to Closing. At least five
(5) business days prior to the Closing Date, each of the parties, as
applicable, shall execute and deposit with the Escrow Agent all of the
documents listed in Section 3.4 below which are to be recorded or filed on the
Closing Date. Each of the parties, as applicable, shall execute and deliver
to the other party all remaining documents listed in Subsection 3.4 below on
the Closing Date.
3.4 Documents to be Delivered by Seller . At or prior to the Closing,
Seller shall deliver, or cause to be delivered, the following:
(a) Documents of transfer, bills of sale, certificates of title
and other instruments of transfer, dated the Closing Date, transferring to
Buyer title to the Assets. With respect to the Timberland described on
Schedule 1.1 (a) (including the buildings, improvements and other appurtenant
interests described in Section 1.1(c) and (d)) title shall be transferred in
the form of the deed(s) attached hereto as Schedule 3.4 (a) directly from
Owner to Buyer; with respect to the Mineral Rights described in Schedule 1.1
(g), transfer shall be accomplished through mineral quit claim deeds directly
from Owner to Buyer and other instruments of transfer without warranty; with
respect to all personal property, title shall be transferred by Bill of Sale
in the form attached hereto as Schedule 3.4 (a)(a);
(b) Documents evidencing the assignment and assumption of the
Contracts to Buyer (together with any third-party consents required for such
transfers) and the assignment and assumption of any permits and licenses
(together with any third-party consents required for such transfers) not
transferred pursuant to Section 3.4(a), and the Assignment, Acceptance, and
Assumption Agreement described in Section 1.8;
(c) A copy of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement by
Seller and a certificate of the secretary or assistant secretary of Seller,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(d) The affidavits of Seller required by Section 1445 (b)(2) of
the Code and by local taxing authorities, and any other documents required of
Seller to transfer the Assets in accordance with this Agreement;
(e) Copies of satisfactions, releases or terminations of the liens
and encumbrances referred to in Section 3.6; and
(f) Copies of documents delivered to Seller by Owner pursuant to
Sections 3.4(c) and (d) of the Purchase Agreement.
3.5 Documents to be Delivered by Buyer. At or prior to the Closing
Date, Buyer shall deliver the following:
(a) Documents evidencing the assignment and assumption of all
Contracts and the assignment and assumption of all permits and licenses
transferred by Seller to Buyer pursuant to Section 3.4(a) and (b), and the
Bill of Sale, and Assignment, Acceptance, and Assumption Agreement described
in Section 1.8;
(b) A copy of the resolutions of the management committee, board
of directors, or other appropriate body of Buyer vested with the authority to
manage Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer, and a certificate of its secretary or assistant secretary,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(c) The affidavits, if any, of Buyer required by local taxing
authorities, including the affidavits specified in Section 8.8(b), and any
other documents required of Buyer to transfer the Assets in accordance with
this Agreement.
3.6 Satisfaction of Liens and Encumbrances. At or prior to the Closing
Date, Owner has agreed to pay in full all liens and encumbrances for borrowed
funds, income tax liens, and judgment liens on the Assets. At or prior to the
Closing Date, Owner has agreed to pay all delinquent property taxes on the
Assets. Buyer shall assume sole responsibility, as of Closing, for any ad
valorem taxes which are deferred because of farm or grazing or forest use or
classification.
3.7 Transfer Taxes; Prorations. Any recording fees, transfer taxes, or
sales taxes payable as a result of the sale of the Assets shall be paid by
Seller or Owner. Escrow fees pursuant to Section 3.8 shall be split equally
between the parties. Buyer shall reimburse Seller for other escrow fees
payable by Seller pursuant to the Purchase Agreement, including fees in
connection with the Deposit under the Purchase Agreement, in the proportion
that the Purchase Price bears to One Billion Five Hundred Eighty Eight Million
Dollars ($1,588,000,000). Real estate taxes, assessments for public
improvements, and all other fees and assessments related to the Assets shall
be prorated as of the Proration Date.
3.8 Default Deeds. At least five (5) business days prior to the
Closing Date, Buyer shall execute and deposit with Chicago Title, in escrow,
quitclaim deeds (the "Quitclaim Deeds") quitclaiming and releasing unto Seller
all of Buyer's right, title, and interest in and to the Timberland Properties,
including any and all after acquired title to the Timberland Properties. If
the closing under the Purchase Agreement occurs and the Closing Date Payment
is made to Owner's Bank by 9 a.m. PDT on the Closing Date, Chicago Title shall
return the Quitclaim Deeds to Buyer. If the closing under the Purchase
Agreement occurs and Buyer fails to make the Closing Date Payment by 9 a.m.
PDT on the Closing Date, regardless of whether such failure is justified on
account of any alleged default by Seller, then Chicago Title shall release the
Quitclaim Deeds to Seller which may proceed to record them in the applicable
real estate records.
4. Title Insurance. Seller has delivered to Buyer evidence of title in
the form of draft title reports and title commitments ("Title Reports"), as
appropriate, covering the Timberland Properties, copies of which are attached
hereto as Schedule 4; Seller and Buyer acknowledge that the Title Reports may
be revised, corrected, and supplemented by Chicago Title between the date of
this Agreement and the Closing Date, as contemplated in Section 5(c) and, as
contemplated in the letters from Rosalee Merritt to Malcolm Newkirk, copies of
which are included in Schedule 4 as part of the Title Reports. In the event
that Chicago Title is not prepared to issue at Closing to Buyer, owner's
policies of title insurance insuring title in the Timberland Properties in
Buyer, subject only to the exceptions set forth in the Title Reports, as those
Title Reports may have been revised, corrected, and supplemented by Chicago
Title as set forth above, but with no reductions, in excess of five hundred
(500) acres in the aggregate, in the acreage vested in Owner, and subject to
the printed exceptions contained in such Title Reports, then Buyer shall have
the rights set forth in Section 8.11 with respect to the additional reductions
in acreage and additional material encumbrances to be added as exceptions to
title. If Chicago Title is not prepared to issue such owner's policies on the
Closing Date for reasons other than additional reductions in acreage or
additional exceptions to title, either Buyer or Seller may delay Closing until
Chicago Title or another title insurance company is prepared to issue such
owner's policies. At Closing Buyer shall purchase, at its own expense, such
owner's policies unless otherwise agreed to by the parties.
5. Conduct Pending Closing.
(a) Between the date hereof and the Closing Date, Owner has agreed
to continue to operate the Timberland Properties in the ordinary course and in
a manner reasonably consistent with its present operating plan which
establishes a maximum volume of harvest or stumpage sales for harvest
("Maximum Volume") through the Closing Date ("Operating Plan"), a copy of
which is attached hereto as Schedule 5(a); provided, that Owner has agreed
that it will not enter into log export contracts that provide for delivery of
logs after Closing in recognition of the fact that Seller will not export
logs, and this change of conduct by Owner may modify Owner's ordinary course
and Operating Plan but shall not affect the Maximum Volume set forth on
Schedule 5(a). Subject to the foregoing, Owner has agreed that it shall
continue to harvest, or sell stumpage for harvest, timber standing, lying, and
situated upon the Timberland Properties described in Schedule 1.1 (a). Owner
has agreed that it shall continue its various silvicultural practices
consistent with its past practices, from the date hereof until the Closing
Date. The log inventory referred to in Section 1.1(b) as of the close of
business on the day preceding the date the Closing actually occurs shall have
a value of at least $400,000; such determination of value to be made on a
basis consistent with Owner's prior practice.
(b) The Purchase Price shall be increased or decreased by the
difference between the actual harvest (including stumpage sales for harvest)
and the Maximum Volume pursuant to the formula ("Harvesting Formula") attached
hereto as Schedule 5(b), as of the date the Closing actually occurs, but such
difference between actual harvest and the Maximum Volume shall not be
considered a breach by Seller of this Agreement. The Purchase Price shall
also be increased or decreased by the amount by which the value of the log
inventory referred to in Section 1.1(b), on hand as of the close of business
on the day preceding the date the Closing actually occurs; if such value is
more than $400,000, the Purchase Price shall be increased by the difference
and if such value is less than $400,000, the Purchase Price shall be decreased
by the difference. Any such shortfall or excess of inventories on hand shall
not be considered a breach by Seller of this Agreement. Adjustments, if any,
to the Purchase Price in this Subsection (b) shall be made within fifteen (15)
days of the date the Closing actually occurs, and each party agrees to pay to
the other the adjusted amount, as applicable, without interest within said
fifteen (15) days.
(c) Owner has agreed that it will not take any action, (i) the
result of which will be to create a Material Adverse Effect on the value of
the assets covered by the Purchase Agreement, or (ii) which is both not
reasonably consistent with its Operating Plan and not in the ordinary course
of business, except as otherwise set forth in this Section 5. Owner may, but
is not obligated, to continue, in the ordinary course of business, to grant
and obtain easements, rights of way and other similar rights to the Timberland
Properties, to grant options to or lease additional Mineral Rights, and to
purchase or sell or exchange additional real properties or interests therein
consistent with its present plan ("Real Estate Plan"), a copy of the relevant
portions of which is attached hereto as Schedule 5(c). In the event Owner
sells any portion of the Timberland Properties or interests therein or grants
options to or leases additional Mineral Rights, other than those identified in
the Real Estate Plan, the Purchase Price shall be reduced by an amount equal
to the proceeds of any such sales, options, or leases, but Seller will not be
deemed in breach of this Agreement. Seller shall promptly notify Buyer of any
notice received from Owner related to the granting or obtaining of any
easement, right of way or other similar right, any additional option to or
lease of Mineral Rights, and any such purchase, sale or exchange; and if the
transaction involves more than two hundred fifty thousand dollars
($250,000.00), Seller shall obtain Buyer's prior written consent to the
transaction, which consent shall not be unreasonably withheld. For purposes
of Section 4, the Title Reports shall be revised or deemed revised to reflect
such transactions.
(d) Notwithstanding the foregoing, the parties agree that, if the
Closing Date is extended beyond May 15, 1996, Owner shall be deemed to be
operating the Timberland Properties in the ordinary course of business from
May 16, 1996, to the date the Closing actually occurs, with respect to the
activities described below if Owner:
(i) meets its obligations under the "fiber supply agreements"
described in Section 1.8(a)(iv); and
(ii) continues its harvest of timber at a level that is
between fifty percent (50%) and one hundred percent (100%) of the level in the
Operating Plan; and
(iii) continues road maintenance and road construction as
necessary to prevent substantial deterioration from the condition of the roads
as of May 15, 1996, and as necessary to meet the needs of Owner's harvest
activities; and
(iv) continues silvicultural and reforestation activities in
Oregon and Washington as required by the forest practices acts of said states.
6. Representations of Seller. Seller represents to Buyer that:
6.1 Organization, Standing and Authority. Seller is a corporation
organized, existing, and in good standing under the laws of the State of
Oregon. Seller has full power and authority to enter into and perform this
Agreement. Seller is not a "foreign person" within the meaning of Section 1445
of the Code.
6.2 Authorization of Agreement; Authority. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary corporate action of Seller, and this Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution, delivery and
performance of this Agreement by Seller will not (a) violate or conflict with
Seller's corporate power and authority; (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Seller;
or (c) subject to the receipt of appropriate consents as specified in this
Agreement as of the Closing Date and subject to the provisions of Section
1.6(d), conflict with, or result in the breach of the provisions of, or
constitute a default under, any agreement, license, permit or other instrument
to which Seller is a party or is bound or by which the Assets are bound.
Except as required by the HSR Act, no consent, approval or authorization of
any governmental authority is required on the part of Seller in connection
with the execution, delivery and performance of this Agreement.
6.3 Material Contracts. All of the Material Contracts which are to be
transferred to Buyer at Closing and which relate to the Timberland Properties
are listed on Schedule 6.3 or Schedule 4. Except as disclosed in Schedule 6.3
or Schedule 4, the Material Contracts have not been further modified or
amended; and to the best of Owner's knowledge, neither Owner nor any party
thereto is in default of any material term in the Material Contracts and true
and complete copies, including applicable amendments, of the Material
Contracts have been made available to Buyer for review prior to execution of
this Agreement. A Material Contract shall mean a Contract which involves
payments, performance of services or delivery of goods by or to Owner after
the Closing Date in an amount or value of two hundred fifty thousand dollars
($250,000.00) or more.
6.4 Litigation; Compliance with Laws. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Seller's knowledge, threatened, that question the validity of this
Agreement or any action taken or to be taken by Seller in connection with this
Agreement. Except as set forth on Schedule 6.4, there is no claim,
litigation, proceeding or governmental investigation pending or, to the best
of Owner's knowledge, threatened, or any order, injunction or decree
outstanding which, if decided unfavorably, would cause Buyer to incur loss or
damage in excess of one hundred thousand dollars ($100,000.00); except as
disclosed on Schedule 6.4, to the best of Owner's knowledge, Owner has
received no written notice from a governmental authority of a material
violation of law relating to the Timberland Properties which has not or will
not have been resolved prior to Closing.
6.5 Personal Property. Owner has, or will have on the Closing Date,
good and marketable title (which includes leasehold title if applicable) to
the personal property to be transferred to Buyer on the Closing Date pursuant
to Section 1.4, subject to equipment leases, purchase money contracts, and
similar security interests to be assumed by Buyer pursuant to Section 1.8.
6.6 Environmental Conditions. Except as disclosed on Schedule 6.6, to
the best of Owner's knowledge there are no environmental conditions on the
Indemnification Properties (as defined in Section 6.7(e)) that would cause
Buyer to incur more than one hundred thousand dollars ($100,000) in loss or
damage for each such environmental condition.
6.7 Disclaimer of Warranties and Representations From Seller; AS IS;
Indemnity
(a) Personal Property. Except as otherwise expressly set forth
in this Agreement, this Agreement is executed, and the personal property will
be transferred, without any warranty of title, either express or implied, and
without any express or implied warranty or representation as to the
merchantability or fitness for any purpose of any of the equipment or other
personal property included in the Assets, and without any other express or
implied warranty or representation whatsoever.
(b) Real Property. Except as otherwise expressly set forth in
this Agreement, this Agreement is executed, and the real property including
Timberland Properties, and Mineral Rights will be transferred, without any
warranty of title, either express or implied, except warranties (if any)
contained in the deed(s) conveying the real property included in the Assets,
and without any express or implied warranty or representation as to the
merchantability of any of the real property included in the Assets, acreage,
legal access, operations or encroachments or any other condition affecting the
Assets.
(c) Condition of Property. Except as otherwise expressly set
forth in this Agreement, Buyer agrees to purchase the Timberland Properties,
Mineral Rights, personal property, mobile equipment, machinery and equipment
and all other Assets "as is", "where is" and with all faults. The Buyer
certifies by execution hereof that it has had an opportunity to inspect the
Timberland Properties, and Mineral Rights and other Assets (including the
surface and subsurface of any real property) prior to executing this
Agreement; that Buyer either has inspected or waived its right to inspect the
Timberland Properties, and Mineral Rights and other Assets for all purposes
and satisfied itself as to its physical condition, both surface and
subsurface, including but not limited to conditions specifically related to
the presence, release or disposal of hazardous substances, but without
limiting Buyer's rights under Section 8.11; that it has not relied upon any
information delivered by Owner, Seller or their respective agents concerning
the Timberland Properties, and Mineral Rights and other Assets; and that it is
relying upon its own examination of the Timberland Properties, and Mineral
Rights and all other Assets in entering into and in consummating this
Agreement. Buyer further acknowledges and agrees that, except as otherwise
expressly set forth in this Agreement, neither Owner nor Seller nor any of
their respective agents have made any representations, warranties or covenants
whatsoever with respect to the quantity or quality of the timber, the acreage,
tax status, legal access, encroachment or physical condition of the Timberland
Properties, and Mineral Rights, nor, except as expressly set forth in this
Agreement, have they made any representations, warranties, or covenants
whatsoever concerning the presence, release or disposal of hazardous
substances thereon.
(d) Disclaimer. Except as otherwise expressly set forth in this
Agreement, the transaction contemplated hereby shall be without any express,
implied, statutory or other warranty or representation as to the condition,
quantity, quality, fitness for particular purpose, conformity to models or
samples of materials or merchantability of any of the Assets, their fitness
for any purpose, and without any other express, implied, statutory or other
warranty or representation whatsoever. In addition, except as otherwise
expressly set forth in this Agreement, Seller makes no warranty or
representation, express, implied, statutory or otherwise, as to the accuracy
or completeness of any data, reports, records, projections information or
materials now, heretofore or hereafter furnished or made available to the
Buyer in connection with this Agreement including, without limitation, any
description of the Assets, pricing assumptions, or the environmental condition
of the Assets or the portions affected by the Endangered Species Act or any
other materials furnished or made available to Buyer by Seller or its agents
or representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made
available to Buyer are provided to Buyer as a convenience, and shall not
create or give rise to any liability of or against Seller; and any reliance on
or use of the same shall be at Buyer's sole risk.
(e) Waiver of Claims and Indemnity. Without limiting the
generality of any other provision in this Section 6.7, except as otherwise
expressly set forth in this Agreement, Buyer assumes any and all liabilities,
past, present, or future, of Seller and "Owners" as defined below, relating to
hazardous substances or materials, wastes, toxics, pollutants, solid wastes,
or contaminants, including without limitation liabilities arising under any
current or future legal requirement pertaining thereto, which are based upon
the ownership or operation of the Assets. Except as otherwise expressly set
forth in this Agreement, Buyer assumes the risk that hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants may be
present in, on or under the Timberland Properties, Mineral Rights or other
Assets, and hereby waives, releases, and discharges forever Owner, Hanson's
general partners, Affiliates of Owner, Owner's successors and assigns, and
their respective shareholders, directors, officers, employees, and agents (in
this Section 6.7(e) collectively referred to as "Owners") and Seller from any
and all present or future claims or demands, and any and all damages, loss,
injury, liability, claims or costs, including fines, penalties judgments,
claims for contribution, and cost recovery actions, arising from or in any way
related to the condition, operation, or use of the Timberland Properties,
Mineral Rights or other Assets or the presence of any hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants in, on or
under the Timberland Properties, Mineral Rights or other Assets; provided,
however, that to the extent such waiver, release, or discharge will prejudice
Buyer's rights to pursue third parties (not including Affiliates of Owner) who
have indemnified or insured Owner (or any of the three Owners) for some or all
of the foregoing matters, Buyer shall not, and shall not be deemed to, have
waived, released, or discharged "Owners" for the sole purpose of pursuing such
third parties. Except as otherwise expressly set forth in this Agreement,
Buyer hereby indemnifies, holds harmless, and agrees to defend Seller and
"Owners" from and against any and all present or future claims or demands, and
any and all damages, losses, liabilities, injuries, fines, penalties,
judgments, claims for contribution, and cost recovery actions, and consultant
fees, expert witness fees, costs and expenses (including attorney's fees
incurred by Seller or Owners in the case of matters involving third parties)
arising from or in any way related to the presence of any hazardous substances
or materials, wastes, toxics, pollutants, solid wastes, or contaminants in, on
or under the (i) Timberland, (ii) Mineral Rights, and (iii) any other real
property constituting a part of other Assets (collectively, the
Indemnification Properties"). This indemnity specifically includes the
obligation of Buyer to remove, remediate, reimburse or take other actions
required by law concerning any hazardous substances or materials, wastes,
toxics, pollutants, solid wastes, or contaminants in, on or under the
Indemnification Properties. Nothing herein shall limit Buyer's right, in good
faith, to contest any action, request or requirement of any governmental
agency provided that such action is taken at Buyer's sole cost, risk and
expense. The provisions of this Section 6.7(e) shall not include, or create
any obligation of Buyer with respect to any contractual obligation of "Owners"
or Owner's predecessors except as provided in Section 1.8(a)(v) or as
disclosed on any Schedule attached to this Agreement, are solely for the
benefit of Seller and "Owners" and shall not be construed to be for the
benefit of any third party or to constitute a waiver or release of rights
against any third party. Seller hereby assigns to Buyer all rights and claims
which Seller may now or hereafter have against third parties relating to any
matter for which Buyer indemnifies Seller or "Owners." The provisions of this
Section 6.7(e) and Section 1.8(a)(v) are intended to exclusively set forth
Buyer's obligations under this Agreement with respect to assumption, waiver,
release, discharge, and indemnification of environmental matters, and the
provisions of Section 10.1(b) and Section 1.8(a) (other than
Section 1.8(a)(v)) shall not apply to such obligations of Buyer.
7. Representations of Buyer. Buyer represents to Seller as follows:
7.1 Buyer's Organization. Buyer is a limited partnership organized,
existing and in good standing under the laws of Delaware and has the full
corporate power and authority to enter into and to perform this Agreement.
Buyer is qualified to do business and is in good standing in the states of
Washington and Oregon.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary partnership action of Buyer, and this Agreement constitutes the
valid and binding obligation of Buyer enforceable against it in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7.3 Consents of Third Parties. The execution, delivery and performance
of this Agreement by Buyer will not (a) violate or conflict with the
certificate of limited partnership or partnership agreement of Buyer; or (b)
constitute a violation of any law, regulation, order, writ, judgment,
injunction or decree applicable to Buyer. Except as required by the HSR Act,
no consent, approval or authorization of any governmental authority is
required on the part of Buyer in connection with the execution, delivery and
performance of this Agreement.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken
or to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or decree
outstanding, against the Buyer that, if adversely determined, would have a
material effect upon Buyer's ability to perform its obligations under this
Agreement.
7.5 Financing. Buyer will have, on the Closing Date, all funds
necessary to pay the Purchase Price and related fees and expenses, and has, or
will have on the Closing Date, the financial capacity to perform all of its
other obligations under this Agreement.
8. Further Agreements of the Parties.
8.1 Access to Information. Owner has agreed that Buyer (subject to
Section 8.7) shall have access to information in the possession of Owner, and
Seller will make available to Buyer information in its possession, relating to
the Timberland Properties, the Mineral Rights, and other Assets for due
diligence investigation purposes and to facilitate an orderly transition in
the management of those Assets in anticipation of Closing. In addition, Owner
has agreed to make available to Buyer its financial statements and shall
cooperate and instruct Owner's independent auditors to cooperate, at Buyer's
expense, in preparing the financial statement related to the Timberland
Properties which Buyer may be required to file with the Securities Exchange
Commission.
8.2 Notice of Changes and Events.
(a) Each party shall promptly notify the other party in writing,
and furnish to such party any information that such party may reasonably
request, with respect to the occurrence of any event or the existence of any
state of facts that would (i) result in the party's or Owner's representations
and warranties not being true if they were made at any time prior to or as of
the Closing Date, or (ii) impair the party's or Owner's ability to perform its
obligations under this Agreement.
(b) Subject to receipt of necessary information from Owner,
Seller agrees to update and bring current all Schedules attached to this
Agreement prior to the Closing Date. Any such updated Schedule shall be for
informational purposes only and shall not affect the rights and obligations of
the parties as set forth in this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
Owner or Seller shall have the right, in their respective sole discretion, to
retain any claim, obligation, or liability that may otherwise be transferred
to or assumed by Buyer in this Agreement. Owner or Seller may, without
limitation, exercise this right by omitting or deleting a claim, liability, or
obligation on one or more of the Schedules attached to this Agreement. If
Owner or Seller exercises this right, Seller shall provide written notice to
Buyer of the claim, liability, or obligation that Seller shall retain within
thirty-five (35) days of Seller's receipt of written notice of said claim,
liability, or obligation.
8.3 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred
in connection with this Agreement and in connection with all obligations
required to be performed by each of them under this Agreement.
8.4 Publicity. Buyer and Seller shall consult with each other before
issuing any public announcement or press release concerning the transactions
contemplated by this Agreement and, except as may be required by applicable
law or regulation or rule of any stock exchange or organized securities market
on which the securities of Buyer or Seller are listed or traded, will not make
a public announcement or issue a press release prior to such consultation. If
Buyer or Seller are so required to make a public announcement or issue a press
release such party shall use its best efforts to inform the other party hereto
prior to making or issuing it.
8.5 Preservation of Records.
(a) Buyer agrees that, without expense to Seller, Buyer (i) shall
preserve and keep the records relating to the Timberland Properties, Mineral
Rights, and other Assets delivered to it by Seller for a period of six (6)
years from the Closing, and (ii) shall give Seller and Owner reasonable access
to such records and to personnel during regular business hours if needed for
any bona fide purpose, provided such access shall be at Seller's or Owner's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any, of providing such access.
(b) Seller or Owner, without expense to Buyer, (i) shall preserve
and keep the records relating to the Timberland Properties, Mineral Rights,
and other Assets which were not transferred to Buyer pursuant to Section
1.4(a), and (ii) shall give Buyer reasonable access to such records and to
personnel during regular business hours if needed for any bona fide purpose,
provided such access shall be at Buyer's cost and expense, including
reimbursement of Seller's or Owner's extraordinary costs, if any, of providing
such access.
(c) Notwithstanding the expiration of the six (6) year period in
Subsection (a) above, Buyer agrees not to destroy the records described in
Subsection (a) without first giving Seller sixty-five (65) days advance
written notice and an opportunity to take custody of such records, at Seller's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any.
8.6 Casualty or Condemnation. In the event any uninsured loss or damage
occurs to the assets being acquired by Seller from Owner, including the
Assets, after the date of the Purchase Agreement, but before Closing, which
has an adverse financial impact in excess of fifteen million dollars
($15,000,000) on the value of such assets, Buyer shall be entitled to a
reduction of the Purchase Price. Buyer's share of any Purchase Price
reduction as a result of an uninsured loss shall be determined pursuant to
Section 8.12. If the amount of the Purchase Price reduction has not been
determined by the date set for Closing, the parties shall proceed to Close as
scheduled and Subsection 2.1(d) shall apply. In the event any insured loss,
destruction, casualty or damage occurs to the Assets after the date of this
Agreement, but before Closing, or in the event condemnation action is
instituted on the Assets after the date of this Agreement, but before Closing,
then Seller shall assign to Buyer at Closing all proceeds from such policies
or condemnation action, and there shall be no adjustment in the Purchase
Price.
8.7 Confidentiality. Hanson and Buyer have previously executed a
Confidentiality Agreement in the form attached hereto as Schedule 8.7.
Notwithstanding anything to the contrary in the Confidentiality Agreement, the
parties hereto covenant and agree that the terms and provisions of this
Agreement and all information and data obtained in connection with this
Agreement shall be treated as Evaluation Material in the Confidentiality
Agreement. Buyer shall require any third party which has not already executed
the Confidentiality Agreement and to which it intends to disclose any
information supplied under the Confidentiality Agreement or this Agreement to
countersign and assume all of the obligations and covenants of the
Confidentiality Agreement and deliver a copy of the Confidentiality Agreement
to Seller and Owner prior to delivery of any information to such third party.
If this Agreement is terminated for any reason, the foregoing covenant shall
survive the termination; if this Agreement is not so terminated, then the
foregoing covenant shall be deemed terminated at Closing.
8.8 Allocation and Tax Matters.
(a) The Purchase Price shall be allocated among the Assets in
accordance with Schedule 8.8 attached hereto. Seller and Buyer agree to
complete IRS form 8594 consistently with the foregoing allocation and to
furnish each other with a copy of such form prepared in draft form within
forty five (45) days prior to the filing due date for such form. Within
fifty-five (55) days after the Closing, Buyer shall submit to Seller a
proposed detailed allocation schedule which is in all respects consistent with
Schedule 8.8. Thereafter, Buyer and Seller shall use their respective best
efforts to promptly agree to a final detailed schedule. Neither Seller nor
Buyer shall file any tax return or take a position with any taxing authority
that is inconsistent with the foregoing allocation.
(b) For purposes of preparing Washington Real Estate Excise Tax
affidavits provided for in RCW 82.45.150, the parties agree to use the market
value assessment as reflected on the county property tax rolls at the time of
Closing. The Buyer agrees to execute at Closing a Notice of Continuance,
incorporated in the Real Estate Excise Tax Affidavits provided for in RCW
82.45.150, continuing the forest land classification or designation of that
portion of the Timberland Properties in the State of Washington so classified
or designated as provided in RCW 84.33.140.
8.9 Termination. This Agreement shall be terminated at any time prior
to the Closing:
(a) By mutual written agreement executed by Seller and Buyer; or
(b) By either party if applicable law (including but not limited
to the HSR Act) prohibits the consummation of the sale and purchase of the
Assets pursuant to this Agreement or if, at the Closing Date, any action,
proceeding or investigation shall have been instituted or threatened in
writing by any governmental agency seeking to enjoin, restrain, prohibit,
impose material conditions upon or obtain substantial damages in respect of,
the transactions contemplated by this Agreement;
(c) By either party as provided in Section 3.2; or
(d) By either party if the Purchase Agreement is terminated for
any reason.
Upon such termination, neither of the parties shall have any liability
or further obligation arising out of this Agreement except as expressly stated
in this Agreement.
8.10 Access Pending Closing. Owner has agreed that Buyer may, upon
reasonable notice to Owner, have access to the Timberland Properties, and
other Assets for purposes of conducting due diligence investigations and
preparing for transition of ownership, all in accordance with the terms and
conditions of the Access Agreement previously executed by Buyer, a copy of
which is attached hereto as Schedule 8.10.
8.11 Buyer's Due Diligence.
(a) Buyer may conduct due diligence examinations during a period
commencing on the date hereof and ending at the close of business on the day
prior to the Closing Date (the "Due Diligence Period"). In the event that
Buyer makes a reasonable and objective determination that there are Price
Adjustment Items as defined in Section 8.11(d), Buyer will have the right, but
only during the Due Diligence Period, to notify Seller in writing, with
reasonable detail, of said Price Adjustment Items; provided, that no such
written notice given to Seller later than April 8, 1996, shall include a Price
Adjustment Item relating to environmental matters.
(b) In the event Buyer makes a reasonable and objective
determination that there are Price Adjustment Items as defined in Section
8.11(d) which will have an adverse financial impact in the Price Adjustment
Formula set forth in Section 8.11(e), Buyer will have the right to deliver to
Seller, but only during the Due Diligence Period, a notice that Buyer is
entitled to an adjustment in the Purchase Price (the "Price Adjustment
Notice"), provided that no Price Adjustment Notice given later than April 8,
1996, shall include a Price Adjustment Item relating to environmental matters.
The Price Adjustment Notice shall be accompanied by a schedule setting forth
in reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items. Seller shall deliver the Price Adjustment Notice to Owner
as one of Seller's Price Adjustment Notices. Buyer hereby appoints Seller as
its agent to pursue a price reduction as specified in the Price Adjustment
Notice. Subject to the provisions of the Purchase Agreement, Seller agrees to
use reasonable diligence in pursuing a price reduction with respect to the
matters referred to in each such Price Adjustment Notice.
(c) If Buyer provides written notice of Price Adjustment Items as
provided in Subsection (a) above but does not deliver to Seller the Price
Adjustment Notice described in Subsection (b) above during the Due Diligence
Period, Buyer will have the right, within six (6) months after Closing, to
deliver to Seller a notice (the "Post Closing Adjustment Notice"). The Post
Closing Adjustment Notice shall be accompanied by a schedule setting forth in
reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items that provide the basis for the Post Closing Adjustment
Notice; provided however, the Post Closing Adjustment Notice cannot allege an
adverse financial impact greater than fifteen million dollars ($15,000,000)
(the First Threshold). Seller shall deliver the Post Closing Adjustment
Notice to Owner as one of Seller's Post Closing Adjustment Notices and shall
pursue an adjustment in the First Threshold as contemplated by Section 10.4 of
the Purchase Agreement; provided that if the Post Closing Adjustment Notices
exceed Fifteen Million Dollars ($15,000,000) in the aggregate, each such
notice shall be reduced pro rata so that the total does not exceed Fifteen
Million Dollars ($15,000,000). The adjustment so determined shall not adjust
the Purchase Price, but shall be carried forward as a portion of the First
Threshold in making the calculations in Section 10.4(c) of the Purchase
Agreement.
(d) In determining the adverse financial impact for purposes of
Section 8.11(a), the following items shall be taken into account as Price
Adjustment Items:
(i) Failure of Owner to be vested in title in more than
five hundred (500) acres of the Timberland Properties described in the Title
Reports attached to this Agreement as Schedule 4, and the threshold provisions
of Section 8.11 and the allocation provisions of Section 8.12 shall not apply
to any such Price Adjustment Item (i.e., the Purchase Price shall be reduced
by the amount of the adverse financial impact of such Item), nor shall the
reduction in Purchase Price for such Item reduce the threshold provisions for
purposes of Section 10.4 of the Purchase Agreement. As used in this
Subsection (i), "vested in title" means that the applicable Title Report
states that Owner (or any of the three Owners) is vested in title (without
regard to exceptions or objections noted in such Title Report);
(ii) The existence of any exception to title on any portion
of the Timberland Properties: (a) which was not shown on Schedule 4, and (b)
which was not disclosed on any other Schedule attached to this Agreement, and
(c) which materially interferes with the use thereof for the production and
harvesting of timber; provided that the threshold provisions of Section 8.11
and the allocation provisions of Section 8.12 shall not apply to such Price
Adjustment Item if the exception to title was created by Owner after the date
of the applicable Title Report and was not either created in the ordinary
course or consented to by Buyer, nor shall the reduction in Purchase Price for
such Item reduce the threshold provisions for purposes of Section 10.4 of the
Purchase Agreement.
(iii) The presence of any hazardous substances or materials,
wastes, toxics, or contaminants in, on or under any of the Indemnification
Properties (but only until April 8, 1996, and only to the extent they were not
disclosed in Schedule 6.6).
(iv) Any breach of representations of Seller in Section 6
of this Agreement during the Due Diligence Period, but with respect to Section
6.6, only if included in a Price Adjustment Notice given not later than April
8, 1996; provided, that in determining the adverse financial impact for breach
of representations of Seller, any benefit to Buyer caused by such breaches of
representations of Seller and other breaches of representations of Seller
during the Due Diligence Period shall be offset or taken into account.
(e) Price Adjustment Formula. As used in this Section 8.11 (and
in Sections 10.4(b) and (c) of the Purchase Agreement), the term "First
Threshold" means fifteen million dollars ($15,000,000); the term "Second
Threshold" means twenty five million dollars ($25,000,000); the term "Third
Threshold" means thirty five million dollars ($35,000,000). Subject to the
provisions of Section 8.12, if the First Threshold, but not the Second
Threshold, is met, the purchase price under the Purchase Agreement shall be
reduced by fifty percent (50%) of the amount of the adverse financial impact
in excess of the First Threshold; and if the Second Threshold, but not the
Third Threshold, is met, the purchase price under the Purchase Agreement shall
be additionally reduced by two-thirds of the amount of the adverse financial
impact in excess of the Second Threshold; and if the Third Threshold is met,
the purchase price under the Purchase Agreement shall be additionally reduced
by one hundred percent (100%) of the amount of the adverse financial impact in
excess of the Third Threshold.
8.12 Allocation of Price Reduction.
No Purchase Price reduction will be allowed to Buyer under this
Agreement unless a purchase price reduction is allowed to Seller under the
Purchase Agreement. If a purchase price reduction is allowed to Seller under
the Purchase Agreement, except as expressly provided in Section 8.11(d), Buyer
will be entitled to a fraction of such reduction, the numerator of which shall
be Buyer's total allowed Purchase Price adjustment claims and the denominator
of which shall be the total purchase price adjustment claims submitted by
Seller to Owner pursuant to the Purchase Agreement and allowed. Buyer shall
be bound by any proceeding or agreement between Owner and Seller determining
the amount of any Purchase Price adjustment.
8.13 Enforcement of Seller's Rights. Seller agrees to use
commercially reasonable efforts as determined by Seller in its reasonable
judgment to enforce the obligations of Owner under Sections 3.6, 5(a), 5(c),
8.1, 11.3(b), and 11.3(c) of the Purchase Agreement. Buyer shall reimburse
Seller for Seller's expenses related to such enforcement in accordance with
the formula for sharing of arbitration costs under the Purchase Agreement set
forth in Section 9.2 of this Agreement.
8.14 Seller's Knowledge. In the event that Seller obtains knowledge
prior to the Closing Date of any material fact which, if known to Owner, would
result in a breach of a representation or warranty of Owner under the Purchase
Agreement, Seller shall notify Owner so that Owner will have knowledge of such
fact.
9. Default; Remedies; Arbitration.
9.1 Default; Remedies. Time is of the essence of this Agreement. If
either party fails or refuses to carry out this Agreement according to its
terms, the other party shall be entitled to the remedies set forth below.
(a) Buyer's Default. Except as otherwise provided in this
Agreement, in the event Buyer fails, without legal excuse, to complete the
purchase of the Assets pursuant to this Agreement, Seller shall be entitled to
terminate this Agreement and/or pursue any and all remedies available at law
or in equity by reason of Buyer's breach or default, including without
limitation, specific performance and damages for any failure by Buyer to
perform the obligations to be performed by it from and after the date of this
Agreement.
(b) Seller's Default. Except as otherwise provided in this
Agreement, in the event Seller fails or refuses to complete the purchase of
the Assets or is otherwise in breach or default of its obligations in this
Agreement, Buyer shall be entitled to terminate this Agreement and/or pursue
any and all remedies available at law or in equity by reason of Seller's
breach or default, including without limitation, specific performance and
damages for any failure by Seller to perform the obligations to be performed
by it from and after the date of this Agreement; provided, however, that
Buyer's sole remedy against Seller for Seller's breach of Section 6 and the
representations set forth therein shall be as set forth in Section 8.11 and
the indemnification by Seller of Buyer as set forth in Section 10.
(c) Owner Default. Notwithstanding the foregoing, Buyer shall
have no rights against Seller if Seller's failure to transfer the Assets to
Buyer results from a default by Owner under the Purchase Agreement. If Seller
elects to seek damages as a result of a default by Owner under the Purchase
Agreement and if any award to Seller includes any amount with respect to
damages suffered by Buyer, Seller shall pay such amount to Buyer minus Buyer's
share of expenses determined pursuant to the formula for allocation of
expenses of arbitration under the Purchase Agreement set forth in Section 9.2.
If Seller seeks specific performance of Owner's obligations under the Purchase
Agreement, Seller agrees that it will not terminate this Agreement pursuant to
Section 8.9(d) if Buyer agrees to be bound by the outcome of such specific
performance proceeding and if Buyer agrees to reimburse Seller for the costs
of such proceeding in the proportion that the Purchase Price bears to One
Billion Five Hundred Eighty Eight Million Dollars ($1,588,000,000).
9.2 Arbitration. This Agreement shall not be subject to termination
except as specifically provided in this Agreement. Any question, controversy
or claim arising under or relating to this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association and the provisions of the laws of the State of Washington relating
to arbitration, as said rules and laws are in effect on the date of this
Agreement. The arbitration shall be conducted in Vancouver, Washington, by
and before a single arbitrator, who is experienced in the problem or problems
in dispute, to be agreed upon by the Seller and Buyer, or if they are unable
to agree upon an arbitrator within ten (10) days after written demand by
either party for arbitration, then, at the written request of either party,
the arbitrator shall be appointed by the American Arbitration Association, or
failing such appointment, by the Superior Court in and for the County of
Clark, State of Washington. Proceedings to obtain a judgment with respect to
any award rendered hereunder shall be undertaken in accordance with the law of
the State of Washington including the conflicts of laws provisions thereof.
Each party shall pay one-half of the arbitrator's fees and expenses.
Upon application to the arbitrator, the parties shall be entitled to limited
discovery, including only exchange of documents and only depositions on such
terms as the arbitrator may allow for purposes of fairness and to reduce the
overall time and expense of the arbitration.
Buyer shall also reimburse Seller for the costs of any arbitration under
the Purchase Agreement, including arbitrator's fees and reasonable attorney's
fees, incurred by Seller in the proportion that the claims related to the
Assets bears to the total of all claims involved in the arbitration. In any
arbitration proceeding under the Purchase Agreement including any arbitration
related to a Purchase Price adjustment claim or indemnification claim which
relates to the Assets, Seller agrees to request of the arbitrator that Buyer
be allowed to participate in the arbitration. Buyer shall be allowed to
participate to the extent allowed by the arbitrator.
10. Indemnification and Related Matters.
10.1 Indemnification.
(a) Seller agrees to defend, indemnify and hold Buyer and its
parents, subsidiaries, affiliates, predecessors, successors and assigns (and
their respective officers, directors, employees and agents) harmless from and
against any and all loss, claims, liabilities, damages, costs and expenses,
including attorneys fees incurred with respect to third parties ("Damages")
resulting from, based upon, or arising out of:
(i) subject to Section 10.4(a), (b) and (c), all of the
Excluded Liabilities set forth in Section 1.8(b);
(ii) subject to Section 10.4, and taking into account any
adjustments made for such breach in Section 8.11, breaches of Seller's
representations set forth in Section 6;
(iii) subject to Section 10.4, claims of third parties that
are asserted after Closing, to the extent the basis of such claims arose prior
to Closing; provided, that this Subsection (iii) shall only apply to a claim
which will result in loss to Buyer in excess of $100,000; and provided
further, that the indemnity in this Subsection (iii) shall not apply at all to
matters disclosed on Schedule 6.4 or to matters covered by Section 8.11 or to
matters for which Buyer is indemnifying Seller as provided in this Agreement;
(iv) subject to Section 10.4, permits, licenses, or Contracts
(which are not Material Contracts) assumed by Buyer pursuant to Section 1.8
but which were not disclosed to Buyer in any Schedule attached to this
Agreement; provided, that this Subsection (iv) shall only apply to a permit,
license, or Contract: (a) which will require Buyer to pay more than $100,000
in any twelve-month period, and (b) which will not expire and cannot be
terminated within twelve months of Closing without penalty, liability, or
premium, and (c) which provides no material benefit to Buyer; and
(v) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
(b) Buyer agrees to save, defend, indemnify and hold Seller and
Owner and its general partners, parents, subsidiaries, affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against any loss, claims,
liabilities, damages, costs and expenses, including attorneys' fees incurred
with respect to third parties ("Damages") resulting from, based upon, or
arising out of:
(i) any breaches, occurring before, at or after Closing, of
Contracts, permits, licenses, and all other agreements and obligations
transferred or assigned to Buyer;
(ii) the operation, management or condition of the Assets,
whether arising before, at or after the Closing, excluding only those matters
covered by Section 10.1(a)(i) above;
(iii) all matters assumed by the Buyer pursuant to any and
all provisions of this Agreement or any related agreement; and
(iv) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
Wherever this Agreement provides for Buyer's indemnification of Owner,
the term "Owner" shall mean each or all of CERI, CFII, and Hanson.
10.2 Determination of Damages; Claims. In calculating any amounts
payable to Buyer pursuant to Section 10.1(a) or payable to Seller pursuant to
Section 10.1(b), Seller or Buyer, as the case may be, shall receive credit for
(i) any reduction in tax liability as a result of the facts giving rise to the
claim for indemnification, and (ii) any insurance recoveries.
10.3 Defense of Claims by Third Parties. If any claim is made against
Buyer or Seller that, if sustained, would give rise to a liability of the
other under this Agreement, Buyer or Seller, as the case may be, shall
promptly cause notice of the claim to be delivered to the other and shall
afford the other and its counsel, at the other's sole expense, the opportunity
to defend, with counsel reasonably satisfactory to the party against which
such claim is made, or settle the claim. If either party takes said
opportunity to settle the claim, such party shall obtain a release of the
other party in any settlement agreement with the third party. In the event of
an indemnification claim by Buyer against Seller, Seller may cause Owner to
undertake the defense in which event Owner shall have the opportunity to
settle the claim as provided above.
10.4 Limitations on the Indemnification.
(a) With respect to Seller's indemnification of Buyer pursuant to
Sections 10.1(a), Buyer shall promptly inform Seller in writing of each such
matter, as and when Buyer becomes aware of such matter, and shall keep
complete and accurate records of actual damages incurred by Buyer as a result
thereof.
(b) Notwithstanding any other provision of this Agreement,
Seller's obligations for indemnification of Buyer and all Other Purchasers
shall not exceed the proceeds of indemnification recoveries by Seller from
Owner. Seller agrees to submit all of Buyer's indemnification claims to Owner
as Seller's indemnification claims. Buyer hereby appoints Seller as Buyer's
agent to pursue such indemnification claims. Seller agrees to use reasonable
diligence in the pursuit of such claims. Buyer shall be bound by the results
of any proceedings under the Purchase Agreement to determine the validity of
Seller's indemnification claims.
(c) Buyer shall be entitled to its pro rata share of total
recoveries by Seller for (i) Purchase Price adjustment claims subject to the
allocation provisions of Section 8.12, and (ii) indemnification claims
submitted by Seller to Owner under the Purchase Agreement. Amounts payable to
Buyer from indemnification claims recovered subsequent to payment of Purchase
Price adjustment claims shall be adjusted to reflect amounts paid with respect
to such Purchase Price adjustment claims.
(d) Notwithstanding anything to the contrary to this Agreement,
Seller shall not be obligated to indemnify Buyer on any claim for
indemnification submitted by Buyer to Seller after December 31, 1998, except
for matters arising under Section 10.1(a)(i).
11. Employee Matters.
11.1 Definitions.
(a) Employees. The term "Employees" shall mean all of the
persons actively employed by Owner exclusively in connection with the
Timberland Properties in daily operations in hourly or salaried status
immediately preceding the Closing, and those persons identified in Schedule
11.2(f) as employed by Owner in daily operations in connection with the
Timberland Properties who are either (a) on disability, or (b) on leave of
absence. This does not include persons listed in Schedule 11.1(a), which
lists executive officers of Owner.
(b) Transferring Employees. All Employees who apply for, are
offered, and who accept employment with Buyer on the Closing Date or within 90
days thereafter.
(c) INTENTIONALLY OMITTED.
(d) List of Employees. Schedule 11.1(d) sets forth a true and
correct list of all Employees, together with their respective job titles,
hourly rates or base salary, date of birth, Social Security number, and most
recent date of hire (or credited service), as of ten (10) days prior to the
date of this Agreement, and will be updated to be true and correct as of ten
(10) days prior to the Closing Date.
11.2 Applications/Hiring.
(a) Within ten (10) days after the date this Agreement is
signed, Seller will provide applications for employment to all Owner's
Employees, as defined in 11.1(d) above.
(b) Employees from whom applications will be solicited by Buyer
will also be provided with a document or documents setting forth the essential
terms and conditions of employment under which Buyer intends to operate the
Assets. Buyer will provide such information to Seller promptly following the
execution of this Agreement. Buyer will consider applications from all
Employees who apply for employment under such terms and conditions of
employment pursuant to its normal hiring procedure. If applications
acceptable to Buyer are received from Salaried Employees, offers of employment
shall be extended within fifteen (15) working days of application receipt or
as soon as reasonably practical thereafter. Offers to other Employees who
submit application and who are acceptable to Buyer will be extended on or
before the Closing Date.
(c) Salaried Terms and Conditions. Solicitations of salaried
Employees who submit applications for employment with Buyer will be made on
terms and conditions of employment consistent with and generally applicable to
Buyer's salaried work force in positions of like status and pay. However, in
order to minimize Owner's severance cost, Buyer agrees to offer employment to
at least eight (8) salaried Employees (or to such lesser number if such lesser
number of salaried Employees apply), and that those salaried Employees offered
employment will be hired at 96 percent or more of their Base pay with Owner as
listed in Schedule 11.1(d).
(d) Nonunion Hourly Terms and Conditions. Solicitations of
Owner's nonunion hourly Employees who submit applications for employment with
Buyer will be made as Buyer may determine on terms and conditions of
employment consistent with their existing terms and conditions or terms and
conditions consistent with and generally applicable to Buyer's nonunion hourly
work force in positions of like status and pay in similar type operations of
Buyer in the same region or geographic proximity.
(e) INTENTIONALLY OMITTED.
(f) Disabled Employees/Leave of Absences. Employees identified
in Schedule 11.2(f) who make application, are offered, and accept employment
must begin employment as evidenced by having worked at least one (1)
compensable day with Buyer no later than the first working day of the sixth
(6th) month following the month in which the Closing Date occurs unless
otherwise provided by law or extended by Buyer.
11.3 Employment Obligations of Seller and Buyer.
(a) Buyer's Obligations/Employment Claims.
(i) Subject to the provisions of Section 11.4 and Section
11.5, Buyer agrees to assume all employment-related obligations accruing on or
after the Closing Date pertaining to Transferring Employees including, without
limitation, compensation for services performed for Buyer (and related
employment and withholding taxes); benefits accrued under any Buyer-sponsored
employee welfare or pension benefit plan (as defined under ERISA Sections 3(1)
and 3(2), respectively); benefits accrued under any other employee benefit
plan or arrangement of Buyer covering the Transferring Employees; and workers'
compensation benefits with respect to claims relating to events occurring on
or after the Closing Date or filed more than one-hundred eighty (180) days
after the Closing Date, regardless of date of accident or illness.
(ii) Buyer will retain all liability for all claims,
losses, damages, and expenses (including, without limitation, reasonable
attorney's fees), and other liabilities and obligations relating to or arising
out of all unfair labor practice charges, wrongful termination litigation,
employment discrimination charges, severance claims, health and welfare
claims, retirement claims and any other claims related to employment and based
upon Buyer's conduct on or after the Closing Date which are filed within
applicable statutes of limitations.
(b) Seller's Obligation/Employment Claims.
(i) Subject to the provisions of Section 11.4 and 11.5,
Owner has agreed to assume all employment related obligations with respect to
all Employees accruing prior to the Closing Date including, without
limitation, compensation for services performed for Owner (and related
employment and withholding taxes); benefits accrued under any Owner sponsored
employee welfare or pension plan (as defined under ERISA Sections 3(1) and
3(2) respectively) covering the Employees or former Employees prior to or
after the Closing Date; benefits accrued under any other employee benefit plan
or arrangement of Owner covering the Employees or former Employees prior to or
after the Closing Date; and workers' compensation benefits with respect to
claims filed before the Closing Date or within one hundred eighty (180) days
after the Closing Date and relating to events occurring prior to the Closing
Date.
(ii) Owner has agreed to retain all liability for any and
all claims, losses, damages, and expenses (including, without limitation,
reasonable attorney's fees) and other liabilities and obligations relating to
or arising out of all unfair labor practice charges, wrongful termination
litigation, employment discrimination charges, severance claims, health and
welfare claims, asbestos claims, retirement claims, OSHA citations and any
other claims arising out of any employment and based upon Owner's conduct
occurring prior to the Closing Date including actions filed as of the Closing
Date or filed thereafter within applicable statutes of limitations.
(c) COBRA. Owner has agreed to be responsible for the health
care coverage of any Employees as may be required by COBRA under affected
Owner Welfare Plans. After the Closing Date, Owner has agreed that it shall
ensure that the option of continuing health care coverage under the Owner
Welfare Plans is extended to the Employees to the extent required by COBRA.
Buyer shall be responsible for providing health care continuation coverage as
required by COBRA to any Transferring Employees terminated by Buyer after the
Closing Date.
(d) Vacation Obligations/Transferring Employees.
(i) Vacation earned as of May 1, 1996 and to be taken in
1996 by Transferring Employees under Owner's vacation policy will be credited
to Transferring Employees on the Closing Date to the extent not then taken.
Buyer shall grant Transferring Employees time off with pay (vacation) for this
full credited amount, or pay in lieu of time off for any portion not taken by
December 31, 1996. Promptly following receipt of payment from Owner Seller
shall pay to Buyer the amount of such earned vacation pay payable by Buyer to
such Transferring Employees.
(ii) Vacation accruing in 1996 to be taken in 1997 by
Transferring Employees will be determined in accordance with Buyer's vacation
policy. In the application of Buyer's vacation policy, Buyer shall recognize
service of such Employees with Owner and its predecessors to the extent Owner
recognized such service under its vacation policy. Seller shall provide
Buyer, on or before the Closing Date, with a list of such recognized service
including the number of vacation weeks earned under Owner's Plan for all
Employees as of May 1, 1996. For those Transferring Employees who remain in
Buyer's employment until at least January 1, 1997, Buyer will accrue vacation
from January 1, 1996 notwithstanding the fact that the Transferring Employees
were not its Employees until after the Closing Date. For those who do not
remain in employment with Buyer until year end, vacation will accrue 1/12 pro
rata for each completed calendar month of employment between the Closing Date
and December 31, 1996.
(e) Severance Pay Obligations.
(i) Owner has assumed all severance pay obligations, if
any, for all Employees who are not hired by Buyer pursuant to Owner's
policies, plans, or agreements relating to severance from employment.
(ii) Any salaried Transferring Employee hired by Buyer who
is terminated during the first six (6) months following the month in which the
Closing Date occurs, for reasons other than cause or misconduct, shall receive
severance pay from Buyer equal to that which he or she would have received
under Owner's severance pay policies as written on January 1, 1996, generally
applicable to Owner's Employees in like positions and pay status in the same
amount which would have been payable had such salaried Transferring Employee
not been hired by Buyer. Seller shall provide Buyer with copies of Owner's
applicable policies as soon as reasonably practical after signing of this
Agreement.
(iii) Any salaried Transferring Employee hired by Buyer who
is terminated by Buyer after the six (6) month period in (ii) above or any
other Transferring Employee will receive severance pay, if any, in accordance
with Buyer's severance pay policies uniformly applicable to other Employees in
positions of similar status and pay. In the application of such policies,
Buyer shall recognize the Transferring Employee's service with Owner from his
or her most recent date of hire with Owner.
11.4 Employee Benefits.
(a) All Transferring Employees who accept employment with Buyer
and commence such employment immediately on the Closing Date will be, starting
on the Closing Date, covered by Buyer's existing employee benefit plans in
accordance with their terms and will be subject to Buyer's existing employment
policies, as applicable to Buyer's Employees who are similarly situated.
Transferring Employees shall be credited with their service with Owner from
their most recent date of hire for purposes of vesting, participation and
eligibility (but not benefit calculations, except as provided in Section
11.5(c) pertaining to certain Salaried Employees), under Buyer's plans and
policies, as though such service had been with Buyer.
(b) With respect to Buyer medical coverage, there shall be no
waiting period for participation by Transferring Employees or their covered
dependents and they shall be credited with any deductibles satisfied under
Owner's medical plans for claims incurred during calendar year 1996 in meeting
the deductible requirements of Buyer's plans. Buyer will also waive any
preexisting condition restrictions under the Buyer Welfare Plans with respect
to Transferring Employees or their dependents.
(c) Buyer will provide no benefit coverage to a Transferring
Employee or his or her dependents to the extent that such person has not
reported to work and continues to be eligible by reason of disability under
the Owner Welfare Plans in accordance with their terms as in effect
immediately prior to the Closing Date.
(d) In particular, but without limitation, (i) claims for
medical, hospital or other health care expenses incurred by Transferring
Employees or their dependents on or after the Closing Date shall be covered
under the Buyer Welfare Plans, subject to the limitations thereof and claims
for such expenses incurred by Transferring Employees or their dependents prior
to the Closing Date shall be covered, subject to the limitations thereof (but
in accordance with the terms of this Agreement), under Owner's Welfare Plans;
(ii) claims of Transferring Employees or their dependents for life insurance,
accidental death and dismemberment and disability benefits with respect to
death, disability or other injury occurring on or after the Closing Date shall
be covered under Buyer's Welfare Plans, and claim for such benefits with
respect to death, disability or injury occurring prior to the Closing Date
shall be covered under Owner's plans (as applicable). The amount and type of
benefits payable in any case shall be determined in accordance with the terms
of the applicable Welfare Plan. Seller and Buyer acknowledge that certain
Transferring Employees who will have attained age 65 or age 55 and 5 years of
service for purposes of Owner's retiree medical plan as of the Closing Date
will be eligible to elect retiree medical coverage under Owner's retiree
medical plan, but only if they do so immediately after the Closing Date; that
such coverage requires payment of contributions in an amount determined by
Owner pursuant to Owner's retiree medical plan with respect to all
participants in such retiree plans and is secondary to active coverage under
Buyer's medical plans while the Transferring Employees are participating in
any of Buyer's medical plans which may cover such Employees.
11.5 Retirement Plan Matters.
(a) Owner Retirement Plans. "Owner Retirement Plans" shall mean
the Cavenham Forest Industries Inc. Retirement Plan for Hourly Paid Employees
and Cavenham Forest Industries Inc. Retirement Plan for Salaried Employees.
(b) Vesting of Benefits. As of the Closing Date, all
Transferring Salaried Employees shall become fully vested in their accrued
benefits under the Owner Retirement Plans. Buyer will recognize past service
credited under the Owner's Retirement Plan for purposes of determining vesting
requirements under Buyer's Plan for Transferring Employees.
(c) Determination of Benefits/Payment of Supplement. Seller will
provide Buyer with a statement, within 180 days of Closing, listing credited
service and accrued benefits (expressed as a Single Life Annuity) through the
Closing Date as determined under Owner's Plan for Salaried Employees (the
"CSAB Statement"). Such accrued benefit amounts shall be listed in the CSAB
Statement for each Transferring Employee. The accrued benefit amount shall be
calculated by Owner's actuary, Hewitt Associates, in consultation with Seller,
using assumptions shown on the CSAB Statement in conjunction with Owner's
current retirement plan formula. Buyer shall provide each salaried
Transferring Employee, upon retirement, a supplemental retirement benefit
under its Salaried Retirement Plan, or under such other form of supplemental
plan or payment acceptable to Buyer, (a "Supplement") equal to:
(i) the age 62 Single Life Annuity amount, taking into
account the credited service listed in the CSAB Statement as applied to the
benefit formula of Buyer's Salaried Retirement Plan, using compensation with
Buyer at retirement, minus,
(ii) the amount of accrued benefit set forth in the CSAB
Statement for each such salaried Transferred Employee.
If the Supplement is provided under Buyer's Salaried Retirement Plan,
such Supplement shall be adjusted pursuant to any options elected by such
Employee pursuant to such plan. If provided outside of Buyer's Salaried
Retirement Plan, such Supplement will be calculated on an actuarial equivalent
basis, using assumptions no less favorable than the assumptions listed on
Schedule 11.5(c) which are used by Owner in determining the accrued benefit
amount. Such Supplement shall be in addition to any benefits earned by such
Employees as a participant in Buyer's Salaried Retirement Plan based upon
their credited service with Buyer and compensation from Buyer after the
Closing Date.
If Buyer does not have a defined benefit retirement plan, the Supplement
(for this purpose calculated by using Seller's retirement plan formula and the
actuarial assumptions set forth on Schedule 11.5(c)) shall be provided to the
Transferring Employee hired by Buyer through an alternative form (such as a
single-life annuity or a lump sum payment of the present value of such
Supplement).
At the time Seller provides the CSAB Statement to Buyer, Seller shall
pay to Buyer an amount equal to the present value of the Supplements to be
provided to the salaried Transferring Employees calculated for this purpose by
using Seller's retirement plan formula and the actuarial assumptions set forth
on Schedule 11.5(c).
(d) Hourly Retirement Plan. For hourly Transferring Employees,
Owner remains responsible for all liabilities of the Cavenham Forest
Industries Inc. Retirement Plan for Hourly Paid Employees for benefits accrued
as of the Closing Date. After the Closing Date, Buyer will provide an
appropriate Hourly Retirement Plan for all Transferring Employees consistent
with Buyer's existing retirement plans covering similarly situated Employee
throughout the country. Buyer will credit Transferring Employees with service
since their most recent date of hire with Owner for purposes of meeting the
vesting requirements of Buyer's plan covering such Employees.
11.6 Employee Payroll Information. Seller shall transfer to Buyer
copies of any records relating to withholding and payment of income and
unemployment taxes (federal, state and local) and FICA and FUTA taxes with
respect to wages paid to Employees hired by Buyer for the calendar year in
which the Closing occurs (including, without limitation, Forms W-4 and
Employee's Withholding Allowance Certificate). Buyer shall provide such
Employees with Forms W-2, Wage and Tax Statement, for the calendar year in
which the Closing occurs setting forth the wages paid and taxes withheld with
respect to such Employees for such calendar year by Owner and Buyer as
predecessor and successor Employees, respectively, as provided by Revenue
Procedure 84-77.
11.7 No Third-Party Beneficiary. This Agreement is being entered into
solely for the benefit of the parties hereto, and the parties do not intend
that any Employee or any other person shall be a third-party beneficiary of
the covenants by either Seller or Buyer contained in this Agreement; provided,
however, that any Transferring Salaried Employee shall have the right to
directly enforce the provisions of Section 11.5(c) against Buyer, and if legal
action is instituted in connection therewith, the prevailing party shall be
entitled to its reasonable attorney fees as set by the court or courts at
trial and on any appeal.
11.8 Labor Matters. As of the date hereof, but not as of the Closing
Date or any other date, except as set forth in Schedule 11.8, (i) within the
last two years Owner has not experienced any material work stoppage due to
labor disagreements with respect to the Timberland Properties; (ii) there is
no unfair labor practice, charge, or complaint against Owner relating the
Timberland Properties pending or, to the knowledge of Owner, threatened,
before the National Labor Relations Board or other similar local tribunal;
(iii) there is no labor strike, request for representation, slowdown or
stoppage actually pending, or to the knowledge of Owner, threatened against or
affecting Owner relating to the Timberland Properties; (iv) to the knowledge
of Owner, no question concerning representation as defined in the National
Labor Relations Act is pending or threatened against Owner respecting the
Timberland Properties; and (v) no arbitration proceeding arising out of or
under any collective bargaining agreement relating to the Timberland
Properties is pending or, to the knowledge of Owner, is threatened.
11.9 Indemnification. Anything in this Agreement to the contrary
notwithstanding, Buyer agrees to indemnify Seller against and hold Seller and
Owner harmless from any and all claims, losses, damages, expenses, obligations
and liabilities arising out of or otherwise in respect of any failure of Buyer
to discharge its obligation under this Section 11. Anything in this Agreement
to the contrary notwithstanding, Seller agrees to indemnify Buyer against and
hold Buyer harmless from any and all claims, losses, damages, expenses,
obligations and liabilities arising out of or otherwise in respect of any
failure of Seller to discharge its obligations under this Section 11. This
indemnity shall survive closing.
12. Miscellaneous.
12.1 Finders. Buyer and Seller respectively represent and warrant that
they have not employed or utilized the services of any broker or finder in
connection with this Agreement or the transactions contemplated by it. Seller
shall indemnify and hold Buyer harmless from and against any and all claims
for brokers' commissions made by any third party as a result of this Agreement
and the transaction contemplated hereunder to the extent that any such
commission was incurred, or alleged to have been incurred, by, through or
under Seller. Buyer shall indemnify and hold Seller harmless from and against
any and all claims for brokers' commissions made by any third party as a
result of this Agreement and transactions contemplated hereunder to the extent
that any such commission was incurred, or alleged to have been incurred, by,
through or under Buyer.
12.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between
the parties with respect to those matters, and cannot be changed or terminated
orally.
12.3 Governing Law. Seller and Buyer each hereby consent to personal
jurisdiction in any action brought with respect to this Agreement and the
transactions contemplated hereunder in the State of Washington and to the
arbitration described in Section 9.2. Section 9.1 of this Agreement shall be
governed by and construed in accordance with the law of the State of
Washington generally, and RCW 64.04.005 specifically, without giving effect to
conflicts of law principles thereof. The balance of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington, including the conflicts of laws principles thereof.
12.4 Tables of Contents and Headings. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller to:
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Attention: Chief Financial Officer
With a copy to:
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
Attention: J. Franklin Cable
If to Buyer to:
Crown Pacific Limited Partnership
121 S.W. Morrison Street
Suite 1500
Portland, Oregon 97204
Attention: Peter Stott, President
<PAGE>
With a copy to:
Ball, Janik & Novack
One Main Place
101 S.W. Main Street, Suite 1100
Portland, Oregon 97204-3274
Attention: Robert S. Ball
12.6 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
12.7 Further Assurances and Assistance. Buyer and Seller agree that
each will execute and deliver to the other any and all documents, in addition
to those expressly provided for herein, that may be necessary or appropriate
to effectuate the provisions of this Agreement, whether before, at or after
the Closing. Seller agrees that, at any time and from time to time after the
Closing, it will execute and deliver to Buyer such further assignments or
other written assurances as Buyer may reasonably request to perfect and
protect Buyer's title to the Assets.
12.8 Survival. The terms, covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement together with all
indemnities and undertakings contained herein shall survive the Closing,
subject to the time limits specified herein, if any, delivery of the Purchase
Price and delivery and/or recordation of the instruments of conveyances and
assignment, bills of sale, assignments of contract rights and other closing
documents, and shall not be deemed to have been merged in any of the documents
delivered at the Closing, irrespective of any investigation made by or on
behalf of any party.
12.9 Waiver. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and signed
by the party waiving such provision.
12.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly set forth in Section 11.7, nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement, including any
such person or entity asserting rights as a third party beneficiary with
respect to environmental matters. No assignment of this Agreement or of any
rights or obligation hereunder may be made by either party (by operation of
law or otherwise) without the prior written consent of the other and any
attempted assignment without the required consent shall be void.
12.11 Best Knowledge. As used in this Agreement (i) "to the best of
Owner's knowledge" shall mean the actual knowledge possessed, at the time the
Purchase Agreement was entered into, by William B. Freck, the Division General
Counsel for Owner, David E. Harris, the Division Chief Financial Officer of
Owner, Richard E. Dahlin, a Division Vice President for Owner, and Lee T.
Alford, a Division Vice President for Owner, all of whom are executive
officers of Owner, and any of the forest managers or the mill manager of
Owner; (ii) "to the best of Seller's knowledge" shall mean actual knowledge
possessed by Steven R. Rogel, President and Chief Executive Officer;
J. A. Parsons, Executive Vice President and Chief Financial Officer; and
Duane C. McDougall, Vice President-Building Materials Group; all of whom are
executive officers of Seller, and (iii) "to the best of Buyer's knowledge"
shall mean actual knowledge possessed by any executive officer of Buyer.
12.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but which together shall constitute one
and the same Agreement.
12.13 No Recordation. Neither this Agreement nor a memorandum hereof
shall be recorded in any jurisdiction or public record.
12.14 INTENTIONALLY OMITTED.
12.15 INTENTIONALLY OMITTED.
12.16 Notice of Reforestation Requirements. In accordance with ORS
527.665, Schedule 12.16 is notice to Buyer of Seller's reforestation
requirements pursuant to the Oregon Forest Practices Act.
12.17 INTENTIONALLY OMITTED.
12.18 No Presumptions. This Agreement is a result of negotiations
between Seller and Buyer, both of whom are represented by counsel of their
choosing. No presumption shall exist in favor of either party concerning the
interpretation of the documents constituting this Agreement by reason of which
party drafted the documents.
12.19 Disclaimer Required by Oregon Statute. THE PROPERTY DESCRIBED IN
THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING
STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH,
IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A
RESIDENCE. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING
FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION
FOR STRUCTURES.
SELLER: WILLAMETTE INDUSTRIES, INC., an Oregon
corporation
By:/s/Jerry A. Parsons
Jerry A. Parsons
Executive Vice President and Chief
Financial Officer
BUYER: CROWN PACIFIC LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Crown Pacific Management Limited
Partnership, its General Partner
By: HS Corp. of Oregon, an Oregon
corporation, a general partner
By:/s/Peter W. Stott
Peter W. Stott
President and Chief Executive
Officer
<PAGE>
GUARANTY
IN CONSIDERATION of the granting of the forgoing Asset Sale,
Purchase and Transfer Agreement (the "Agreement"), Crown Pacific Partners,
L.P., a Delaware limited partnership ("Guarantor") hereby unconditionally and
irrevocably guarantees to Seller and to Seller's successors and assigns the
prompt payment by Buyer of the Purchase Price under the Agreement and the full
performance by Buyer of all of the terms and provisions of the Agreement on
Buyer's part to be performed. Guarantor hereby expressly waives (1) notice of
acceptance of this guaranty and (2) any other notice given to Buyer in
accordance with the provisions of the Agreement of any default under the
Agreement.
Guarantor hereby agrees that neither the waiver by Seller of any
rights against Buyer, arising out of any default by Buyer or otherwise, nor
any modification or amendment of the Agreement shall in any way modify or
release the obligations of Guarantor under this guaranty. Upon any default by
Buyer, Guarantor agrees to pay to Seller the entire amount of any damages
suffered by Seller as a result of such default without any obligation on the
part of Seller to endeavor to collect such indebtedness from or to proceed
against Buyer.
In the event any suit or action is instituted against Guarantor on
account of, in connection with, or based upon this guaranty, in addition to
the costs and disbursements provided by statute, such sum as the court may
adjudge reasonable as attorneys' fees in such suit or action or any appeal
therefrom.
CROWN PACIFIC PARTNERS, L.P., a Delaware limited
partnership
by CROWN PACIFIC MANAGEMENT LIMITED PARTNERSHIP,
Managing General Partner
By: HS Corp. of Oregon, an Oregon corporation
Title: General Partner
By: /s/Peter W. Stott
Name: Peter W. Stott
Title: President and CEO
<PAGE>
SCHEDULE INDEX
CROWN PACIFIC
Schedule 1.1(a) description of parcels of real property
(Timberland)
Schedule 1.1(c) buildings, improvements, roads, bridges,
permits, and easements on or appurtenant to real
property
Schedule 1.1(d) related facilities
Schedule 1.1(e) other rights related to real property
Schedule 1.1(g) description of Mineral Rights
Schedule 1.4(b) mobile equipment, machinery, equipment, tools,
fixtures and furniture
Schedule 1.4(d) contracts (including service contracts, sales
and purchase orders and commitments), leases,
permits and licenses not related to real
property
Schedule 1.8(b)(ii) accrued expenses
Schedule 1.8(b)(iv) exceptions for Affiliates of Owner
Schedule 3.4(a) instruments of transfer to real property
Schedule 3.4(a)(a) form of bill of sale with indemnity
Schedule 4 title reports and commitments
Schedule 5(a) operating plan
Schedule 5(b) harvesting formula
Schedule 5(c) real estate plan
Schedule 6.3 Material Contracts
Schedule 6.4 claims, litigation, proceedings, governmental
investigations
Schedule 6.6 environmental conditions
Schedule 8.7 confidentiality agreement
Schedule 8.8 allocation
Schedule 8.10 access agreement
Schedule 11.1(a) list of executive officers
Schedule 11.1(d) list of all employees
Schedule 11.2(f) list of disabled employees/leave of absences
Schedule 11.5(c) actuarial assumptions
Schedule 11.8 labor matters
Schedule 12.16 reforestation requirements
<PAGE>
Exhibit 2.3
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
This Asset Sale, Purchase and Transfer Agreement (this
"Agreement") is made as of this 23rd day of April, 1996, between Willamette
Industries, Inc., an Oregon corporation ("Seller") and Temple-Inland Forest
Products Corporation, a Delaware corporation ("Buyer").
RECITALS:
A. Seller and Hanson Natural Resources Company, a
Delaware general partnership ("Hanson"), Cavenham Energy Resources Inc., a
Delaware corporation ("CERI"), and Cavenham Forest Industries Inc., a Delaware
corporation ("CFII") (Hanson, CERI and CFII are collectively called "Owner")
have entered into an agreement (the "Purchase Agreement") pursuant to which
Owner has agreed to sell and transfer and Seller has agreed to buy and accept
from Owner substantially all of the assets which are used in the conduct of
Hanson's timber, wood products and energy business located in Oregon,
Washington, Southwest Louisiana, and North Louisiana.
B. Seller has delivered to Buyer a copy of the Purchase
Agreement without Schedules.
C. Seller and Buyer desire to enter into this Agreement
pursuant to which Seller agrees to sell and transfer and Buyer agrees to buy
and accept from Seller certain timberland properties and related assets in
Southwest Louisiana and North Louisiana.
D. Seller intends to sell certain other assets it
acquires from Owner to other purchasers ("Other Purchasers").
It is therefore agreed as follows:
Definitions. As used herein, the following terms
shall have the following meanings:
Assets - The term "Assets" shall mean the Timberland
Properties, Contracts, and other items and leases described in Sections 1.1,
1.3, and 1.4, but excluding the Excluded Assets.
Contracts - The term "Contracts" shall mean the
contracts and leases (except for the long term leases described in Section
1.3) which are described in Sections 1.1 and 1.4.
Closing - The term "Closing" or "Closing Date" shall
have the meaning ascribed to it in Section 3.1.
Closing Date Payment - The term "Closing Date Payment"
shall have the meaning ascribed to it in Section 2.1(b).
Excluded Assets - The term "Excluded Assets" shall
mean the assets excluded in Section 1.5.
Material Adverse Effect - The term "Material Adverse
Effect" shall mean events which have an adverse effect in the aggregate which,
measured in dollars, exceeds the sum of $15,000,000.
Material Contract - The term "Material Contract" shall
have the meaning ascribed to it in Section 6.3.
Proration Date - The term "Proration Date" shall mean
the specific date set for Closing in Section 3.1, or any subsequent date set
for Closing, provided that the actual date of Closing occurs within five (5)
business days after said date set for Closing.
Timberland Properties - The term "Timberland
Properties" shall mean the real property and real property interests described
in Section 1.1(a).
Louisiana Transitional/Transactional Definitions - To
the extent this Agreement is describing Assets located in Louisiana, or rights
therein, or to the extent the internal laws of Louisiana govern this
Agreement: the terms "real property," "real estate," and words of similar
import shall include immovable property; the term "personal property" and
words of similar import shall include movable property; and the term
"easements" and words of similar import shall include servitudes.
Affiliate of Owner - The term "Affiliate of Owner"
shall mean (i) any individual, partnership, corporation, or other entity or
person which is owned or controlled directly or indirectly by Hanson plc; (ii)
any other individual, partnership, corporation, or other entity or person
which controls or is controlled by or under common control with Owner; and
(iii) any officer, director, partner, or owner of 10 percent or greater equity
or voting interest in any such other corporation, partnership, or other entity
or person.
Code - The term "Code" shall mean the Internal Revenue
Code of 1986, as amended.
Agreement - The term "Agreement" shall mean this
instrument and all Schedules and Exhibits attached hereto.
1.Sale, Purchase and Transfer of Assets.
Subject to the terms and conditions of this Agreement,
at the Closing referred to herein, Seller agrees to sell, transfer and assign
or cause to be sold, transferred and assigned, and Buyer agrees to purchase
and accept on the terms stated herein, all of Seller's right, title and
interest in and to the Assets, including, without limitation, the following:
1.1Real Property (Timberland Properties).
(a) Timberland. Those certain parcels of real
property, owned by Owner situated in Southwest Louisiana and North Louisiana
and described on Schedule 1.1 (a), together with all timber of all species,
standing, dead or down, pulpwood, all felled and bucked logs, trees, shrubs
and reproduction thereon as of the Closing Date, the ("Timberland" or
"Timberland Properties"), excepting therefrom changes therein prior to Closing
pursuant to Section 5.
(b) INTENTIONALLY OMITTED
(c) Buildings, Improvements and Easements. All
buildings and improvements, all roads, bridges, permits, servitudes, and
easements, owned or leased by Owner or which Owner has a right to use and on
or appurtenant to the Timberland Properties, including those described on
Schedule 1.1 (c).
(d) Related Facilities. All sorting yards, log
booms, offices, and rock pits, owned or leased by Owner and associated with
the Timberland Properties, whether or not located on the Timberland
Properties, including those described on Schedule 1.1 (d).
(e) Other Rights. All other contracts and rights of
Owner specifically relating to the Timberland Properties and operations
thereon including, but not limited to, contracts, contract rights, leases,
servitudes, permits, licenses, notifications, approvals and authorizations of
governmental bodies, including those described on Schedule 1.1 (e), to the
extent assignable.
(f) Water Rights. All water rights owned by Owner
relating to and appurtenant to the Timberland Properties.
(g) Mineral Rights. All minerals, including without
express or implied limitation, oil, gas, and hydrocarbon and geothermal
resources in which Owner has an interest related to the Timberland Properties,
or otherwise held by Owner in Allen, Beaureguard, Evangeline, Jefferson Davis,
Rapides, or Vernon Parishes, Louisiana, including those Mineral Rights listed
on Schedule 1.1 (g) (the "Mineral Rights").
1.2 INTENTIONALLY OMITTED
1.3 Long Term Leases. Owner is the lessee under
those long term timber leases (the "Long Term Leases") which grant to Owner
the right to grow and harvest timber on the lands described in said leases in
Southwest Louisiana, subject to the terms and conditions of said leases. All
of said leases are described on the attached Schedule 1.3. At Closing, Owner
will assign to Buyer all of its rights under said leases, and Buyer will
assume Owner's obligations under the leases, and will fully perform Owner's
obligations thereunder. The attached Schedule 1.3 also indicates those leases
which may be assigned by Owner without the consent of the lessor and those
that require the consent of the lessor. Should any one or more of the lessors
identified on the attached Schedule 1.3 be unwilling to consent to the
assignment of that lease, the inability of Owner to assign that lease shall
not be considered a breach of this Agreement. The Purchase Price shall be
adjusted, after Closing, to reflect any reduction in the value of the Assets
resulting from Owner's inability to assign said lease because such consent is
not obtained or for any other reason and Subsection 2.1(d) shall apply. Buyer
hereby designates Seller as its agent to pursue any claim for reduction in the
value of the Assets resulting from Owner's inability to assign any Long Term
Leases. Seller agrees to use reasonable diligence in pursuing any claim.
Buyer agrees to be bound by the determination of any such claim pursuant to
the procedures set forth in the Purchase Agreement.
1.4 Personal Property.
The following personal property related to the
Timberland Properties:
(a) Records. Owner's land management and other
records relating to the Timberland Properties, Mineral Rights, Long Term
Leases, and other Assets which, in the reasonable judgment and discretion of
Seller, are segregated or segregable by Seller from the overall records to be
acquired by Seller from Owner, including but not limited to management unit
maps, aerial photographs, timber cruises, road and gate records, operational
records and leases, easements, deeds, licenses, survey and survey notes,
information relating to oil, gas, and mineral activities, permits, approvals
and authorizations of governmental agencies held by Owner in connection with
the Timberland Properties, Mineral Rights, Long Term Leases and other Assets.
The records shall also include all files and documents relating to customers,
suppliers and contractors directly related to the Timberland Properties,
Mineral Rights, Long Term Leases, and other Assets which, in the reasonable
judgment and discretion of Seller, are segregated or segregable from all other
business records, files, books and documents of Seller.
(b) Mobile Equipment, Machinery and Equipment. The
mobile equipment, machinery, equipment, tools, fixtures and furniture used by
Seller exclusively in connection with the Timberland Properties including
those listed on Schedule 1.4 (b), as such items listed thereon may have been
sold, replaced, deleted or added in the ordinary course of business, together
with certificates of title for motor vehicles constituting part of such
equipment which are licensed and owned by Owner.
(c) Office Supplies. The office supplies and forms,
packaging materials and similar miscellaneous tangible personal property used
by Owner exclusively in connection with the Timberland Properties except such
supplies which are marked or identifiable with the logo, mark or trademark of
Owner or Hanson's general partners.
(d) Contracts. All rights and obligations under
those instruments related to the operation of the Assets that are not related
to real property, including the contracts, leases, permits and licenses
described on Schedule 1.4 (d), to the extent the same are assignable,
including sales orders and commitments, purchase orders and commitments,
agreements and contracts of Owner which relate to work or services to be
performed for or at the Assets.
1.5Excluded Assets. The parties to this Agreement
expressly understand and agree that the Seller is selling, assigning,
transferring or conveying, or causing to be sold, assigned, transferred or
conveyed to Buyer, only the Timberland Properties, Long Term Leases, Mineral
Rights, and the assets related thereto that Seller has the right to acquire
from Owner pursuant to the Purchase Agreement. Rights, assets, and properties
which are retained by Owner pursuant to the Purchase Agreement shall be
specifically excluded from the transactions contemplated by this Agreement,
notwithstanding anything to the contrary elsewhere in this Agreement
("Excluded Assets").
1.6 Assignment of Contracts.
(a) Contracts Assignable Without Consent. Seller
agrees to assign or cause to be assigned to Buyer as of the Closing, all of
the rights of Seller and Owner under the Contracts that are assignable without
consent of any third party and Buyer shall assume, as of the Closing, all
obligations of Seller and Owner thereunder which arise before, at or after
Closing.
(b) Seller to Use Reasonable Efforts. Anything in
this Agreement to the contrary notwithstanding, Seller shall not be obligated
to sell, assign, transfer or convey or cause to be sold, assigned, transferred
or conveyed to Buyer any of its rights in and to any of the Contracts without
first obtaining all necessary approvals, consents or waivers. Seller shall
use all reasonable efforts, and Buyer shall reasonably cooperate with Seller,
to obtain all necessary approvals, consents or waivers, or to resolve any
impracticalities of transfer necessary to assign or convey to Buyer each such
Contract as soon as practicable; provided, however, that neither Seller nor
Buyer shall be obligated to pay any consideration therefor except for filing
fees and other ordinary administrative charges which shall be paid by Seller
to the third party from whom such approval, consent or waiver is requested.
In the event Seller obtains consent to assignment of a Contract prior to the
Closing, Buyer shall assume, as of Closing, all obligations of Seller and
Owner thereunder which arise before, at or after the Closing, as though no
consent was required.
(c) If Waivers or Consents Cannot be Obtained. To
the extent that any of the approvals, consents or waivers referred to in
Section 1.6(b) have not been obtained by Seller as of the Closing, or until
the impracticalities of transfer are resolved, Seller shall, during the
remaining term of such Contracts, use all reasonable efforts to (i) obtain the
consent of any such third party with the filing fees and ordinary
administrative charges payable to such third party to be split equally by the
parties; (ii) cooperate with Buyer in any reasonable and lawful arrangements
designed to provide the benefits of such Contracts to Buyer so long as Buyer
fully cooperates with Seller and Owner in such arrangements; and (iii)
enforce, or cause to be enforced, at the request of Buyer and at the expense
and for the account of Buyer, any rights of Seller or Owner arising from such
Contracts against such issuer thereof or the other party or parties thereto
(including the right to elect to terminate any such Contracts in accordance
with the terms thereof upon the request of, and indemnification of Seller and
Owner from, Buyer).
(d) Non-assignability. To the extent that any
Contract or any claim, right or benefit arising thereunder or resulting
therefrom is not capable of being sold, assigned, transferred or conveyed
without the approval, consent or waiver of the issuer thereof or the other
party thereto, or any third person (including a government or governmental
unit), or if such sale, assignment, transfer or conveyance or attempted
assignment, transfer or conveyance would constitute a breach thereof or a
violation of any law, decree, order, regulation or other governmental edict,
this Agreement shall not constitute a sale, assignment, transfer or conveyance
thereof, or an attempted assignment, transfer or conveyance thereof.
1.7 Transferring Permits and Licenses. Seller will
assign, transfer or convey, or cause to be assigned, transferred or conveyed
to Buyer at the Closing those permits and licenses, including those described
in Schedules 1.1 (c) and (e), and 1.4 (d) which are held or used by Owner in
connection with the Assets and which can be assigned without having to obtain
the consent of any third party with respect thereto. Seller will cooperate
with Buyer in obtaining any third party consents necessary to the assignment
or transfer of any other permits or licenses used or held by Seller or Owner
in connection with the Assets which are so assignable or transferable;
however, neither Seller nor Buyer shall be obligated to pay any consideration
therefor except for filing fees and other ordinary administrative charges
which shall be paid by Buyer to the third party from whom such approval,
consent or waiver is requested. Buyer shall assume, as of Closing, all
obligations of Seller and Owner arising prior to, at or after Closing under
those permits and licenses which can be transferred without having to obtain
the consent of any third party and those permits and licenses for which
consent to transfer is obtained prior to Closing. Subsequent to the Closing,
to the extent permitted by law, upon ninety (90) days prior written notice,
Owner has the right to cancel any permits or licenses or any bonds, guarantees
or undertakings by Owner applicable to the Assets to the extent such are not
so assigned or transferred to Seller pursuant to Section 1.7 of the Purchase
Agreement to Buyer pursuant to this Section 1.7.
1.8 Liabilities Assumed by Buyer; Liabilities Not
Assumed by Buyer.
(a) Assumed Liabilities. Except as expressly
provided in Subsection 1.8(b), Buyer shall, effective as of the Closing and
without any further responsibility or liability of or recourse to Seller, or
its directors, shareholders, officers, partners, employees, agents,
consultants, representatives, successors, transferees or assignees, absolutely
and irrevocably assume and shall be liable and responsible for the claims,
liabilities, and obligations of Seller arising pursuant to the Purchase
Agreement and Owner with respect to the Timberland Properties, Mineral Rights,
Long Term Leases, and other Assets, whether or not disclosed to Buyer, and
whether or not occurring or arising prior to, at or after Closing, except as
expressly set forth in Section 1.8(b) and except to the extent to which Seller
indemnifies Buyer as expressly set forth in Section 10.1(a); and nothing in
this Section 1.8(a) shall diminish Buyer's rights in Section 8.11.
Without limiting the foregoing, Buyer shall assume the
following:
(i) Buyer shall assume the Long Term Leases described
on Schedule 1.3, and all Contracts assigned to Buyer pursuant to Section 1.6,
and permits and licenses assigned to Buyer pursuant to Section 1.7;
(ii) Buyer shall assume all matters disclosed to
Buyer in Schedules 6.3 through 6.6;
(iii) Buyer shall assume the employee matters that
are set forth in Section 11 as Buyer's responsibility; and
(iv) INTENTIONALY OMITTED
(v) Buyer shall assume all undertakings of, and
liabilities and obligations assumed by, CFII, and all indemnity obligations of
CFII, if any, to Crown Zellerbach Corporation and its successors and assigns
relating to all environmental conditions arising from ownership, possession,
use, or conduct of business and operations of the Indemnification Properties
(as defined in Section 6.7(e) of this Agreement), which undertakings,
liabilities, obligations, and indemnity obligations are contemplated in that
certain Transaction Agreement dated December 14, 1985, by and between James
River Corporation of Virginia and Crown Zellerbach Corporation and are more
specifically set forth in that certain Undertaking dated as of May 2, 1986, by
CFII in favor of Crown Zellerbach Corporation (the Transaction Agreement and
Undertaking are collectively referred to herein as "Transaction
Agreement/Undertaking").
At Closing, the parties shall execute an Assignment,
Acceptance, and Assumption Agreement in the form attached hereto as Schedule
1.8 to evidence the foregoing matters to be assumed by Buyer, in addition to
the more specific instruments of assignment and assumption described in this
Agreement.
(b) Excluded Liabilities. Notwithstanding anything
to the contrary in this Agreement, the following liabilities and obligations
("Excluded Liabilities") shall not be assigned to Buyer nor assumed by Buyer:
(i) all liabilities and obligations related to the
Excluded Assets;
(ii) trade accounts payable for items purchased and
delivered as of the Closing Date, and all accrued expenses of the type set
forth on Schedule 1.8 (b)(ii) attached hereto which are, or under generally
accepted accounting principles should be, accrued at Closing;
(iii) all liabilities and obligations for taxes,
except for assessments and real estate taxes for the current year which shall
be prorated on the Proration Date as provided in this Agreement, and except
for the deferred ad valorem taxes because of classification of all or a
portion of the Timberland Properties as farmland, grazing land, or timberland;
(iv) all liabilities and obligations of Owner to any
Affiliate of Owner, except for any matters listed on Schedule 1.8 (b)(iv)
attached hereto;
(v) any liabilities or obligations to or with respect
to employees of Seller or Owner, except for the obligations and liabilities to
be assumed by Buyer pursuant to Section 11;
(vi) any obligations for borrowed funds; the term
"borrowed funds" shall not be construed to include purchase money contracts
and similar security interests for personal property;
(vii) all bodily injury claims occurring on or in
connection with the Assets prior to Closing and all product liability claims
arising from sale or operation of the Assets prior to Closing;
(viii) any matters retained by Seller or Owner
pursuant to Section 8.2(c);
(ix) all undertakings of, and liabilities and
obligations assumed by, CFII, and all indemnity obligations of CFII,
contemplated by or set forth in the Transaction Agreement/Undertaking, except
for the undertakings, assumed liabilities and obligations, and indemnity
obligations described in Section 1.8(a)(v) of this Agreement; and
(x) liens and encumbrances to be satisfied by Owner
as provided in Section 3.6.
2. Purchase Price. Subject to adjustment in
accordance with the provisions of this Agreement, the purchase price for the
Assets ("Purchase Price") shall be Eighty Six Million Dollars ($86,000,000).
The Purchase Price shall be payable as provided in Section 2.1.
2.1 Payment of Purchase Price.
(a) INTENTIONALLY OMITTED
(b)Buyer shall pay to Seller the entire Purchase Price
(the "Closing Date Payment"), by wire transfer of immediately available funds
to the escrow trust account established by Chicago Title Insurance Company
(herein "Chicago Title" or "Escrow Agent") at Chemical Bank, New York, New
York ("Owner's Bank"), which transfer shall have been received by Owner's Bank
no later than 7 a.m. PDT on the Closing Date. Upon confirmation to Buyer by
Escrow Agent or First American Title Insurance Company ("First American") that
the deeds and assignments of the Long Term Leases described in Section 3.4
have been recorded, the Escrow Agent shall deliver the Closing Date Payment to
Seller or to Seller's order.
(c)If Buyer is legally obligated to Close and if the
Closing Date Payment is not received by Owner's Bank by 7 a.m. PDT on the
Closing Date, Seller may, at its option, either exercise the Seller's remedies
described in Section 9 by reason of Buyer's default, or may accept late
payment of the Closing Date Payment which shall, in such event, be accompanied
by payment of an amount determined by computing simple interest on the amount
of that payment at the rate of interest announced publicly by Chemical Bank in
New York, New York from time to time as its "Prime Rate" (on the basis of a
360-day year) from the Closing Date to the date of payment. For purposes of
computing the amount payable, any amount received after 7 a.m. shall be deemed
to have been received on the next day. If the Closing Date Payment is not
received by Owner's Bank on the Closing Date by 7 a.m. PDT, and if Seller
elects to accept a late payment, the Closing Date Payment shall be transferred
to an account to be designated by Seller.
(d) If, at the Closing, the parties have not resolved
the Purchase Price reduction as contemplated in Section 8.6, or the Price
Adjustment Items or Price Adjustment Notice as contemplated in Section 8.11,
then the parties shall proceed to Close as scheduled and the amount to be paid
to Seller at Closing shall be the Closing Date Payment. Seller shall
reimburse Buyer for any overpayment in the Purchase Price within three (3)
business days of resolution of the amount of the Purchase Price reduction.
3. Closing.
3.1 Date of Closing. The Closing shall take place at
the offices of Ater Wynne Hewitt Dodson & Skerritt, 222 SW Columbia, Suite
1800, Portland, Oregon, or at such other place as the parties may agree in
writing, on May 15, 1996, unless another time and date are mutually designated
by Seller and Owner. The foregoing date is the date on which Owner's deed(s)
to Buyer are to be recorded immediately prior to the delivery of the Purchase
Price to Seller and is referred to in this Agreement as the "Closing" or
"Closing Date". Seller shall deliver possession of the Assets to Buyer on the
Closing Date. Seller shall have no obligation to consummate the Closing if
for any reason the closing under the Purchase Agreement does not occur.
3.2 Hart-Scott Rodino Act. Buyer and Seller have
prepared all necessary documentation and performed all other necessary actions
to complete all necessary filings under the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). Each party agrees to
respond to any request for additional information within twenty (20) days of
receipt of the request. In the event the waiting period (which term includes
the extension period) under the HSR Act has not expired by the Closing Date
set forth in Section 3.1, the Closing Date shall be delayed until five (5)
business days after expiration of the waiting period; provided, that Seller,
in its sole discretion, may terminate this Agreement (i) if the waiting period
has not expired or been terminated prior to the closing under the Purchase
Agreement within 115 calendar days following the date on which Seller
completes its initial filing, or (ii) if Owner terminates the Purchase
Agreement pursuant to Section 3.2 thereof, and Buyer, in its sole discretion,
may terminate this Agreement if the waiting period has not expired or been
terminated within 180 calendar days of the date on which Buyer completes its
initial filing.
3.3 Execution and Deposit of Documents Prior to
Closing. At least five (5) business days prior to the Closing Date, each of
the parties, as applicable, shall execute and deposit with the Escrow Agent
all of the documents listed in Section 3.4 below which are to be recorded or
filed on the Closing Date. Each of the parties, as applicable, shall execute
and deliver to the other party all remaining documents listed in Subsection
3.4 below on the Closing Date.
3.4 Documents to be Delivered by Seller . At or
prior to the Closing, Seller shall deliver, or cause to be delivered, the
following:
(a) Documents of transfer, bills of sale,
certificates of title and other instruments of transfer, dated the Closing
Date, transferring to Buyer title to the Assets. With respect to the
Timberland described on Schedule 1.1 (a) (including the buildings,
improvements and other appurtenant interests described in Section 1.1(c) and
(d)) title shall be transferred in the form of the deed(s) attached hereto as
Schedule 3.4 (a) directly from Owner to Buyer; with respect to the Mineral
Rights described in Schedule 1.1(g), transfer shall be accomplished through
mineral quit claim deeds for each of those Parishes listed in Section 1.1(g)
directly from Owner to Buyer and other instruments of transfer without
warranty; with respect to all personal property, title shall be transferred by
Bill of Sale in the form attached hereto as Schedule 3.4 (a)(a); and with
respect to the Long Term Leases to be transferred pursuant to Section 1.3,
title shall be transferred directly from Owner to Buyer in the form of the
assignment attached hereto as Schedule 3.4 (a)(a)(a), together with documents
evidencing the consent of the lessor.
(b) Documents evidencing the assignment and
assumption of the Contracts to Buyer (together with any third-party consents
required for such transfers) and the assignment and assumption of any permits
and licenses (together with any third-party consents required for such
transfers) not transferred pursuant to Section 3.4(a), and the Assignment,
Acceptance, and Assumption Agreement described in Section 1.8;
(c) A copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and performance of
this Agreement by Seller and a certificate of the secretary or assistant
secretary of Seller, dated the Closing Date, that such resolutions were duly
adopted and are in full force and effect;
(d) The affidavits of Seller required by Section 1445
(b)(2) of the Code and by local taxing authorities, and any other documents
required of Seller to transfer the Assets in accordance with this Agreement;
(e) Copies satisfaction, releases or terminations of
the liens and encumbrances referred to in Section 3.6; and
(f) Copies of documents delivered to Seller by Owner
pursuant to Sections 3.4(c) and (d) of the Purchase Agreement.
3.5 Documents to be Delivered by Buyer. At or prior
to the Closing Date, Buyer shall deliver the following:
(a) Documents evidencing the assignment and
assumption of all Contracts and the assignment and assumption of all permits
and licenses transferred by Seller to Buyer pursuant to Section 3.4(a) and
(b), and the Bill of Sale, and Assignment, Acceptance, and Assumption
Agreement described in Section 1.8;
(b) A copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer, and a certificate of its secretary or assistant secretary,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(c) The affidavits, if any, of Buyer required by
local taxing authorities, including the affidavits specified in
Section 8.8(b), and any other documents required of Buyer to transfer the
Assets in accordance with this Agreement.
3.6 Satisfaction of Liens and Encumbrances. At or
prior to the Closing Date, Owner has agreed to pay in full all liens and
encumbrances for borrowed funds, income tax liens, and judgment liens on the
Assets. At or prior to the Closing Date, Owner has agreed to pay all
delinquent property taxes on the Assets. Buyer shall assume sole
responsibility, as of Closing, for any ad valorem taxes which are deferred
because of farm or grazing or forest use or classification.
3.7 Transfer Taxes; Prorations. Any recording fees,
transfer taxes, or sales taxes payable as a result of the sale of the Assets
shall be paid by Seller or Owner. Escrow fees pursuant to Section 3.8 shall
be split equally between the parties. Buyer shall reimburse Seller for other
escrow fees payable by Seller pursuant to the Purchase Agreement, including
fees in connection with the Deposit under the Purchase Agreement, in the
proportion that the Purchase Price bears to One Billion Five Hundred Eighty-
Eight Million Dollars ($1,588,000,000). Real estate taxes, assessments for
public improvements, and all other fees and assessments related to the Assets
and rent for the Long Term Leases shall be prorated as of the Proration Date.
3.8 Default Deeds. At least five (5) business days
prior to the Closing Date, Buyer shall execute and deposit with Chicago Title,
in escrow, deeds (the "Quitclaim Deeds") conveying, quitclaiming and releasing
unto Seller all of Buyer's right, title, and interest in and to the Timberland
Properties, including any and all after acquired title to the Timberland
properties, without warranty or recourse, and assignments (the "Quitclaim
Assignments") assigning the Long Term Lease to Seller without warranty or
recourse. If the closing under the Purchase Agreement occurs and the Closing
Date Payment is made to Owner's Bank by 9 a.m. PDT on the Closing Date,
Chicago Title shall return the Quitclaim Deeds and Quitclaim Assignments to
Buyer. If the closing under the Purchase Agreement occurs and Buyer fails to
make the Closing Date Payment by 9 a.m. PDT on the Closing Date, regardless of
whether such failure is justified on account of any alleged default by Seller,
then Chicago Title shall release the Quitclaim Deeds and Quitclaim Assignments
to Seller which may proceed to record them in the applicable real estate
records.
4. Title Insurance. Seller has delivered to Buyer
evidence of title in the form of title commitments ("Title Reports"), as
appropriate, covering the Timberland Properties, copies of which are attached
hereto as Schedule 4; Seller and Buyer acknowledge that the Title Reports may
be revised, corrected, and supplemented by First American between the date of
this Agreement and the Closing Date, as contemplated in Section 5(c). In the
event that First American is not prepared to issue at Closing to Buyer,
owner's policies of title insurance insuring title in the Timberland
Properties in Buyer, subject only to the exceptions set forth in the Title
Reports, as those Title Reports may have been revised, corrected, and
supplemented by First American as set forth above, but with no reductions, in
excess of five hundred (500) acres in the aggregate, in the acreage vested in
Owner, and subject to the printed exceptions contained in such Title Reports,
then Buyer shall have the rights set forth in Section 8.11 with respect to the
additional reductions in acreage and additional material encumbrances to be
added as exceptions to title. In the event First American is not prepared to
issue at Closing a leasehold policy of title insurance insuring in Buyer the
lessee's interest under each Long Term Lease (subject to exceptions and
objections contained in such policy), Buyer shall have the rights set forth in
Section 1.3 for Owner's inability to assign such Long Term Lease. If First
American is not prepared to issue such owner's policies on the Closing Date
for reasons other than additional reductions in acreage or additional
exceptions to title, either Buyer or Seller may delay Closing until First
American or another title insurance company is prepared to issue such owner's
policies. At Closing Buyer shall purchase, at its own expense, such owner's
policies unless otherwise agreed to by the parties.
5.Conduct Pending Closing.
(a) Between the date hereof and the Closing Date,
Owner has agreed to continue to operate the Timberland Properties in the
ordinary course and in a manner reasonably consistent with its present
operating plan which establishes a maximum volume of harvest or stumpage sales
for harvest ("Maximum Volume") through the Closing Date ("Operating Plan"), a
copy of which is attached hereto as Schedule 5(a); provided, that Owner has
agreed that it will not enter into log export contracts that provide for
delivery of logs after Closing in recognition of the fact that Seller will not
export logs, and this change of conduct by Owner may modify Owner's ordinary
course and Operating Plan but shall not affect the Maximum Volume set forth on
Schedule 5(a). Subject to the foregoing, Owner has agreed that it shall
continue to harvest, or sell stumpage for harvest, timber standing, lying, and
situated upon the Timberland Properties described in Schedule 1.1 (a) and on
Long Term Leases described in Section 1.3. Owner has agreed that it shall
continue its various silvicultural practices consistent with its past
practices, from the date hereof until the Closing Date.
(b) The Purchase Price shall be increased or
decreased by the difference between the actual harvest from the Timberland
Properties (including stumpage sales for harvest) and the Maximum Volume
applicable to the Timberland Properties pursuant to the formula ("Harvesting
Formula") attached hereto as Schedule 5(b), as of the date the Closing
actually occurs, but such difference between actual harvest and the Maximum
Volume shall not be considered a breach by Seller of this Agreement.
Adjustments, if any, to the Purchase Price in this Subsection (b) shall be
made within fifteen (15) days of the date the Closing actually occurs, and
each party agrees to pay to the other the adjusted amount, as applicable,
without interest within said fifteen (15) days.
(c) Owner has agreed that it will not take any
action, (i) the result of which will be to create a Material Adverse Effect on
the value of the assets covered by the Purchase Agreement, or (ii) which is
both not reasonably consistent with its Operating Plan and not in the ordinary
course of business, except as otherwise set forth in this Section 5. Owner
may, but is not obligated, to continue, in the ordinary course of business, to
grant and obtain easements, rights of way and other similar rights to the
Timberland Properties, to grant options to or lease additional Mineral Rights,
and to purchase or sell or exchange additional real properties or interests
therein consistent with its present plan ("Real Estate Plan"), a copy of the
relevant portions of which is attached hereto as Schedule 5(c). In the event
Owner sells any portion of the Timberland Properties or interests therein or
grants options to or leases additional Mineral Rights, other than those
identified in the Real Estate Plan, the Purchase Price shall be reduced by an
amount equal to the proceeds of any such sales, options, or leases, but Seller
will not be deemed in breach of this Agreement. Seller shall promptly notify
Buyer of any notice received from Owner related to the granting or obtaining
of any easement, right of way or other similar right, any additional option to
or lease of Mineral Rights, and any such purchase, sale or exchange; and if
the transaction involves more than two hundred fifty thousand dollars
($250,000.00), Seller shall obtain Buyer's prior written consent to the
transaction, which consent shall not be unreasonably withheld. For purposes
of Section 4, the Title Reports shall be revised or deemed revised to reflect
such transactions.
(d) Notwithstanding the foregoing, the parties agree
that, if the Closing Date is extended beyond May 15, 1996, Owner shall be
deemed to be operating the Timberland Properties in the ordinary course of
business from May 16, 1996, to the date the Closing actually occurs, with
respect to the activities described below if Owner:
(i) meets its obligations under the "fiber supply
agreements" described in Section 1.8(a)(iv); and
(ii) continues its harvest of timber at a level that
is between fifty percent (50%) and one hundred percent (100%) of the level in
the Operating Plan; and
(iii) continues road maintenance and road construction
as necessary to prevent substantial deterioration from the condition of the
roads as of May 15, 1996, and as necessary to meet the needs of Owner's
harvest activities; and
(iv) continues silvicultural and reforestation
activities in accordance with good management practices.
6. Representations of Seller. Seller represents to
Buyer that:
6.1 Organization, Standing and Authority. Seller is a corporation
organized, existing, and in good standing under the laws of the State of
Oregon. Seller has full power and authority to enter into and perform this
Agreement. Seller is not a "foreign person" within the meaning of Section 1445
of the Code.
6.2 Authorization of Agreement; Authority. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary corporate action of Seller, and this Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution, delivery and
performance of this Agreement by Seller will not (a) violate or conflict with
Seller's corporate power and authority; (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Seller;
or (c) subject to the receipt of appropriate consents as specified in this
Agreement as of the Closing Date and subject to the provisions of Section
1.6(d), conflict with, or result in the breach of the provisions of, or
constitute a default under, any agreement, license, permit or other instrument
to which Seller is a party or is bound or by which the Assets are bound.
Except as required by the HSR Act, no consent, approval or authorization of
any governmental authority is required on the part of Seller in connection
with the execution, delivery and performance of this Agreement.
6.3 Material Contracts. All of the Material Contracts which are to be
transferred to Buyer at Closing and which relate to the Timberland Properties
are listed on Schedule 6.3 or Schedule 4 and all of the Long Term Leases are
listed on Schedule 1.3. Except as disclosed in Schedule 6.3 or Schedule 4,
the Material Contracts have not been further modified or amended, and except
as disclosed in Schedule 1.3, said Long Term Leases have not been further
modified, and amended; and to the best of Owner's knowledge, neither Owner nor
any party thereto is in default of any material term in the Material Contracts
or Long Term Leases, and true and complete copies, including applicable
amendments, of the Material Contracts and Long Term Leases have been made
available to Buyer for review prior to execution of this Agreement. A
Material Contract shall mean a Contract which involves payments, performance
of services or delivery of goods by or to Owner after the Closing Date in an
amount or value of two hundred fifty thousand dollars ($250,000.00) or more.
6.4 Litigation; Compliance with Laws. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Seller's knowledge, threatened, that question the validity of this
Agreement or any action taken or to be taken by Seller in connection with this
Agreement. Except as set forth on Schedule 6.4, there is no claim,
litigation, proceeding or governmental investigation pending or, to the best
of Owner's knowledge, threatened, or any order, injunction or decree
outstanding which, if decided unfavorably, would cause Buyer to incur loss or
damage in excess of one hundred thousand dollars ($100,000.00); except as
disclosed on Schedule 6.4, to the best of Owner's knowledge Owner has received
no written notice from a governmental authority of a material violation of law
relating to the Timberland Properties which has not or will not have been
resolved prior to Closing.
6.5 Personal Property. Owner has, or will have on the Closing Date,
good and marketable title (which includes leasehold title if applicable) to
the personal property to be transferred to Buyer on the Closing Date pursuant
to Section 1.4, subject to equipment leases, purchase money contracts, and
similar security interests to be assumed by Buyer pursuant to Section 1.8.
6.6 Environmental Conditions. Except as disclosed on Schedule 6.6, to
the best of Owner's knowledge there are no environmental conditions on the
Indemnification Properties (as defined in Section 6.7(e)) that would cause
Buyer to incur more than one hundred thousand dollars ($100,000) in loss or
damage for each such environmental condition. The foregoing representation
specifically includes no representation whatsoever with respect to the real
property in North Louisiana and Southwest Louisiana (including the Long Term
Leases) regarding the effects created by oil and gas operations.
6.7 Disclaimer of Warranties and Representations From Seller; AS IS;
Indemnity
(a) Personal Property. Except as otherwise expressly set forth
in this Agreement, this Agreement is executed, and the personal property will
be transferred, without any warranty of title, either express or implied, and
without any express or implied warranty or representation as to the
merchantability or fitness for any purpose of any of the equipment or other
personal property included in the Assets, and without any other express or
implied warranty or representation whatsoever.
(b) Real Property. Except as otherwise expressly set forth in
this Agreement, this Agreement is executed, and the real property including
Timberland Properties, Mineral Rights, and Long Term Leases will be
transferred, without any warranty of title, either express or implied, except
warranties (if any) contained in the deed(s) conveying the real property
included in the Assets, and without any express or implied warranty or
representation as to the merchantability of any of the real property included
in the Assets, acreage, legal access, operations or encroachments or any other
condition affecting the Assets.
(c) Condition of Property. Except as otherwise expressly set
forth in this Agreement, Buyer agrees to purchase the Timberland Properties,
Mineral Rights, Long Term Leases, personal property, mobile equipment,
machinery and equipment and all other Assets "as is", "where is" and with all
faults. The Buyer certifies by execution hereof that it has had an
opportunity to inspect the Timberland Properties, Mineral Rights, Long Term
Leases, and other Assets (including the surface and subsurface of any real
property) prior to executing this Agreement; that Buyer either has inspected
or waived its right to inspect the Timberland Properties, Mineral Rights, Long
Term Leases, and other Assets for all purposes and satisfied itself as to its
physical condition, both surface and subsurface, including but not limited to
conditions specifically related to the presence, release or disposal of
hazardous substances, but without limiting Buyer's rights under Section 8.11;
that it has not relied upon any information delivered by Owner, Seller or
their respective agents concerning the Timberland Properties, Mineral Rights,
Long Term Leases, and other Assets; and that it is relying upon its own
examination of the Timberland Properties, Mineral Rights, Long Term Leases,
and all other Assets in entering into and in consummating this Agreement.
Buyer further acknowledges and agrees that, except as otherwise expressly set
forth in this Agreement, neither Owner nor Seller nor any of their respective
agents have made any representations, warranties or covenants whatsoever with
respect to the quantity or quality of the timber, the acreage, tax status,
legal access, encroachment or physical condition of the Timberland Properties,
Mineral Rights, and Long Term Leases, nor, except as expressly set forth in
this Agreement, have they made any representations, warranties, or covenants
whatsoever concerning the presence, release or disposal of hazardous
substances thereon.
(d) Disclaimer. Except as otherwise expressly set forth in this
Agreement, the transaction contemplated hereby shall be without any express,
implied, statutory or other warranty or representation as to the condition,
quantity, quality, fitness for particular purpose, freedom from redhibitory
vices or defects, conformity to models or samples of materials or
merchantability of any of the Assets, their fitness for any purpose, and
without any other express, implied, statutory or other warranty or
representation whatsoever. In addition, except as otherwise expressly set
forth in this Agreement, Seller makes no warranty or representation, express,
implied, statutory or otherwise, as to the accuracy or completeness of any
data, reports, records, projections information or materials now, heretofore
or hereafter furnished or made available to the Buyer in connection with this
Agreement including, without limitation, any description of the Assets,
pricing assumptions, or the environmental condition of the Assets or the
portions affected by the Endangered Species Act or any other materials
furnished or made available to Buyer by Seller or its agents or
representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made
available to Buyer are provided to Buyer as a convenience, and shall not
create or give rise to any liability of or against Seller; and any reliance on
or use of the same shall be at Buyer's sole risk.
Buyer expressly waives the warranty of fitness for intended purposes or
guarantee against hidden or latent redhibitory vices under Louisiana law,
including Louisiana Civil Code Articles 2520 through 2548, and the warranty
imposed by Louisiana Civil Code Articles 2475; waives all rights in
redhibition pursuant to Louisiana Civil Code Article 2520, et seq;
acknowledges that this express waiver shall be considered a material and
integral part of this Agreement and the consideration thereof; and
acknowledges that this waiver has been brought to its attention and explained
in detail and that it has voluntarily and knowingly consented to this waiver
or warranty of fitness and/or warranty against redhibitory vices and defects
for the Assets.
(e) Waiver of Claims and Indemnity. Without limiting the
generality of any other provision in this Section 6.7, except as otherwise
expressly set forth in this Agreement, Buyer assumes any and all liabilities,
past, present, or future, of Seller and "Owners" as defined below, relating to
hazardous substances or materials, wastes, toxics, pollutants, solid wastes,
or contaminants, including without limitation liabilities arising under any
current or future legal requirement pertaining thereto, which are based upon
the ownership or operation of the Assets. Except as otherwise expressly set
forth in this Agreement, Buyer assumes the risk that hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants may be
present in, on or under the Timberland Properties, Mineral Rights, Long Term
Leases, or other Assets, and hereby waives, releases, and discharges forever
Owner, Hanson's general partners, Affiliates of Owner, Owner's successors and
assigns, and their respective shareholders, directors, officers, employees,
and agents (in this Section 6.7(e) collectively referred to as "Owners") and
Seller from any and all present or future claims or demands, and any and all
damages, loss, injury, liability, claims or costs, including fines, penalties
judgments, claims for contribution, and cost recovery actions, arising from or
in any way related to the condition, operation, or use of the Timberland
Properties, Mineral Rights, Long Term Leases, or other Assets or the presence
of any hazardous substances or materials, wastes, toxics, pollutants, solid
wastes, or contaminants in, on or under the Timberland Properties, Mineral
Rights, Long Term Leases, or other Assets; provided, however, that to the
extent such waiver, release or discharge will prejudice Buyer's rights to
pursue third parties (not including Affiliates of Owner) who have indemnified
or insured Owner (or any of the three Owners) for some or all of the foregoing
matters, Buyer shall not, and shall not be deemed to, have waived, released or
discharged "Owners" for the sole purpose of pursuing such third parties.
Except as otherwise expressly set forth in this Agreement, Buyer hereby
indemnifies, holds harmless, and agrees to defend Seller and "Owners" from and
against any and all present or future claims or demands, and any and all
damages, losses, liabilities, injuries, fines, penalties, judgments, claims
for contribution, and cost recovery actions, and consultant fees, expert
witness fees, costs and expenses (including attorney's fees incurred by Seller
or Owners in the case of matters involving third parties) arising from or in
any way related to the presence of any hazardous substances or materials,
wastes, toxics, pollutants, solid wastes, or contaminants in, on or under the
(i) Timberland, (ii) Mineral Rights, (iii) Long Term Leases, and (iv) any
other real property constituting a part of other Assets (collectively, the
Indemnification Properties"). This indemnity specifically includes the
obligation of Buyer to remove, remediate, reimburse or take other actions
required by law concerning any hazardous substances or materials, wastes,
toxics, pollutants, solid wastes, or contaminants in, on or under the
Indemnification Properties. Nothing herein shall limit Buyer's right, in good
faith, to contest any action, request or requirement of any governmental
agency provided that such action is taken at Buyer's sole cost, risk and
expense. The provisions of this Section 6.7(e) shall not include, or create
any obligation of Buyer with respect to any contractual obligation of "Owners"
or Owner's predecessors except as provided in Section 1.8(a)(v) or as
disclosed on any Schedule attached to this Agreement, are solely for the
benefit of Seller and "Owners" and shall not be construed to be for the
benefit of any third party or to constitute a waiver or release of rights
against any third party. Seller hereby assigns to Buyer all rights and claims
which Seller may now or hereafter have against third parties relating to any
matter for which Buyer indemnifies Seller or "Owners." The provisions of this
Section 6.7(e) and Section 1.8(a)(v) are intended to exclusively set forth
Buyer's obligations under this Agreement with respect to assumption, waiver,
release, discharge, and indemnification of environmental matters, and the
provisions of Section 10.1(b) and Section 1.8(a) (other than
Section 1.8(a)(v)) shall not apply to such obligations of Buyer.
7. Representations of Buyer. Buyer represents to Seller as follows:
7.1 Buyer's Organization. Buyer is a corporation organized, existing
and in good standing under the laws of Delaware and has the full corporate
power and authority to enter into and to perform this Agreement. Buyer is
qualified to do business and is in good standing in the state of Louisiana.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action of Buyer, and this Agreement constitutes the valid
and binding obligation of Buyer enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights in general and subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
7.3 Consents of Third Parties. The execution, delivery and performance
of this Agreement by Buyer will not (a) violate or conflict with the articles
of incorporation or by-laws of Buyer; or (b) constitute a violation of any
law, regulation, order, writ, judgment, injunction or decree applicable to
Buyer. Except as required by the HSR Act, no consent, approval or
authorization of any governmental authority is required on the part of Buyer
in connection with the execution, delivery and performance of this Agreement.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken
or to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or decree
outstanding, against the Buyer that, if adversely determined, would have a
material effect upon Buyer's ability to perform its obligations under this
Agreement.
7.5 Financing. Buyer will have, on the Closing Date, all funds
necessary to pay the Purchase Price and related fees and expenses, and has, or
will have on the Closing Date, the financial capacity to perform all of its
other obligations under this Agreement.
8. Further Agreements of the Parties.
8.1 Access to Information. Owner has agreed that Buyer (subject to
Section 8.7) shall have access to information in the possession of Owner, and
Seller will make available to Buyer information in its possession, relating to
the Timberland Properties, the Mineral Rights, the Long Term Leases, and other
Assets for due diligence investigation purposes and to facilitate an orderly
transition in the management of those Assets in anticipation of Closing. In
addition, Owner has agreed to make available to Buyer its financial statements
and shall cooperate and instruct Owner's independent auditors to cooperate, at
Buyer's expense, in preparing the financial statement related to the
Timberland Properties which Buyer may be required to file with the Securities
Exchange Commission.
8.2 Notice of Changes and Events.
(a) Each party shall promptly notify the other party in writing,
and furnish to such party any information that such party may reasonably
request, with respect to the occurrence of any event or the existence of any
state of facts that would (i) result in the party's or Owner's representations
and warranties not being true if they were made at any time prior to or as of
the Closing Date, or (ii) impair the party's or Owner's ability to perform its
obligations under this Agreement.
(b) Subject to receipt of necessary information from Owner,
Seller agrees to update and bring current all Schedules attached to this
Agreement prior to the Closing Date. Any such updated Schedule shall be for
informational purposes only and shall not affect the rights and obligations of
the parties as set forth in this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
Owner or Seller shall have the right, in their respective sole discretion, to
retain any claim, obligation, or liability that may otherwise be transferred
to or assumed by Buyer in this Agreement. Owner or Seller may, without
limitation, exercise this right by omitting or deleting a claim, liability, or
obligation on one or more of the Schedules attached to this Agreement. If
Owner or Seller exercises this right, Seller shall provide written notice to
Buyer of the claim, liability, or obligation that Seller shall retain within
thirty-five (35) days of Seller's receipt of written notice of said claim,
liability, or obligation.
8.3 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred
in connection with this Agreement and in connection with all obligations
required to be performed by each of them under this Agreement.
8.4 Publicity. Buyer and Seller shall consult with each other before
issuing any public announcement or press release concerning the transactions
contemplated by this Agreement and, except as may be required by applicable
law or regulation or rule of any stock exchange or organized securities market
on which the securities of Buyer or Seller are listed or traded, will not make
a public announcement or issue a press release prior to such consultation. If
Buyer or Seller are so required to make a public announcement or issue a press
release such party shall use its best efforts to inform the other party hereto
prior to making or issuing it.
8.5 Preservation of Records.
(a) Buyer agrees that, without expense to Seller, Buyer (i) shall
preserve and keep the records relating to the Timberland Properties, Mineral
Rights, Long Term Leases, and other Assets delivered to it by Seller for a
period of six (6) years from the Closing, and (ii) shall give Seller and Owner
reasonable access to such records and to personnel during regular business
hours if needed for any bona fide purpose, provided such access shall be at
Seller's or Owner's cost and expense, including reimbursement of Buyer's
extraordinary costs, if any, of providing such access.
(b) Seller or Owner, without expense to Buyer, (a) shall preserve
and keep the records relating to the Timberland Properties, Mineral Rights,
Long Term Leases, and other Assets which were not transferred to Buyer
pursuant to Section 1.4(a), and (b) shall give Buyer reasonable access to such
records and to personnel during regular business hours if needed for any bona
fide purpose, provided such access shall be at Buyer's cost and expense,
including reimbursement of Seller's or Owner's extraordinary costs, if any, of
providing such access.
(c) Notwithstanding the expiration of the six (6) year period in
Subsection (a) above, Buyer agrees not to destroy the records described in
Subsection (a) without first giving Seller sixty-five (65) days advance
written notice and an opportunity to take custody of such records, at Seller's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any.
8.6 Casualty or Condemnation. In the event any uninsured loss or damage
occurs to the assets being acquired by Seller from Owner, including the
Assets, after the date of the Purchase Agreement, but before Closing, which
has an adverse financial impact in excess of fifteen million dollars
($15,000,000) on the value of such assets, Buyer shall be entitled to a
reduction of the Purchase Price. Buyer's share of any Purchase Price
reduction as a result of an uninsured loss shall be determined pursuant to
Section 8.12. If the amount of the Purchase Price reduction has not been
determined by the date set for Closing, the parties shall proceed to Close as
scheduled and Subsection 2.1(d) shall apply. In the event any insured loss,
destruction, casualty or damage occurs to the Assets after the date of this
Agreement, but before Closing, or in the event condemnation action is
instituted on the Assets after the date of this Agreement, but before Closing,
then Seller shall assign to Buyer at Closing all proceeds from such policies
or condemnation action, and there shall be no adjustment in the Purchase
Price.
8.7 Confidentiality. Hanson and Buyer have previously executed a
Confidentiality Agreement in the form attached hereto as Schedule 8.7.
Notwithstanding anything to the contrary in the Confidentiality Agreement, the
parties hereto covenant and agree that the terms and provisions of this
Agreement and all information and data obtained in connection with this
Agreement shall be treated as Evaluation Material in the Confidentiality
Agreement. Buyer shall require any third party which has not already executed
the Confidentiality Agreement and to which it intends to disclose any
information supplied under the Confidentiality Agreement or this Agreement to
countersign and assume all of the obligations and covenants of the
Confidentiality Agreement and deliver a copy of the Confidentiality Agreement
to Seller and Owner prior to delivery of any information to such third party.
If this Agreement is terminated for any reason, the foregoing covenant shall
survive the termination; if this Agreement is not so terminated, then the
foregoing covenant shall be deemed terminated at Closing.
8.8 Allocation and Tax Matters. The Purchase Price shall be allocated
among the Assets in accordance with Schedule 8.8 attached hereto. Seller and
Buyer agree to complete IRS form 8594 consistently with the foregoing
allocation and to furnish each other with a copy of such form prepared in
draft form within forty five (45) days prior to the filing due date for such
form. Within fifty-five (55) days after the Closing, Buyer shall submit to
Seller a proposed detailed allocation schedule which is in all respects
consistent with Schedule 8.8. Thereafter, Buyer and Seller shall use their
respective best efforts to promptly agree to a final detailed schedule.
Neither Seller nor Buyer shall file any tax return or take a position with any
taxing authority that is inconsistent with the foregoing allocation.
8.9 Termination. This Agreement shall be terminated at any time prior
to the Closing:
(a) By mutual written agreement executed by Seller and Buyer; or
(b) By either party if applicable law (including but not limited
to the HSR Act) prohibits the consummation of the sale and purchase of the
Assets pursuant to this Agreement or if, at the Closing Date, any action,
proceeding or investigation shall have been instituted or threatened in
writing by any governmental agency seeking to enjoin, restrain, prohibit,
impose material conditions upon or obtain substantial damages in respect of,
the transactions contemplated by this Agreement;
(c) By either party as provided in Section 3.2; or
(d) By either party if the Purchase Agreement is terminated for
any reason.
Upon such termination, neither of the parties shall have any liability
or further obligation arising out of this Agreement except as expressly stated
in this Agreement.
8.10 Access Pending Closing. Owner has agreed that Buyer may, upon
reasonable notice to Owner, have access to the Timberland Properties, real
property described in the Long Term Leases and other Assets for purposes of
conducting due diligence investigations and preparing for transition of
ownership, all in accordance with the terms and conditions of the Access
Agreement previously executed by Buyer, a copy of which is attached hereto as
Schedule 8.10.
8.11 Buyer's Due Diligence.
(a) Buyer may conduct due diligence examinations during a period
commencing on the date hereof and ending at the close of business on the day
prior to the Closing Date (the "Due Diligence Period"). In the event that
Buyer makes a reasonable and objective determination that there are Price
Adjustment Items as defined in Section 8.11(d), Buyer will have the right, but
only during the Due Diligence Period, to notify Seller in writing, with
reasonable detail, of said Price Adjustment Items; provided, that no such
written notice given to Seller later than April 8, 1996, shall include a Price
Adjustment Item relating to environmental matters.
(b) In the event Buyer makes a reasonable and objective
determination that there are Price Adjustment Items as defined in Section
8.11(d) which will have an adverse financial impact in the Price Adjustment
Formula set forth in Section 8.11(e), Buyer will have the right to deliver to
Seller, but only during the Due Diligence Period, a notice that Buyer is
entitled to an adjustment in the Purchase Price (the "Price Adjustment
Notice"), provided that no Price Adjustment Notice given later than April 8,
1996, shall include a Price Adjustment Item relating to environmental matters.
The Price Adjustment Notice shall be accompanied by a schedule setting forth
in reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items. Seller shall deliver the Price Adjustment Notice to Owner
as one of Seller's Price Adjustment Notices. Buyer hereby appoints Seller as
its agent to pursue a price reduction as specified in the Price Adjustment
Notice. Subject to the provisions of the Purchase Agreement, Seller agrees to
use reasonable diligence in pursuing a price reduction with respect to the
matters referred to in each such Price Adjustment Notice.
(c) If Buyer provides written notice of Price Adjustment Items as
provided in Subsection (a) above but does not deliver to Seller the Price
Adjustment Notice described in Subsection (b) above during the Due Diligence
Period, Buyer will have the right, within six (6) months after Closing, to
deliver to Seller a notice (the "Post Closing Adjustment Notice"). The Post
Closing Adjustment Notice shall be accompanied by a schedule setting forth in
reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items that provide the basis for the Post Closing Adjustment
Notice; provided however, the Post Closing Adjustment Notice cannot allege an
adverse financial impact greater than fifteen million dollars ($15,000,000)
(the First Threshold). Seller shall deliver the Post Closing Adjustment
Notice to Owner as one of Seller's Post Closing Adjustment Notices and shall
pursue an adjustment in the First Threshold as contemplated by Section 10.4 of
the Purchase Agreement; provided that if the Post Closing Adjustment Notices
exceed Fifteen Million Dollars ($15,000,000) in the aggregate, each such
notice shall be reduced pro rata so that the total does not exceed Fifteen
Million Dollars ($15,000,000). The adjustment so determined shall not adjust
the Purchase Price, but shall be carried forward as a portion of the First
Threshold in making the calculations in Section 10.4(c) of the Purchase
Agreement.
(d) In determining the adverse financial impact for purposes of
Section 8.11(a), the following items shall be taken into account as Price
Adjustment Items:
(i) Failure of Owner to be vested in title in more than
five hundred (500) acres of the Timberland Properties described in the Title
Reports attached to this Agreement as Schedule 4, and the threshold provisions
of Section 8.11 and the allocation provisions of Section 8.12 shall not apply
to any such Price Adjustment Item (i.e., the Purchase Price shall be reduced
by the amount of the adverse financial impact of such Item), nor shall the
reduction in Purchase Price for such Item reduce the threshold provisions for
purposes of Section 10.4 of the Purchase Agreement. As used in this
Subsection (i), "vested in title" means that the applicable Title Report
states that the Owner (or any of the three Owners) is vested in title (without
regard to exceptions or objections noted in such Title Report);
(ii) The existence of any exception to title on any portion
of the Timberland Properties: (a) which was not shown on Schedule 4, and (b)
which was not disclosed on any other Schedule attached to this Agreement, and
(c) which materially interferes with the use thereof for the production and
harvesting of timber; provided that the threshold provisions of Section 8.11
and the allocation provisions of Section 8.12 shall not apply to such Price
Adjustment Item if the exception to title was created by Seller after the date
of the applicable Title Report and was not either created in the ordinary
course or consented to by Buyer, nor shall the reduction in Purchase Price for
such Item reduce the threshold provisions for purposes of Section 10.4 of the
Purchase Agreement.
(iii) The existence of any exception to title on Owner's
leasehold interest in any of the Long Term Leases assigned to Buyer: (a)
which would have been an exception to title on a Title Report if such Reports
had been prepared for the Long Term Leases, and (b) which was not disclosed on
any Schedule attached to this Agreement, and (c) which materially interferes
with the use thereof for the production and harvesting of timber; provided
that the threshold provisions of Section 8.11 and the allocation provisions of
Section 8.12 shall not apply if the exception to title was created by Seller
after January 1, 1996, and was not either created in the ordinary course of
business or consented to by Buyer, nor shall the reduction in Purchase Price
for such Item reduce the threshold provisions for purposes of Section 10.4 of
the Purchase Agreement.
(iv) The presence of any hazardous substances or materials,
wastes, toxics, or contaminants in, on or under any of the Indemnification
Properties (but only until April 8, 1996, and only to the extent they were not
disclosed in Schedule 6.6); provided that with respect to the real property in
North Louisiana and Southwest Louisiana (including the Long Term Leases), the
presence of any hazardous substances or materials, wastes, toxics, or
contaminants or any other effects created by, resulting from or related to oil
and gas operations shall not be taken into account as Price Adjustment Items.
(v) Any breach of representations of Seller in Section 6
of this Agreement during the Due Diligence Period, but with respect to Section
6.6, only if included in a Price Adjustment Notice given not later than April
8, 1996; provided, that in determining the adverse financial impact for breach
of representations of Seller, any benefit to Buyer caused by such breaches of
representations of Seller and other breaches of representations of Seller
during the Due Diligence Period shall be offset or taken into account.
(e) Price Adjustment Formula. As used in this Section 8.11 (and
in Sections 10.4(b) and (c) of the Purchase Agreement), the term "First
Threshold" means fifteen million dollars ($15,000,000); the term "Second
Threshold" means twenty five million dollars ($25,000,000); the term "Third
Threshold" means thirty five million dollars ($35,000,000). Subject to the
provisions of Section 8.12, if the First Threshold, but not the Second
Threshold, is met, the purchase price under the Purchase Agreement shall be
reduced by fifty percent (50%) of the amount of the adverse financial impact
in excess of the First Threshold; and if the Second Threshold, but not the
Third Threshold, is met, the purchase price under the Purchase Agreement shall
be additionally reduced by two-thirds of the amount of the adverse financial
impact in excess of the Second Threshold; and if the Third Threshold is met,
the purchase price under the Purchase Agreement shall be additionally reduced
by one hundred percent (100%) of the amount of the adverse financial impact in
excess of the Third Threshold.
8.12 Allocation of Price Reduction. No Purchase Price reduction will
be allowed to Buyer under this Agreement unless a purchase price reduction is
allowed to Seller under the Purchase Agreement. If a purchase price reduction
is allowed to Seller under the Purchase Agreement, except as expressly
provided in Section 8.11(d), Buyer will be entitled to a fraction of such
reduction, the numerator of which shall be Buyer's total allowed Purchase
Price adjustment claims and the denominator of which shall be the total
purchase price adjustment claims submitted by Seller to Owner pursuant to the
Purchase Agreement and allowed. Buyer shall be bound by any proceeding or
agreement between Owner and Seller determining the amount of any Purchase
Price adjustment.
8.13 Enforcement of Seller's Rights. Seller agrees to use
commercially reasonable efforts as determined by Seller in its reasonable
judgment to enforce the obligations of Owner under Sections 3.6, 5(a), 5(c),
8.1, 11.3(b), and 11.3(c) of the Purchase Agreement. Buyer shall reimburse
Seller for Seller's expenses related to such enforcement in accordance with
the formula for sharing of arbitration costs under the Purchase Agreement set
forth in Section 9.2 of this Agreement.
8.14 Seller's Knowledge. In the event that Seller obtains knowledge
prior to the Closing Date of any material fact which, if known to Owner, would
result in a breach of a representation or warranty of Owner under the Purchase
Agreement, Seller shall notify Owner so that Owner will have knowledge of such
fact.
9. Default; Remedies; Arbitration.
9.1 Default; Remedies. Time is of the essence of this Agreement. If
either party fails or refuses to carry out this Agreement according to its
terms, the other party shall be entitled to the remedies set forth below.
(a) Buyer's Default. Except as otherwise provided in this
Agreement, in the event Buyer fails, without legal excuse, to complete the
purchase of the Assets pursuant to this Agreement, Seller shall be entitled to
terminate this Agreement and/or pursue any and all remedies available at law
or in equity by reason of Buyer's breach or default, including without
limitation, specific performance and damages for any failure by Buyer to
perform the obligations to be performed by it from and after the date of this
Agreement.
(b) Seller's Default. Except as otherwise provided in this
Agreement, in the event Seller fails or refuses to complete the purchase of
the Assets or is otherwise in breach or default of its obligations in this
Agreement, Buyer shall be entitled to terminate this Agreement and/or pursue
any and all remedies available at law or in equity by reason of Seller's
breach or default, including without limitation, specific performance and
damages for any failure by Seller to perform the obligations to be performed
by it from and after the date of this Agreement; provided, however, that
Buyer's sole remedy against Seller for Seller's breach of Section 6 and the
representations set forth therein shall be as set forth in Section 8.11 and
the indemnification by Seller of Buyer as set forth in Section 10.
(c) Owner Default. Notwithstanding the foregoing, Buyer shall
have no rights against Seller if Seller's failure to transfer the Assets to
Buyer results from a default by Owner under the Purchase Agreement. If Seller
elects to seek damages as a result of a default by Owner under the Purchase
Agreement and if any award to Seller includes any amount with respect to
damages suffered by Buyer, Seller shall pay such amount to Buyer minus Buyer's
share of expenses determined pursuant to the formula for allocation of
expenses of arbitration under the Purchase Agreement set forth in Section 9.2.
If Seller seeks specific performance of Owner's obligations under the Purchase
Agreement, Seller agrees that it will not terminate this Agreement pursuant to
Section 8.9(d) if Buyer agrees to be bound by the outcome of such specific
performance proceeding and if Buyer agrees to reimburse Seller for the costs
of such proceeding in the proportion that the Purchase Price bears to One
Billion Five Hundred Eighty Eight Million Dollars ($1,588,000,000).
9.2 Arbitration. This Agreement shall not be subject to termination
except as specifically provided in this Agreement. Any question, controversy
or claim arising under or relating to this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association and the provisions of the laws of the State of Washington relating
to arbitration, as said rules and laws are in effect on the date of this
Agreement. The arbitration shall be conducted in Vancouver, Washington, by
and before a single arbitrator, who is experienced in the problem or problems
in dispute, to be agreed upon by the Seller and Buyer, or if they are unable
to agree upon an arbitrator within ten (10) days after written demand by
either party for arbitration, then, at the written request of either party,
the arbitrator shall be appointed by the American Arbitration Association, or
failing such appointment, by the Superior Court in and for the County of
Clark, State of Washington. Proceedings to obtain a judgment with respect to
any award rendered hereunder shall be undertaken in accordance with the law of
the State of Washington including the conflicts of laws provisions thereof.
Each party shall pay one-half of the arbitrator's fees and expenses.
Upon application to the arbitrator, the parties shall be entitled to limited
discovery, including only exchange of documents and only depositions on such
terms as the arbitrator may allow for purposes of fairness and to reduce the
overall time and expense of the arbitration.
Buyer shall also reimburse Seller for the costs of any arbitration under
the Purchase Agreement, including arbitrator's fees and reasonable attorney's
fees, incurred by Seller in the proportion that the claims related to the
Assets bears to the total of all claims involved in the arbitration. In any
arbitration proceeding under the Purchase Agreement including any arbitration
related to a Purchase Price adjustment claim or indemnification claim which
relates to the Assets, Seller agrees to request of the arbitrator that Buyer
be allowed to participate in the arbitration. Buyer shall be allowed to
participate to the extent allowed by the arbitrator.
10. Indemnification and Related Matters.
10.1 Indemnification.
(a) Seller agrees to defend, indemnify and hold Buyer and its
parents, subsidiaries, affiliates, predecessors, successors and assigns (and
their respective officers, directors, employees and agents) harmless from and
against any and all loss, claims, liabilities, damages, costs and expenses,
including attorneys fees incurred with respect to third parties ("Damages")
resulting from, based upon, or arising out of:
(i) subject to Section 10.4(a), (b), and (c), all of the
Excluded Liabilities set forth in Section 1.8(b);
(ii) subject to Section 10.4, and taking into account any
adjustments made for such breach in Section 8.11, breaches of Seller's
representations set forth in Section 6;
(iii) subject to Section 10.4, claims of third parties that
are asserted after Closing, to the extent the basis of such claims arose prior
to Closing; provided, that this Subsection (iii) shall only apply to a claim
which will result in loss to Buyer in excess of $100,000; and provided
further, that the indemnity in this Subsection (iii) shall not apply at all to
matters disclosed on Schedule 6.4 or to matters covered by Section 8.11 or to
matters for which Buyer is indemnifying Seller as provided in this Agreement;
(iv) subject to Section 10.4, permits, licenses, or Contracts
(which are not Material Contracts) assumed by Buyer pursuant to Section 1.8
but which were not disclosed to Buyer in any Schedule attached to this
Agreement; provided, that this Subsection (iv) shall only apply to a permit,
license, or Contract: (a) which will require Buyer to pay more than $100,000
in any twelve-month period, and (b) which will not expire and cannot be
terminated within twelve months of Closing without penalty, liability, or
premium, and (c) which provides no material benefit to Buyer; and
(v) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
(b) Buyer agrees to save, defend, indemnify and hold Seller and
Owner and its general partners, parents, subsidiaries, affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against any loss, claims,
liabilities, damages, costs and expenses, including attorneys' fees incurred
with respect to third parties ("Damages") resulting from, based upon, or
arising out of:
(i) any breaches, occurring before, at or after Closing, of
Contracts, Long Term Leases, permits, licenses, and all other agreements and
obligations transferred or assigned to Buyer;
(ii) the operation, management or condition of the Assets,
whether arising before, at or after the Closing, excluding only those matters
covered by Section 10.1(a)(i) above;
(iii) all matters assumed by the Buyer pursuant to any and
all provisions of this Agreement or any related agreement; and
(iv) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
Wherever this Agreement provides for Buyer's indemnification of Owner,
the term "Seller" shall mean each or all of CERI, CFII, and Hanson.
10.2 Determination of Damages; Claims. In calculating any amounts
payable to Buyer pursuant to Section 10.1(a) or payable to Seller pursuant to
Section 10.1(b), Seller or Buyer, as the case may be, shall receive credit for
(i) any reduction in tax liability as a result of the facts giving rise to the
claim for indemnification, and (ii) any insurance recoveries.
10.3 Defense of Claims by Third Parties. If any claim is made against
Buyer or Seller that, if sustained, would give rise to a liability of the
other under this Agreement, Buyer or Seller, as the case may be, shall
promptly cause notice of the claim to be delivered to the other and shall
afford the other and its counsel, at the other's sole expense, the opportunity
to defend, with counsel reasonably satisfactory to the party against which
such claim is made, or settle the claim. If either party takes said
opportunity to settle the claim, such party shall obtain a release of the
other party in any settlement agreement with the third party. In the event of
an indemnification claim by Buyer against Seller, Seller may cause Owner to
undertake the defense in which event Owner shall have the opportunity to
settle the claim as provided above.
10.4 Limitations on the Indemnification.
(a) With respect to Seller's indemnification of Buyer pursuant to
Subsections 10.1(a), Buyer shall promptly inform Seller in writing of each
such matter, as and when Buyer becomes aware of such matter, and shall keep
complete and accurate records of actual damages incurred by Buyer as a result
thereof.
(b) Notwithstanding any other provision of this Agreement,
Seller's obligations for indemnification of Buyer and all Other Purchasers
shall not exceed the proceeds of indemnification recoveries by Seller from
Owner. Seller agrees to submit all of Buyer's indemnification claims to Owner
as Seller's indemnification claims. Buyer hereby appoints Seller as Buyer's
agent to pursue such indemnification claims. Seller agrees to use reasonable
diligence in the pursuit of such claims. Buyer shall be bound by the results
of any proceedings under the Purchase Agreement to determine the validity of
Seller's indemnification claims.
(c) Buyer shall be entitled to its pro rata share of total
recoveries by Seller for (i) Purchase Price adjustment claims subject to the
allocation provisions of Section 8.12, and (ii) indemnification claims
submitted by Seller to Owner under the Purchase Agreement. Amounts payable to
Buyer from indemnification claims recovered subsequent to payment of Purchase
Price adjustment claims shall be adjusted to reflect amounts paid with respect
to such Purchase Price adjustment claims.
(d) Notwithstanding anything to the contrary to this Agreement,
Seller shall not be obligated to indemnify Buyer on any claim for
indemnification submitted by Buyer to Seller after December 31, 1998, except
for matters arising under Section 10.1(a)(i).
11. Employee Matters.
11.1 Definitions.
(a) Employees. The term "Employees" shall mean all of the
persons actively employed by Owner exclusively in connection with the
Timberland Properties in daily operations in hourly or salaried status
immediately preceding the Closing, and those persons identified in Schedule
11.2(f) as employed by Owner in daily operations in connection with the
Timberland Properties who are either (a) on disability, or (b) on leave of
absence. This does not include persons listed in Schedule 11.1(a), which
lists executive officers of Owner.
(b) Transferring Employees. All Employees who apply for, are
offered, and who accept employment with Buyer on the Closing Date or within 90
days thereafter.
(c) INTENTIONALLY OMITTED
(d) List of Employees. Schedule 11.1(d) sets forth a true and
correct list of all Employees, together with their respective job titles,
hourly rates or base salary, date of birth, Social Security number, and most
recent date of hire (or credited service), as of ten (10) days prior to the
date of this Agreement, and will be updated to be true and correct as of ten
(10) days prior to the Closing Date.
11.2 Applications/Hiring.
(a) Within ten (10) days after the date this Agreement is
signed, Seller will provide applications for employment to all Owner's
Employees, as defined in 11.1(d) above.
(b) Employees from whom applications will be solicited by Buyer
will also be provided with a document or documents setting forth the essential
terms and conditions of employment under which Buyer intends to operate the
Assets. Buyer will provide such information to Seller promptly following the
execution of this Agreement. Buyer will consider applications from all
Employees who apply for employment under such terms and conditions of
employment pursuant to its normal hiring procedure. If applications
acceptable to Buyer are received from Salaried Employees, offers of employment
shall be extended within fifteen (15) working days of application receipt or
as soon as reasonably practical thereafter. Offers to other Employees who
submit application and who are acceptable to Buyer will be extended on or
before the Closing Date.
(c) Salaried Terms and Conditions. Solicitations of salaried
Employees who submit applications for employment with Buyer will be made on
terms and conditions of employment consistent with and generally applicable to
Buyer's salaried work force in positions of like status and pay. However, in
order to minimize Owner's severance cost, Buyer agrees to offer employment to
at least four (4) salaried Employees (or to such lesser number if such lesser
number of salaried Employees apply), and that those salaried Employees offered
employment will be hired at 96 percent or more of their Base pay with Owner as
listed in Schedule 11.1(d).
(d) Nonunion Hourly Terms and Conditions. Solicitations of
Owner's nonunion hourly Employees who submit applications for employment with
Buyer will be made as Buyer may determine on terms and conditions of
employment consistent with their existing terms and conditions or terms and
conditions consistent with and generally applicable to Buyer's nonunion hourly
work force in positions of like status and pay in similar type operations of
Buyer in the same region or geographic proximity.
(e) INTENTIONALLY OMITTED
(f) Disabled Employees/Leave of Absences. Employees identified
in Schedule 11.2(f) who make application, are offered, and accept employment
must begin employment as evidenced by having worked at least one (1)
compensable day with Buyer no later than the first working day of the sixth
(6th) month following the month in which the Closing Date occurs unless
otherwise provided by law or extended by Buyer.
11.3 Employment Obligations of Seller and Buyer.
(a) Buyer's Obligations/Employment Claims.
(i) Subject to the provisions of Section 11.4 and Section
11.5, Buyer agrees to assume all employment-related obligations accruing on or
after the Closing Date pertaining to Transferring Employees including, without
limitation, compensation for services performed for Buyer (and related
employment and withholding taxes); benefits accrued under any Buyer-sponsored
employee welfare or pension benefit plan (as defined under ERISA Sections 3(1)
and 3(2), respectively); benefits accrued under any other employee benefit
plan or arrangement of Buyer covering the Transferring Employees; and workers'
compensation benefits with respect to claims relating to events occurring on
or after the Closing Date or filed more than one-hundred eighty (180) days
after the Closing Date, regardless of date of accident or illness.
(ii) Buyer will retain all liability for all claims,
losses, damages, and expenses (including, without limitation, reasonable
attorney's fees), and other liabilities and obligations relating to or arising
out of all unfair labor practice charges, wrongful termination litigation,
employment discrimination charges, severance claims, health and welfare
claims, retirement claims and any other claims related to employment and based
upon Buyer's conduct on or after the Closing Date which are filed within
applicable statutes of limitations.
(b) Seller's Obligation/Employment Claims.
(i) Subject to the provisions of Section 11.4 and 11.5,
Owner has agreed to assume all employment related obligations with respect to
all Employees accruing prior to the Closing Date including, without
limitation, compensation for services performed for Owner (and related
employment and withholding taxes); benefits accrued under any Owner sponsored
employee welfare or pension plan (as defined under ERISA Sections 3(1) and
3(2) respectively) covering the Employees or former Employees prior to or
after the Closing Date; benefits accrued under any other employee benefit plan
or arrangement of Owner covering the Employees or former Employees prior to or
after the Closing Date; and workers' compensation benefits with respect to
claims filed before the Closing Date or within one hundred eighty (180) days
after the Closing Date and relating to events occurring prior to the Closing
Date.
(ii) Owner has agreed to retain all liability for any and
all claims, losses, damages, and expenses (including, without limitation,
reasonable attorney's fees) and other liabilities and obligations relating to
or arising out of all unfair labor practice charges, wrongful termination
litigation, employment discrimination charges, severance claims, health and
welfare claims, asbestos claims, retirement claims, OSHA citations and any
other claims arising out of any employment and based upon Owner's conduct
occurring prior to the Closing Date including actions filed as of the Closing
Date or filed thereafter within applicable statutes of limitations.
(c) COBRA. Owner has agreed to be responsible for the health
care coverage of any Employees as may be required by COBRA under affected
Owner Welfare Plans. After the Closing Date, Owner has agreed that it shall
ensure that the option of continuing health care coverage under the Owner
Welfare Plans is extended to the Employees to the extent required by COBRA.
Buyer shall be responsible for providing health care continuation coverage as
required by COBRA to any Transferring Employees terminated by Buyer after the
Closing Date.
(d) Vacation Obligations/Transferring Employees.
(i) Vacation earned as of May 1, 1996 and to be taken in
1996 by Transferring Employees under Owner's vacation policy will be credited
to Transferring Employees on the Closing Date to the extent not then taken.
Buyer shall grant Transferring Employees time off with pay (vacation) for this
full credited amount, or pay in lieu of time off for any portion not taken by
December 31, 1996. Promptly following receipt of payment from Owner Seller
shall pay to Buyer the amount of such earned vacation pay payable by Buyer to
such Transferring Employees.
(ii) Vacation accruing in 1996 to be taken in 1997 by
Transferring Employees will be determined in accordance with Buyer's vacation
policy. In the application of Buyer's vacation policy, Buyer shall recognize
service of such Employees with Owner and its predecessors to the extent Owner
recognized such service under its vacation policy. Seller shall provide
Buyer, on or before the Closing Date, with a list of such recognized service
including the number of vacation weeks earned under Owner's Plan for all
Employees as of May 1, 1996. For those Transferring Employees who remain in
Buyer's employment until at least January 1, 1997, Buyer will accrue vacation
from January 1, 1996 notwithstanding the fact that the Transferring Employees
were not its Employees until after the Closing Date. For those who do not
remain in employment with Buyer until year end, vacation will accrue 1/12 pro
rata for each completed calendar month of employment between the Closing Date
and December 31, 1996.
(e) Severance Pay Obligations.
(i) Owner has assumed all severance pay obligations, if
any, for all Employees who are not hired by Buyer pursuant to Owner's
policies, plans, or agreements relating to severance from employment.
(ii) Any salaried Transferring Employee hired by Buyer who
is terminated during the first six (6) months following the month in which the
Closing Date occurs, for reasons other than cause or misconduct, shall receive
severance pay from Buyer equal to that which he or she would have received
under Owner's severance pay policies as written on January 1, 1996, generally
applicable to Owner's Employees in like positions and pay status in the same
amount which would have been payable had such salaried Transferring Employee
not been hired by Buyer. Seller shall provide Buyer with copies of Owner's
applicable policies as soon as reasonably practical after signing of this
Agreement.
(iii) Any salaried Transferring Employee hired by Buyer who
is terminated by Buyer after the six (6) month period in (ii) above or any
other Transferring Employee will receive severance pay, if any, in accordance
with Buyer's severance pay policies uniformly applicable to other Employees in
positions of similar status and pay. In the application of such policies,
Buyer shall recognize the Transferring Employee's service with Owner from his
or her most recent date of hire with Owner.
11.4 Employee Benefits.
(a) All Transferring Employees who accept employment with Buyer
and commence such employment immediately on the Closing Date will be, starting
on the Closing Date, covered by Buyer's existing employee benefit plans in
accordance with their terms and will be subject to Buyer's existing employment
policies, as applicable to Buyer's Employees who are similarly situated.
Transferring Employees shall be credited with their service with Owner from
their most recent date of hire for purposes of vesting, participation and
eligibility (but not benefit calculations, except as provided in Section
11.5(c) pertaining to certain Salaried Employees), under Buyer's plans and
policies, as though such service had been with Buyer.
(b) With respect to Buyer medical coverage, there shall be no
waiting period for participation by Transferring Employees or their covered
dependents and they shall be credited with any deductibles satisfied under
Owner's medical plans for claims incurred during calendar year 1996 in meeting
the deductible requirements of Buyer's plans. Buyer will also waive any
preexisting condition restrictions under the Buyer Welfare Plans with respect
to Transferring Employees or their dependents.
(c) Buyer will provide no benefit coverage to a Transferring
Employee or his or her dependents to the extent that such person has not
reported to work and continues to be eligible by reason of disability under
the Owner Welfare Plans in accordance with their terms as in effect
immediately prior to the Closing Date.
(d) In particular, but without limitation, (i) claims for
medical, hospital or other health care expenses incurred by Transferring
Employees or their dependents on or after the Closing Date shall be covered
under the Buyer Welfare Plans, subject to the limitations thereof and claims
for such expenses incurred by Transferring Employees or their dependents prior
to the Closing Date shall be covered, subject to the limitations thereof (but
in accordance with the terms of this Agreement), under Owner's Welfare Plans;
(ii) claims of Transferring Employees or their dependents for life insurance,
accidental death and dismemberment and disability benefits with respect to
death, disability or other injury occurring on or after the Closing Date shall
be covered under Buyer's Welfare Plans, and claim for such benefits with
respect to death, disability or injury occurring prior to the Closing Date
shall be covered under Owner's plans (as applicable). The amount and type of
benefits payable in any case shall be determined in accordance with the terms
of the applicable Welfare Plan. Seller and Buyer acknowledge that certain
Transferring Employees who will have attained age 65 or age 55 and 5 years of
service for purposes of Owner's retiree medical plan as of the Closing Date
will be eligible to elect retiree medical coverage under Owner's retiree
medical plan, but only if they do so immediately after the Closing Date; that
such coverage requires payment of contributions in an amount determined by
Owner pursuant to Owner's retiree medical plan with respect to all
participants in such retiree plans and is secondary to active coverage under
Buyer's medical plans while the Transferring Employees are participating in
any of Buyer's medical plans which may cover such Employees.
11.5 Retirement Plan Matters.
(a) Owner Retirement Plans. "Owner Retirement Plans" shall mean
the Cavenham Forest Industries Inc. Retirement Plan for Hourly Paid Employees
and Cavenham Forest Industries Inc. Retirement Plan for Salaried Employees.
(b) Vesting of Benefits. As of the Closing Date, all
Transferring Salaried Employees shall become fully vested in their accrued
benefits under the Owner Retirement Plans. Buyer will recognize past service
credited under the Owner's Retirement Plan for purposes of determining vesting
requirements under Buyer's Plan for Transferring Employees.
(c) Determination of Benefits/Payment of Supplement. Seller will
provide Buyer with a statement, within 180 days of Closing, listing credited
service and accrued benefits (expressed as a Single Life Annuity) through the
Closing Date as determined under Owner's Plan for Salaried Employees (the
"CSAB Statement"). Such accrued benefit amounts shall be listed in the CSAB
Statement for each Transferring Employee. The accrued benefit amount shall be
calculated by Owner's actuary, Hewitt Associates, in consultation with Seller,
using assumptions shown on the CSAB Statement in conjunction with Owner's
current retirement plan formula. Buyer shall provide each salaried
Transferring Employee, upon retirement, a supplemental retirement benefit
under its Salaried Retirement Plan, or under such other form of supplemental
plan or payment acceptable to Buyer, (a "Supplement") equal to:
(i) the age 62 Single Life Annuity amount, taking into
account the credited service listed in the CSAB Statement as applied to the
benefit formula of Buyer's Salaried Retirement Plan, using compensation with
Buyer at retirement, minus,
(ii) the amount of accrued benefit set forth in the CSAB
Statement for each such salaried Transferred Employee.
If the Supplement is provided under Buyer's Salaried Retirement Plan,
such Supplement shall be adjusted pursuant to any options elected by such
Employee pursuant to such plan. If provided outside of Buyer's Salaried
Retirement Plan, such Supplement will be calculated on an actuarial equivalent
basis, using assumptions no less favorable than the assumptions listed on
Schedule 11.5(c) which are used by Owner in determining the accrued benefit
amount. Such Supplement shall be in addition to any benefits earned by such
Employees as a participant in Buyer's Salaried Retirement Plan based upon
their credited service with Buyer and compensation from Buyer after the
Closing Date.
If Buyer does not have a defined benefit retirement plan, the Supplement
(for this purpose calculated by using Seller's retirement plan formula and the
actuarial assumptions set forth on Schedule 11.5(c)) shall be provided to the
Transferring Employee hired by Buyer through an alternative form (such as a
single-life annuity or a lump sum payment of the present value of such
Supplement).
At the time Seller provides the CSAB Statement to Buyer, Seller shall
pay to Buyer an amount equal to the present value of the Supplements to be
provided to the salaried Transferring Employees calculated for this purpose by
using Seller's retirement plan formula and the actuarial assumptions set forth
on Schedule 11.5(c).
(d) Hourly Retirement Plan. For hourly Transferring Employees,
Owner remains responsible for all liabilities of the Cavenham Forest
Industries Inc. Retirement Plan for Hourly Paid Employees for benefits accrued
as of the Closing Date. After the Closing Date, Buyer will provide an
appropriate Hourly Retirement Plan for all Transferring Employees consistent
with Buyer's existing retirement plans covering similarly situated Employee
throughout the country. Buyer will credit Transferring Employees with service
since their most recent date of hire with Owner for purposes of meeting the
vesting requirements of Buyer's plan covering such Employees.
11.6 Employee Payroll Information. Seller shall transfer to Buyer
copies of any records relating to withholding and payment of income and
unemployment taxes (federal, state and local) and FICA and FUTA taxes with
respect to wages paid to Employees hired by Buyer for the calendar year in
which the Closing occurs (including, without limitation, Forms W-4 and
Employee's Withholding Allowance Certificate). Buyer shall provide such
Employees with Forms W-2, Wage and Tax Statement, for the calendar year in
which the Closing occurs setting forth the wages paid and taxes withheld with
respect to such Employees for such calendar year by Owner and Buyer as
predecessor and successor Employees, respectively, as provided by Revenue
Procedure 84-77.
11.7 No Third-Party Beneficiary. This Agreement is being entered into
solely for the benefit of the parties hereto, and the parties do not intend
that any Employee or any other person shall be a third-party beneficiary of
the covenants by either Seller or Buyer contained in this Agreement; provided,
however, that any Transferring Salaried Employee shall have the right to
directly enforce the provisions of Section 11.5(c) against Buyer, and if legal
action is instituted in connection therewith, the prevailing party shall be
entitled to its reasonable attorney fees as set by the court or courts at
trial and on any appeal.
11.8 Labor Matters. As of the date hereof, but not as of the Closing
Date or any other date, except as set forth in Schedule 11.8, (i) within the
last two years Owner has not experienced any material work stoppage due to
labor disagreements with respect to the Timberland Properties; (ii) there is
no unfair labor practice charge or complaint against Owner relating the
Timberland Properties pending or, to the knowledge of Owner, threatened,
before the National Labor Relations Board or other similar local tribunal;
(iii) there is no labor strike, request for representation, slowdown or
stoppage actually pending or to the knowledge of Owner, threatened against or
affecting Owner relating to the Timberland Properties; (iv) to the knowledge
of Owner, no question concerning representation as defined in the National
Labor Relations Act is pending or threatened against Owner respecting the
Timberland Properties; and (v) no arbitration proceeding arising out of or
under any collective bargaining agreement relating to the Timberland
Properties is pending or, to the knowledge of Owner, is threatened.
11.9 Indemnification. Anything in this Agreement to the contrary
notwithstanding, Buyer agrees to indemnify Seller against and hold Seller and
Owner harmless from any and all claims, losses, damages, expenses,obligations
and liabilities arising out of or otherwise in respect of any failure of the
Buyer to discharge its obligation under this Section 11. Anything in this
Agreement to the contrary notwithstanding, Seller agrees to indemnify Buyer
against and hold Buyer harmless from any and all claims, losses, damages,
expenses, obligations and liabilities arising out of or otherwise in respect
of any failure of Seller to discharge its obligations under this Section 11.
This indemnity shall survive closing.
12. Miscellaneous.
12.1 Finders. Buyer and Seller respectively represent and warrant that
they have not employed or utilized the services of any broker or finder in
connection with this Agreement or the transactions contemplated by it. Seller
shall indemnify and hold Buyer harmless from and against any and all claims
for brokers' commissions made by any third party as a result of this Agreement
and the transaction contemplated hereunder to the extent that any such
commission was incurred, or alleged to have been incurred, by, through or
under Seller. Buyer shall indemnify and hold Seller harmless from and against
any and all claims for brokers' commissions made by any third party as a
result of this Agreement and transactions contemplated hereunder to the extent
that any such commission was incurred, or alleged to have been incurred, by,
through or under Buyer.
12.2 Entire Agreement. This Agreement (with its Schedules, as may be
amended at or prior to Closing, and Exhibits) contains, and is intended as, a
complete statement of all of the terms of the arrangements between the parties
with respect to the matters provided for, supersedes any previous agreements
and understandings between the parties with respect to those matters, and
cannot be changed or terminated orally.
12.3 Governing Law. In order to provide consistency in interpretation
with the Purchase Agreement which is governed by Washington law, Seller and
Buyer agree that this Agreement shall generally be governed by Washington law
as hereinafter provided. Seller and Buyer each hereby consent to personal
jurisdiction in any action brought with respect to this Agreement and the
transactions contemplated hereunder in the State of Washington and to the
arbitration described in Section 9.2. Section 9.1 of this Agreement shall be
governed by and construed in accordance with the law of the State of
Washington generally, and RCW 64.04.005 specifically, without giving effect to
conflicts of law principles thereof. The balance of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington, including the conflicts of laws principles thereof except to the
extent that the law of the state of Louisiana governs nonmovable property
covered by this Agreement.
12.4 Tables of Contents and Headings. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller to:
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Attention: Chief Financial Officer
With a copy to:
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
Attention: J. Franklin Cable
If to Buyer to:
Temple-Inland Forest Products Corporation
Post Office Drawer N
Diboll, Texas 75941
Attention: Harold C. Maxwell, Group Vice President
With a copy to:
Temple-Inland Forest Products Corporation
303 South Temple
Diboll, Texas 75941
Attention: George Vorpahl
12.6 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
12.7 Further Assurances and Assistance. Buyer and Seller agree that
each will execute and deliver to the other any and all documents, in addition
to those expressly provided for herein, that may be necessary or appropriate
to effectuate the provisions of this Agreement, whether before, at or after
the Closing. Seller agrees that, at any time and from time to time after the
Closing, it will execute and deliver to Buyer such further assignments or
other written assurances as Buyer may reasonably request to perfect and
protect Buyer's title to the Assets.
12.8 Survival. The terms, covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement together with all
indemnities and undertakings contained herein shall survive the Closing,
subject to the time limits specified herein, if any, delivery of the Purchase
Price and delivery and/or recordation of the instruments of conveyances and
assignment, bills of sale, assignments of contract rights and other closing
documents, and shall not be deemed to have been merged in any of the documents
delivered at the Closing, irrespective of any investigation made by or on
behalf of any party.
12.9 Waiver. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and signed
by the party waiving such provision.
12.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly set forth in Section 11.7, nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement, including any
such person or entity asserting rights as a third party beneficiary with
respect to environmental matters. No assignment of this Agreement or of any
rights or obligation hereunder may be made by either party (by operation of
law or otherwise) without the prior written consent of the other and any
attempted assignment without the required consent shall be void.
12.11 Best Knowledge. As used in this Agreement (i) "to the best of
Owner's knowledge" shall mean the actual knowledge possessed, at the time the
Purchase Agreement was entered into, by William B. Freck, the Division General
Counsel for Owner, David E. Harris, the Division Chief Financial Officer of
Owner, Richard E. Dahlin, a Division Vice President for Owner, and Lee T.
Alford, a Division Vice President for Owner, all of whom are executive
officers of Owner, and any of the forest managers or the mill manager of
Owner; (ii) "to the best of Seller's knowledge" shall mean actual knowledge
possessed by Steven R. Rogel, President and Chief Executive Officer; Jerry A.
Parsons, Executive Vice President and Chief Financial Officer; and Duane C.
McDougall, Vice President-Building Materials Group; all of whom are executive
officers of Seller, and (iii) "to the best of Buyer's knowledge" shall mean
actual knowledge possessed by Harold C. Maxwell, Jack C. Sweeny, John L. Monk,
or George Vorpahl, all of whom are executive officers or managers of Buyer.
12.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but which together shall constitute one
and the same Agreement.
12.13 No Recordation. Neither this Agreement nor a memorandum hereof
shall be recorded in any jurisdiction or public record.
12.14 Transitional Services. At the request of Buyer, Seller will
continue to provide accounting, payroll, and general administration services
to Buyer for a reasonable period of time after the Closing on a basis
consistent with past practice.
12.15 INTENTIONALLY OMITTED
12.16 INTENTIONALLY OMITTED
12.17 INTENTIONALLY OMITTED
12.18 No Presumptions. This Agreement is a result of negotiations
between Seller and Buyer, both of whom are represented by counsel of their
choosing. No presumption shall exist in favor of either party concerning the
interpretation of the documents constituting this Agreement by reason of which
party drafted the documents.
SELLER: WILLAMETTE INDUSTRIES, INC., an Oregon
corporation
By: /s/ J. A. Parsons
Name: J. A. Parsons
Title: Executive Vice President, C.F.O.
BUYER: TEMPLE-INLAND FOREST PRODUCTS CORPORATION, a
Delaware corporation
By: /s/ Harold C. Maxwell
Name: Harold C. Maxwell
Title: Group Vice President - Building Products
<PAGE>
GUARANTY
IN CONSIDERATION of the granting of the forgoing Asset Sale,
Purchase and Transfer Agreement (the "Agreement"), Temple-Inland, Inc.
("Guarantor"), hereby unconditionally and irrevocably guarantees to Seller and
to Seller's successors and assigns the prompt payment by Buyer of the Purchase
Price under the Agreement and the full performance by Buyer of all of the
terms and provisions of the Agreement on Buyer's part to be performed.
Guarantor hereby expressly waives (1) notice of acceptance of this guaranty
and (2) any other notice given to Buyer in accordance with the provisions of
the Agreement of any default under the Agreement.
Guarantor hereby agrees that neither the waiver by Seller of any
rights against Buyer, arising out of any default by Buyer or otherwise, nor
any modification or amendment of the Agreement shall in any way modify or
release the obligations of Guarantor under this guaranty. Upon any default by
Buyer, Guarantor agrees to pay to Seller the entire amount of any damages
suffered by Seller as a result of such default without any obligation on the
part of Seller to endeavor to collect such indebtedness from or to proceed
against Buyer.
In the event any suit or action is instituted against Guarantor on
account of, in connection with, or based upon this guaranty, in addition to
the costs and disbursements provided by statute, such sum as the court may
adjudge reasonable as attorneys' fees in such suit or action or any appeal
therefrom.
TEMPLE-INLAND, INC.
By: /s/ M. Richard Warner
M. Richard Warner
Title: Vice President and Secretary
<PAGE>
SCHEDULES
Schedule 1.1(a) description of parcels of real property (Timberland)
Schedule 1.1(c) buildings, improvements, roads, bridges, permits, and
easements on or appurtenant to real property
Schedule 1.1(d) related facilities
Schedule 1.1(e) other rights related to real property
Schedule 1.1(g) description of Mineral Rights held separate from
Timberland
Schedule 1.3 Long Term Leases
Schedule 1.4(b) mobile equipment, machinery, equipment,
tools, fixtures and furniture
Schedule 1.4(d) contracts (including service contracts,
sales and purchase orders and
commitments), leases, permits and
licenses not related to real property
Schedule 1.8 form of Assignment, Acceptance, and
Assumption Agreement
Schedule 1.8(b)(ii) accrued expenses
Schedule 1.8(b)(iv) exceptions for Affiliates of Seller
Schedule 3.4(a) instruments of transfer to real property
Schedule 3.4(a)(a) form of bill of sale with indemnity
Schedule 3.4(a)(a)(a) form of assignment for Long Term Leases
Schedule 4. title reports and commitments
Schedule 5(a) operating plan
Schedule 5(b) harvesting formula
Schedule 5(c) real estate plan
Schedule 6.3 Material Contracts
Schedule 6.4 claims, litigation, proceedings,
governmental investigations
Schedule 6.6 environmental conditions
Schedule 8.7 confidentiality agreement
Schedule 8.8 allocation
Schedule 8.10 access agreement
Schedule 11.1(a) list of executive officers
Schedule 11.1(d) list of all Employees in Northwest Business and
Remaining Louisiana Businesses
Schedule 11.2(f) list of disabled employees/leave of
absences
Schedule 11.5(c) actuarial assumptions
Schedule 11.8 labor matters
Schedule 12.16 reforestation requirements
<PAGE>
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
This Asset Sale, Purchase and Transfer Agreement (this "Agreement")
is made as of this 26th day of April, 1996, between Willamette Industries,
Inc., an Oregon corporation ("Seller") and John Hancock Mutual Life Insurance
Company, a Massachusetts corporation ("John Hancock").
RECITALS:
A. Seller and Hanson Natural Resources Company, a Delaware general
partnership ("Hanson"), Cavenham Energy Resources Inc., a Delaware corporation
("CERI"), and Cavenham Forest Industries Inc., a Delaware corporation ("CFII")
(Hanson, CERI and CFII are collectively called "Owner") have entered into an
agreement (the "Purchase Agreement") pursuant to which Owner has agreed to
sell and transfer and Seller has agreed to buy and accept from Owner
substantially all of the assets which are used in the conduct of Hanson's
timber, wood products and energy business located in Oregon, Washington,
Southwest Louisiana, and North Louisiana.
B. Seller has delivered to Buyer a copy of the Purchase Agreement without
Schedules.
C. Seller and Buyer desire to enter into this Agreement pursuant to which
Seller agrees to sell and transfer and Buyer agrees to buy and accept from
Seller certain timberland properties and related assets in the state of
Oregon.
D. Seller intends to sell certain other assets it acquires from Owner to
other purchasers ("Other Purchasers").
It is therefore agreed as follows:
Definitions. As used herein, the following terms shall have the
following meanings:
Affiliate of Owner - The term "Affiliate of Owner" shall mean (i)
any individual, partnership, corporation, or other entity or person which is
owned or controlled directly or indirectly by Hanson plc; (ii) any other
individual, partnership, corporation, or other entity or person which controls
or is controlled by or under common control with Owner; and (iii) any officer,
director, partner, or owner of 10 percent or greater equity or voting interest
in any such other corporation, partnership, or other entity or person.
Agreement - The term "Agreement" shall mean this instrument and all
Schedules and Exhibits attached hereto.
Assets - The term "Assets" shall mean the Timberland Properties,
Contracts, and other items and leases described in Sections 1.1 and 1.4, but
excluding the Excluded Assets.
Buyer - The term "Buyer" means John Hancock and/or any entity or
affiliate controlled by John Hancock to which any portion of John Hancock's
interest under this Agreement is assigned.
Closing - The term "Closing" or "Closing Date" shall mean the date
on which one or more Parcels are transferred to Buyer by one or more deeds to
be recorded immediately prior to delivery of the portion of the Purchase Price
allocated to such Parcel or Parcels.
Closing Date Payment - The term "Closing Date Payment" shall have
the meaning ascribed to it in Section 2.1(b).
Code - The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
Contracts - The term "Contracts" shall mean the contracts and
leases which are described in Sections 1.1 and 1.4.
Excluded Assets - The term "Excluded Assets" shall mean the assets
excluded in Section 1.5.
Initial Closing, Initial Closing Date - The terms "Initial Closing"
and "Initial Closing Date" shall mean the closing and date of closing the
transfer of Parcel 1 and related assets as more particularly described in
Section 3.1(a).
The terms "Subsequent Closing" and "Subsequent Closing Date" shall
have the meaning ascribed to it in Section 3.2(b).
Material Adverse Effect - The term "Material Adverse Effect" shall
mean events which have an adverse effect in the aggregate which, measured in
dollars, exceeds the sum of $15,000,000.
Material Contract - The term "Material Contract" shall have the
meaning ascribed to it in Section 6.3.
Parcel - The term "Parcel" means a portion of the Timberland
Properties described as a separate parcel on Schedule 1.1 (a) and that portion
of the other Assets directly related to such portion of the Timberland
Properties as determined by Seller in its reasonable judgment; provided that
Assets in Owner's Vernonia office will be included in the last Parcel
transferred.
Proration Date - The term "Proration Date" shall mean the specific
date set for Initial Closing in Section 3.1, or any subsequent date set for
Initial Closing, provided that the actual date of Initial Closing occurs
within five (5) business days after said date set for Initial Closing.
Timberland Properties - The term "Timberland Properties" shall mean
the real property and real property interests described in Section 1.1(a).
1. Sale, Purchase and Transfer of Assets.
Subject to the terms and conditions of this Agreement, Seller agrees to
sell, transfer and assign or cause to be sold, transferred and assigned, and
Buyer agrees to purchase and accept on the terms stated herein, all of
Seller's right, title and interest in and to the Assets, including, without
limitation, the following:
1.1 Real Property (Timberland Properties).
(a) Timberland. Those certain Parcels of real property each
consisting of one or more tracts, owned by Owner situated in the state of
Oregon and described on Schedule 1.1 (a), together with all timber of all
species, standing, dead or down, pulpwood, all felled and bucked logs, trees,
shrubs and reproduction thereon as of the Closing Date for each Parcel, the
("Timberland" or "Timberland Properties"), excepting therefrom changes therein
prior to Closing pursuant to Section 5.
(b) INTENTIONALLY OMITTED
(c) Buildings, Improvements and Easements. All buildings and
improvements, all roads, bridges, permits, servitudes, and easements, owned or
leased by Owner or which Owner has a right to use and on or appurtenant to the
Timberland Properties, including those described on Schedule 1.1 (c).
(d) Related Facilities. All sorting yards, log booms, offices,
and rock pits, owned or leased by Owner and associated with the Timberland
Properties, whether or not located on the Timberland Properties, including
those described on Schedule 1.1 (d).
(e) Other Rights. All other contracts and rights of Owner
specifically relating to the Timberland Properties and operations thereon
including, but not limited to, contracts, contract rights, leases, servitudes,
permits, licenses, notifications, approvals and authorizations of governmental
bodies, including those described on Schedule 1.1 (e), to the extent
assignable.
(f) Water Rights. All water rights owned by Owner relating to and
appurtenant to the Timberland Properties.
(g) Mineral Rights. All minerals, including without express or
implied limitation, oil, gas, and hydrocarbon and geothermal resources in
which Owner has an interest related to the Timberland Properties including
those Mineral Rights listed on Schedule 1.1 (g) (the "Mineral Rights").
Included in the Mineral Rights are mineral rights acquired from Owner and
related to lands not included in the Timberland Properties but situated in
Columbia County or Washington County, Oregon (the "Vagrant Mineral Rights").
(h) Wilson River Tract. Seller shall have the right, upon written
notice to Buyer delivered not later than December 15, 1996, to withdraw Parcel
6 (the Wilson River Tract) from the Timberland Properties subject to this
Agreement. In the event of a withdrawal, the Purchase Price shall be reduced
by the amount allocated to Parcel 6 on Schedule 1.1 (a). Notice of withdrawal
may be delivered to Buyer at any time prior to the Subsequent Closing with
respect to Parcel 6. If Seller elects to withdraw Parcel 6, Seller shall use
reasonable diligence to offer property of comparable value as a substitute.
1.2 INTENTIONALLY OMITTED
1.3 INTENTIONALLY OMITTED
1.4 Personal Property.
The following personal property related to the Timberland Properties:
(a) Records. Owner's land management and other records relating to
the Timberland Properties, Mineral Rights, and other Assets which, in the
reasonable judgment and discretion of Seller, are segregated or segregable by
Seller from the overall records to be acquired by Seller from Owner, including
but not limited to management unit maps, aerial photographs, timber cruises,
road and gate records, operational records and leases, computer records (but
not hardware or software except for hardware in the Vernonia office)
easements, deeds, licenses, survey and survey notes, information relating to
oil, gas, and mineral activities, permits, approvals and authorizations of
governmental agencies held by Owner in connection with the Timberland
Properties, Mineral Rights, and other Assets. The records shall also include
all files and documents relating to customers, suppliers and contractors
directly related to the Timberland Properties, Mineral Rights, and other
Assets which, in the reasonable judgment and discretion of Seller, are
segregated or segregable from all other business records, files, books and
documents of Seller.
(b) Mobile Equipment, Machinery and Equipment. The mobile
equipment, machinery, equipment, tools, fixtures and furniture used by Owner
exclusively in connection with the Timberland Properties including those
listed on Schedule 1.4 (b), as such items listed thereon may have been sold,
replaced, deleted or added in the ordinary course of business, together with
certificates of title for motor vehicles constituting part of such equipment
which are licensed and owned by Owner but excluding seed orchard equipment and
motor vehicles used by employees of Owner who will be employed by Seller.
(c) Office Supplies. The office supplies and forms, packaging
materials and similar miscellaneous tangible personal property used by Owner
exclusively in connection with the Timberland Properties except such supplies
which are marked or identifiable with the logo, mark or trademark of Owner or
Hanson's general partners.
(d) Contracts. All rights and obligations under those instruments
related to the operation of the Assets that are not related to real property,
including the contracts, leases, permits and licenses described on
Schedule 1.4 (d), to the extent the same are assignable, including sales
orders and commitments, purchase orders and commitments, agreements and
contracts of Owner which relate to work or services to be performed for or at
the Assets.
1.5 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Seller is selling, assigning, transferring or
conveying or causing to be sold, assigned, transferred or conveyed to Buyer
only the Timberland Properties and the assets related thereto that Seller has
the right to acquire from Owner pursuant to the Purchase Agreement. Rights,
assets, and properties which are retained by Owner pursuant to the Purchase
Agreement shall be specifically excluded from the transactions contemplated by
this Agreement, notwithstanding anything to the contrary elsewhere in this
Agreement ("Excluded Assets").
1.6 Assignment of Contracts.
(a) Contracts Assignable Without Consent. Seller agrees to assign
or cause to be assigned to Buyer as of each Closing, all of the rights of
Seller and Owner under the Contracts related to operations on the Parcel or
Parcels being transferred at such Closing that are assignable without consent
of any third party and Buyer shall assume, as of such Closing, all obligations
of Seller and Owner thereunder which arise before, at or after such Closing.
The parties recognize that Contracts which by their terms do not require
consent to assignment may require consent to a partial assignment if the
Contract covers more than one Parcel.
(b) Seller to Use Reasonable Efforts. Anything in this Agreement
to the contrary notwithstanding, Seller shall not be obligated to sell,
assign, transfer or convey or cause to be sold, assigned, transferred or
conveyed to Buyer any of its rights in and to any of the Contracts without
first obtaining all necessary approvals, consents or waivers. Seller shall
use all reasonable efforts, and Buyer shall reasonably cooperate with Seller,
to obtain all necessary approvals, consents or waivers, or to resolve any
impracticalities of transfer necessary to assign or convey to Buyer each such
Contract as soon as practicable; provided, however, that neither Seller nor
Buyer shall be obligated to pay any consideration therefor except for filing
fees and other ordinary administrative charges which shall be paid by Seller
to the third party from whom such approval, consent or waiver is requested.
In the event Seller obtains consent to assignment of a Contract prior to a
Closing, Buyer shall assume, as of Closing, all obligations of Seller and
Owner thereunder which arise before, at or after the Closing, as though no
consent was required.
(c) If Waivers or Consents Cannot be Obtained. To the extent that
any of the approvals, consents or waivers referred to in Section 1.6(b) have
not been obtained by Seller as of the Closing, or until the impracticalities
of transfer are resolved, Seller shall, during the remaining term of such
Contracts, use all reasonable efforts to (i) obtain the consent of any such
third party with the filing fees and ordinary administrative charges payable
to such third party to be split equally by the parties; (ii) cooperate with
Buyer in any reasonable and lawful arrangements designed to provide the
benefits of such Contracts to Buyer so long as Buyer fully cooperates with
Seller and Owner in such arrangements; and (iii) enforce, or cause to be
enforced, at the request of Buyer and at the expense and for the account of
Buyer, any rights of Seller or Owner arising from such Contracts against such
issuer thereof or the other party or parties thereto (including the right to
elect to terminate any such Contracts in accordance with the terms thereof
upon the request of, and indemnification of Seller and Owner from, Buyer).
(d) Non-assignability. To the extent that any Contract or any
claim, right or benefit arising thereunder or resulting therefrom is not
capable of being sold, assigned, transferred or conveyed without the approval,
consent or waiver of the issuer thereof or the other party thereto, or any
third person (including a government or governmental unit), or if such sale,
assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this Agreement shall
not constitute a sale, assignment, transfer or conveyance thereof, or an
attempted assignment, transfer or conveyance thereof.
1.7 Transferring Permits and Licenses. Seller will assign, transfer or
convey, or cause to be assigned, transferred or conveyed to Buyer at each
Closing those permits and licenses, including those described in Schedules 1.1
(c) and (e), and 1.4 (d) which are held or used by Owner in connection with
the Assets being transferred at such Closing and which can be assigned without
having to obtain the consent of any third party with respect thereto. Seller
will cooperate with Buyer in obtaining any third party consents necessary to
the assignment or transfer of any other permits or licenses used or held by
Seller or Owner in connection with such Assets which are so assignable or
transferable; however, neither Seller nor Buyer shall be obligated to pay any
consideration therefor except for filing fees and other ordinary
administrative charges which shall be paid by Buyer to the third party from
whom such approval, consent or waiver is requested. Buyer shall assume, as of
the relevant Closing, all obligations of Seller and Owner arising prior to, at
or after the relevant Closing under those permits and licenses which can be
transferred without having to obtain the consent of any third party and those
permits and licenses for which consent to transfer is obtained prior to the
relevant Closing. Subsequent to the relevant Closing, to the extent permitted
by law, upon ninety (90) days prior written notice, Owner has the right to
cancel any permits or licenses or any bonds, guarantees, or undertakings by
Owner applicable to the Assets to the extent such are not so assigned or
transferred to Seller pursuant to Section 1.7 of the Purchase Agreement to
Buyer pursuant to this Section 1.7. Seller will not be required to transfer
any permits or licenses which affect more than one Parcel where the effect of
such transfer would be to invalidate such license or permit with respect to
one or more Parcels retained by Seller.
1.8 Liabilities Assumed by Buyer; Liabilities Not Assumed by Buyer.
(a) Assumed Liabilities. Except as expressly provided in
Subsection 1.8(b), Buyer shall, effective as of each Closing and without any
further responsibility or liability of or recourse to Seller, or its
directors, shareholders, officers, partners, employees, agents, consultants,
representatives, successors, transferees or assignees, absolutely and
irrevocably assume and shall be liable and responsible for the claims,
liabilities, and obligations of Seller arising pursuant to the Purchase
Agreement and Owner with respect to the Timberland Properties, Mineral Rights,
and other Assets being transferred at such Closing, whether or not disclosed
to Buyer, and whether or not occurring or arising prior to, at or after such
Closing, except as expressly set forth in Section 1.8(b) and except to the
extent to which Seller indemnifies Buyer as expressly set forth in Section
10.1(a); and nothing in this Section 1.8(a) shall diminish Buyer's rights in
Section 8.11.
Without limiting the foregoing, Buyer shall assume the following
related to the Assets being transferred at such Closing:
(i) Buyer shall assume all Contracts assigned to Buyer
pursuant to Section 1.6, and permits and licenses assigned to Buyer pursuant
to Section 1.7;
(ii) Buyer shall assume all matters disclosed to Buyer in
Schedules 6.3 through 6.6; and
(iii) INTENTIONALLY OMITTED
(iv) INTENTIONALLY OMITTED
(v) Buyer shall assume all undertakings of, and liabilities
and obligations assumed by, CFII, and all indemnity obligations of CFII, if
any, to Crown Zellerbach Corporation and its successors and assigns relating
to all environmental conditions arising from ownership, possession, use, or
conduct of business and operations of the Indemnification Properties being
transferred at such Closing (as defined in Section 6.7(e) of this Agreement),
which undertakings, liabilities, obligations, and indemnity obligations are
contemplated in that certain Transaction Agreement dated December 14, 1985, by
and between James River Corporation of Virginia and Crown Zellerbach
Corporation and are more specifically set forth in that certain Undertaking
dated as of May 2, 1986, by CFII in favor of Crown Zellerbach Corporation (the
Transaction Agreement and Undertaking are collectively referred to herein as
"Transaction Agreement/Undertaking").
At each Closing, the parties shall execute an Assignment,
Acceptance, and Assumption Agreement in the form attached hereto as Schedule
1.8 to evidence the foregoing matters to be assumed by Buyer, in addition to
the more specific instruments of assignment and assumption described in this
Agreement.
(b) Excluded Liabilities. Notwithstanding anything to the
contrary in this Agreement, the following liabilities and obligations
("Excluded Liabilities") shall not be assigned to Buyer nor assumed by Buyer:
(i) all liabilities and obligations related to the Excluded
Assets;
(ii) trade accounts payable for items purchased and
delivered as of the Closing Date, and all accrued expenses of the type set
forth on Schedule 1.8 (b)(ii) attached hereto which are, or under generally
accepted accounting principles should be, accrued at Closing;
(iii) all liabilities and obligations for taxes, except for
assessments and real estate taxes which shall be prorated on the Proration
Date as provided in this Agreement, and except for the deferred ad valorem
taxes because of classification of all or a portion of the Timberland
Properties as farmland, grazing land, or timberland;
(iv) all liabilities and obligations of Owner to any
Affiliate of Owner, except for any matters listed on Schedule 1.8 (b)(iv)
attached hereto;
(v) any liabilities or obligations to or with respect to
employees of Seller or Owner;
(vi) except as provided in Section 2.1(f), any obligations
for borrowed funds; the term "borrowed funds" shall not be construed to
include purchase money contracts and similar security interests for personal
property;
(vii) all bodily injury claims occurring on or in connection
with the Assets prior to Initial Closing and all product liability claims
arising from sale or operation of the Assets prior to Initial Closing;
(viii) any matters retained by Seller or Owner pursuant to
Section 8.2(c);
(ix) all undertakings of, and liabilities and obligations
assumed by, CFII, and all indemnity obligations of CFII, contemplated by or
set forth in the Transaction Agreement/Undertaking, except for the
undertakings, assumed liabilities and obligations, and indemnity obligations
described in Section 1.8(a)(v) of this Agreement; and
(x) liens and encumbrances to be satisfied by Owner as
provided in Section 3.6.
2. Purchase Price.
(a) Subject to adjustment in accordance with the provisions of
this Agreement, the purchase price for the Assets ("Purchase Price") shall be
Three Hundred Fifty Million Dollars ($350,000,000). The Purchase Price shall
be payable as provided in Section 2.1.
(b) The portion of the Purchase Price allocated to each Parcel is
set forth on Schedule 1.1(a).
2.1 Payment of Purchase Price.
(a) INTENTIONALLY OMITTED
(b) Buyer shall pay to Seller the portion of the Purchase Price
allocated to Parcel 1 in the amount of $99,401,430 (the "Closing Date
Payment"), by wire transfer of immediately available funds to the escrow trust
account established by Chicago Title Insurance Company (herein "Chicago Title"
or "Escrow Agent") at Chemical Bank, New York, New York ("Owner's Bank"),
which transfer shall have been received by Owner's Bank no later than 7 a.m.
PDT on the Initial Closing Date. Upon confirmation to Buyer by the Escrow
Agent that the deeds described in Section 3.4 have been recorded, the Escrow
Agent shall deliver the Closing Date Payment to Seller or to Seller's order.
(c) If Buyer is legally obligated to Close and if the Closing
Date Payment is not received by Owner's Bank by 7 a.m. PDT on the Initial
Closing Date, Seller may, at its option, either exercise the Seller's remedies
described in Section 9 by reason of Buyer's default, or may accept late
payment of the Closing Date Payment which shall, in such event, be accompanied
by payment of an amount determined by computing simple interest on the amount
of that payment at the rate of interest announced publicly by Chemical Bank in
New York, New York from time to time as its "Prime Rate" (on the basis of a
360-day year) from the Initial Closing Date to the date of payment. For
purposes of computing the amount payable, any amount received after 7 a.m.
shall be deemed to have been received on the next day. If the Closing Date
Payment is not received by Owner's Bank on the Initial Closing Date by 7 a.m.
PDT, and if Seller elects to accept a late payment, the Closing Date Payment
shall be transferred to an account to be designated by Seller.
(d) At each Subsequent Closing, Buyer shall pay to Seller the
portion of the Purchase Price allocated to the Parcel or Parcels being
transferred by wire transfer of immediately available funds to the escrow
trust account established by Escrow Agent at a bank to be designated by Seller
("Seller's Bank"), which transfer shall have been received by Seller's Bank no
later than 9 a.m. PDT on the Subsequent Closing Date. Upon confirmation to
Buyer by the Escrow Agent that the deeds described in Section 3.4 have been
recorded, the Escrow Agent shall deliver the payment to Seller or to Seller's
order.
(e) If Buyer is legally obligated to Close and if the payment is
not received by Seller's Bank by 9 a.m. PDT on the Subsequent Closing Date,
Seller may, at its option, either exercise the Seller's remedies described in
Section 9 by reason of Buyer's default, or may accept late payment of the
Closing Date Payment which shall, in such event, be accompanied by payment of
an amount determined by computing simple interest on the amount of that
payment at the rate of interest announced publicly by Chemical Bank in New
York, New York, from time to time as its "Prime Rate" (on the basis of a 360-
day year) from the Subsequent Closing Date to the date of payment.
(f) Additional Costs. The Purchase Price will include for each
Parcel, other than Parcel 1, an amount determined by Seller in its reasonable
judgment to reimburse Seller for financing and other costs related to the
acquisition and holding of each such Parcel until conveyance to Buyer,
including escrow fees, title insurance premiums, excise taxes related to
acquisition of such Parcel and management fees and operating costs advanced by
Seller to the extent not recovered by Seller pursuant to the provisions of the
Management Agreement referred to in Section 3.9. Such costs shall be added to
and become a part of the Purchase Price allocated to each Parcel other than
Parcel 1. At least three (3) business days prior to each Subsequent Closing
Date, Seller will provide to Buyer a statement setting forth in reasonable
detail the calculation of the additional costs to be allocated to the Parcel
being transferred.
(g) If, at any Closing, the parties have not resolved the Purchase
Price reduction as contemplated in Section 8.6, or the Price Adjustment Items
or Price Adjustment Notice as contemplated in Section 8.11, then the parties
shall proceed to Close as scheduled and the amount to be paid to Seller at the
Initial Closing shall be the Closing Date Payment and the amount to be paid at
any Subsequent Closing Date shall be the full amount of the Purchase Price
allocated to the Parcel or Parcels being transferred. Seller shall reimburse
Buyer for any overpayment in the Purchase Price within three (3) business days
of resolution of the amount of the Purchase Price reduction.
3. Closing.
3.1 Initial and Subsequent Closings.
(a) Date of Initial Closing. The Initial Closing shall take place
concurrently with the closing under the Purchase Agreement at the offices of
Ater Wynne Hewitt Dodson & Skerritt, 222 SW Columbia, Suite 1800, Portland,
Oregon, or at such other place as the parties may agree in writing, on May 15,
1996, unless another time and date are mutually designated by Seller and
Owner. The foregoing date is the date on which Owner's deed(s) to Buyer
conveying Parcel 1 are to be recorded immediately prior to the delivery of the
Closing Date Payment to Seller and is referred to in this Agreement as the
"Initial Closing" or "Initial Closing Date." Seller shall deliver possession
of the Assets related to Parcel 1 to Buyer on the Initial Closing Date.
Seller shall have no obligation to consummate the sale contemplated by this
Agreement if for any reason the Closing under the Purchase Agreement does not
occur.
(b) Dates of Subsequent Closings. Each Subsequent Closing shall
take place on a date designated by Buyer upon written notice to Seller at
least twenty (20) days prior to the Subsequent Closing Date. Each such notice
shall identify the Parcel or Parcels to be transferred on the designated
Subsequent Closing Date. Buyer shall have the right to designate the order in
which Parcels will be purchased except that the Wilson River Tract cannot be
purchased until all other Parcels have been purchased; and provided further
that the Wilson River Tract cannot be purchased prior to December 15, 1996.
Subsequent Closings shall take place at the offices of Seller in Portland,
Oregon, or at such other place as may be agreed upon in writing. The date so
designated is the date on which Seller's deed(s) to Buyer covering the
Timberland Properties included in the Parcel or Parcels being transferred are
to be recorded immediately prior to the delivery to Seller of the portion of
the Purchase Price allocated to such Parcel or Parcels and is referred to in
this Agreement as a "Subsequent Closing" or "Subsequent Closing Date." Seller
shall deliver possession of the Assets being transferred to Buyer on the
Subsequent Closing Date. Buyer's obligation to purchase Assets other than
Parcel 1 is contingent on its ability to secure client funding which Buyer
agrees it will make diligent and sustained efforts to obtain. Buyer will
purchase additional portions of the Assets if client funding commitments
become available; provided that Buyer's right to purchase additional portions
of the Assets will expire eighteen (18) months from the Initial Closing Date.
3.2 Hart-Scott Rodino Act. Buyer and Seller have prepared all necessary
documentation and performed all other necessary actions to complete all
necessary filings under the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). Each party agrees to respond to any request
for additional information within twenty (20) days of receipt of the request.
In the event the waiting period (which term includes the extension period)
under the HSR Act has not expired by the Initial Closing Date set forth in
Section 3.1, the Initial Closing Date shall be delayed until five (5) business
days after expiration of the waiting period; provided that this Agreement is
automatically terminated if Owner terminates the Purchase Agreement pursuant
to Section 3.2 thereof, and Buyer, in its sole discretion, may terminate this
Agreement if the waiting period has not expired or been terminated within 180
calendar days of the date on which Buyer completes its initial filing. It is
understood that Buyer by filing under the HSR Act is not waiving its claim
that it is entitled to an exemption from filing.
3.3 Execution and Deposit of Documents Prior to Closing. At least five
(5) business days prior to each Closing Date, each of the parties, as
applicable, shall execute and deposit with the Escrow Agent all of the
documents listed in Section 3.4 below which are to be recorded or filed on the
Closing Date. Each of the parties, as applicable, shall execute and deliver
to the other party all remaining documents listed in Subsection 3.4 below on
each Closing Date. At least five (5) days prior to the Initial Closing Date,
Buyer shall deliver to the Escrow Agent a duly executed and acknowledged
memorandum of right of first offer with respect to all of the Timberland
Properties.
3.4 Documents to be Delivered by Seller. At or prior to each Closing,
Seller shall deliver, or cause to be delivered, the following with respect to
the portion of the Assets being transferred at such Closing:
(a) Documents of transfer, bills of sale, certificates of title
and other instruments of transfer, dated the Closing Date, transferring to
Buyer title to the Assets being transferred. With respect to Parcel 1 of the
Timberland described on Schedule 1.1(a) (including the buildings, improvements
and other appurtenant interests described in Section 1.1(c) and (d)) title
shall be transferred in the form of the deed(s) attached hereto as Schedule
3.4(a) directly from Owner to Buyer; with respect to the Mineral Rights
described in Schedule 1.1(g) related to Parcel 1, transfer shall be
accomplished through mineral quit claim deeds directly from Owner to Buyer and
other instruments of transfer without warranty; with respect to all personal
property, title shall be transferred by Bill of Sale in the form attached
hereto as Schedule 3.4(a)(a); provided that Parcels other than Parcel 1 will
be transferred by Seller to Buyer rather than directly from Owner and provided
further that Vagrant Mineral Rights will be transferred concurrently with the
transfer of the fifth Parcel to be transferred;
(b) Documents evidencing the assignment and assumption of the
Contracts to Buyer (together with any third-party consents required for such
transfers) and the assignment and assumption of any permits and licenses
(together with any third-party consents required for such transfers) not
transferred pursuant to Section 3.4(a), and the Assignment, Acceptance, and
Assumption Agreement described in Section 1.8;
(c) A copy of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement by
Seller and a certificate of the secretary or assistant secretary of Seller,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(d) The affidavits of Seller required by Section 1445 (b)(2) of
the Code and by local taxing authorities, and any other documents required of
Seller to transfer the Assets in accordance with this Agreement;
(e) Copies of any satisfactions, releases or terminations of the
liens and encumbrances referred to in Section 3.6 not previously delivered;
and
(f) Copies of documents delivered to Seller by Owner pursuant to
Sections 3.4(c) and (d) of the Purchase Agreement.
3.5 Documents to be Delivered by Buyer. At or prior to each Closing
Date, Buyer shall deliver the following:
(a) Documents evidencing, with respect to the Assets being
transferred, the assignment and assumption of all Contracts and the assignment
and assumption of all permits and licenses transferred by Seller to Buyer
pursuant to Section 3.4(a) and (b), and the Bill of Sale, and Assignment,
Acceptance, and Assumption Agreement described in Section 1.8;
(b) A copy of the resolutions of a duly empowered committee of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer, together with a copy of a resolution of the board of directors of Buyer
empowering such committee to take the action reflected in the committee
resolutions and a certificate of its secretary or assistant secretary, dated
the Closing Date, that such committee and board resolutions were duly adopted
and are in full force and effect;
(c) The affidavits, if any, of Buyer required by local taxing
authorities, including the affidavits specified in Section 8.8(b), and any
other documents required of Buyer to transfer the Assets in accordance with
this Agreement.
3.6 Satisfaction of Liens and Encumbrances. At or prior to the Initial
Closing Date, Owner has agreed to pay in full all liens and encumbrances for
borrowed funds, income tax liens, and judgment liens on the Assets. At or
prior to the Initial Closing Date, Owner has agreed to pay all delinquent
property taxes on the Assets. Buyer shall assume sole responsibility, as of
each Closing relative to the Parcel being acquired at such Closing, for any ad
valorem taxes which are deferred because of farm or grazing or forest use or
classification.
3.7 Transfer Taxes; Prorations. Any recording fees, transfer taxes, or
sales taxes payable as a result of the sale of the Assets included in Parcel
1, shall be paid by Seller or Owner. Any recording fees, transfer taxes, or
sales taxes payable as a result of a Subsequent Closing shall be paid by Buyer
at such Closing. Any escrow fees related solely to the Initial Closing
between Seller and Buyer shall be split equally between the parties. At the
Initial Closing Buyer shall reimburse Seller for other escrow fees payable by
Seller pursuant to the Purchase Agreement, including fees in connection with
the Deposit under the Purchase Agreement, in the proportion that the Purchase
Price bears to One Billion Five Hundred Eighty Eight Million Dollars
($1,588,000,000). Real estate taxes, assessments for public improvements, and
all other fees and assessments related to the Assets shall be prorated at each
Closing as of the Proration Date.
3.8 Default Deeds. At least five (5) business days prior to the
Initial Closing Date, Buyer shall execute and deposit with Chicago Title, in
escrow, quitclaim deeds (the "Quitclaim Deeds") quitclaiming and releasing
unto Seller all of Buyer's right, title, and interest in and to Parcel 1 of
the Timberland Properties, including any and all after acquired title to the
Timberland Properties. If the closing under the Purchase Agreement occurs and
the Closing Date Payment is made to Owner's Bank by 9 a.m. PDT on the Initial
Closing Date, Chicago Title shall return the Quitclaim Deeds to Buyer. If the
closing under the Purchase Agreement occurs and Buyer fails to make the
Closing Date Payment by 9 a.m. PDT on the Initial Closing Date, regardless of
whether such failure is justified on account of any alleged default by Seller,
then Chicago Title shall release the Quitclaim Deeds to Seller which may
proceed to record them in the applicable real estate records.
3.9 Other Agreements. At the Initial Closing the parties will enter
into a Right of First Offer Agreement in the form of Schedule 3.9(a), a
Management Agreement in the form of Schedule 3.9(b), and a Timber Supply
Agreement in the form of Schedule 3.9(c).
4. Title Insurance. Seller has delivered to Buyer evidence of title in
the form of draft title reports and title commitments ("Title Reports"), as
appropriate, covering the Timberland Properties, copies of which are attached
hereto as Schedule 4; Seller and Buyer acknowledge that the Title Reports may
be revised, corrected, and supplemented by Chicago Title between the date of
this Agreement and the Initial Closing Date, as contemplated in Section 5(c)
and, as contemplated in the letters from Rosalee Merritt to Malcolm Newkirk,
copies of which are included in Schedule 4 as part of the Title Reports. In
the event that Chicago Title is not prepared to issue at each Closing to
Buyer, owner's policies of title insurance insuring title in Buyer in the
portion of the Timberland Properties being conveyed in Buyer, subject only to
the exceptions set forth in the Title Reports, as those Title Reports may have
been revised, corrected, and supplemented by Chicago Title as set forth above,
but with no reductions, in excess of five hundred (500) acres in the
aggregate, in the acreage vested in Owner, and subject to the printed
exceptions contained in such Title Reports, then Buyer shall have the rights
set forth in Section 8.11 with respect to the additional reductions in acreage
and additional material encumbrances to be added as exceptions to title. If
Chicago Title is not prepared to issue such owner's policies on any Closing
Date for reasons other than additional reductions in acreage or additional
exceptions to title, either Buyer or Seller may delay Closing until Chicago
Title or another title insurance company is prepared to issue such owner's
policies. Except as hereinafter provided, at each Closing Buyer shall
purchase, at its own expense, such owner's policies unless otherwise agreed to
by the parties. Buyer may at its option purchase at Initial Closing an
owner's policy of title insurance covering the Timberland Properties included
in Parcel 1 and a purchaser's policy of title insurance covering the remainder
of the Timberland Properties. In the event that Buyer purchases a purchaser's
policy of title insurance, it will not be a condition of any Subsequent
Closing that Chicago Title is prepared to issue its owner's policy of title
insurance.
5. Conduct Pending Closing.
(a) Between the date hereof and the Initial Closing Date, Owner
has agreed to continue to operate the Timberland Properties in the ordinary
course and in a manner reasonably consistent with its present operating plan
which establishes a maximum volume of harvest or stumpage sales for harvest
("Maximum Volume") through the Initial Closing Date ("Operating Plan"), a copy
of which is attached hereto as Schedule 5(a); provided, that Owner has agreed
that it will not enter into log export contracts that provide for delivery of
logs after Initial Closing in recognition of the fact that Seller will not
export logs, and this change of conduct by Owner may modify Owner's ordinary
course and Operating Plan but shall not affect the Maximum Volume set forth on
Schedule 5(a). Subject to the foregoing, Owner has agreed that it shall
continue to harvest, or sell stumpage for harvest, timber standing, lying, and
situated upon the Timberland Properties described in Schedule 1.1(a). Owner
has agreed that it shall continue its various silvicultural practices
consistent with its past practices, from the date hereof until the Initial
Closing Date.
(b) The Purchase Price shall be increased or decreased by the
difference between the actual harvest (including stumpage sales for harvest)
and the Maximum Volume pursuant to the formula ("Harvesting Formula") attached
hereto as Schedule 5(b), as of the date the Initial Closing actually occurs,
but such difference between actual harvest and the Maximum Volume shall not be
considered a breach by Seller of this Agreement. Adjustments, if any, to the
Purchase Price in this Subsection (b) shall be made within fifteen (15) days
of the date the Closing actually occurs, and each party agrees to pay to the
other the adjusted amount, as applicable, without interest within said fifteen
(15) days.
(c) Owner has agreed that it will not take any action, (i) the
result of which will be to create a Material Adverse Effect on the value of
the assets covered by the Purchase Agreement, or (ii) which is both not
reasonably consistent with its Operating Plan and not in the ordinary course
of business, except as otherwise set forth in this Section 5. Owner may, but
is not obligated, to continue, in the ordinary course of business, to grant
and obtain easements, rights of way and other similar rights to the Timberland
Properties, to grant options to or lease additional Mineral Rights, and to
purchase or sell or exchange additional real properties or interests therein
consistent with its present plan ("Real Estate Plan"), a copy of the relevant
portions of which is attached hereto as Schedule 5(c). In the event Owner
sells any portion of the Timberland Properties or interests therein or grants
options to or leases additional Mineral Rights, other than those identified in
the Real Estate Plan, the Purchase Price shall be reduced by an amount equal
to the proceeds of any such sales, options, or leases, but Seller will not be
deemed in breach of this Agreement. Seller shall promptly notify Buyer of any
notice received from Owner related to the granting or obtaining of any
easement, right of way or other similar right, any additional option to or
lease of Mineral Rights, and any such purchase, sale or exchange; and if the
transaction involves more than two hundred fifty thousand dollars
($250,000.00), Seller shall obtain Buyer's prior written consent to the
transaction, which consent shall not be unreasonably withheld. For purposes
of Section 4, the Title Reports shall be revised or deemed revised to reflect
such transactions.
(d) Notwithstanding the foregoing, the parties agree that, if the
Initial Closing Date is extended beyond May 15, 1996, Owner shall be deemed to
be operating the Timberland Properties in the ordinary course of business from
May 16, 1996, to the date the Closing actually occurs, with respect to the
activities described below if Owner:
(i) INTENTIONALLY OMITTED
(ii) continues its harvest of timber at a level that is
between fifty percent (50%) and one hundred percent (100%) of the level in the
Operating Plan; and
(iii) continues road maintenance and road construction as
necessary to prevent substantial deterioration from the condition of the roads
as of May 15, 1996, and as necessary to meet the needs of Owner's harvest
activities; and
(iv) continues silvicultural and reforestation activities in
Oregon as required by the Oregon Forest Practices Act.
(e) From the Initial Closing Date through the date of conveyance
of each Parcel or the expiration of eighteen (18) months from the Initial
Closing Date, whichever occurs first, the Timberland Properties which have not
been conveyed to Buyer will be managed in accordance with the Management
Agreement attached as Schedule 3.9(b).
(f) Any Purchase Price adjustment pursuant to Subsection (b) or
(c) shall be allocated among the Parcels on an equitable basis. If Owner's
operations as described in the Section 5 have a disproportionate impact on the
value of the various Parcels, there will be an equitable adjustment in the
allocation of the Purchase Price among the Parcels. If the parties are unable
to agree on any equitable adjustment pursuant to this Section 5, the equitable
adjustment shall be determined by arbitration pursuant to Section 9.2.
(g) During the period following the Initial Closing in which Buyer
has the right to purchase any Parcel or Parcels, Seller will not take any
action which would have a materially adverse impact on the value of any Parcel
except as contemplated in the Management Agreement (Schedule 3.9(b)). During
such period Buyer shall have a right of access to any Parcels not yet
purchased by it; provided that Buyer shall indemnify, defend, and hold
harmless Seller from and against any and all loss, cost, or damage arising out
of the exercise of such right of access.
6. Representations of Seller. Seller represents to Buyer that:
6.1 Organization, Standing and Authority. Seller is a corporation
organized, existing, and in good standing under the laws of the State of
Oregon. Seller has full power and authority to enter into and perform this
Agreement. Seller is not a "foreign person" within the meaning of Section 1445
of the Code.
6.2 Authorization of Agreement; Authority. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary corporate action of Seller, and this Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution, delivery and
performance of this Agreement by Seller will not (a) violate or conflict with
Seller's corporate power and authority; (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Seller;
or (c) subject to the receipt of appropriate consents as specified in this
Agreement as of the Closing Date and subject to the provisions of Section
1.6(d), conflict with, or result in the breach of the provisions of, or
constitute a default under, any agreement, license, permit or other instrument
to which Seller is a party or is bound or by which the Assets are bound.
Except as required by the HSR Act, no consent, approval or authorization of
any governmental authority is required on the part of Seller in connection
with the execution, delivery and performance of this Agreement.
6.3 Material Contracts. All of the Material Contracts which are to be
transferred to Buyer and which relate to the Timberland Properties are listed
on Schedule 6.3 or Schedule 4. Except as disclosed in Schedule 6.3 or
Schedule 4, the Material Contracts have not been further modified or amended;
and to the best of Owner's knowledge, neither Owner nor any party thereto is
in default of any material term in the Material Contracts and true and
complete copies, including applicable amendments, of the Material Contracts
have been made available to Buyer for review prior to execution of this
Agreement. A Material Contract shall mean a Contract which involves payments,
performance of services or delivery of goods by or to Owner after the Initial
Closing Date in an amount or value of two hundred fifty thousand dollars
($250,000.00) or more.
6.4 Litigation; Compliance with Laws. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Seller's knowledge, threatened, that question the validity of this
Agreement or any action taken or to be taken by Seller in connection with this
Agreement. Except as set forth on Schedule 6.4, there is no claim,
litigation, proceeding or governmental investigation pending or, to the best
of Owner's knowledge, threatened, or any order, injunction or decree
outstanding which, if decided unfavorably, would cause Buyer to incur loss or
damage in excess of one hundred thousand dollars ($100,000.00); except as
disclosed on Schedule 6.4, to the best of Owner's knowledge, Owner has
received no written notice from a governmental authority of a material
violation of law relating to the Timberland Properties which has not or will
not have been resolved prior to the Initial Closing.
6.5 Personal Property. Owner has, or will have on the Initial Closing
Date, good and marketable title (which includes leasehold title if applicable)
to the personal property to be transferred to Buyer pursuant to Section 1.4,
subject to equipment leases, purchase money contracts, and similar security
interests to be assumed by Buyer pursuant to Section 1.8.
6.6 Environmental Conditions. Except as disclosed on Schedule 6.6, to
the best of Owner's knowledge there are no environmental conditions on the
Indemnification Properties (as defined in Section 6.7(e)) that would cause
Buyer to incur more than one hundred thousand dollars ($100,000) in loss or
damage for each such environmental condition.
6.7 Disclaimer of Warranties and Representations From Seller; AS IS
Indemnity.
(a) Personal Property. Except as otherwise expressly set forth
in this Agreement, this Agreement is executed, and the personal property will
be transferred, without any warranty of title, either express or implied, and
without any express or implied warranty or representation as to the
merchantability or fitness for any purpose of any of the equipment or other
personal property included in the Assets, and without any other express or
implied warranty or representation whatsoever.
(b) Real Property. Except as otherwise expressly set forth in
this Agreement, this Agreement is executed, and the real property including
Timberland Properties, and Mineral Rights will be transferred, without any
warranty of title, either express or implied, except warranties (if any)
contained in the deed(s) conveying the real property included in the Assets,
and without any express or implied warranty or representation as to the
merchantability of any of the real property included in the Assets, acreage,
legal access, operations or encroachments or any other condition affecting the
Assets.
(c) Condition of Property. Except as otherwise expressly set
forth in this Agreement, Buyer agrees to purchase the Timberland Properties,
Mineral Rights, personal property, mobile equipment, machinery and equipment
and all other Assets "as is", "where is" and with all faults. The Buyer
certifies by execution hereof that it has had an opportunity to inspect the
Timberland Properties, and Mineral Rights and other Assets (including the
surface and subsurface of any real property) prior to executing this
Agreement; that Buyer either has inspected or waived its right to inspect the
Timberland Properties, and Mineral Rights and other Assets for all purposes
and satisfied itself as to its physical condition, both surface and
subsurface, including but not limited to conditions specifically related to
the presence, release or disposal of hazardous substances, but without
limiting Buyer's rights under Section 8.11; that it has not relied upon any
information delivered by Owner, Seller or their respective agents concerning
the Timberland Properties, and Mineral Rights and other Assets; and that it is
relying upon its own examination of the Timberland Properties, and Mineral
Rights and all other Assets in entering into and in consummating this
Agreement. Buyer further acknowledges and agrees that, except as otherwise
expressly set forth in this Agreement, neither Owner nor Seller nor any of
their respective agents have made any representations, warranties or covenants
whatsoever with respect to the quantity or quality of the timber, the acreage,
tax status, legal access, encroachment or physical condition of the Timberland
Properties, and Mineral Rights, nor, except as expressly set forth in this
Agreement, have they made any representations, warranties, or covenants
whatsoever concerning the presence, release or disposal of hazardous
substances thereon.
(d) Disclaimer. Except as otherwise expressly set forth in this
Agreement, the transaction contemplated hereby shall be without any express,
implied, statutory or other warranty or representation as to the condition,
quantity, quality, fitness for particular purpose, conformity to models or
samples of materials or merchantability of any of the Assets, their fitness
for any purpose, and without any other express, implied, statutory or other
warranty or representation whatsoever. In addition, except as otherwise
expressly set forth in this Agreement, Seller makes no warranty or
representation, express, implied, statutory or otherwise, as to the accuracy
or completeness of any data, reports, records, projections information or
materials now, heretofore or hereafter furnished or made available to the
Buyer in connection with this Agreement including, without limitation, any
description of the Assets, pricing assumptions, or the environmental condition
of the Assets or the portions affected by the Endangered Species Act or any
other materials furnished or made available to Buyer by Seller or its agents
or representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made
available to Buyer are provided to Buyer as a convenience, and shall not
create or give rise to any liability of or against Seller; and any reliance on
or use of the same shall be at Buyer's sole risk.
(e) Waiver of Claims and Indemnity. Without limiting the
generality of any other provision in this Section 6.7, except as otherwise
expressly set forth in this Agreement, Buyer assumes any and all liabilities,
past, present, or future, of Seller and "Owners" as defined below, relating to
hazardous substances or materials, wastes, toxics, pollutants, solid wastes,
or contaminants, including without limitation liabilities arising under any
current or future legal requirement pertaining thereto, which are based upon
the ownership or operation of the Assets. Except as otherwise expressly set
forth in this Agreement, Buyer assumes the risk that hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants may be
present in, on or under the Timberland Properties, Mineral Rights or other
Assets acquired by Buyer, and hereby waives, releases, and discharges forever
Owner, Hanson's general partners, Affiliates of Owner, Owner's successors and
assigns, and their respective shareholders, directors, officers, employees,
and agents (in this Section 6.7(e) collectively referred to as "Owners") and
Seller from any and all present or future claims or demands, and any and all
damages, loss, injury, liability, claims or costs, including fines, penalties
judgments, claims for contribution, and cost recovery actions, arising from or
in any way related to the condition, operation, or use of the Timberland
Properties, Mineral Rights or other Assets acquired by Buyer or the presence
of any hazardous substances or materials, wastes, toxics, pollutants, solid
wastes, or contaminants in, on or under the Timberland Properties, Mineral
Rights or other Assets acquired by Buyer; provided, however, that to the
extent such waiver, release, or discharge will prejudice Buyer's rights to
pursue third parties (not including Affiliates of Owner) who have indemnified
or insured Owner (or any of the three Owners) for some or all of the foregoing
matters, Buyer shall not, and shall not be deemed to, have waived, released,
or discharged "Owners" for the sole purpose of pursuing such third parties.
Except as otherwise expressly set forth in this Agreement, Buyer hereby
indemnifies, holds harmless, and agrees to defend Seller and "Owners" from and
against any and all present or future claims or demands, and any and all
damages, losses, liabilities, injuries, fines, penalties, judgments, claims
for contribution, and cost recovery actions, and consultant fees, expert
witness fees, costs and expenses (including attorney's fees incurred by Seller
or Owners in the case of matters involving third parties) arising from or in
any way related to the presence of any hazardous substances or materials,
wastes, toxics, pollutants, solid wastes, or contaminants in, on or under the
(i) Timberland, (ii) Mineral Rights, and (iii) any other real property
constituting a part of other Assets (collectively, but limited to Timberland,
Mineral Rights, and other Assets acquired by Buyer, the "Indemnification
Properties"). This indemnity specifically includes the obligation of Buyer to
remove, remediate, reimburse or take other actions required by law concerning
any hazardous substances or materials, wastes, toxics, pollutants, solid
wastes, or contaminants in, on or under the Indemnification Properties.
Nothing herein shall limit Buyer's right, in good faith, to contest any
action, request or requirement of any governmental agency provided that such
action is taken at Buyer's sole cost, risk and expense. The provisions of
this Section 6.7(e) shall not include, or create any obligation of Buyer with
respect to any contractual obligation of "Owners" or Owner's predecessors
except as provided in Section 1.8(a)(v) or as disclosed on any Schedule
attached to this Agreement, are solely for the benefit of Seller and "Owners"
and shall not be construed to be for the benefit of any third party or to
constitute a waiver or release of rights against any third party. Seller
hereby assigns to Buyer all rights and claims which Seller may now or
hereafter have against third parties relating to any matter for which Buyer
indemnifies Seller or "Owners." The provisions of this Section 6.7(e) and
Section 1.8(a)(v) are intended to exclusively set forth Buyer's obligations
under this Agreement with respect to assumption, waiver, release, discharge,
and indemnification of environmental matters, and the provisions of Section
10.1(b) and Section 1.8(a) (other than Section 1.8(a)(v)) shall not apply to
such obligations of Buyer.
7. Representations of Buyer. Buyer represents to Seller as follows:
7.1 Buyer's Organization. John Hancock is a corporation organized,
existing and in good standing under the laws of Massachusetts and has the full
corporate power and authority to enter into and to perform this Agreement.
Buyer is qualified to do business and is in good standing in the state of
Oregon.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action of Buyer, and this Agreement constitutes the valid
and binding obligation of Buyer enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights in general and subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
7.3 Consents of Third Parties. The execution, delivery and performance
of this Agreement by Buyer will not (a) violate or conflict with the articles
of incorporation or bylaws of Buyer; or (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Buyer.
Except as may be required by the HSR Act, no consent, approval or
authorization of any governmental authority is required on the part of Buyer
in connection with the execution, delivery and performance of this Agreement.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken
or to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or decree
outstanding, against the Buyer that, if adversely determined, would have a
material effect upon Buyer's ability to perform its obligations under this
Agreement.
8. Further Agreements of the Parties.
8.1 Access to Information. Owner has agreed that Buyer (subject to
Section 8.7) shall have access to information in the possession of Owner, and
Seller will make available to Buyer information in its possession, relating to
the Timberland Properties, the Mineral Rights, and other Assets for due
diligence investigation purposes and to facilitate an orderly transition in
the management of those Assets in anticipation of Closing.
8.2 Notice of Changes and Events.
(a) Each party shall promptly notify the other party in writing,
and furnish to such party any information that such party may reasonably
request, with respect to the occurrence of any event or the existence of any
state of facts that would (i) result in the party's or Owner's representations
and warranties not being true if they were made at any time prior to or as of
each Closing Date, or (ii) impair the party's or Owner's ability to perform
its obligations under this Agreement.
(b) Subject to receipt of necessary information from Owner,
Seller agrees to update and bring current all Schedules attached to this
Agreement prior to the Initial Closing Date. Any such updated Schedule shall
be for informational purposes only and shall not affect the rights and
obligations of the parties as set forth in this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
Owner or Seller shall have the right, in their respective sole discretion, to
retain any claim, obligation, or liability that may otherwise be transferred
to or assumed by Buyer in this Agreement. Owner or Seller may, without
limitation, exercise this right by omitting or deleting a claim, liability, or
obligation on one or more of the Schedules attached to this Agreement. If
Owner or Seller exercises this right, Seller shall provide written notice to
Buyer of the claim, liability, or obligation that Seller shall retain within
thirty-five (35) days of Seller's receipt of written notice of said claim,
liability, or obligation.
8.3 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred
in connection with this Agreement and in connection with all obligations
required to be performed by each of them under this Agreement.
8.4 Publicity. Buyer and Seller shall consult with each other before
issuing any public announcement or press release concerning the transactions
contemplated by this Agreement and, except as may be required by applicable
law or regulation or rule of any stock exchange or organized securities market
on which the securities of Buyer or Seller are listed or traded, will not make
a public announcement or issue a press release prior to such consultation. If
Buyer or Seller are so required to make a public announcement or issue a press
release such party shall use its best efforts to inform the other party hereto
prior to making or issuing it.
8.5 Preservation of Records.
(a) Buyer agrees that, without expense to Seller, Buyer (i) shall
preserve and keep the records relating to the Timberland Properties, Mineral
Rights, and other Assets delivered to it by Seller for a period of six (6)
years from the Initial Closing, and (ii) shall give Seller and Owner
reasonable access to such records and to personnel during regular business
hours if needed for any bona fide purpose, provided such access shall be at
Seller's or Owner's cost and expense, including reimbursement of Buyer's
extraordinary costs, if any, of providing such access.
(b) Seller or Owner, without expense to Buyer, (i) shall preserve
and keep the records relating to the Timberland Properties, Mineral Rights,
and other Assets which were not transferred to Buyer pursuant to Section
1.4(a), and (ii) shall give Buyer reasonable access to such records and to
personnel during regular business hours if needed for any bona fide purpose,
provided such access shall be at Buyer's cost and expense, including
reimbursement of Seller's or Owner's extraordinary costs, if any, of providing
such access.
(c) Notwithstanding the expiration of the six (6) year period in
Subsection (a) above, Buyer agrees not to destroy the records described in
Subsection (a) without first giving Seller sixty-five (65) days advance
written notice and an opportunity to take custody of such records, at Seller's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any.
(d) Promptly following the expiration of eighteen (18) months
from the date of Initial Closing, Buyer shall return to Seller all records
related to Parcels not acquired by Buyer pursuant to this Agreement.
8.6 Casualty or Condemnation.
(a) In the event any uninsured loss or damage occurs to the
assets being acquired by Seller from Owner, including the Assets, after the
date of the Purchase Agreement, but before Initial Closing, which has an
adverse financial impact in excess of fifteen million dollars ($15,000,000) on
the value of such assets, Buyer shall be entitled to a reduction of the
Purchase Price. Buyer's share of any Purchase Price reduction as a result of
an uninsured loss shall be determined pursuant to Section 8.12. If the amount
of the Purchase Price reduction has not been determined by the date set for
Closing, the parties shall proceed to Close as scheduled and Subsection 2.1(d)
shall apply. In the event any insured loss, destruction, casualty or damage
occurs to the Assets after the date of this Agreement, but before Closing, or
in the event condemnation action is instituted on the Assets after the date of
this Agreement, but before Closing, then Seller shall assign to Buyer at
Closing with respect to the affected Parcel or Parcels all proceeds from such
policies or condemnation action, and there shall be no adjustment in the
Purchase Price.
(b) In the event any uninsured loss or damage occurs to portions
of the Assets after the date of Initial Closing but before the Subsequent
Closing with respect to such portion of the Assets, Buyer shall be entitled to
a reduction in the Purchase Price equal to the reduction in the value of such
Assets as a result of the uninsured loss or damage; provided that if the
reduction in value with respect to any Parcel exceeds 20 percent of the
portion of the Purchase Price allocated to such Parcel, Seller may withdraw
such Parcel from the Timberland Properties and this Agreement shall terminate
as to such Parcel or Buyer may terminate this Agreement as to such Parcel. If
the parties are unable to agree on the amount of the reduction, it shall be
determined by arbitration pursuant to Section 9.2 of this Agreement.
8.7 Confidentiality. Hanson and Buyer have previously executed a
Confidentiality Agreement in the form attached hereto as Schedule 8.7.
Notwithstanding anything to the contrary in the Confidentiality Agreement, the
parties hereto covenant and agree that the terms and provisions of this
Agreement and all information and data obtained in connection with this
Agreement shall be treated as Evaluation Material in the Confidentiality
Agreement. Buyer shall require any third party which has not already executed
the Confidentiality Agreement and to which it intends to disclose any
information supplied under the Confidentiality Agreement or this Agreement to
countersign and assume all of the obligations and covenants of the
Confidentiality Agreement and deliver a copy of the Confidentiality Agreement
to Seller and Owner prior to delivery of any information to such third party.
If this Agreement is terminated for any reason prior to the Initial Closing,
the foregoing covenant shall survive the termination; if this Agreement is not
so terminated, then the foregoing covenant shall be deemed terminated at
Initial Closing.
8.8 Allocation and Tax Matters.
(a) The Purchase Price shall be allocated among the Assets in
accordance with Schedule 8.8 attached hereto. Seller and Buyer agree to
complete IRS form 8594 consistently with the foregoing allocation and to
furnish each other with a copy of such form prepared in draft form within
forty five (45) days prior to the filing due date for such form. Within
fifty-five (55) days after the Closing, Buyer shall submit to Seller a
proposed detailed allocation schedule which is in all respects consistent with
Schedule 8.8. Thereafter, Buyer and Seller shall use their respective best
efforts to promptly agree to a final detailed schedule. Neither Seller nor
Buyer shall file any tax return or take a position with any taxing authority
that is inconsistent with the foregoing allocation.
(b) For purposes of computing the transfer tax in Washington
County, Oregon, the parties agree to use the market value assessment as
reflected on the county property tax rolls at the time of Closing. Buyer
agrees to indemnify, defend, and hold harmless Seller from any investigation,
claim, liability, fine, or penalty arising from the foregoing method of
computation.
8.9 Termination. This Agreement shall be terminated at any time prior
to the Closing:
(a) By mutual written agreement executed by Seller and Buyer; or
(b) By either party if applicable law (including but not limited
to the HSR Act) prohibits the consummation of the sale and purchase of the
Assets pursuant to this Agreement or if, at the Closing Date, any action,
proceeding or investigation shall have been instituted or threatened in
writing by any governmental agency seeking to enjoin, restrain, prohibit,
impose material conditions upon or obtain substantial damages in respect of,
the transactions contemplated by this Agreement;
(c) By either party as provided in Section 3.2; or
(d) By either party if the Purchase Agreement is terminated for
any reason.
(e) By Buyer upon written notice to Seller at any time prior to
fifteen (15) business days in advance of the Initial Closing if Buyer is not
satisfied with environmental conditions on the Timberland Properties or if
Buyer determines in its reasonable judgment that there is a material
discrepancy between Owner's records of timber volume on the Timberland
Properties and the actual volume of timber on the Timberland Properties;
provided that a notice of termination shall be accompanied by deeds in the
form of the Quit Claim Deeds described in Section 3.8 of this Agreement.
This Agreement shall automatically terminate upon the expiration of
eighteen (18) months following the Initial Closing Date as to any Parcels that
have not then been transferred to Buyer by that date.
Upon such termination, neither of the parties shall have any liability
or further obligation arising out of this Agreement except as expressly stated
in this Agreement.
8.10 Access Pending Closing. Owner has agreed that Buyer may, upon
reasonable notice to Owner, have access to the Timberland Properties, and
other Assets for purposes of conducting due diligence investigations and
preparing for transition of ownership, all in accordance with the terms and
conditions of the Access Agreement previously executed by Buyer, a copy of
which is attached hereto as Schedule 8.10.
8.11 Buyer's Due Diligence.
(a) Buyer may conduct due diligence examinations during a period
commencing on the date hereof and ending at the close of business on the day
prior to the Initial Closing Date (the "Due Diligence Period"). In the event
that Buyer makes a reasonable and objective determination that there are Price
Adjustment Items as defined in Section 8.11(d), Buyer will have the right, but
only during the Due Diligence Period, to notify Seller in writing, with
reasonable detail, of said Price Adjustment Items; provided, that no such
written notice given to Seller later than April 8, 1996, shall include a Price
Adjustment Item relating to environmental matters.
(b) In the event Buyer makes a reasonable and objective
determination that there are Price Adjustment Items as defined in Section
8.11(d) which will have an adverse financial impact in the Price Adjustment
Formula set forth in Section 8.11(e), Buyer will have the right to deliver to
Seller, but only during the Due Diligence Period, a notice that Buyer is
entitled to an adjustment in the Purchase Price (the "Price Adjustment
Notice"), provided that no Price Adjustment Notice given later than April 8,
1996, shall include a Price Adjustment Item relating to environmental matters.
The Price Adjustment Notice shall be accompanied by a schedule setting forth
in reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items. Subject to the provisions of the Purchase Agreement, Seller
shall deliver the Price Adjustment Notice to Owner as one of Seller's Price
Adjustment Notices. Buyer hereby appoints Seller as its agent to pursue a
price reduction as specified in the Price Adjustment Notice. Subject to the
provisions of the Purchase Agreement, Seller agrees to use reasonable
diligence in pursuing a price reduction with respect to the matters referred
to in each such Price Adjustment Notice.
(c) If Buyer provides written notice of Price Adjustment Items as
provided in Subsection (a) above but does not deliver to Seller the Price
Adjustment Notice described in Subsection (b) above during the Due Diligence
Period, Buyer will have the right, within six (6) months after Initial
Closing, to deliver to Seller a notice (the "Post Closing Adjustment Notice").
The Post Closing Adjustment Notice shall be accompanied by a schedule setting
forth in reasonable detail Buyer's computation of the dollar amount of the
Price Adjustment Items that provide the basis for the Post Closing Adjustment
Notice; provided however, the Post Closing Adjustment Notice cannot allege an
adverse financial impact greater than fifteen million dollars ($15,000,000)
(the First Threshold). Seller shall deliver the Post Closing Adjustment
Notice to Owner as one of Seller's Post Closing Adjustment Notices and shall
pursue an adjustment in the First Threshold as contemplated by Section 10.4 of
the Purchase Agreement; provided that if the Post Closing Adjustment Notices
exceed Fifteen Million Dollars ($15,000,000) in the aggregate, each such
notice shall be reduced pro rata so that the total does not exceed Fifteen
Million Dollars ($15,000,000). The adjustment so determined shall not adjust
the Purchase Price, but shall be carried forward as a portion of the First
Threshold in making the calculations in Section 10.4(c) of the Purchase
Agreement.
(d) In determining the adverse financial impact for purposes of
Section 8.11(a), the following items shall be taken into account as Price
Adjustment Items:
(i) Failure of Owner to be vested in title in more than
five hundred (500) acres of the Timberland Properties described in the Title
Reports attached to this Agreement as Schedule 4, and the threshold provisions
of Section 8.11 and the allocation provisions of Section 8.12 shall not apply
to any such Price Adjustment Item (i.e., the Purchase Price shall be reduced
by the amount of the adverse financial impact of such Item), nor shall the
reduction in Purchase Price for such Item reduce the threshold provisions for
purposes of Section 10.4 of the Purchase Agreement. As used in this
Subsection (i), "vested in title" means that the applicable Title Report
states that Owner (or any of the three Owners) is vested in title (without
regard to exceptions or objections noted in such Title Report);
(ii) The existence of any exception to title on any portion
of the Timberland Properties: (a) which was not shown on Schedule 4, and (b)
which was not disclosed on any other Schedule attached to this Agreement, and
(c) which materially interferes with the use thereof for the production and
harvesting of timber; provided that the threshold provisions of Section 8.11
and the allocation provisions of Section 8.12 shall not apply to such Price
Adjustment Item if the exception to title was created by Owner after the date
of the applicable Title Report and was not either created in the ordinary
course or consented to by Buyer, nor shall the reduction in Purchase Price for
such Item reduce the threshold provisions for purposes of Section 10.4 of the
Purchase Agreement.
(iii) The presence of any hazardous substances or materials,
wastes, toxics, or contaminants in, on or under any of the Indemnification
Properties (but only until April 8, 1996, and only to the extent they were not
disclosed in Schedule 6.6).
(iv) Any breach of representations of Seller in Section 6
of this Agreement during the Due Diligence Period, but with respect to Section
6.6, only if included in a Price Adjustment Notice given not later than April
8, 1996; provided, that in determining the adverse financial impact for breach
of representations of Seller, any benefit to Buyer caused by such breaches of
representations of Seller and other breaches of representations of Seller
during the Due Diligence Period shall be offset or taken into account.
(e) Price Adjustment Formula. As used in this Section 8.11 (and
in Sections 10.4(b) and (c) of the Purchase Agreement), the term "First
Threshold" means fifteen million dollars ($15,000,000); the term "Second
Threshold" means twenty five million dollars ($25,000,000); the term "Third
Threshold" means thirty five million dollars ($35,000,000). Subject to the
provisions of Section 8.12, if the First Threshold, but not the Second
Threshold, is met, the purchase price under the Purchase Agreement shall be
reduced by fifty percent (50%) of the amount of the adverse financial impact
in excess of the First Threshold; and if the Second Threshold, but not the
Third Threshold, is met, the purchase price under the Purchase Agreement shall
be additionally reduced by two-thirds of the amount of the adverse financial
impact in excess of the Second Threshold; and if the Third Threshold is met,
the purchase price under the Purchase Agreement shall be additionally reduced
by one hundred percent (100%) of the amount of the adverse financial impact in
excess of the Third Threshold.
8.12 Allocation of Price Reduction.
No Purchase Price reduction will be allowed to Buyer under this
Agreement unless a purchase price reduction is allowed to Seller under the
Purchase Agreement. If a purchase price reduction is allowed to Seller under
the Purchase Agreement, except as expressly provided in Section 8.11(d), Buyer
will be entitled to a fraction of such reduction, the numerator of which shall
be Buyer's total allowed Purchase Price adjustment claims and the denominator
of which shall be the total purchase price adjustment claims submitted by
Seller to Owner pursuant to the Purchase Agreement and allowed. Buyer shall
be bound by any proceeding or agreement between Owner and Seller determining
the amount of any Purchase Price adjustment. Buyer's share of any allowed
Purchase Price adjustment shall be allocated among the Parcels on the basis of
a fraction, the numerator of which shall be Buyer's allowed Purchase Price
adjustment claims for the Parcel in question and the denominator of which
shall be Buyer's total allowed Purchase Price adjustment claims.
8.13 Enforcement of Seller's Rights. Seller agrees to use commercially
reasonable efforts as determined by Seller in its reasonable judgment to
enforce the obligations of Owner under Sections 3.6, 5(a), 5(c), 8.1, 11.3(b),
and 11.3(c) of the Purchase Agreement. Buyer shall reimburse Seller for
Seller's expenses related to such enforcement in accordance with the formula
for sharing of arbitration costs under the Purchase Agreement set forth in
Section 9.2 of this Agreement.
8.14 Seller's Knowledge. In the event that Seller obtains knowledge
prior to the Closing Date of any material fact which, if known to Owner, would
result in a breach of a representation or warranty of Owner under the Purchase
Agreement, Seller shall notify Owner so that Owner will have knowledge of such
fact.
8.15 Easements. To the extent reasonably required by Seller, Seller
shall have the right to reserve right-of-way easements across any Parcel to
provide access rights sufficient for timber harvest activity in accordance
with then current industry practices for Northwestern, Oregon, for portions of
the Timberland Properties retained by Seller. As reasonably required by
Buyer, Seller will grant to buyer right-of-way easements across portions of
the Timberland Properties retained by Seller to provide practical access
rights sufficient for timber harvest activity on Parcels being acquired by
Buyer in accordance with then current industry practices for Northwestern,
Oregon.
9. Default; Remedies; Arbitration.
9.1 Default; Remedies. Time is of the essence of this Agreement. If
either party fails or refuses to carry out this Agreement according to its
terms, the other party shall be entitled to the remedies set forth below.
(a) Buyer's Default. Except as otherwise provided in this
Agreement, in the event Buyer fails, without legal excuse, to complete the
purchase of the Assets pursuant to this Agreement, Seller shall be entitled to
terminate this Agreement and/or pursue any and all remedies available at law
or in equity by reason of Buyer's breach or default, including without
limitation, specific performance and damages for any failure by Buyer to
perform the obligations to be performed by it from and after the date of this
Agreement.
(b) Seller's Default. Except as otherwise provided in this
Agreement, in the event Seller fails or refuses to complete the purchase of
the Assets or is otherwise in breach or default of its obligations in this
Agreement, Buyer shall be entitled to terminate this Agreement and/or pursue
any and all remedies available at law or in equity by reason of Seller's
breach or default, including without limitation, specific performance and
damages for any failure by Seller to perform the obligations to be performed
by it from and after the date of this Agreement; provided, however, that
Buyer's sole remedy against Seller for Seller's breach of Section 6 and the
representations set forth therein shall be as set forth in Section 8.11 and
the indemnification by Seller of Buyer as set forth in Section 10.
(c) Owner Default. Notwithstanding the foregoing, Buyer shall
have no rights against Seller if Seller's failure to transfer the Assets to
Buyer results from a default by Owner under the Purchase Agreement. If Seller
elects to seek damages as a result of a default by Owner under the Purchase
Agreement and if any award to Seller includes any amount with respect to
damages suffered by Buyer, Seller shall pay such amount to Buyer minus Buyer's
share of expenses determined pursuant to the formula for allocation of
expenses of arbitration under the Purchase Agreement set forth in Section 9.2.
If Seller seeks specific performance of Owner's obligations under the Purchase
Agreement, Seller agrees that it will not terminate this Agreement pursuant to
Section 8.9(d) if Buyer agrees to be bound by the outcome of such specific
performance proceeding and if Buyer agrees to reimburse Seller for the costs
of such proceeding in the proportion that the Purchase Price bears to One
Billion Five Hundred Eighty Eight Million Dollars ($1,588,000,000). If
specific performance is ordered, the Initial Closing shall occur on the date
of the closing between Owner and Seller.
9.2 Arbitration. This Agreement shall not be subject to termination
except as specifically provided in this Agreement. Any question, controversy
or claim arising under or relating to this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association and the provisions of the laws of the State of Washington relating
to arbitration, as said rules and laws are in effect on the date of this
Agreement. The arbitration shall be conducted in Vancouver, Washington, by
and before a single arbitrator, who is experienced in the problem or problems
in dispute, to be agreed upon by the Seller and Buyer, or if they are unable
to agree upon an arbitrator within ten (10) days after written demand by
either party for arbitration, then, at the written request of either party,
the arbitrator shall be appointed by the American Arbitration Association, or
failing such appointment, by the Superior Court in and for the County of
Clark, State of Washington. Proceedings to obtain a judgment with respect to
any award rendered hereunder shall be undertaken in accordance with the law of
the State of Washington including the conflicts of laws provisions thereof.
Each party shall pay one-half of the arbitrator's fees and expenses.
Upon application to the arbitrator, the parties shall be entitled to limited
discovery, including only exchange of documents and only depositions on such
terms as the arbitrator may allow for purposes of fairness and to reduce the
overall time and expense of the arbitration.
Buyer shall also reimburse Seller for the costs of any arbitration under
the Purchase Agreement, including arbitrator's fees and reasonable attorney's
fees, incurred by Seller in the proportion that the claims related to the
Assets bears to the total of all claims involved in the arbitration. In any
arbitration proceeding under the Purchase Agreement including any arbitration
related to a Purchase Price adjustment claim or indemnification claim which
relates to the Assets, Seller agrees to request of the arbitrator that Buyer
be allowed to participate in the arbitration. Buyer shall be allowed to
participate to the extent allowed by the arbitrator.
10. Indemnification and Related Matters.
10.1 Indemnification.
(a) Seller agrees to defend, indemnify and hold Buyer and its
parents, subsidiaries, affiliates, predecessors, successors and assigns (and
their respective officers, directors, employees and agents) harmless from and
against any and all loss, claims, liabilities, damages, costs and expenses,
including attorneys fees incurred with respect to third parties ("Damages")
resulting from, based upon, or arising out of:
(i) subject to Section 10.4(a), (b) and (c), all of the
Excluded Liabilities set forth in Section 1.8(b);
(ii) subject to Section 10.4, and taking into account any
adjustments made for such breach in Section 8.11, breaches of Seller's
representations set forth in Section 6;
(iii) subject to Section 10.4, claims of third parties that
are asserted after Initial Closing, to the extent the basis of such claims
arose prior to Initial Closing; provided, that this Subsection (iii) shall
only apply to a claim which will result in loss to Buyer in excess of
$100,000; and provided further, that the indemnity in this Subsection (iii)
shall not apply at all to matters disclosed on Schedule 6.4 or to matters
covered by Section 8.11 or to matters for which Buyer is indemnifying Seller
as provided in this Agreement;
(iv) subject to Section 10.4, permits, licenses, or Contracts
(which are not Material Contracts) assumed by Buyer pursuant to Section 1.8
but which were not disclosed to Buyer in any Schedule attached to this
Agreement; provided, that this Subsection (iv) shall only apply to a permit,
license, or Contract: (a) which will require Buyer to pay more than $100,000
in any twelve-month period, and (b) which will not expire and cannot be
terminated within twelve months of Initial Closing without penalty, liability,
or premium, and (c) which provides no material benefit to Buyer; and
(v) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
(b) Buyer agrees to save, defend, indemnify and hold Seller and
Owner and its general partners, parents, subsidiaries, affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against any loss, claims,
liabilities, damages, costs and expenses, including attorneys' fees incurred
with respect to third parties and related to one or more Parcels conveyed to
Buyer by Seller ("Damages") resulting from, based upon, or arising out of:
(i) any breaches, occurring before, at or after Initial
Closing, of Contracts, permits, licenses, and all other agreements and
obligations transferred or assigned to Buyer;
(ii) the operation, management or condition of the Assets,
whether arising before, at or after the Initial Closing, excluding only those
matters covered by Section 10.1(a)(i) above;
(iii) all matters assumed by the Buyer pursuant to any and
all provisions of this Agreement or any related agreement; and
(iv) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
Wherever this Agreement provides for Buyer's indemnification of Owner,
the term "Owner" shall mean each or all of CERI, CFII, and Hanson.
10.2 Determination of Damages; Claims. In calculating any amounts
payable to Buyer pursuant to Section 10.1(a) or payable to Seller pursuant to
Section 10.1(b), Seller or Buyer, as the case may be, shall receive credit for
(i) any reduction in tax liability as a result of the facts giving rise to the
claim for indemnification, and (ii) any insurance recoveries.
10.3 Defense of Claims by Third Parties. If any claim is made against
Buyer or Seller that, if sustained, would give rise to a liability of the
other under this Agreement, Buyer or Seller, as the case may be, shall
promptly cause notice of the claim to be delivered to the other and shall
afford the other and its counsel, at the other's sole expense, the opportunity
to defend, with counsel reasonably satisfactory to the party against which
such claim is made, or settle the claim. If either party takes said
opportunity to settle the claim, such party shall obtain a release of the
other party in any settlement agreement with the third party. In the event of
an indemnification claim by Buyer against Seller, Seller may cause Owner to
undertake the defense in which event Owner shall have the opportunity to
settle the claim as provided above.
10.4 Limitations on the Indemnification.
(a) With respect to Seller's indemnification of Buyer pursuant to
Sections 10.1(a), Buyer shall promptly inform Seller in writing of each such
matter, as and when Buyer becomes aware of such matter, and shall keep
complete and accurate records of actual damages incurred by Buyer as a result
thereof.
(b) Notwithstanding any other provision of this Agreement,
Seller's obligations for indemnification of Buyer and all Other Purchasers
shall not exceed the proceeds of indemnification recoveries by Seller from
Owner. Seller agrees to submit all of Buyer's indemnification claims to Owner
as Seller's indemnification claims. Buyer hereby appoints Seller as Buyer's
agent to pursue such indemnification claims. Seller agrees to use reasonable
diligence in the pursuit of such claims. Buyer shall be bound by the results
of any proceedings under the Purchase Agreement to determine the validity of
Seller's indemnification claims.
(c) Buyer shall be entitled to its pro rata share of total
recoveries by Seller for (i) Purchase Price adjustment claims subject to the
allocation provisions of Section 8.12, and (ii) indemnification claims
submitted by Seller to Owner under the Purchase Agreement. Amounts payable to
Buyer from indemnification claims recovered subsequent to payment of Purchase
Price adjustment claims shall be adjusted to reflect amounts paid with respect
to such Purchase Price adjustment claims. Buyer shall not be entitled to
receive any amount with respect to indemnification claims related to Parcels
until the latest to occur of the Subsequent Closing Date for the Parcel or
five (5) days following the date of recovery of the amount of the
indemnification claim.
(d) Notwithstanding anything to the contrary to this Agreement,
Seller shall not be obligated to indemnify Buyer on any claim for
indemnification submitted by Buyer to Seller after December 31, 1998, except
for matters arising under Section 10.1(a)(i).
11. INTENTIONALLY OMITTED
12. Miscellaneous.
12.1 Finders. Buyer and Seller respectively represent and warrant that
they have not employed or utilized the services of any broker or finder in
connection with this Agreement or the transactions contemplated by it. Seller
shall indemnify and hold Buyer harmless from and against any and all claims
for brokers' commissions made by any third party as a result of this Agreement
and the transaction contemplated hereunder to the extent that any such
commission was incurred, or alleged to have been incurred, by, through or
under Seller. Buyer shall indemnify and hold Seller harmless from and against
any and all claims for brokers' commissions made by any third party as a
result of this Agreement and transactions contemplated hereunder to the extent
that any such commission was incurred, or alleged to have been incurred, by,
through or under Buyer.
12.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between
the parties with respect to those matters, and cannot be changed or terminated
orally.
12.3 Governing Law. In order to provide consistency in interpretation
with the Purchase Agreement which is governed by Washington law, Seller and
Buyer agree that this Agreement shall generally be governed by Washington law
as hereinafter provided. Seller and Buyer each hereby consent to personal
jurisdiction in any action brought with respect to this Agreement and the
transactions contemplated hereunder in the State of Washington and to the
arbitration described in Section 9.2. Section 9.1 of this Agreement shall be
governed by and construed in accordance with the law of the State of
Washington generally, and RCW 64.04.005 specifically, without giving effect to
conflicts of law principles thereof. The balance of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington, including the conflicts of laws principles thereof.
12.4 Tables of Contents and Headings. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller to:
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Attention: Chief Financial Officer
With a copy to:
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
Attention: J. Franklin Cable
If to Buyer to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Post Office Box 111
Boston, Massachusetts 02117
Attention: Daniel P. Christensen
With a copy to:
Robert Golden, Counsel
John Hancock Plaza
200 Clarendon Street
Post Office Box 111
Boston, Massachusetts 02117
And with a copy to:
Stanley G. Renecker or John Gilleland
The Campbell Group
One S.W. Columbia
Suite 1720
Portland, Oregon 97258
12.6 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
12.7 Further Assurances and Assistance. Buyer and Seller agree that
each will execute and deliver to the other any and all documents, in addition
to those expressly provided for herein, that may be necessary or appropriate
to effectuate the provisions of this Agreement, whether before, at or after
the Initial Closing. Seller agrees that, at any time and from time to time
after the Initial Closing, it will execute and deliver to Buyer such further
assignments or other written assurances as Buyer may reasonably request to
perfect and protect Buyer's title to the Assets.
12.8 Survival. The terms, covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement together with all
indemnities and undertakings contained herein shall survive the Closing,
subject to the time limits specified herein, if any, delivery of the Purchase
Price and delivery and/or recordation of the instruments of conveyances and
assignment, bills of sale, assignments of contract rights and other closing
documents, and shall not be deemed to have been merged in any of the documents
delivered at the Closing, irrespective of any investigation made by or on
behalf of any party.
12.9 Waiver. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and signed
by the party waiving such provision.
12.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly set forth in Section 11.7, nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement, including any
such person or entity asserting rights as a third party beneficiary with
respect to environmental matters. Except as expressly provided herein, no
assignment of this Agreement or of any rights or obligation hereunder may be
made by either party (by operation of law or otherwise) without the prior
written consent of the other and any attempted assignment without the required
consent shall be void. Seller shall have the right to assign its rights
hereunder to a wholly owned subsidiary. Such an assignment shall not
exonerate Seller from any liability to Buyer under this Agreement, and such
permitted assignee shall assume all obligations of Seller to Buyer under this
Agreement. John Hancock shall have the right to assign portions of its
interest to one or more entities or affiliates controlled by John Hancock (an
"Assignee"). No such assignment shall relieve John Hancock from liability for
performance of John Hancock's obligations under this Agreement. In the event
of any such assignment, John Hancock hereby expressly waives any notice given
to an Assignee in accordance with the provisions of this Agreement of any
default under this Agreement. John Hancock hereby agrees that neither the
waiver by Seller of any rights against an Assignee, arising out of any default
by an Assignee or otherwise, nor any modification or amendment of this
Agreement shall in any way modify or release the obligations of John Hancock
under this Agreement. Upon any default by an Assignee, John Hancock agrees to
pay to Seller the entire amount of any damages suffered by Seller as a result
of such default without any obligation on the part of Seller to endeavor to
collect such indebtedness from or to proceed against an Assignee.
12.11 Best Knowledge. As used in this Agreement (i) "to the best of
Owner's knowledge" shall mean the actual knowledge possessed, at the time the
Purchase Agreement was entered into, by William B. Freck, the Division General
Counsel for Owner, David E. Harris, the Division Chief Financial Officer of
Owner, Richard E. Dahlin, a Division Vice President for Owner, and Lee T.
Alford, a Division Vice President for Owner, all of whom are executive
officers of Owner, and any of the forest managers or the mill manager of
Owner; (ii) "to the best of Seller's knowledge" shall mean actual knowledge
possessed by Steven R. Rogel, President and Chief Executive Officer;
J. A. Parsons, Executive Vice President and Chief Financial Officer; and Duane
C. McDougall, Vice President-Building Materials Group; all of whom are
executive officers of Seller, and (iii) "to the best of Buyer's knowledge"
shall mean actual knowledge possessed by any executive officer of Buyer.
12.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but which together shall constitute one
and the same Agreement.
12.13 No Recordation. Neither this Agreement nor a memorandum hereof
shall be recorded in any jurisdiction or public record.
12.14 Transitional Services. At the request of Buyer, Seller will
continue to provide accounting, payroll, and general administration services
to Buyer for a reasonable period of time after the Closing on a basis
consistent with past practice.
12.15 INTENTIONALLY OMITTED
12.16 Notice of Reforestation Requirements. In accordance with ORS
527.665, Schedule 12.16 is notice to Buyer of Seller's reforestation
requirements pursuant to the Oregon Forest Practices Act.
12.17 INTENTIONALLY OMITTED
12.18 No Presumptions. This Agreement is a result of negotiations
between Seller and Buyer, both of whom are represented by counsel of their
choosing. No presumption shall exist in favor of either party concerning the
interpretation of the documents constituting this Agreement by reason of which
party drafted the documents.
12.19 Seeds and Seedings. Included in the Purchase Price are seeds and
seedlings at the Polk County Seed Farm designated for use on the Timberland
Properties provided that Buyer will pay all transportation costs and any cost
of caring for the seeds and seedlings after May 15, 1996. Seller agrees to
sell to Buyer additional seed and seedlings from the Polk County Seed Farm for
use on the Timberland Properties for a reasonable period of time.
12.20 Disclaimer Required by Oregon Statute. THE PROPERTY DESCRIBED IN
THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING
STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH,
IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A
RESIDENCE. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING
FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION
FOR STRUCTURES.
SELLER: WILLAMETTE INDUSTRIES, INC., an Oregon
corporation
By:/s/Steven R. Rogel
Steven R. Rogel
President and Chief Executive Officer
BUYER: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation
By: /s/ Paul A. Meissner, Jr.
Name: Paul A. Meissner, Jr.
Title: Assistant Treasurer
<PAGE>
SCHEDULE INDEX
HANCOCK
Schedule 1.1(a) description of parcels of real property
(Timberland)
Schedule 1.1(c) buildings, improvements, roads, bridges,
permits, and easements on or appurtenant to real
property
Schedule 1.1(d) related facilities
Schedule 1.1(e) other rights related to real property
Schedule 1.1(g) description of Mineral Rights
Schedule 1.4(b) mobile equipment, machinery, equipment, tools,
fixtures and furniture
Schedule 1.4(d) contracts (including service contracts, sales
and purchase orders and commitments), leases,
permits and licenses not related to real
property
Schedule 1.8 form of Assignment, Acceptance, and Assumption
Agreement
Schedule 1.8(b)(ii) accrued expenses
Schedule 1.8(b)(iv) exceptions for Affiliates of Seller
Schedule 3.4(a) instruments of transfer to real property
Schedule 3.4(a)(a) form of bill of sale with indemnity
Schedule 3.9(a) form of Right of First Offer Agreement
Schedule 3.9(b) form of Management Agreement
Schedule 3.9(c) form of Timber Supply Agreement
Schedule 4 title reports and commitments
Schedule 5(a) operating plan
Schedule 5(b) harvesting formula
Schedule 5(c) real estate plan
Schedule 6.3 Material Contracts
Schedule 6.4 claims, litigation, proceedings, governmental
investigations
Schedule 6.6 environmental conditions
Schedule 8.7 confidentiality agreement
Schedule 8.8 allocation
Schedule 8.10 access agreement
Schedule 12.16 reforestation requirements
<PAGE>
ADDENDUM NO. 1
TO
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
Addendum No. 1 to Asset Sale, Purchase and Transfer Agreement ("WI
Purchase Agreement") dated April 26, 1996, between Willamette Industries, Inc.
("WI") and John Hancock Mutual Life Insurance Co. ("JH").
RECITALS
A. All capitalized terms not otherwise defined herein shall have
the meanings given such terms in the WI Purchase Agreement.
B. The WI Purchase Agreement contemplates that, as a Designee of
WI, JH will pay for at Initial Closing (set for May 15, 1996) and receive
directly from Owner a deed for Parcel 1.
C. Subsequent to April 26, 1996, the parties have determined that
fee title to only a portion of Parcel 1 may be legally conveyed to JH at
Initial Closing, the legal conveyance to JH of the balance of Parcel 1 (said
balance being hereinafter referred to as the "Coates Partition Portions")
being dependant upon compliance with ORS Chapter 92 relative to real property
partitions.
D. As the time needed to comply with the relevant provisions of ORS
Chapter 92 will extend beyond Initial Closing, WI and JH have agreed, as
herein set forth, that WI will acquire at Initial Closing from Owner and will
hold, in the status of a contract vendor, fee title of record to the Coates
Partition Portions (as described on Exhibit A attached hereto) until such time
as JH and WI shall successfully complete any partitioning process needed to
enable WI to deed the Coates Partition Portions to JH without violating ORS
Chapter 92.
E. JH shall pay to WI at or before Initial Closing the full
purchase price for Parcel 1 as specified in the WI Purchase Agreement, but JH
shall remain obligated after Initial Closing to use every effort to promptly
initiate (with the cooperation of WI which will then own outright the other
segment of the property to be partitioned) and successfully conclude the
partition process and to pay all the costs and expenses of such process as
necessitated by ORS Chapter 92 and the Columbia County, Oregon, rules and
regulations adopted pursuant thereto as the sole condition precedent to JH's
entitlement to a fulfillment deed(s) to the Coates Partition Portions, such a
deed(s) to be held in escrow in the interim by Chicago Title Insurance Company
pursuant to escrow instructions in the form attached hereto as Exhibit B.
NOW, THEREFORE, WI and JH agree as follows:
1. Amendment to WI Purchase Agreement. To the extent that the
provisions of this Addendum No. 1 conflict with the provisions of the WI
Purchase Agreement, the provisions of this Addendum No. 1 shall control and
shall be deemed to be an amendment thereto.
2. Record Title to Partition Portions. Parcel 1 consists of two
segments delineated by JH as the Mist Parcel ("Mist") and the Coates Parcel
("Coates"). A legal description of Mist is attached hereto as Exhibit C. A
portion of Coates may be legally conveyed to JH without violating ORS
Chapter 92. Such portion is legally described on Exhibit D attached hereto.
The Coates Partition Portions are those portions of Coates that the parties
agree require successful partition applications before fee title may be
conveyed by WI to JH without a violation of ORS Chapter 92.
3. Partition Process. JH, as contract vendee of the Coates
Partition Portions, agrees, at its sole cost and expense, to prepare and to
file, as soon as feasible after Initial Closing, with the appropriate
authorities in Columbia County, Oregon, appropriate partition applications to
constitute the Coates Partition Portions as legal parcels and to diligently
pursue such applications until final decisions are rendered thereon by the
appropriate body or bodies having jurisdiction thereover.
WI shall, as contract vendor and record owner of the Coates Partition
Portions, consent to all such applications filed in accordance with this
Addendum No. 1 and as the beneficial and record owner of the other segment of
the property to be partitioned, shall execute such applications as a joint
applicant. Should JH request the participation of any WI personnel at any
partition hearings resulting therefrom or at any staff level meetings relative
thereto, WI shall use its best efforts to meet such request(s); provided that
JH shall bear all travel expenses involved, plus JH shall pay WI, measured on
an hourly basis, a reasonable fee for the use of such personnel. Should any
such application be rejected, dismissed or modified, JH agrees to refile,
appeal, modify or otherwise use its best efforts to cause fee title to all of
the Coates Partition Portions to be legally conveyed by WI to JH without a
violation of ORS Chapter 92 and of any applicable partitioning rules and
regulations of Columbia County, Oregon. WI agrees to reasonably cooperate
with JH in any such refiling, appeal or modification, including the execution
as joint applicant or appellant of any documentation therein involved.
Provided that all costs or expenses involved shall be for the account of JH.
Provided further that at any time should the acquisition by JH of property
adjacent to any of the Coates Partition Portions permit WI to legally convey
any or all of such Partition Portions to JH without a violation of ORS
Chapter 92, WI shall so do, in which even JH shall have no further obligations
hereunder with regard to any related partition application.
4. Responsibility of WI. After Initial Closing, WI shall bear no
responsibility whatsoever with regard to the Coates Partition Portions other
than the specific duties delineated in this Addendum No. 1. It shall bear no
risk of loss with regard to the Coates Partition Portions, shall have no
responsibility regarding any operations on the Coates Partition Portions and
shall have no possessory rights or obligations with regard to the Coates
Partition Portions (except for any specific obligations set forth herein).
5. Recording. This Addendum No. 1 or a Memorandum thereof in the
form attached as Exhibit E hereto shall be recorded, at the expense of JH, in
the Columbia County, Oregon, Records at Initial Closing.
6. Title Insurance. WI shall have no obligation to provide JH with
any title insurance or title reports on the Coates Partition Portions at or
after Initial Closing, except that at Initial Closing, WI shall obtain a
standard owner's policy of title insurance from Chicago Title Insurance
Company covering the Coates Partition Portions in the sum of $48,122,099. The
cost of such policy shall be paid by JH, which will simultaneously buy a
purchaser's standard title policy on the Coates Partition Portions. WI shall
use all reasonable efforts to cause the reinsurers under such owner's title
policy to satisfy JH's requirements for such reinsurance both as to identity
and amounts so reinsured.
7. Wilson River Tract. WI shall have the right upon written notice
to JH delivered not later than June 30, 1996, to withdraw Parcel 6 from the
Timberland Properties.
8. Allocation of Purchase Price. The revised allocation of the
Purchase Price for each parcel is set forth on Exhibit F attached hereto.
9. Order of Purchase. JH shall have the right to designate the
order in which parcels will be purchased except that JH shall not have the
right to designate the Wilson River Tract as the last Parcel to be purchased
and provided further that the Wilson River Tract cannot be purchased prior to
June 30, 1996.
10. Willamette Columbia. At Initial Closing, WI shall cause its
wholly-owned subsidiary, Willamette Columbia Timber Company, an Oregon
corporation ("WC"), to become the record owner of the Coates Partition
Portions. Consequent, WI hereby agrees that, as of Initial Closing, WC will
assume all of WI's obligations under this Addendum No. 1 relative to the
Coates Partition Portions.
IN WITNESS WHEREOF, this Addendum No. 1 has been executed by the
parties as of this 13th day of May, 1996.
WILLAMETTE INDUSTRIES, INC.
By: /s/ Steven R. Rogel
Name: Steven R. Rogel
Title: President and CEO
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ Paul A. Meissner, Jr.
Name: Paul A. Meissner, Jr.
Title: Assistant Treasurer
<PAGE>
Exhibits to Addendum No. 1 to
Asset Sale, Purchase and Transfer Agreement
Exhibit A Coates Partition Portions
Exhibit B Coates Partition Portions Escrow Instructions
Exhibit C Mist Legal Description
Exhibit D Portions of Coates Not Requiring Partitioning
Exhibit E Coates Partition Portions Memorandum of Asset Sales
Purchase and Transfer Agreement and Addendum No. 1 thereto.
Exhibit F Revised Purchase Price Allocation
<PAGE>
Exhibit 2.5
MANAGEMENT AGREEMENT
Among
WILLAMETTE INDUSTRIES, INC. ("WI")
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY ("JH")
WILLAMETTE COLUMBIA TIMBER CO. ("WC")
HANCOCK NATURAL RESOURCE GROUP, INC. ("HNRG")
Dated May 15, 1996
<PAGE>
MANAGEMENT AGREEMENT
This Agreement is made and entered into May 15, 1996 by and among
WILLAMETTE INDUSTRIES, INC., an Oregon corporation ("WI"), JOHN HANCOCK MUTUAL
LIFE INSURANCE COMPANY, a Massachusetts corporation ("JH"), WILLAMETTE
COLUMBIA TIMBER CO., an Oregon corporation ("WC") and HANCOCK NATURAL RESOURCE
GROUP, INC., a Delaware corporation ("HNRG").
WHEREAS, on May 15, 1996, WI closed the acquisition from HANSON NATURAL
RESOURCES COMPANY, CAVENHAM ENERGY RESOURCES, INC. and CAVENHAM FOREST
INDUSTRIES, INC. (collectively "Hanson") of, among other assets, certain
timberlands (acquired at closing by WC) located in Columbia, Washington,
Clatsop and Tillamook Counties, Oregon, more particularly described on
Schedule 1.1 to the Purchase Agreement (hereinafter defined) ("Timberlands"),
and
WHEREAS, simultaneously JH and/or its permitted designee (all references
herein to JH as the purchaser of any portion of the Timberlands shall include
its permitted designee) purchased from Hanson, as WI's designee(s), a portion
of the Timberlands, and
WHEREAS, under Asset Sale, Purchase and Transfer Agreement Dated
April 23, 1996 ("Purchase Agreement") between WI and JH, JH has the right to
purchase in the 18 months following May 15, 1996 (or such later date on which
WI closes its said acquisition from Hanson ("Purchase Period") those parcels
of the Timberlands not purchased at said May 15, 1996 closing into which the
parties have divided the Timberlands for such potential future purchase
purposes, including any parcel substituted pursuant to the terms of the
Purchase Agreement ("Future Purchase Parcels"), and
WHEREAS, HNRG as the Investment Manager for JH will be designated as the
Manager hereunder, and
WHEREAS, pending expiration of the Purchase Period, the parties have
agreed that HNRG shall, using the management services of The Campbell Group,
Inc. ("TCG"), manage that portion of the Timberlands during that portion of
the Purchase Period that such are owned by WC, such management to be under the
terms and conditions hereinafter stated, the balance of the Timberlands to be
also managed by TCG during such time in accordance with the standards outlined
in its existing management agreement with JH dated January 1, 1994, the
objective being to have TCG provide for the Timberlands during the Purchase
Period the services herein stated; provided that any exchange parcel
identified in the Purchase Agreement that is hereafter substituted for the
Wilson River Tract portion of the Timberlands shall, if not located in Oregon,
Washington or California, not be subject to this Management Agreement.
NOW, THEREFORE, the undersigned agree as follows:
1. Appointment of Manager. Effective as of WC's acquisition of the
Timberlands, WI hereby appoints and engages HNRG to act as manager (herein
sometimes referred to as "Manager") of that portion of the Timberlands owned
by WC (herein the "Managed Timberlands") and to provide the other services
hereinafter described (collectively the "Services") during the Purchase
Period, subject to the terms and conditions of this Agreement, provided that
(i) any Future Purchase Parcel acquired by JH during the Purchase Period
shall, and (ii) should WI exercise its option under the Purchase Agreement to
withdraw the Wilson River Tract from the status of a Future Purchase Parcel
under the Agreement, upon such acquisition and/or withdrawal, as the case may
be, the Purchase Parcel involved shall automatically be withdrawn from that
portion of the Managed Timberlands subject to this Agreement; and reference
herein to "Managed Timberlands" shall be interpreted accordingly.
2. Compensation. Neither JH nor HNRG shall be entitled to any
compensation for the performance of their obligations under this Agreement.
3. Acceptance of Appointment; Use of TCG. HNRG hereby accepts the
appointment as Manager and agrees to contract with TCG (for the fees specified
on Exhibit A) to provide the Services in a prudent, efficient and orderly
manner based on TCG's professional judgment and experience. WI agrees that
TCG is experienced in the performance of the Services and fully qualified to
render such Services; it being understood that Manager shall provide all of
the Services directly or indirectly through contract with TCG. Manager's
contract with TCG will include the indemnity provisions substantially the same
as those contained in Exhibit B attached hereto. WI shall accept such
indemnity in lieu of any direct claim against JH or HNRG for damage to the
Managed Timberlands that WI may have against JH or HNRG based on the actions
or omissions of HNRG in the performance of HNRG's obligations under this
Agreement at all times that TCG is utilized by HNRG to perform all of the
Services. Provided always that nothing in this Section 3 or in any other
section of this Agreement shall exonerate JH or HNRG from any liability for
damages resulting from their own negligent or intentional acts or omissions.
Further, HNRG shall exercise the same degree of care regarding the monitoring
of TCG's performance under its contract with TCG to provide the Services that
HNRG normally exercises with regard to TCG's services in managing timberlands
owned by JH in the Pacific Northwest.
4. Harvest Plans. Attached hereto as Exhibit C are Harvest Plans on
each of the Future Purchase Parcels ("Plans") agreed to by the parties to this
Agreement. During the Purchase Period, Manager shall cause timber to be
harvested from each of the Future Purchase Parcels in volumes at least up to,
but not exceeding the minimums and maximums, respectively, specified on
Exhibit C. The Purchase Period as to each Future Purchase Parcel shall, of
course, expire as to each such parcel at the closing of the purchase thereof
by JH or at such earlier time as JH's rights to purchase such parcel shall
terminate. Using anticipated harvest and maintenance costs, together with
anticipated market prices during the Purchase Period, the Plans have been
designed to generate sufficient income from the Future Purchase Parcels to
cover not only all harvest costs and operating expenses for such Parcels, but
also to the extent warranted by market conditions, WI's financing costs (as
agreed to by the parties) for such Parcels (such costs being defined in and
based on the option prices for the Future Purchase Parcels set forth in the
Purchase Agreement). In no event shall any harvest or operating plan under
this Agreement provide for the export to any location outside the United
States of America of logs harvested from any Future Purchase Parcel during the
time such Parcel is owned by WI or WC.
5. Payment of Net Cash Income. All Net Cash Income (as defined on
Exhibit D attached) in excess of agreed upon minimum net working capital
reserves allocated as to each Future Purchase Parcel shall be paid over to WC
by Manager within Forty-five (45) days from the end of each calendar quarter
ending during the Purchase Period and, if JH shall not have purchased such
Future Purchase Parcel, within 45 days from the end of the Purchase Period
(should the Purchase Period end on a day other than the last day of a calendar
quarter) covering the final segment of the Purchase Period. For the purposes
of this Agreement, net cash income shall be computed without any deduction for
costs of reforestation or capital improvements. The Purchase Period for the
purposes of this Agreement shall be deemed to end on the earliest to occur of
the following:
(1) The date that JH notifies WI that JH elects to terminate the
Purchase Period prior to its full scheduled term and to waive
any unexercised option on the unpurchased Future Purchase
Parcel(s).
(2) The date agreed to by JH and WI in writing as the termination
date of the Purchase Period.
(3) The date of the closing of the sale by WI to JH of the last
of the Future Purchase Parcels, JH having previously
purchased (or is purchasing simultaneously) the other four
(three should WI have withdrawn the Wilson River Tract from
the Future Purchase Parcels and substituted therefor an
exchange parcel not located in Oregon, Washington or
California) Future Purchase Parcels.
(4) The date JH forfeits any further rights to exercise any
unexercised purchase option(s) by reason of its failure to
close in a timely fashion, a previously exercised option on a
Future Purchase Parcel(s).
(5) 5:00 p.m. PST on November 14, 1997 (or such later date as the
Purchase Period shall expire by reason of a delay in the
Hanson closing).
6. Purchase Price Credit. At the closing of the purchase by JH of any
Future Purchase Parcel, JH shall be entitled to a credit against the purchase
price thereof of an amount equal to the net cash income from such parcel paid
to WC that is attributable to the Purchase Period. Any such net cash income
not actually paid to WC shall not be deemed a credit against the purchase
price, but shall be payable to JH rather than to WC. As stated, JH may cause
one or more of its permitted designees (as authorized under the Purchase
Agreement) to be the actual buyer or one of the buyers of one or more Future
Purchase Parcels. In such event, any credit against the price of the Future
Purchase Parcel available under this Section shall be available allocably to
such designee(s).
7. Property Related Services. The Manager shall develop and
implement, and periodically review and update, an operating plan (including
the Plans discussed in Section 4 above) and operating budget for each Future
Purchase Parcel. No such operating plan or operating budget shall be
implemented in any aspect until such plan or budget has been approved in
writing by WC. WC agrees that it will approve or disapprove any operating
plan or budget and any proposed variation therefrom within ten (10) business
days from the date WC receives such in writing. As used herein, "business
days" shall mean all weekdays that WI's executive offices in Portland, Oregon
are open for business. The Manager will endeavor to obtain all necessary
permits and approvals to operate and manage each Future Purchase Parcel as
commercial timberlands; shall endeavor to obtain relief or abatements from
governmental and quasi-governmental bodies with jurisdiction over each Future
Purchase Parcel as appropriate; shall negotiate and conclude agreements and
arrangements to maintain each Future Purchase Parcel as commercial timberland,
including without limitation agreements and arrangements with contractors,
subcontractors, and forestry specialists and experts; and take such other
action as may be reasonable under the circumstances including without
limitation the contracting for the harvesting of timber or other products from
the Future Purchase Parcels.
All contracts, agreements or easements of any nature whatsoever
entered into by Manager or by TCG in the performance of the Services shall
contain a specific provision, unless WI or WC shall otherwise agree in
writing, that such shall be terminable, by WI or WC, to the extent that such
relates to Future Purchase Parcels then owned by WC or WI, without notice, and
without penalty or premium, upon the expiration or termination of this
Management Agreement.
The parties recognize that TCG manages extensive timberlands for JH
in Oregon, Washington and California, and that subject to the plans and the
specific provisions and limitations of this Agreement, HNRG shall engage TCG
to act as Manager's agent in managing the Managed Timberlands by performing
the scope of management that TCG is currently providing for the other
timberlands of JH in the aforesaid states. A specific enumeration of such
management duties that TCG is now performing for Manager on other properties
is set forth on Exhibit F attached.
In the event of emergencies or natural disasters that threaten the
value or well-being of the Managed Timberlands, Manager shall have the
obligation to protect the Property and the right to expend up to a sum equal
to the greater of (i) $25,000.00 or (ii) an amount that excess any applicable,
budgeted line item by not more than 15%, in extra-budgetary funds for such
purpose without prior approval of WC or WI, subject to all other provisions of
this Agreement. Manager shall notify WC immediately of any such expenditure
and the reason therefor. In the event of any such emergency or natural
disaster which necessitates an expenditure of funds in excess of the monetary
limitations set forth above, Manager shall obtain the approval of WC or WI
before expending any such excess funds above the monetary limits set above,
and Manager shall seek such approval in a timely manner.
Provided always that none of the following items as to the Managed
Timberlands shall be undertaken by Manager without the prior written consent
of WC; which consent will not be unreasonably withheld:
(1) New road or bridge construction.
(2) Repairs, improvements or maintenance of an existing road or
bridge (which items shall be deemed items of operational
expense and not as capital improvement items) with an
anticipated cost in excess of $500,000.
(3) Any other work that is normally classified in the timber
industry as a capital improvement (rather than as an
operational expense).
(4) Any actions not within the scope of an operating plan
approved by WI or WC.
Anticipating that JH will be purchasing the Future Purchase Parcels, neither
WI nor WC shall, during the Purchase Period, have the right to unilaterally
direct Manager to construct any capital improvements on any Future Purchase
Parcel.
At all times, WI and/or WC shall have the right, at the expense of
WI or WC, to monitor the activities of TCG in managing the Managed
Timberlands, including the inspection at all reasonable times of any records
of TCG directly relevant thereto.
8. Bank Account; Cash Flow. Cash flow from the Managed Timberlands
will be collected, segregated for accounting purposes as to each Future
Purchase Parcel, and held by the Manager in a bank account or accounts
maintained in the Manager's name, but which shall be identified on the books
and records of the Manager and the applicable bank as a customer account of
the Manager held for the benefit of WC. Moneys in such account(s) shall be
segregated from other moneys belonging to the Manager. The Manager shall pay
all property related expenses out of such account(s) (including, without
limitation, the fees due TCG and all property related taxes and assessments).
The Manager shall maintain in such bank account a reasonable
working capital reserve at all times. Manager shall advance any cash needed
to fund the initial timber operations on the Future Purchase Parcels under
this Agreement, to be repaid, without interest or other compensation for the
use of such funds, from the initial income receipts (prior to any payments to
WC) from the Future Purchase Parcel for which such initial cash was advanced.
If, at any time, the amount of cash in the account, together with the cash
flow expected to be received by the Manager from the Managed Timberlands, is
insufficient to pay the operational expenses (but not including reforestation
or capital improvement costs) of the Managed Timberlands (including the
monthly management fees due TCG), the Manager shall provide additional working
capital.
Funds required to pay for reforestation costs and capital
improvements shall be advanced by Manager, but shall not be paid from the
income generated by harvest activity on the Future Purchase Parcels. Should
JH purchase any Future Purchase Parcel on which such reforestation or capital
improvements are located, JH shall receive no credit for the costs of such
items against the purchase price due WC therefor, but should JH not so
purchase, WC shall reimburse Manager for the costs of such reforestation or
capital improvements paid by Manager (not to include any interest or other
compensation for use of such funds), related to a Future Purchase Parcel, but
only if such were included and even if included only to the extent authorized,
in an operating plan or budget approved in writing by WC or WI, such
reimbursement to be paid within Thirty (30) days of the date JH's option
rights to so purchase have terminated or expired for any reason whatsoever.
9. Unreimbursed Advances for Expenses. Should the Purchase Period as
to a Future Purchase Parcel terminate or expire without JH or its permitted
designee purchasing same, the Manager shall be promptly reimbursed by WC for
all unreimbursed operational expenses incurred in connection with such
unpurchased Parcel (but only if such expenses were within the scope of an
operating plan or budget (or variance therefrom) approved in writing by WI or
WC), and paid from moneys advanced by Manager, including but not limited to:
all fees charged by TCG (or its replacement); and fees payable to federal,
state and other governmental units or agencies; costs of insurance and
insurance brokers; audit and accounting fees of independent accountants; legal
fees, closing costs and other expenses relating to the Services; all direct
on-site expenses, such as property surveillance, site preparation, insect,
animal and stocking control, fire suppression and other reasonable and
customary or appropriate activities.
10. The Campbell Group, Inc. Should TCG be unable for any reason to
perform the Services required of HNRG hereunder, or should TCG's Services be
terminated by HNRG for a material breach of its duties regarding the Managed
Timberlands or of that portion of the Timberlands owned by JH, WC and JH shall
promptly agree upon a replacement for TCG. In such event, reference herein to
"TCG" shall mean such replacement for TCG, unless the content of this
Agreement shall otherwise require. As under the terms of the Purchase
Agreement, while WI or JH will be the initial purchaser from Hanson, TCG will
be the ultimate purchaser from JH, WC or WI of a number of tangible personal
property items required to operate the Timberlands, as well as the potential
employer of several employees formerly employed by Hanson who are experienced
and familiar with the operation of the Timberlands, HNRG shall cause TCG to
agree prior to TCG's undertaking its duties with regard to the Managed
Timberlands that, at such time, for whatever reason whatsoever, TCG is
discharged or resigns from its status as the actual service provider, TCG
shall sell and HNRG (or its new service provider) shall buy at the price paid
therefor by TCG or the then current fair market value, whichever is less, all
personal property items so purchased by TCG, excluding only those items whose
use is limited to property not included in the Timberlands or which have been
disposed of as being unnecessary to the performance of the Services.
11. Reports and Audits. Within sixty (60) days following the end of
each calendar quarter ending during the Purchase Period, and within 60 days
following the end of the Purchase Period, the Manager shall provide WI with a
quarterly report summarizing activity by Future Purchase Parcel during the
applicable period, including harvest activity, a cash flow statement and a
cash reconciliation showing the balances held in any bank account maintained
pursuant to this Agreement. Within 60 days following the end of the calendar
year and, if later, the end of the Purchase Period, Manager shall also provide
WI with a modified balance sheet and modified income statement (but not
including any depletion items, the calculation of which shall remain the
responsibility of WI) covering the Managed Timberlands for the period(s) such
were owned by WC for the respective periods. WI, at its own expense, upon not
less than five business day's prior written notice to the Manager and TCG
shall have the right to inspect and audit the Manager's and TCG's books and
records (Manager shall cause TCG to allow such inspection and audit) relating
solely to performance of the Services under this Agreement, including all
costs, expenses and fees incurred or paid hereunder and directly related to
the Managed Timberlands. Provided, that should such audit disclose that the
cash income from the Managed Timberlands for a tax-reporting period of WI or
WC has been understated by at least 5% or that the expenses for any such
period have been overstated by at least 5%, Manager shall promptly reimburse
WI or WC upon demand for the reasonable costs of such audit. In all events,
Manager shall provide all available information regarding the Managed
Timberlands as may reasonably be required to facilitate the timely filing by
WC and WI of income tax returns and other legally required forms. Provided
always that such information or other reports or financial data to be provided
under this Section 11 need not include audited data or accrual basis
statements complying with generally accepted accounting principles so long as
such data is of the type Manager normally requires of TCG relative to other
timberlands managed by TCG for Manager. Further, no information or reports
shall be required of Manager that cannot be compiled from the records of
Manager or of TCG. The audit and records inspection rights set forth in this
Section 11 shall survive termination of this Agreement.
12. Vernonia Office and Storage Facilities Equipment and GIS Lease.
Currently, the employees providing management services for the Managed
Timberlands are officed in or operate from office and storage facilities
located on one of the Future Purchase Parcels. During the term of this
Management Agreement until such time as JH or its designee shall purchase the
last Parcel available for purchase under the Purchase Agreement, WC and/or WI,
whichever may be the owner of the Vernonia office and storage facilities, the
equipment (including computer hardware and software) now located in such
office and storage facilities and the holder of the lessee's interest in Sun
Sparc Columbia GIS Lease #00123911-00001 ("Lease"), shall permit HNRG and its
timber manager to utilize such facilities, equipment and items covered by the
Lease to the extent such are now located in the Vernonia office and were used
in the operation of Timberlands (which includes any real property covered by
the Purchase Agreement owned in fee by Hancock or a designee thereof) by
Hanson, in consideration of the rental set forth herein, for performance of
the services called for in this Agreement. The monthly rental charge for such
utilization shall be $650.00, plus $1,641.93 to cover the monthly rental
obligation under the Lease (prorated for partial months), said $650 being
payable at the end of the month or partial month to which the charge is
attributable. Manager shall make the Rental payments due under the Lease
directly to the lessor thereunder, at the times provided for therein, during
the term of this Agreement. In addition, HNRG shall maintain such facilities,
equipment and leased items in good condition and repair, normal wear and tear
and structural repairs excepted, as well as maintaining fire and extended
coverage casualty insurance thereon to the extent of the full insurable value
thereof; provided, that in all events, the leased items shall be insured and
maintained as set forth in the Lease. Any other obligations required of the
lessee under the Lease shall be assumed by Manager for the term of this
Agreement to the extent such relates to the Managed Timberlands. The total
cost of such monthly rental, repairs, insurance and any other obligations set
forth in this Section 12 or under the Lease shall be deemed an operating
expense and shall be allocated 14% to each Future Purchase Parcel (17%, should
the Wilson River parcel be withdrawn by WI and for which a substitute parcel
is not provided that is subject to this Agreement, from the effective date of
such withdrawal) still owned by WC or WI at the end of each month, with the
balance treated as an operating expense of that portion of the Timberlands
owned by JH or a designee thereof as of the allocation date. At such time as
JH or its designee purchases the last of the Future Purchase Parcels, title to
all such facilities, equipment and the lessee's interest in the Lease (to the
extent assignable and to the extent such applies to the Timberlands then owned
by Hancock or a designee thereof) shall be conveyed to JH or its designee.
13. Guarantee by WI. WI hereby guarantees the performance by WC of all
of WC's obligations under this Agreement.
14. Emergency Control. Anything to the contrary in this Agreement
notwithstanding, upon the threatened or actual occurrence of a fire or similar
emergency involving actual or threatened material damage to any part of the
Managed Timberlands, WI and/or WC shall have the option to temporarily
terminate all rights of Manager hereunder to physically manage all or a
designated portion of the Managed Timberlands and to assume complete physical
management and control thereof during an "Assumption Period" (directly and/or
using the services of a third party or parties) for the duration (to be
determined in WC's or WI's reasonable discretion) of such actual or threatened
emergency situation. Any such assumption of physical management and control
shall be effective upon receipt by JH and TCG of an appropriate notification
("Assumption Notice") specifying the basis for such and the portion, if less
than all, of the Managed Timberlands involved. Such a control assumption
shall terminate only upon receipt by JH and TCG of written notice of such
termination at least two business days prior to the termination date. All
duties and responsibilities of Manager under this Agreement as to physical
control of the portion of the Managed Timberlands subject to an Assumption
Notice shall be suspended for the period of such assumption. However, Manager
shall cause TCG, to all feasible extent, to assist WI or WC, both personnel-
wise and equipment-wise during the Assumption Period. All actions of WI and
WC during such Assumption Period shall conform to industry standards for
Northwest Oregon commercial timberlands taking into account the nature of the
special situation causing the Assumption Notice to be given. Reasonable
expenditures by WC or WI in connection with the effected property during the
Assumption Period shall be repayable from the timber sales off of the Future
Purchase Parcel in question, but need not be advanced by Manager.
15. Fire Suppression Standards. Manager shall cause TCG to prepare and
submit to WC, as soon as reasonably practicable, a proposed outline of the
fire suppression standards for the Managed Timberlands. Upon approval thereof
(in the form so submitted or as modified) by WC, Manager shall instruct TCG to
comply with such standards with regard to the Managed Timberlands.
16. Default. In the event Manager fails to carry out its obligations
under this Agreement in any material respect and if such failure is not cured
within 30 days after written notice of such default, WC may, at its option,
terminate this Agreement without prejudice to any claim it may have for
damages suffered by it as a result of Manager's default. Provided that if the
failure by Manager is not reasonably curable in 30 days, WC shall not have
such termination option if Manager shall commence to cure such default within
said 30-day cure period and shall diligently pursue such correction until
completed.
17. Title. WI and WC agree that at all times a Purchase Parcel is
subject to rights to purchase by JH (or other permitted purchaser) under the
Purchase Agreement, fee title thereto shall be vested in WC or WI.
18. Arbitration. Any question, controversy or claim arising under or
relating to this Agreement, including without limitation any failure to agree
upon a replacement for TCG (see Section 10 hereof) or the failure to agree
upon an operating plan or operating budget (see Section 7 hereof), shall be
settled by arbitration in accordance with the rules of the American
Arbitration Association and the provisions of the laws of the State of Oregon
relating to arbitration, as said rules and laws are in effect on the date of
this Agreement. The arbitration shall be conducted in Portland, Oregon, by
and before a single arbitrator, who is experienced in the problem or problems
in dispute, to be agreed upon by WC and HNRG, or if they are unable to agree
upon an arbitrator within ten (10) days after written demand by either party
for arbitration, then, at the written request of either party, the arbitrator
shall be appointed by the American Arbitration Association, or failing such
appointment, by the Circuit Court of the State of Oregon, Multnomah County,
for proceedings to obtain a judgment with respect to any award rendered
hereunder shall be undertaken in accordance with the law of the State of
Oregon including the conflicts of laws provisions thereof.
19. No Recordation. Neither this Agreement nor a memorandum hereof
shall be recorded in any jurisdiction or public record.
20. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but which together shall constitute one and the
same Agreement.
21. Tables of Contents and Headings. The table of contents and section
headings of this Agreement and titles given to Exhibits to this Agreement are
for reference purposes only and are to be given no effect in the construction
or interpretation of this Agreement.
22. Term and Termination. Unless the term of this Agreement is
extended or sooner terminated by written agreement of the parties hereto, this
Agreement shall continue in full force and effect until the termination of the
Purchase Period.
23. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and may be delivered personally or by commercial
overnight carrier, telecopied, telegraphed, telexed, or mailed (postage
prepaid via the US postal service) to the applicable party at the following
address (or at such other address as the party may designate in writing from
time to time); however, any such notice or communication shall be deemed to be
delivered only when actually received by the party to whom it is addressed:
JH and HNRG: Hancock Natural Resource Group, Inc.,
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Daniel P. Christensen
Fax: (617) 572-4090
Copy to: The Campbell Group, Inc.
One S.W. Columbia
Suite 1720
Portland, OR 97258
Attention: Stanley G. Renecker or John Gilleland
Fax: (503) 275-9667
WI: Willamette Industries, Inc.
2730 Pacific Blvd. S.E.
P.O. Box 907
Albany, Oregon 97231
Attention: Duane McDougall, Vice President
Building Materials Group
Fax: (541) 967-7183
WC: Willamette Columbia Timber Co.
2730 Pacific Blvd. S.E.
P.O. Box 907
Albany, Oregon 97231
Attention: Duane McDougall, Vice President
Fax: (541) 967-7183
24. Waivers and Amendments. This Agreement may be amended or
modified, and the terms and conditions hereof may be waived, only by a written
instrument signed by each of the parties hereto. No delay on the part of any
party in exercising any right or power hereunder shall operate as a waiver of
any such right or power, and no single waiver (or partial exercise) of any
right or power shall preclude any other exercise thereof or of any other right
or power.
25. Assignments; Binding Effect. Neither this Agreement, nor any
right or obligations hereunder, may be assigned (whether by operation of law
or otherwise) without the prior written consent of the other parties hereto;
provided WI may assign this Agreement and its rights and obligations hereunder
to a wholly-owned subsidiary if, at the time of such assignment, WI shall
irrevocably and unconditionally guaranty payment and performance of such
wholly-owned subsidiary's obligations under this Agreement pursuant to a
guaranty agreement reasonably acceptable in form and substance to Manager.
This Agreement and all rights and obligations of the respective parties shall
be binding upon and enure to the benefit of the permitted successors and
assigns of each party.
26. Governing Law. This Agreement shall be administered, construed
and enforced according to the laws of the State of Oregon (without regard to
any conflict of laws provision).
27. Entire Agreement; Severability. This Agreement embodies the
entire understanding of the parties and supersedes any prior agreements or
understandings with respect to the subject matter hereof, but not including
the Purchase Agreement. Should one or more of the provisions of this
Agreement be held by any court to be invalid, void or unenforceable, the
remaining provisions shall nevertheless remain in full force and effect.
28. Attorneys Fees. Should any litigation be commenced between any
party to this Agreement for specific performance, injunction, declaratory
relief, damages, or any other remedy provided by law, the prevailing party, in
addition to such other relief as may be granted in such action, shall be
entitled to recover from the losing party a reasonable sum as and for its
costs and attorneys' fees incurred both at and in preparation for arbitration,
trial and any appeal or review, such sums to be set by the arbitrator(s) or
court(s) before which the matter is heard. This provision shall include costs
and attorneys' fees incurred in Bankruptcy Court, including those pertaining
to issues unique to bankruptcy.
29. Exhibits. The following Exhibits are attached to this Agreement:
Exhibit A. Property Management Fees. The Campbell Group, Inc.
Exhibit B. Indemnity provisions.
Exhibit C. Harvest Plans.
Exhibit D. Definition of Net Cash Income.
Exhibit E. Specific Enumeration of TCG's Management Duties For
Manager or Manager's Existing Northwest Properties.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date first written above.
WILLAMETTE INDUSTRIES, INC., an Oregon corporation
By: /s/ J. A. Parsons
Name: J. A. Parsons
Title: Executive Vice President, CFO
<PAGE>
WILLAMETTE COLUMBIA TIMBER CO., an Oregon corporation
By: /s/ J. A. Parsons
Name: J. A. Parsons
Title: Vice President
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
BY: HANCOCK NATURAL RESOURCE GROUP, INC. Its Investment Manager
By: /s/ Wm. R. Gordan
Name: Wm. R. Gordan
Title: President and CEO
<PAGE>
Exhibits to Management Agreement
Exhibit A Property Management Fees. The Campbell Group, Inc.
Exhibit B Indemnity Provisions
Exhibit C Harvest Plans
Exhibit D Definition of Net Cash Income
Exhibit E Specific Enumeration of TCG's Management Duties for Manager
or Manager's Existing Northwest Properties
<PAGE>
Exhibit 2.6
RIGHT OF FIRST OFFER AGREEMENT
This agreement is made and entered this 15th day of May, 1996, by
and between Willamette Industries, Inc., an Oregon corporation ("Seller"), and
John Hancock Mutual Life Insurance Company, a Massachusetts corporation
("Buyer").
RECITALS:
A. Seller and Buyer are parties to an Asset Sale, Purchase and
Transfer Agreement dated April 26, 1996 (the "Purchase Agreement"), pursuant
to which Seller has agreed to buy certain timberland and related assets in the
state of Oregon.
B. All capitalized terms not otherwise defined herein shall have the
meanings given in the Purchase Agreement.
C. Buyer and Seller desire to enter into this Agreement to provide
Seller with certain rights with respect to the Timberland Properties.
NOW, THEREFORE, it is agreed as follows:
1. Notwithstanding anything to the contrary in this Agreement for a
period of 25 years following the Initial Closing, any sale or other transfer
by Buyer of its interest in the Timberland Properties, or any portion thereof,
other than Exempt Transfers as defined in Section 5 shall be subject to
Seller's right of first offer as provided below.
2. Subject to the provisions of Section 1, in the event Buyer desires
to sell or otherwise transfer, whether directly or indirectly, all or any part
of the Timberland Properties (the "Offered Property"), it shall give a notice
(the "First Offer Notice") to Seller. The First Offer Notice shall specify
the price and terms of sale including, without limitation, the description of
the Offered Property, the type of deed to be delivered, the exceptions to
which the Offered Property will be subject, whether or not title insurance
will be provided, and the allocation of responsibility for sales and
documentary taxes and other closing costs. The First Offer Notice shall
constitute an offer by Buyer to sell its interest in the Offered Property to
Seller on the price and terms and conditions set forth in such notice.
Seller, if it desires to accept such offer, shall, within 30 days after the
giving of the First Offer Notice, give Buyer written notice to such effect
(the "Acceptance Notice"). If Seller shall fail to give the Acceptance Notice
within the time period provided, Seller shall be deemed to have consented to
the proposed sale and Buyer may sell its interest in the Offered Property upon
the price and terms and conditions set forth in the First Offer Notice at any
time within six months of the expiration of the time period for the giving of
the Acceptance Notice; provided, however, that Buyer may only, during such
period, sell at any price equal to or greater than 100 percent the price
stated in the First Offer Notice and on terms no more favorable to the
purchaser than the terms included in the First Offer Notice.
3. In the event that Seller gives Buyer an Acceptance Notice, then, on
such business day as Seller shall set forth in the Acceptance Notice, which
shall be not less than 30 days nor more than 90 days after the giving of the
Acceptance Notice, Seller shall purchase the Offered Property for the purchase
price stated in the First Offer Notice and upon the other terms and conditions
of the First Offer Notice. The closing of the sale shall be held in the
offices of The Campbell Group, Inc., in Portland, Oregon, or at such other
place as the parties to the sale may mutually agree, on the date selected as
provided above. At the closing, Buyer shall deliver to Seller its deed in the
form and subject to the exceptions stated in the First Offer Notice.
4. Notwithstanding anything to the contrary in this Agreement, if any
part of the Offered Property to be purchased by Seller pursuant to this
Agreement does not have legal, historical, or practical access rights
sufficient for timber harvest activity in accordance with then current
industry practices for Northwestern Oregon, then such purchase shall include,
whether or not described in the First Offer Notice or the Acceptance Notice
with respect thereto, additional land or easements providing for such rights
of way for access and utilities over reasonable routes on or appurtenant to
such Offered Property but over land owned by Buyer or entities controlled by
Buyer as shall be necessary for Seller, its successors and assigns, to have
such access, in perpetuity, to the purchased Offered Property. No such
easements shall unreasonably interfere with Buyer's current or contemplated
forestry operations.
5. The provisions of this Agreement shall not apply to discretionary
sales by Buyer and entities controlled by Buyer of not more than 10,000 acres
in the aggregate, cutting contracts entered into by Buyer and entities
controlled by Buyer of not more than 10,000 acres in the aggregate, none of
which shall have a duration in excess of 36 months; transfers or leases
(including the assignment of existing leases) of mineral rights, including but
not limited to the transfer or leasing of geological formations useful for the
underground storage of natural gas, compressed air, and other gaseous
substances; right of way easements granted in the ordinary course of business,
changes of ownership between Buyer and controlled entities, or distributions
in kind to owners of a controlled entity (collectively "Exempt Transfers");
provided that Buyer shall give Seller written notice of each proposed Exempt
Transfer at least 30 days prior to the consummation of the transfer and;
provided further that in case of changes of ownership between Buyer and
controlled entities or distributions in kind, the property transferred shall
remain subject to the provisions of this Agreement and Buyer shall deliver to
Seller a written acknowledgment of the transferee that it is bound by the
provisions of this Agreement.
6. In the event of a sale to a third party pursuant to paragraph 2 or
an exempt transfer to an independent third party pursuant to paragraph 5,
Seller shall, at the request of Buyer, execute and acknowledge a memorandum
for recording to evidence that the transferred property is no longer subject
to Seller's rights under this Agreement.
7. The parties shall cause a memorandum of Seller's Right of First
Offer in the form of Exhibit A attached hereto, to be recorded in the official
records of Columbia County, Washington County, Clatsop County, and Tillamook
County, Oregon.
8. Any question, controversy, or claim arising under or relating to
this Agreement shall be settled by arbitration in accordance with the
provisions of Section 9.2 of the Purchase Agreement, except that the
arbitration hearing shall be held in Portland, Oregon.
9. Any notices to be delivered pursuant to this Agreement will be
delivered as specified in Section 12.5 of the Purchase Agreement.
10. This Agreement shall be binding on each buyer under the Purchase
Agreement controlled by Buyer. Seller may require as a condition of
conveyance of a portion of the Timberland Properties to any buyer controlled
by Buyer other than Buyer, that such buyer execute an instrument agreeing to
be bound by the terms of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WILLAMETTE INDUSTRIES, INC., an Oregon
corporation
By: /s/ Steven R. Rogel
Steven R. Rogel
President and Chief Executive Officer
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation
By: /s/ Paul A. Meissner, Jr.
Name: Paul A. Meissner, Jr.
Title: Assistant Treasurer
<PAGE>
Exhibits to Right of First Offer Agreement
Exhibit A Memorandum of Right of First Offer Agreement
Exhibit 1 Legal Description of Timberland Properties
<PAGE>
<PAGE>
TIMBER SUPPLY
AGREEMENT
DATE: May 15, 1996
BETWEEN: JOHN HANCOCK MUTUAL LIFE ("JH")
INSURANCE COMPANY
AND: WILLAMETTE INDUSTRIES, INC. ("WI")
Recitals:
A. Pursuant to Asset Sale, Purchase and Transfer Agreement dated
April 23, 1996 ("Purchase Agreement"), JH has on the date hereof acquired from
WI, or has obtained options to purchase from WI, certain timberlands located
in the State of Oregon, as more fully described therein ("Timberlands").
B. The Purchase Agreement requires that JH grant to WI a right of
first offer with respect to certain logs harvested from that portion of the
Timberlands subject to a certain Right of First Offer Agreement between the
parties dated May 15, 1996 ("First Offer Agreement") as set forth in this
Agreement ("Agreement") setting forth the terms and conditions on which WI
shall be entitled to exercise such right.
Agreements:
In consideration of the foregoing and the mutual covenants of the parties
set forth in this Agreement, the parties agree as follows:
1. Defined Terms. For all purposes of this Agreement, the following
terms, when capitalized, shall have the following meanings:
1.1 "First Offer Lands" means that portion of the Timberlands
from time to time subject to the First Offer Agreement. The First Offer
Agreement sets forth certain exemptions under which JH may cause certain
portions of the Timberlands to be permanently exempt from subjectivity to such
Agreement. Until such time as JH has utilized an exemption to remove a
specified portion of the Timberland from subjectivity to the Right of First
Offer Agreement, such portion shall be deemed subject to said Agreement.
1.2 "Export Logs" shall mean all species of Logs harvested from
the First Offer Lands which, under current market conditions as of the date of
harvest, and the standards of the industry, would commonly be sold on the
export market, divided into the following two categories:
1.2.1 high-end quality; includes regular Japan quality 8" and
larger; and
1.2.2 low-end quality; includes regular Korean and China
quality 8" and larger.
1.3 "Domestic Logs" shall mean all species of Logs harvested from
the First Offer Lands which, under current market conditions as of the date of
harvest, and the standards of the industry, would commonly be sold on the
domestic market, divided into the following two categories:
1.3.1 saw logs 8" and larger suitable for the manufacture of
standard and better lumber; and
1.3.2 chip and saw logs 5", 6" and 7" in diameter suitable
for the manufacture of chips and standard and better lumber.
1.4 "Pulp Logs" shall mean all species of Logs harvested from the
First Offer Lands which, under current market conditions as of the date of
harvest, and the standards of the industry, including utility, special
(peelable) cull, and highly defective grade logs, would commonly be sold on
the pulp market.
1.5 "Logs" shall mean all Export, Domestic and Pulp Logs.
1.6 "Category" shall mean any of the following five groups:
1.6.1 the type of Export Logs described in Section ;
1.6.2 the type of Export Logs described in Section ;
1.6.3 the type of Domestic Logs described in Section ;
1.6.4 the type of Domestic Logs described in Section ; and
1.6.5 the Logs described in Section .
2. Right of First Offer. JH hereby grants to WI the exclusive right
of first offer with respect to 25% of each Category of Logs harvested from the
First Offer Lands, subject to and in accordance with the terms and conditions
set forth in this Agreement. Without limiting the generality of the
foregoing, JH agrees that it shall not offer to sell, negotiate regarding the
sale of, nor enter into an agreement to sell any Logs subject to this
Agreement to any third party until and unless WI has failed to give a timely
Acceptance Notice (defined in Section ) with regard to such Logs.
3. Notices of Availability and Price. Not later than twenty (20) days
prior to the end of each fiscal quarter (as elected by JH from time to time
for its Log harvest and marketing purposes) during the Term (defined in
Section ), JH shall give WI written notice in substantially the form attached
as Exhibit A ("Notice of Availability") setting forth the approximate volume
of Logs (indicating the volume in each Category which JH expects to have
available for sale during the following fiscal quarter; provided, however,
that JH shall not be required to give a Notice of Availability if, at the time
such notice would otherwise be required hereunder, WI is in default in the
payment of any amount due JH for Logs previously delivered to WI hereunder.
For the purposes of this Agreement, all merchantable Logs 6" in diameter or
larger shall be measured and graded using the Official Rules of the Columbia
River Log Scaling and Grading Bureau (or any successor to such bureau agreed
to by the parties) scribner long log Rule M board feet. Pulp logs shall be
measured by weight on a per ton (2,000 pounds per ton) basis. The volume
estimates set forth in any Notice of Availability shall include estimated
volume by species, shall be based on the best information available to JH, and
shall not be binding with respect to actual volumes delivered. Not later than
ten (10) days prior to the end of each fiscal quarter during the Term, JH
shall give WI a Notice of Price/Acceptance Notice in substantially the form
attached as Exhibit B setting forth the price(s) at which JH is willing to
sell to WI 25% of each Category of the Logs described in the Notice of
Availability, which price shall be equal to the highest sales price (taking
into account any relevant transportation differentials) at which JH is selling
any portion of the volume not being so offered to WI, pursuant to JH's
standard, open market bidding procedures, to customers other than WI who are
not affiliated with or controlled by JH.
Due to varying market, weather, labor, topographical or other
conditions, JH may actually harvest greater volumes from one or more harvest
units than the estimated volume(s) set forth in the Notice of Availability for
the quarter in question. Should it appear during the progress of the harvest,
based on JH's best estimate, that as a result of such excess harvest, the
total volume to be harvested during any such quarter will exceed by at least
20% the total volume set forth in the initial Notice of Availability for that
quarter, JH shall promptly transmit to WI a supplemental Notice of
Availability setting forth the estimated excess harvest by Category and a
supplemental Notice of Price setting forth the highest price for which JH is
in a position to market such excess volume to customers other than WI not
controlled by or affiliated with JH.
4. Acceptance Notice, Procedure and Delivery.
4.1 Within five (5) business days after the delivery to WI of any
Notice of Price/Acceptance Notice, the Notice of Availability (initial or
supplemental) having been timely given as hereinabove provided, WI shall give
JH written notice by completing, dating and signing the Acceptance Notice
portion of the Notice of Price/Acceptance Notice ("Acceptance Notice") if it
wishes to purchase any Logs which are subject to this Agreement and described
in the Notice of Availability for the price(s) set forth in the Notice of
Price/Acceptance Notice (initial or supplemental). WI may accept the offer to
sell only by electing to buy at least 25% of the volume identified in the
Notice of Availability in one or more of the Categories defined above in
Section .
4.2 If WI gives a timely Acceptance Notice, WI shall thereafter
purchase from JH, and JH shall thereafter sell to WI, the Logs described in
such Acceptance Notice, for the price(s) set forth in the applicable Notice of
Price/Acceptance Notice.
4.3 If WI fails to give a timely Acceptance Notice with respect
to any Logs which have been the subject of a Notice of Availability, JH shall
thereafter be free to sell such Logs to any third party without any further
obligation to WI, whether or not the price or terms of any such sale are more
or less favorable to the purchaser than those offered to WI.
4.4 Logs purchased by WI under this Agreement shall be delivered
pursuant to JH's usual delivery procedures in which deliveries to each
customer are made throughout the quarter in substantially pro rata shipments,
using the percentage of the total anticipated volume for that quarter going to
each customer.
5. Sales Terms and Conditions. All sales of Logs to WI under this
Agreement shall be governed by the terms and conditions set forth in the
Notice of Availability.
6. Term. The term of this Agreement shall expire June 30, 2001, (the
"Term"), but shall be automatically extended for an unlimited number of
successive two (2) year terms from the initial or any subsequent expiration
date unless either party shall give written notice to the other party, at
least one (1) year before the date the Term is due to expire, that it elects
to allow the Term to expire at the end of the Term then in effect.
7. Time of Essence. Time is of the essence of this Agreement.
8. Recordation. This Agreement shall not be recorded, but the parties
shall execute and record from time to time as portions of the Timberlands are
purchased by JH, a Memorandum of this Agreement in the form attached as
Exhibit C, with an attached legal description of the said portion(s) so
purchased. Since certain portions of the Timberlands and the timber thereon,
not now identified, will be exempt from the First Offer Agreement (and thus
not impacted by this Agreement), WI agrees that it will promptly execute and
deliver to JH such appropriate release documents in recordable form that JH
may reasonably request from time to time so that JH's ability to deal with
such portions not subject to this Agreement will not be unreasonably or
unduly impeded, hindered or delayed.
9. Audit. WI shall have the right to audit and inspect, using the
services of independent public or certified public accounting firms, upon
reasonable notice during normal office hours, the relevant records of JH or
its timber manager to verify the accuracy of the price(s) set forth in any
Notice of Price/Acceptance Notice to the extent such audit or inspection will
not be in violation of any applicable laws. Prior to any such audit or
inspection, the auditing or inspection firm shall execute and deliver to JH a
confidentiality agreement in standard form in order to protect the
confidentiality of the data disclosed by the audit or inspection.
10. Force Majeure.
10.1 WI and JH shall not be liable to each other for any failure
or delay in delivery or acceptance of delivery of Logs in the event that such
failure of delay is due to circumstances beyond the party's reasonable
control, including, without limitation, inclement weather, fires, labor
disputes, acts of God and acts of any governmental body (each of the foregoing
being referred to herein as a "Force Majeure Event"). The occurrence of a
Force Majeure Event shall not give either party the right to terminate this
Agreement. With respect to any Force Majeure event of the type described in
the preceding sentence, the party whose performance is prevented or delayed
shall use all reasonable efforts to minimize the duration and consequences of
any failure or delay in delivery or acceptance of delivery resulting from such
Force Majeure Event and shall give the other party prompt notice of the
occurrence of such Force Majeure Event.
10.2 If as a result of a Force Majeure Event WI cannot accept the
quantity of Logs it has elected to purchase under this Agreement, JH shall
have the right to sell Logs to customers other than WI until such time as WI
shall notify JH that WI is again able to accept delivery of Logs purchased
from JH hereunder. After WI again proposes to commence acceptance of delivery
of Logs purchased from JH hereunder, JH shall have the right to deliver any
Logs otherwise subject to WI's right to purchase under this Agreement, the
sale of which was contracted for by JH during the period WI did not accept
Logs subject to this Agreement due to a Force Majeure Event; provided that no
such contract shall be entered into for a term longer than three (3) months
without the prior written consent of WI, which consent shall not be
unreasonably withheld.
11. Confidentiality. It is recognized that both parties may disclose
to each other or ascertain in the process of exercising its audit or records
inspection rights, certain information with respect to their respective
operations which the other may consider to be private and confidential, the
disclosure of which could prove injurious to either party. Therefore, each
party agrees to use any pricing information and proposals and any other
information designated in writing by the other party as confidential solely
for the purposes hereof, and to use its best efforts to prevent the disclosure
of such information (other than information which is or becomes a matter of
public knowledge or which has been or is subsequently filed as public
information with any governmental authority) to third parties without the
prior written consent of the affected party, unless such disclosure is
required by law.
12. Cancellation and Termination.
12.1 In addition to the provisions of Section hereof, and all
other remedies available hereunder or under applicable law, this Agreement may
be cancelled by either party, at its option exercisable by written notice to
the other, if such other party shall default in the performance of any of its
agreements or obligations herein, and such default continues without cure for
a period of sixty (60) days after written notice from the non-defaulting
party.
12.2 This Agreement may be cancelled by either party, at its
option exercisable by written notice to the other, in the event the other
party (i) files, consents to the filing of, or within 30 days fails to have
rescinded or to obtain the dismissal of, any petition for relief under any
federal or state bankruptcy, insolvency or other similar law, (ii) makes any
assignment for the benefit of creditors, (iii) fails generally to pay its
debts as they come due, (iv) takes any corporate action to authorize any of
the foregoing, or (iv) becomes insolvent.
13. Relationship of Parties. In all matters relating to this
Agreement, both parties shall be acting solely as independent contractors and
shall be solely responsible for the acts of their employees; and employees of
one party shall not be considered employees of the other party. Neither party
shall have any right, power, or authority to create any obligation, express or
implied, on behalf of the other party.
14. Assignment. This Agreement shall not be assignable or transferable
by WI or JH without the consent in writing of the other party, which consent
shall not be unreasonably withheld, except that either party shall assign this
Agreement to any corporation formed by consolidation of such party with
another corporation or corporations, or into which such party shall be merged,
or to any corporation, form or person to whom substantially all the property
of such party is transferred as an entirety (the "Successor Party"). Upon any
such transfer, all the terms and provisions of this Agreement binding upon, or
inuring to the benefit of, the party transferring the same shall be binding
upon, and inure to the benefit of, the Successor Party whether so expressed or
not.
15. Automatic Release/Non-Application. At such time as title to any
portion of the Timberlands or timber thereon is transferred by JH to a party
in whose ownership such portion of the Timberlands or timber thereon is not
subject to the First Offer Agreement, such property shall no longer be subject
to this Agreement, except to the extent of the fulfillment of any relevant log
sale agreement or cutting contract entered into between WI and JH prior to
such change of ownership. Further, the First Offer Agreement sets forth
certain transactions that are exempt from the application thereof. Subject to
the provisions of Section hereof, JH may utilize any such exemptions without
first affording WI any opportunity to purchase under this Agreement.
16. Cutting Contract Bidding. JH shall not enter into a cutting
contract intended to qualify as exempt from the restrictions of the First
Offer Agreement unless the following conditions are satisfied: Such cutting
contract shall be awarded as the result of a bid solicitation conducted
according to JH's normal procedures in such matters, provided that WI shall be
given at least twenty (20) days' written notice of the opportunity to bid,
such notice to be directed as set forth in Section hereof.
17. Designees Bound. Under the Purchase Agreement, JH has the right to
cause its designee(s) to acquire a portion of the Timberland at any closing
under the Purchase Agreement. This Agreement shall be binding on such
designee(s). In such event, reference in this Agreement to "JH" shall be
deemed to include such designee(s), unless the context shall otherwise
require.
18. Notices. Notices under this Agreement shall be effective upon
actual delivery, if given by hand delivery, telefacsimile, or overnight
delivery service, or two (2) business days after the date of mailing, if given
by certified or registered mail, postage prepaid with return receipt
requested. Notices shall be addressed as follows (or to such other or
additional address as either party may designate by written notice to the
other):
If to WI: Willamette Industries
P.O. Box 907
Albany, OR 97321
Attn: Jim A. James, General Manager
Western Timber and Logging
Copy to: Duane McDougall, Vice President
Building Materials Group
Willamette Industries, Inc.
2730 Pacific Boulevard S.E.
P.O. Box 907
Albany, Oregon 97321
If to JH: John Hancock Mutual Life Insurance Company
John Hancock Plaza
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attn: Daniel P. Christensen
Hancock Natural Resource Group, Inc.
Copy to: Robert Golden, Counsel
John Hancock Mutual Life Insurance Company
John Hancock Plaza
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Copy to: Stanley G. Renecker or John Gilleland
The Campbell Group, Inc.
One S.W. Columbia
Suite 1720
Portland, OR 97258
Provided that any Acceptance Notice under Section 4 hereof shall be given only
to:
The Campbell Group, Inc.
Suite 1720
One S. W. Columbia
Portland, OR 97258
Attn: Cary Young or Joe Shore
19. Binding Effect. The provisions of this Agreement shall run with
the land comprising the Timberlands and shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns; provided,
however, that WI shall be entitled to assign its rights under this Agreement
only with the prior written consent of JH, which consent shall not be
unreasonably withheld.
20. Waiver. Failure of either party at any time to require performance
of any provision of this Agreement shall not limit such party's right to
enforce such provision, nor shall any waiver of any breach of any provision of
this Agreement constitute a waiver of any succeeding breach of such provision
or a waiver of such provision itself.
21. Amendment. This Agreement may not be modified or amended except by
the written agreement of the parties.
22. Attorneys' Fees. If a suit, action, or other proceeding of any
nature whatsoever (including any proceeding under the U.S. Bankruptcy Code) is
instituted in connection with any controversy arising out of this Agreement or
to interpret or enforce any rights hereunder, the prevailing party shall be
entitled to recover its attorneys', paralegals', accountants', and other
experts' fees and expenses and all other fees and expenses actually incurred
and reasonably necessary in connection therewith, as determined by the court
at trial or on any appeal or review, in addition to all other amounts provided
by law.
23. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Agreement and the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and
each term or provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
24. Integration. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements between them with respect
to such subject matter, excepting only those agreements noted in this
Agreement.
25. Construction and Interpretation. The headings or titles of the
sections of this agreement are intended for ease of reference only and shall
have no effect whatsoever on the construction or interpretation of any
provision of this Agreement. The use in this Agreement of the words
"including," "such as," and words of similar import following any general
statement, term, or matter shall not be construed to limit such statement,
term, or matter in any manner, whether or not language of non-limitation (such
as "without limitation" or "but not limited to") is used in connection
therewith, but rather shall be deemed to refer to all other items or matters
that could reasonably fall within the scope of the general statement, term, or
matter. All provisions of this Agreement have been negotiated at arms length,
and this Agreement shall not be construed for or against any part by reason of
the authorship or alleged authorship of any provision hereof.
26 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation
By: HANCOCK NATURAL RESOURCE GROUP, INC., its Investment Manager
By: /s/ Wm. R. Gordan
Signature
Wm. R. Gordan
Name
President and CEO
Title
WILLAMETTE INDUSTRIES, INC., an Oregon corporation
By: /s/ J. A. Parsons
Signature
J. A. Parsons
Name
Executive Vice President, CFO
Title
<PAGE>
Exhibits to Timber Supply Agreement
Exhibit A Notice of Availability
Exhibit B Notice of Price/Acceptance Notice
Exhibit C Memorandum of Timber Supply Agreement
<PAGE>
Exhibit 4
U.S. $1,650,000,000
CREDIT AGREEMENT
Dated as of May 10, 1996
among
WILLAMETTE INDUSTRIES, INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent,
ABN AMRO BANK N.V.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
NATIONSBANK, N.A.
and
WACHOVIA BANK OF GEORGIA, N.A.
as Co-Agents
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BA SECURITIES, INC.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . 17
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . 18
ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . 19
2.01 Amounts and Terms of Commitments. . . . . . . . . . . . . . 19
(a) The Term Credit. . . . . . . . . . . . . . . . . . . . 19
(b) The Revolving Credit . . . . . . . . . . . . . . . . . 19
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . 19
2.03 Procedure for Committed Borrowing . . . . . . . . . . . . . 20
2.04 Conversion and Continuation Elections for Committed
Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 21
2.05 Bid Borrowings. . . . . . . . . . . . . . . . . . . . . . . 22
2.06 Procedure for Bid Borrowings. . . . . . . . . . . . . . . . 23
2.07 Termination or Reduction of Commitments . . . . . . . . . . 27
(a) Term Commitments . . . . . . . . . . . . . . . . . . . 27
(b) Revolving Commitments. . . . . . . . . . . . . . . . 27
2.08 Optional Prepayments. . . . . . . . . . . . . . . . . . . . 27
(a) Committed Loans . . . . . . . . . . . . . . . . . . . . 27
(b) Bid Loans. . . . . . . . . . . . . . . . . . . . . . 28
2.09 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . 28
(a) Asset Dispositions. . . . . . . . . . . . . . . . . . . 28
(b) Debt and Equity Issuances. . . . . . . . . . . . . . 28
(c) General. . . . . . . . . . . . . . . . . . . . . . . 28
2.10 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Term Loans. . . . . . . . . . . . . . . . . . . . . . . 29
(b) Revolving Loans. . . . . . . . . . . . . . . . . . . 29
(c) Bid Loans. . . . . . . . . . . . . . . . . . . . . . 29
2.11 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.12 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Arrangement and Agency Fees . . . . . . . . . . . . . . 30
(b) Bid Auction Fee. . . . . . . . . . . . . . . . . . . 30
(c) Facility Fee . . . . . . . . . . . . . . . . . . . . 30
2.13 Computation of Fees and Interest. . . . . . . . . . . . . . 30
2.14 Payments by the Company . . . . . . . . . . . . . . . . . . 31
2.15 Payments by the Banks and Designated Bidders to the
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.16 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . 33
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY. . . . . . . . . . . 33
3.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.02 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . 34
3.03 Increased Costs and Reduction of Return . . . . . . . . . . 35
3.04 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . 36
3.05 Inability to Determine Rates. . . . . . . . . . . . . . . . 37
3.06 Reserves on Offshore Rate Committed Loans . . . . . . . . . 37
3.07 Certificates of Banks . . . . . . . . . . . . . . . . . . . 37
3.08 Substitution of Banks . . . . . . . . . . . . . . . . . . . 38
3.09 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IV CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . 38
4.01 Conditions of Initial Loans . . . . . . . . . . . . . . . . 38
(a) Credit Agreement and Notes . . . . . . . . . . . . . 38
(b) Resolutions; Incumbency. . . . . . . . . . . . . . . 38
(c) Organization Documents; Good Standing. . . . . . . . 39
(d) Legal Opinions . . . . . . . . . . . . . . . . . . . 39
(e) Payment of Fees. . . . . . . . . . . . . . . . . . . 39
(f) Certificate. . . . . . . . . . . . . . . . . . . . . 39
(g) Acquisition. . . . . . . . . . . . . . . . . . . . . 40
(h) Approvals and Consents . . . . . . . . . . . . . . . 40
(i) No Litigation. . . . . . . . . . . . . . . . . . . . 40
(j) Company Financial Statements . . . . . . . . . . . . 40
(k) Pro Forma Financial Statements and Projections . . . 40
(l) Other Documents. . . . . . . . . . . . . . . . . . . 40
4.02 Conditions to All Borrowings. . . . . . . . . . . . . . . . 41
(a) Notice of Borrowing. . . . . . . . . . . . . . . . . 41
(b) Continuation of Representations and Warranties . . . 41
(c) No Existing Default. . . . . . . . . . . . . . . . . 41
(d) No Material Adverse Effect . . . . . . . . . . . . . 41
ARTICLE V REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 42
5.01 Corporate Existence and Power . . . . . . . . . . . . . . . 42
5.02 Corporate Authorization; No Contravention . . . . . . . . . 42
5.03 Governmental Authorization. . . . . . . . . . . . . . . . . 42
5.04 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . 43
5.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.06 No Default. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.07 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . 43
5.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . 44
5.09 Title to Properties; Liens. . . . . . . . . . . . . . . . . 44
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.11 Financial Condition . . . . . . . . . . . . . . . . . . . . 44
5.12 Environmental Matters . . . . . . . . . . . . . . . . . . . 45
5.13 Regulated Entities. . . . . . . . . . . . . . . . . . . . . 45
5.14 No Burdensome Restrictions. . . . . . . . . . . . . . . . . 45
5.15 Copyrights, Patents, Trademarks and Licenses, Etc.. . . . . 45
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 46
6.01 Financial Statements. . . . . . . . . . . . . . . . . . . . 46
6.02 Certificates; Other Information . . . . . . . . . . . . . . 47
6.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.04 Preservation of Corporate Existence, Etc. . . . . . . . . . 48
6.05 Maintenance of Property . . . . . . . . . . . . . . . . . . 49
6.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.07 Payment of Obligations. . . . . . . . . . . . . . . . . . . 49
6.08 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 50
6.09 Maintenance of Books and Records; Inspection. . . . . . . . 50
6.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 50
7.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . 50
7.02 Restrictions on Fundamental Changes . . . . . . . . . . . . 52
7.03 Disposition of Assets . . . . . . . . . . . . . . . . . . . 53
7.04 Sales and Leasebacks. . . . . . . . . . . . . . . . . . . . 54
7.05 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 54
7.06 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . 55
7.07 Maximum Funded Debt to Capitalization . . . . . . . . . . . 55
7.08 Transactions with Affiliates. . . . . . . . . . . . . . . . 55
7.09 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.10 Change in Business. . . . . . . . . . . . . . . . . . . . . 55
7.11 Accounting Changes. . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 55
8.01 Event of Default. . . . . . . . . . . . . . . . . . . . . . 55
(a) Non-Payment. . . . . . . . . . . . . . . . . . . . . 55
(b) Representation or Warranty . . . . . . . . . . . . . 56
(c) Specific Defaults. . . . . . . . . . . . . . . . . . 56
(d) Other Defaults . . . . . . . . . . . . . . . . . . . 56
(e) Cross-Default. . . . . . . . . . . . . . . . . . . . 56
(f) Insolvency; Voluntary Proceedings. . . . . . . . . . 56
(g) Involuntary Proceedings. . . . . . . . . . . . . . . 56
(h) ERISA. . . . . . . . . . . . . . . . . . . . . . . . 57
(i) Monetary Judgments . . . . . . . . . . . . . . . . . 57
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . 57
(k) Change of Control. . . . . . . . . . . . . . . . . . 57
(l) Adverse Change . . . . . . . . . . . . . . . . . . . 57
8.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.03 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . 58
ARTICLE IX THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.01 Appointment and Authorization; "Agent". . . . . . . . . . . 58
9.02 Delegation of Duties. . . . . . . . . . . . . . . . . . . . 58
9.03 Liability of Agent. . . . . . . . . . . . . . . . . . . . . 58
9.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . 59
9.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . 60
9.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . 60
9.07 Indemnification of Agent. . . . . . . . . . . . . . . . . . 60
9.08 Agent in Individual Capacity. . . . . . . . . . . . . . . . 61
9.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 61
9.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . 61
9.11 Co-Agents; Lead Managers. . . . . . . . . . . . . . . . . . 63
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 63
10.01 Amendments and Waivers. . . . . . . . . . . . . . . . . . . 63
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . 65
10.04 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . 65
10.05 Company Indemnification . . . . . . . . . . . . . . . . . . 65
10.06 Payments Set Aside. . . . . . . . . . . . . . . . . . . . . 66
10.07 Successors and Assigns. . . . . . . . . . . . . . . . . . . 66
10.08 Assignments, Participations, Etc. . . . . . . . . . . . . . 66
10.09 Designated Bidders. . . . . . . . . . . . . . . . . . . . . 68
10.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 68
10.11 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.12 Notification of Addresses, Lending Offices, Etc.. . . . . . 69
10.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 69
10.14 Severability. . . . . . . . . . . . . . . . . . . . . . . . 70
10.15 No Third Parties Benefited. . . . . . . . . . . . . . . . . 70
10.16 Governing Law and Jurisdiction. . . . . . . . . . . . . . . 70
10.17 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . 70
10.18 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 71
<PAGE>
ANNEXES
Annex I Pricing Grid
SCHEDULES
Schedule 2.01 Commitments and Pro Rata Shares
Schedule 5.07 ERISA Compliance
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Invitation for Competitive Bids
Exhibit G Form of Competitive Bid Request
Exhibit H Form of Competitive Bid
Exhibit I-1 Form of Committed Loan Note (Revolving Loans)
Exhibit I-2 Form of Committed Loan Note (Term Loans)
Exhibit J Form of Bid Loan Note
Exhibit K Form of Designation Agreement
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of May 10, 1996, among
WILLAMETTE INDUSTRIES, INC., an Oregon corporation (the "Company"), the
several financial institutions from time to time party to this Agreement
(individually, a "Bank," and collectively, the "Banks"), ABN AMRO BANK N.V.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, NATIONSBANK, N.A. and WACHOVIA BANK
OF GEORGIA, N.A., as co-agents, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a term
loan facility, and a revolving credit and bid loan facility, upon the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Absolute Rate" has the meaning specified in
subsection 2.06(c)(ii)(D).
"Absolute Rate Auction" means a solicitation of Competitive
Bids setting forth Absolute Rates pursuant to Section 2.06.
"Absolute Rate Bid Loan" means a Bid Loan that bears
interest at a rate determined with reference to the Absolute Rate.
"Acquisition" means the acquisition by the Company of certain
timberlands and other assets in the United States from Hanson Natural
Resources Company, a Delaware general partnership, Cavenham Energy
Resources Inc., a Delaware corporation, and Cavenham Forest Industries
Inc., a Delaware corporation.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of
voting securities, membership interests, by contract, or otherwise.
"Agent" means BofA in its capacity as agent for the Banks and the
Designated Bidders hereunder, and any successor agent arising under
Section 9.09.
"Agent-Related Persons" means (i) BofA and any successor agent
arising under Section 9.09, together with their respective Affiliates
(including, in the case of BofA, the Arranger), and (ii) the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set forth
on Schedule 10.02 or such other address as the Agent may from time to
time specify.
"Agreement" means this Credit Agreement.
"Applicable Fee Amount" means with respect to the Facility Fee,
the amount set forth opposite the indicated Level below the heading
"Facility Fee" in the pricing grid set forth on Annex I in accordance
with the parameters for calculations of such amount also set forth on
Annex I.
"Applicable Margin" means (i) with respect to Base Rate Committed
Loans, 0%; and (ii) with respect to Offshore Rate Committed Loans, the
amount set forth opposite the indicated Level below the heading
"Revolving Loan LIBO Rate Spread" or "Term Loan LIBO Rate Spread," as
applicable, in the pricing grid set forth on Annex I in accordance with
the parameters for calculations of such amounts also set forth on
Annex I.
"Arranger" means BA Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated
cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bank" has the meaning specified in the introductory clause
hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in
San Francisco, California, as its "reference rate." (The "reference
rate" is a rate set by BofA based upon various factors including BofA's
costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Committed Loan" means a Committed Loan that bears
interest based on the Base Rate.
"Bid Borrowing" means a Borrowing hereunder consisting of
one or more Bid Loans made to the Company on the same day by one
or more Bid Loan Banks or Designated Bidders.
"Bid Loan" means a Loan by a Bid Loan Bank or a Designated
Bidder to the Company under Section 2.05, which may be a LIBOR Bid
Loan or an Absolute Rate Bid Loan.
"Bid Loan Bank" means each Bank specified in a written
notice from the Company to the Agent (which, in the case of the
first such notice, must be given at least five Business Days prior
to the first Competitive Bid Request hereunder) unless such Bank
has since been specified by the Company as no longer being a Bid
Loan Bank in a written notice to the Agent; provided that (i) the
addition or removal of a Bid Loan Bank shall not take effect until
five Business Days following the Agent's receipt of written notice
thereof, (ii) the number of Bid Loan Banks at any time (exclusive
of any Bid Loan Bank which has since been specified by the Company
as no longer being a Bid Loan Bank in a written notice to the
Agent but which still has Bid loans outstanding) may not be less
than ten, and (iii) Bid Loan Banks may be added or removed only on
one day in each calendar month; and provided, further, that the
Company may not give notice adding or removing Bid Loan Banks
during a LIBOR Auction or an Absolute Rate Auction. Subject to the
foregoing, Bid Loan Banks may be selected, added or removed
hereunder in the Company's discretion. As used herein, the term
"Bid Loan Bank" shall include any Bank which was previously
specified as a Bid Loan Bank and then specified as no longer being
a Bid Loan Bank but still has Bid Loans outstanding. The Agent
will promptly notify the Banks of any notice from the Company
selecting, adding or removing Bid Loan Banks.
"Bid Loan Note" has the meaning specified in Section 2.02.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Banks or (in the
case of Bid Borrowings) Designated Bidders under Article II, and may be
a Committed Borrowing or a Bid Borrowing and, other than in the case of
Base Rate Committed Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Committed Borrowing
occurs under Section 2.03 or a Bid Borrowing occurs under Section 2.06.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close and, if the applicable
Business Day relates to any Offshore Rate Loan, means such a day on
which dealings are carried on in the applicable offshore dollar
interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Capital Expenditures" means, for any period, expenditures
(including the aggregate amount of any capital lease obligations
incurred during such period) made by the Company or any of its
Subsidiaries to acquire or to construct fixed assets, plant and
equipment during such period as determined in accordance with GAAP;
provided, however, that Capital Expenditures shall exclude expenditures
to make the Acquisition, or any other acquisition of substantially all
of the capital stock of or other equity interests in any Person, or
substantially all of the assets of any Person or any division, business
unit or line of business of any Person, to the extent funded by Loans
hereunder ("Excluded Capital Expenditures").
"Capitalization", on any date, means the sum of (i) Consolidated
Funded Debt plus (ii) Net Worth on such date.
"Change of Control" means (i) any transaction or series of related
transactions in which any Person or two or more Persons acting in
concert shall acquire beneficial ownership, directly or indirectly, of
securities of the Company (or other securities convertible into such
securities) representing 40% or more of the combined voting power of all
securities of the Company entitled to vote in the election of directors;
or (ii) during any period of up to 12 consecutive months, commencing
after the Effective Date, individuals who at the beginning of such 12
month period were directors of the Company shall cease for any reason to
constitute a majority of the Board of Directors of the Company and the
Persons replacing such individuals shall not have been nominated by the
Board of Directors of the Company.
"Closing Date" means the date of the initial funding of any Loan
hereunder.
"Co-Agent" means each of ABN AMRO Bank N.V., Morgan Guaranty Trust
Company of New York, Nationsbank, N.A. and Wachovia Bank of Georgia,
N.A., in its capacity as co-agent hereunder.
"Code" means the Internal Revenue Code of 1986.
"Commitment" means, for each Bank, the sum of its Revolving
Commitment and Term Commitment.
"Committed Borrowing" means a Borrowing hereunder consisting
of Committed Loans made on the same day by the Banks ratably
according to their respective Pro Rata Shares and, in the case of
Offshore Rate Committed Loans, having the same Interest Periods.
"Committed Loan" means a Term Loan or a Revolving Loan made
by a Bank to the Company under Section 2.01.
"Committed Loan Note" has the meaning specified in Section 2.02.
"Competitive Bid" means an offer by a Bid Loan Bank or a
Designated Bidder to make a Bid Loan in accordance with subsection
2.06(c).
"Competitive Bid Request" has the meaning specified in
subsection 2.06(a).
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C.
"Consolidated EBITDA" means, for any period, net income for such
period, plus Consolidated Interest Expense for such period, plus income
tax expense for such period, plus depreciation expense, amortization
expense and other non-cash expenses for such period, of the Company and
its Subsidiaries on a consolidated basis, as determined in accordance
with GAAP.
"Consolidated Funded Debt" means, as of any date of determination,
all Indebtedness of the Company and its Subsidiaries on such date, on a
consolidated basis and as determined in accordance with GAAP.
"Consolidated Gross Interest Expense" means, for any period,
interest expense of the Company and its Subsidiaries for such period,
plus interest of the Company and its Subsidiaries capitalized during
such period, in each case on a consolidated basis and as determined in
accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, for any period, the
ratio of (i) Consolidated EBITDA, minus Capital Expenditures, for such
period, to (ii) Consolidated Gross Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, interest
expense of the Company and its Subsidiaries on a consolidated basis for
such period, as determined in accordance with GAAP.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets of the Company and its Subsidiaries (minus applicable reserves
and other properly deductible items) after deducting therefrom (i) all
liabilities other than deferred income taxes, Consolidated Funded Debt
and shareholders' equity and (ii) all goodwill, trade names, trademarks,
patents, organization expenses and other like intangibles, all as set
forth on the most recent balance sheet of the Company and its
Subsidiaries, on a consolidated basis and determined in accordance with
GAAP.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or
any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Committed Loans of one Type to
another Type, or (b) continues as Committed Loans of the same Type, but
with a new Interest Period, Committed Loans having Interest Periods
expiring on such date.
"Debt Rating" means the rating of the Company's senior unsecured
long-term debt by each of S&P and Moody's.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Designated Bidder" means an Affiliate of a Bid Loan Bank that is
an entity described in clause (c)(i) or (ii) of the definition of
"Eligible Assignee" and that has become a party hereto pursuant to
Section 10.09.
"Designation Agreement" means a designation agreement entered into
by a Bank and a Designated Bidder and accepted by the Agent, in
substantially the form of Exhibit K.
"Disposition" means the sale, lease, conveyance or other
disposition of property or assets, other than sales or other
dispositions expressly permitted under subsections 7.03(a) through
7.03(f).
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Effective Date" means May 10, 1996, the date as of which this
Agreement has been executed and delivered by the parties hereto.
"Eligible Assignee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $250,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having a combined
capital and surplus of at least $250,000,000, provided that such bank is
acting through a branch or agency located in the United States; and
(c) a Person that is primarily engaged in the business of commercial
banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a
Person of which a Bank is a Subsidiary, or (iii) a Person of which a
Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b) or (c) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d)
the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Facility Fee" has the meaning specified in subsection 2.12(c).
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York with
respect to the preceding Business Day opposite the caption "Federal
Funds (Effective)"; or, if for any relevant day such rate is not so
published with respect to any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
"Fee Letter" has the meaning specified in subsection 2.12(a).
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account
of amounts payable or paid pursuant to Section 3.01.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession),
which are applicable to the circumstances as of the date of
determination, subject to Section 1.03.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken
or assumed as the deferred purchase price of property or services (other
than trade payables entered into in the ordinary course of business on
ordinary terms); (c) all reimbursement or payment obligations
(contingent or otherwise) with respect to Surety Instruments (in the
case of letters of credit, whether or not drawn); (d) all obligations
evidenced by notes, bonds, debentures or similar instruments; (e) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with
respect to property acquired by the Person (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all net liabilities of
such Person under all Swap Contracts; (h) all indebtedness referred to
in clauses (a) through (g) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (i)
all guaranties and other direct and indirect liabilities of any Person
in respect of indebtedness or obligations of others of the kinds
referred to in clauses (a) through (h) above. For all purposes of this
Agreement, the Indebtedness of any Person shall include all recourse
Indebtedness of any partnership or joint venture or limited liability
company in which such Person is a general partner or a joint venturer or
a member.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in subsection
6.01(a).
"Ineligible Securities" means securities which may not be
underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24,
Seventh), as amended.
"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court
or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a Base
Rate Committed Loan, the last day of each Interest Period applicable to
such Loan and, as to any Base Rate Committed Loan, the last Business Day
of each calendar quarter and each date such Base Rate Committed Loan is
converted into another Type of Committed Loan; provided, however, that
(a) if any Interest Period for an Offshore Rate Committed Loan exceeds
three months, the date that falls three months after the beginning of
such Interest Period and after each Interest Payment Date thereafter is
also an Interest Payment Date, and (b) as to any Bid Loan, such
intervening dates prior to the maturity thereof as may be specified by
the Company and agreed to by the applicable Bid Loan Bank or Designated
Bidder in the applicable Competitive Bid shall also be Interest Payment
Dates.
"Interest Period" means, (a) as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan, or (in the case of
any Offshore Rate Committed Loan) on the Conversion/Continuation Date on
which the Loan is converted into or continued as an Offshore Rate
Committed Loan, and ending on the date one, two, three or six months
thereafter as selected by the Company in its Notice of Borrowing, Notice
of Conversion/Continuation or Competitive Bid Request, as the case may
be; and (b) as to any Absolute Rate Bid Loan, a period of not less than
14 days and not more than 365 days (366 days in leap years) as selected
by the Company in the applicable Competitive Bid Request;
provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be extended
to the following Business Day unless, in the case of an Offshore
Rate Loan, the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate
Loan that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end
on the last Business Day of the calendar month at the end of such
Interest Period;
(iii) no Interest Period for any Term Loan shall extend
beyond the Term Maturity Date, and no Interest Period for any
Revolving Loan shall extend beyond the Revolving Termination Date;
and
(iv) no Interest Period applicable to a Term Loan or
portion thereof shall extend beyond any date upon which is due any
scheduled principal payment in respect of the Term Loans unless
the aggregate principal amount of Term Loans represented by Base
Rate Committed Loans and by Offshore Rate Committed Loans having
Interest Periods that will expire on or before such date, equals
or exceeds the amount of such principal payment.
"Invitation for Competitive Bids" means a solicitation for
Competitive Bids, substantially in the form of Exhibit F.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Lending Office" means (i), as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on Schedule
10.02; (ii), as to any Designated Bidder, the office or offices of such
Designated Bidder specified as its "Lending Office" or "Lending Offices"
in its Designation Agreement; and (iii) such other office or offices as
such Bank or Designated Bidder may from time to time notify the Company
and the Agent.
"LIBO Rate" for any Interest Period, with respect to each LIBOR
Bid Loan in any Bid Borrowing or an Offshore Rate Committed Loan, means:
(i) the rate of interest per annum determined by the Agent to be
the rate of interest per annum appearing on Telerate display page 3750
(or such other display on the Telerate System as may replace such page)
for Dollar deposits in the approximate amount of, in the case of LIBOR
Bid Loans and with respect to each LIBOR Bid Loan in the applicable Bid
Borrowing, such LIBOR Bid Loan to be borrowed in such Bid Borrowing,
and, in the case of Offshore Rate Committed Loans, the Offshore Rate
Committed Loan to be made, continued or converted by BofA, and having a
maturity comparable to such Interest Period, at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of such
Interest Period, subject to clause (ii) below; or
(ii) if for any reason rates are not available as provided in the
preceding clause (i) of this definition, the "LIBO Rate" instead means
the rate of interest per annum determined by the Agent to be the
arithmetic mean (rounded upward to the nearest 1/16th of 1%) of the
rates of interest per annum notified to the Agent by BofA as the rate of
interest at which Dollar deposits in the approximate amount of, in the
case of LIBOR Bid Loans and with respect to each LIBOR Bid Loan in the
applicable Bid Borrowing, such LIBOR Bid Loan to be borrowed in such Bid
Borrowing, and, in the case of Offshore Rate Committed Loans, the
Offshore Rate Committed Loan to be made, continued or converted by BofA,
and having a maturity comparable to such Interest Period, would be
offered to major banks in the London interbank market at their request
at approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
"LIBOR Auction" means a solicitation of Competitive Bids
setting forth a LIBOR Bid Margin pursuant to Section 2.06.
"LIBOR Bid Loan" means any Bid Loan that bears interest at a
rate based upon the LIBO Rate.
"LIBOR Bid Margin" has the meaning specified in subsection
2.06(c)(ii)(C).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement for security purposes, lien
(statutory or other) or other security interest or encumbrance of any
kind or nature in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the
interest of a lessor under an operating lease.
"Loan" means an extension of credit by a Bank or a Designated
Bidder to the Company under Article II, and may be a Committed Loan
(including any Revolving Loan or Term Loan) or a Bid Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letter
and all other documents delivered to the Agent or any Bank or Designated
Bidder in connection herewith.
"Majority Banks" means (a) Banks holding more than 66-2/3% of the
Commitments, or (b) if the Commitments have been terminated, Banks
holding more than 66-2/3% of the then aggregate unpaid principal amount
of the Loans. For purposes of this definition, each Bank shall be
deemed to hold all outstanding Bid Loans of such Bank's Designated
Bidders.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material impairment
of the ability of the Company to perform under any Loan Document and to
avoid any Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Company
of any Loan Document.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making, or is obligated to make contributions
or, during the preceding three calendar years, has made, or been
obligated to make, contributions.
"Net Issuance Proceeds" means, as to any incurrence, issuance or
sale of Indebtedness of the type referred to in clause (a) and clause
(d) of the definition of Indebtedness herein, or any issuance or sale of
equity, by any Person, cash proceeds received or receivable by such
Person in connection therewith, net of commissions, fees and other
reasonable out-of-pocket costs and expenses paid or incurred in
connection therewith in favor of any Person not an Affiliate of such
Person; provided that the following shall not be deemed Net Issuance
Proceeds hereunder: (i) any incurrence of any such Indebtedness by any
Subsidiary from the Company or any other Subsidiary, or any issuance or
sale of equity securities by any Subsidiary to the Company or any other
Subsidiary; (ii) any issuance or sale of equity securities pursuant to
any stock option plan or employee benefit or compensation plan;
(iii) any such Indebtedness incurred pursuant to this Agreement;
(iv) any such Indebtedness in connection with commercial paper notes or
other short term Indebtedness to the extent that unutilized Revolving
Commitments hereunder constitute credit support with respect thereto;
(v) any such Indebtedness incurred in connection with any extension,
renewal, refinancing or replacement of any existing Indebtedness (to the
extent that the aggregate principal amount of such Indebtedness is not
increased in connection therewith); and (vi) any such Indebtedness in
connection with any industrial revenue bond issuance.
"Net Proceeds" means, as to any Disposition by a Person, proceeds
in cash and cash equivalents as and when received by such Person
(including such proceeds subsequently received in respect of noncash
consideration initially received and amounts initially placed in escrow
that subsequently become available), net of: (A) the direct costs
relating to such Disposition (excluding amounts payable to such Person
or any Affiliate of such Person), (B) sale, use or other transaction
taxes paid or payable by such Person as a direct result thereof, and
(C) amounts required to be applied to repay principal, interest and
prepayment premiums and penalties on Indebtedness secured by a Lien on
the asset which is the subject of such Disposition; provided that, if no
Default or Event of Default exists hereunder, any such proceeds shall
not be considered Net Proceeds to the extent that such proceeds are
placed in an escrow account promptly upon the receipt thereof and within
180 days after receipt of such proceeds, such proceeds are applied to
the replacement of all or any part of the assets in respect of which
such cash proceeds were received, it being understood that any portion
of such proceeds that has not been so used within such 180 day period
shall be deemed to be Net Proceeds for purposes hereof.
"Net Worth" means, as of any date, the sum of the capital stock
and additional paid in capital plus retained earnings (or minus
accumulated deficits) of the Company and its Subsidiaries on such date,
on a consolidated basis and as determined in accordance with GAAP.
"Notes" means the Committed Loan Notes and the Bid Loan Notes.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by the
Company to any Bank, Designated Bidder, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing
or hereafter arising.
"Offshore Rate Committed Loan" means any Committed Loan that bears
interest based on the LIBO Rate.
"Offshore Rate Loan" means any LIBOR Bid Loan or any Offshore Rate
Committed Loan.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee
thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company or any ERISA
Affiliate sponsors or maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a multiple employer
plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
any other entity of whatever nature.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Company sponsors or maintains or to which the
Company makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place)
at such time of such Bank's Commitment divided by the combined
Commitments of all Banks. The initial Pro Rata Share of each Bank is
set forth opposite such Bank's name in Schedule 2.01 under the heading
"Pro Rata Share."
"Replacement Bank" has the meaning specified in Section 3.08.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" means the chief executive officer, the chief
financial officer or the president of the Company, or any other officer
having substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief financial
officer, the corporate controller, or the treasurer of the Company, or
any other officer having substantially the same authority and
responsibility.
"Revolving Commitment", as to each Bank, has the meaning specified
in subsection 2.01(b).
"Revolving Loan" has the meaning specified in subsection 2.01(b).
"Revolving Termination Date" means the earlier to occur of:
(a) May 15, 2001; and
(b) the date on which the Revolving Commitments terminate
in accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"S&P" means Standard & Poor's Ratings Group.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests
or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the
Company.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity
index swap or option, bond, note or bill option, interest rate option,
forward foreign exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption, currency option or
any other, similar transaction (including any option to enter into any
of the foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any master agreement relating to or
governing any or all of the foregoing.
"Target Business Material Adverse Effect" means a material adverse
change in, or a material adverse effect upon, the financial condition,
economic value or business prospects of the assets and business to be
acquired by the Company in connection with the Acquisition.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, which arise from any
payment made hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents, excluding, in the case of each
Bank and the Agent, respectively, taxes imposed on or measured by its
net income by each jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Agent, as the case may be, is
organized or maintains a lending office.
"Term Commitment," as to each Bank, has the meaning specified in
subsection 2.01(a).
"Term Loan" has the meaning specified in subsection 2.01(a).
"Term Maturity Date" means May 15, 1998.
"Type" means, as to any Committed Loan, its nature as an Offshore
Rate Committed Loan or a Base Rate Committed Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities (as defined in Section 4001(a)(16) of ERISA), over
the current value of that Pension Plan's assets, determined in
accordance with the assumptions used for funding the Pension Plan
pursuant to Section 412 of the Code for the applicable plan year.
"United States" and "U.S." each means the United States of
America.
"Wholly-Owned Subsidiary" means any corporation in which (other
than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100% of the
capital stock of every other class, in each case, at the time as of
which any determination is being made, is owned, beneficially and of
record, by the Company, or by one or more of the other Wholly-Owned
Subsidiaries, or both.
1.02 Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Agent or the Banks by
way of consent, approval or waiver shall be deemed modified by the phrase "in
its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result
of negotiations among the Agent, the Company and the other parties, have been
reviewed by counsel to the Agent, the Company and such other parties, and are
the products of all parties. Accordingly, they shall not be construed against
the Banks or the Agent merely because of the Agent's or Banks' involvement in
their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied; provided, however,
that, if GAAP shall have been modified after the Effective Date and the
application of such modified GAAP shall have a material effect on such
financial computations (including the computations required for the purpose of
determining compliance with the covenants set forth in Article VII), then such
computations shall be made and such financial statements, certificates and
reports shall be prepared, and all accounting terms not otherwise defined
herein shall be construed, in accordance with GAAP as in effect prior to such
modification, unless and until the Majority Banks and the Company shall have
agreed upon the terms of the application of such modified GAAP.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. (a) The Term Credit. Each
Bank severally agrees, on the terms and conditions set forth herein, to make a
single loan to the Company (each such loan, a "Term Loan") on the Closing Date
in an amount not to exceed the amount set forth opposite such Bank's name on
Schedule 2.01 under the heading "Term Commitment" (such amount, such Bank's
"Term Commitment"). Amounts borrowed as Term Loans which are repaid or
prepaid by the Company may not be reborrowed.
(b) The Revolving Credit. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company (each such
loan, a "Revolving Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an
aggregate amount not to exceed at any time outstanding the amount set forth
opposite such Bank's name on Schedule 2.01 under the heading "Revolving
Commitment" (such amount, as the same may be reduced under Section 2.07 or
reduced or increased as a result of one or more assignments under Section
10.08, such Bank's "Revolving Commitment"); provided, however, that, after
giving effect to any Committed Borrowing of Revolving Loans, (i) the aggregate
principal amount of all Revolving Loans outstanding at such time plus the
aggregate principal amount of all Bid Loans outstanding, shall not at any time
exceed the combined Revolving Commitments, and (ii) the aggregate principal
amount of all outstanding Revolving Loans, together with the aggregate
principal amount of all Term Loans outstanding at such time plus the aggregate
principal amount of all Bid Loans outstanding, shall not at any time exceed
the combined Commitments. Within the limits of each Bank's Revolving
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this subsection 2.01(b), prepay under Section 2.08 and
reborrow under this subsection 2.01(b).
2.02 Loan Accounts. (a) The Loans made by each Bank or Designated
Bidder shall be evidenced by one or more loan accounts or records maintained
by such Bank or Designated Bidder in the ordinary course of business. The
loan accounts or records maintained by the Agent and each Bank or Designated
Bidder shall be rebuttable presumptive evidence of the amount of the Loans
made by the Banks and Designated Bidders to the Company and the interest and
payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Agent, the
Committed Loans made by such Bank may be evidenced by one or more promissory
notes of the Company, substantially in the form of Exhibit I-1 and
Exhibit I-2, with appropriate insertions ("Committed Loan Notes"), and upon
the request of any Bank or Designated Bidder made through the Agent the Bid
Loans made by such Bank or Designated Bidder may be evidenced by one or more
promissory notes of the Company, substantially in the form of Exhibit J, with
appropriate insertions ("Bid Loan Notes"), instead of or in addition to loan
accounts. Each such Bank or Designated Bidder shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it
and the amount of each payment of principal made by the Company with respect
thereto. Each such Bank and Designated Bidder is irrevocably authorized by
the Company to endorse its Note(s) and each Bank's or Designated Bidder's
record shall be rebuttable presumptive evidence of the accuracy of the
information so recorded; provided, however, that the failure of a Bank or
Designated Bidder to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank or Designated Bidder.
2.03 Procedure for Committed Borrowing. (a) Each Committed Borrowing
shall be made upon the Company's irrevocable written notice delivered to the
Agent in the form of a Notice of Borrowing (which notice must be received by
the Agent prior to 9:00 a.m. (San Francisco time) (i) three Business Days
prior to the requested Borrowing Date, in the case of Offshore Rate Committed
Loans; and (ii) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Committed Loans, specifying:
(A) the amount of the Committed Borrowing, which
(1) in the case of Base Rate Committed Loans, shall be in an
aggregate minimum amount of $10,000,000 or any integral multiple
of $1,000,000 in excess thereof and (2) in the case of Offshore
Rate Committed Loans, shall be in an aggregate minimum amount of
$10,000,000 or any integral multiple of $1,000,000 in excess
thereof;
(B) in the case of the initial Committed Borrowing,
whether Term Loans only or Revolving Loans and Term Loans are
requested and in the latter case the respective amounts thereof;
(C) the requested Borrowing Date, which shall be a
Business Day;
(D) the Type of Loans comprising the Committed
Borrowing; and
(E) the duration of the Interest Period applicable
to Offshore Rate Committed Loans included in such notice. If the
Notice of Borrowing fails to specify the duration of the Interest
Period for any Committed Borrowing comprised of Offshore Rate
Loans, such Interest Period shall be three months;
provided, however, that with respect to the Committed Borrowing to be made on
the Closing Date, the Notice of Borrowing shall be delivered to the Agent not
later than 9:00 a.m. (San Francisco time) (1) three Business Days prior to the
Closing Date for Offshore Rate Committed Loans, and (2) one Business Day
before the Closing Date for Base Rate Committed Loans.
(b) The Agent will promptly notify each Bank of its receipt of
any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of
that Committed Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Committed Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing
Date requested by the Company in funds immediately available to the Agent.
If, on such proposed Borrowing Date, all applicable conditions to funding
referenced in Article IV are satisfied, the proceeds of all such Committed
Loans will then be made available to the Company by the Agent by wire transfer
in accordance with written instructions provided to the Agent by the Company
of like funds as received by the Agent.
(d) After giving effect to any Committed Borrowing, unless the
Agent shall otherwise consent, there may not be more than ten different
Interest Periods in effect in respect of all Committed Loans and Bid Loans
together then outstanding.
2.04 Conversion and Continuation Elections for Committed Borrowings.
(a) The Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base
Rate Committed Loans, or as of the last day of the applicable Interest
Period, in the case of Offshore Rate Committed Loans, to convert any
such Committed Loans (or any part thereof (1), in the case of Base Rate
Committed Loans, in an aggregate amount not less than $10,000,000, or
that is in an integral multiple of $1,000,000 in excess thereof and (2),
in the case of Offshore Rate Committed Loans, in an aggregate amount not
less than $10,000,000, or that is an integral multiple of $1,000,000 in
excess thereof, into Committed Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Offshore Rate Committed Loans having Interest
Periods expiring on such day (or any part thereof in an amount not less
than $10,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Committed
Loans in respect of any Committed Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than $10,000,000, such
Offshore Rate Committed Loans shall automatically convert into Base Rate
Committed Loans, and on and after such date the right of the Company to
continue such Committed Loans as Offshore Rate Committed Loans shall
terminate.
(b) The Company shall deliver a Notice of Conversion/
Continuation to be received by the Agent not later than 9:00 a.m. (San
Francisco time) at least (i) three Business Days in advance of the Conversion/
Continuation Date, if the Committed Loans are to be converted into or
continued as Offshore Rate Committed Loans; and (ii) one Business Day in
advance of the Conversion/Continuation Date, if the Loans are to be converted
into Base Rate Committed Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Committed Loans to be
continued;
(C) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(D) in the case of conversions into Offshore
Committed Rate Loans, the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Committed Loans, the Company has failed to select timely a new
Interest Period to be applicable to such Offshore Rate Committed Loans, or if
any Default or Event of Default then exists, the Company shall be deemed to
have elected to convert such Offshore Rate Committed Loans into Base Rate
Committed Loans effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Committed
Loans held by each Bank with respect to which the notice was given.
(e) Unless the Majority Banks otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have
a Committed Loan converted into or continued as an Offshore Rate Committed
Loan.
(f) After giving effect to any conversion or continuation of
Committed Loans, unless the Agent shall otherwise consent, there may not be
more than ten different Interest Periods in effect in respect of all Committed
Loans and Bid Loans together then outstanding.
2.05 Bid Borrowings. In addition to Committed Borrowings pursuant to
Section 2.03, each Bid Loan Bank severally agrees that the Company may, as set
forth in Section 2.06, from time to time request the Bid Loan Banks prior to
the Revolving Termination Date to submit offers to make Bid Loans to the
Company; provided, however, that the Bid Loan Banks may, but shall have no
obligation to, submit such offers and the Company may, but shall have no
obligation to, accept any such offers, and any Bid Loan Bank may designate one
or more Designated Bidders to make such offers from time to time and, if such
offers are accepted by the Company, to make such Bid Loans; and provided,
further, that at no time shall (a) the outstanding aggregate principal amount
of all Bid Loans made by all Bid Loan Banks and Designated Bidders, plus the
outstanding aggregate principal amount of all Committed Loans made by all
Banks, exceed the combined Commitments; (b) the outstanding aggregate
principal amount of all Bid Loans made by all Bid Loan Banks and Designated
Bidders, plus the outstanding aggregate principal amount of all Revolving
Loans made by all Banks, exceed the combined Revolving Commitments; or (c) the
number of Interest Periods for Bid Loans then outstanding plus the number of
Interest Periods for Committed Loans then outstanding, exceed ten.
2.06 Procedure for Bid Borrowings. (a) When the Company wishes to
request the Bid Loan Banks to submit offers to make Bid Loans hereunder, it
shall transmit to the Agent by telephone call followed promptly by facsimile
transmission a notice in substantially the form of Exhibit G (a "Competitive
Bid Request") so as to be received no later than 7:00 a.m. (San Francisco
time) (x) four Business Days prior to the date of a proposed Bid Borrowing in
the case of a LIBOR Auction, or (y) two Business Days prior to the date of a
proposed Bid Borrowing in the case of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Borrowing,
which shall be a minimum amount of $5,000,000 or in integral
multiples of $1,000,000 in excess thereof;
(iii) whether the Competitive Bids requested are to
be for LIBOR Bid Loans or Absolute Rate Bid Loans or both; and
(iv) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of "Interest
Period" herein.
Subject to subsection 2.06(c), the Company may not request Competitive Bids
for more than three Interest Periods in a single Competitive Bid Request and
may not request Competitive Bids more than once in any period of five Business
Days.
(b) Upon receipt of a Competitive Bid Request, the Agent will
promptly send to the Bid Loan Banks and Designated Bidders by facsimile
transmission an Invitation for Competitive Bids, which shall constitute an
invitation by the Company to each Bid Loan Bank and Designated Bidder to
submit Competitive Bids offering to make the Bid Loans to which such
Competitive Bid Request relates in accordance with this Section 2.06.
(c) (i) Each Bid Loan Bank and Designated Bidder may at
its discretion submit a Competitive Bid containing an offer or
offers to make Bid Loans in response to any Invitation for
Competitive Bids. Each Competitive Bid must comply with the
requirements of this subsection 2.06(c) and must be submitted to
the Agent by facsimile transmission at the Agent's office for
notices set forth on Schedule 10.02 not later than (A) 6:30 a.m.
(San Francisco time) three Business Days prior to the proposed
Borrowing Date, in the case of a LIBOR Auction or (B) 6:30 a.m.
(San Francisco time) on the proposed Borrowing Date, in the case
of an Absolute Rate Auction; provided that Competitive Bids
submitted by the Agent (or any Affiliate of the Agent) in the
capacity of a Bid Loan Bank or Designated Bidder may be submitted,
and may only be submitted, if the Agent or such Affiliate notifies
the Company of the terms of the offer or offers contained therein
not later than (A) 6:15 a.m. (San Francisco time) three Business
Days prior to the proposed Borrowing Date, in the case of a LIBOR
Auction or (B) 6:15 a.m. (San Francisco time) on the proposed
Borrowing Date, in the case of an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially
the form of Exhibit H, specifying therein:
(A) the proposed Borrowing Date;
(B) the principal amount of each Bid Loan for
which such Competitive Bid is being made, which principal
amount (x) may be equal to, greater than or less than the
Revolving Commitment of the quoting Bid Loan Bank or the
quoting Designated Bidder's affiliated Bid Loan Bank,
(y) must be $5,000,000 or in integral multiples of
$1,000,000 in excess thereof, and (z) may not exceed the
principal amount of Bid Loans for which Competitive Bids
were requested;
(C) in case the Company elects a LIBOR Auction,
the margin above or below the LIBO Rate (the "LIBOR Bid
Margin") offered for each such Bid Loan, expressed in
multiples of 1/1000th of one basis point to be added to or
subtracted from the applicable LIBO Rate and the Interest
Period applicable thereto;
(D) in case the Company elects an Absolute Rate
Auction, the rate of interest per annum expressed in
multiples of 1/1000th of one basis point (the "Absolute
Rate") offered for each such Bid Loan and the Interest
Period applicable thereto; and
(E) the identity of the quoting Bid Loan Bank
or Designated Bidder.
A Competitive Bid may contain up to three separate offers by the
quoting Bid Loan Bank or Designated Bidder with respect to each
Interest Period specified in the related Invitation for
Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity with
Exhibit H or does not specify all of the information
required by subsection (c)(ii) of this Section;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bids; or
(D) arrives after the time set forth in
subsection (c)(i).
(d) Promptly on receipt and not later than 7:00 a.m. (San
Francisco time) three Business Days prior to the proposed Borrowing Date in
the case of a LIBOR Auction, or 7:00 a.m. (San Francisco time) on the proposed
Borrowing Date, in the case of an Absolute Rate Auction, the Agent will notify
the Company of the terms (i) of any Competitive Bid submitted by a Bid Loan
Bank or Designated Bidder that is in accordance with subsection 2.06(c), and
(ii) of any Competitive Bid that amends, modifies or is otherwise inconsistent
with a previous Competitive Bid submitted by such Bid Loan Bank or Designated
Bidder with respect to the same Competitive Bid Request. Any such subsequent
Competitive Bid shall be disregarded by the Agent unless such subsequent
Competitive Bid is submitted solely to correct a manifest error in such former
Competitive Bid and only if received within the times set forth in subsection
2.06(c). The Agent's notice to the Company shall specify (1) the aggregate
principal amount of Bid Loans for which offers have been received for each
Interest Period specified in the related Competitive Bid Request; and (2) the
respective principal amounts and LIBOR Bid Margins or Absolute Rates, as the
case may be, so offered. Subject only to the provisions of Sections 3.02,
3.05 and 4.02 hereof and the provisions of this subsection (d), any
Competitive Bid shall be irrevocable except with the written consent of the
Agent given on the written instructions of the Company.
(e) Not later than 7:30 a.m. (San Francisco time) three Business
Days prior to the proposed Borrowing Date, in the case of a LIBOR Auction, or
7:30 a.m. (San Francisco time) on the proposed Borrowing Date, in the case of
an Absolute Rate Auction, the Company shall notify the Agent of its acceptance
or non-acceptance of the offers so notified to it pursuant to subsection
2.06(d). The Company shall be under no obligation to accept any offer and may
choose to reject all offers. In the case of acceptance, such notice shall
specify the aggregate principal amount of offers for each Interest Period that
is accepted. The Company may accept any Competitive Bid in whole or in part;
provided that:
(i) the aggregate principal amount of each Bid
Borrowing may not exceed the applicable amount set forth in the
related Competitive Bid Request;
(ii) the principal amount of each Bid Borrowing must
be $5,000,000 or in any integral multiple of $1,000,000 in excess
thereof;
(iii) acceptance of offers may only be made on the
basis of ascending LIBOR Bid Margins or Absolute Rates within each
Interest Period, as the case may be; and
(iv) the Company may not accept any offer that is
described in subsection 2.06(c)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
(f) If offers are made by two or more Bid Loan Banks or
Designated Bidders with the same LIBOR Bid Margins or Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related Interest Period, the
principal amount of Bid Loans in respect of which such offers are accepted
shall be allocated by the Agent among such Bid Loan Banks or Designated
Bidders as nearly as possible (in such multiples, not less than $1,000,000, as
the Agent may deem appropriate) in proportion to the aggregate principal
amounts of such offers. Determination by the Agent of the amounts of Bid
Loans shall be conclusive in the absence of manifest error.
(g) (i) The Agent will promptly notify each Bid Loan Bank or
Designated Bidder having submitted a Competitive Bid if its offer has
been accepted and, if its offer has been accepted, of the amount of the
Bid Loan or Bid Loans to be made by it on the date of the Bid Borrowing.
(ii) Each Bid Loan Bank or Designated Bidder, which
has received notice pursuant to subsection 2.06(g)(i) that its
Competitive Bid has been accepted, shall make the amounts of such
Bid Loans available to the Agent for the account of the Company at
the Agent's Payment Office, by 11:00 a.m. (San Francisco time), on
such date of Bid Borrowing, in funds immediately available to the
Agent for the account of the Company at the Agent's Payment
Office. If, on or prior to the proposed date of the Bid
Borrowing, all applicable conditions to funding referenced in
Article IV are satisfied, the proceeds of all such Bid Loans will
then be made available to the Company by the Agent by wire
transfer in accordance with written instructions provided to the
Agent by the Company of like funds as received by the Agent.
(iii) Promptly following each Bid Borrowing, the
Agent shall notify each Bank and Designated Bidder of the ranges
of bids submitted and the highest and lowest Bids accepted for
each Interest Period requested by the Company and the aggregate
amount borrowed pursuant to such Bid Borrowing.
(iv) From time to time, the Company and the Bid Loan
Banks and Designated Bidders shall furnish such information to the
Agent as the Agent may request relating to the making of Bid
Loans, including the amounts, interest rates, dates of borrowings
and maturities thereof, for purposes of the allocation of amounts
received from the Company for payment of all amounts owing
hereunder.
(h) Nothing in this Section 2.06 shall be construed as a right
of first offer in favor of the Bid Loan Banks or Designated Bidders or to
otherwise limit the ability of the Company to request and accept credit
facilities from any Person (including any of the Bid Loan Banks or Designated
Bidders), provided that no Default or Event of Default would otherwise arise
or exist as a result of the Company executing, delivering or performing under
such credit facilities.
2.07 Termination or Reduction of Commitments. (a) Term Commitments.
If on the Closing Date the aggregate Term Commitments shall exceed the
outstanding principal amount of the Term Loans made, such unused portion of
the Term Commitments shall automatically terminate on the Closing Date.
(b) Revolving Commitments. The Company may, upon not less than
five Business Days' prior notice to the Agent, terminate the Revolving
Commitments, or permanently reduce the Revolving Commitments by an aggregate
minimum amount of $25,000,000 or any integral multiple of $5,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of
Revolving Loans made on the effective date thereof, the then-outstanding
principal amount of the Revolving and Bid Loans would exceed the amount of the
combined Revolving Commitments then in effect. Once reduced in accordance
with this Section, the Revolving Commitments may not be increased. Any
reduction of the Revolving Commitments shall be applied to each Bank according
to its Pro Rata Share. All of the accrued Facility Fee to, but not including,
the effective date of any reduction or termination of the Revolving
Commitments, shall be paid on the effective date of such reduction or
termination.
2.08 Optional Prepayments. (a) Committed Loans. Subject to Section
3.04, the Company may, at any time or from time to time, upon notice to the
Agent given not later than 9:00 a.m. (San Francisco time), at least three
Business Days prior to the proposed prepayment date (in the case of Offshore
Rate Committed Loans), and at least one Business Day prior to the proposed
prepayment date (in the case of Base Rate Committed Loans), ratably prepay
Committed Loans in whole or in part, in minimum amounts of $10,000,000 or any
integral multiple of $1,000,000 in excess thereof. Such notice of prepayment
shall be irrevocable and shall specify the date and amount of such prepayment,
whether such prepayment of Committed Loans is of Term Loans or Revolving Loans
(or a combination thereof), and the Type(s) of Committed Loans to be prepaid.
The Agent will promptly notify each Bank of its receipt of any such notice,
and of such Bank's Pro Rata Share of such prepayment. If such notice is given
by the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to each such date on the amount
prepaid and any amounts required pursuant to Section 3.04.
(b) Bid Loans. Bid Loans may not be voluntarily prepaid.
2.09 Mandatory Prepayments. (a) Asset Dispositions. If the Company or
any Subsidiary shall at any time or from time to time make or agree to make a
Disposition involving an aggregate amount of Net Proceeds of $25,000,000 or
more, then (i) the Company shall promptly notify the Agent of such proposed
Disposition (including the amount of the estimated Net Proceeds to be received
by the Company or such Subsidiary in respect thereof) and of the Company's
intent to make a mandatory prepayment of Term Loans hereunder, and
(ii) promptly upon, and in no event later than five days after, receipt by the
Company or the Subsidiary of the Net Proceeds of such Disposition, the Company
shall prepay Term Loans in an aggregate amount equal to the amount of such Net
Proceeds.
(b) Debt and Equity Issuances. If the Company or any Subsidiary
shall incur, issue or sell any Indebtedness of the type referred to in clause
(a) and clause (d) of the definition of Indebtedness herein, or issue or sell
new common or preferred equity securities, the Company shall promptly notify
the Agent of the estimated Net Issuance Proceeds thereof to be received by the
Company or such Subsidiary in respect thereof and of the Company's intent to
make a mandatory prepayment of Term Loans hereunder. Promptly upon, and in no
event later than five days after, receipt by the Company or such Subsidiary of
such Net Issuance Proceeds, the Company shall prepay the Term Loans in an
aggregate amount equal to the amount of such Net Issuance Proceeds.
(c) General. Any prepayments pursuant to this Section 2.09
shall be applied first to any Term Loans consisting of Base Rate Committed
Loans then outstanding and then to Term Loans consisting of Offshore Rate
Committed Loans with the shortest Interest Periods remaining; provided,
however, that if the amount of Base Rate Committed Loans then outstanding is
not sufficient to satisfy the entire prepayment requirement, the Company may,
at its option, so long as no Default or Event of Default exists, place any
amounts which it would otherwise be required to use to prepay Offshore Rate
Committed Loans on a day other than the last day of the Interest Period
therefor in an interest-bearing escrow account with one of the Banks until the
end of such Interest Period at which time such escrowed amounts shall be
applied to prepay such Offshore Rate Loans. In connection with any prepayment
under this Section 2.09, the Company shall deliver to the Agent on or before
the date of the prepayment a certificate of a Responsible Officer setting
forth in reasonable detail the calculation of the amount of the prepayment and
the facts and circumstances giving rise to the applicable prepayment event.
The Agent will promptly notify each Bank of its receipt of any notice from the
Company under this Section 2.09, any information provided by the Company in
connection with the prepayment and such Bank's Pro Rata Share of any
prepayment. The Company shall pay, together with each prepayment under this
Section 2.09, accrued interest on the amount prepaid and any amounts required
pursuant to Section 3.04.
2.10 Repayment. (a) Term Loans. The Company shall repay to the Banks
in full on the Term Maturity Date the aggregate principal amount of Term Loans
outstanding on such date.
(b) Revolving Loans. The Company shall repay to the Banks in
full on the Revolving Termination Date the aggregate principal amount of
Revolving Loans outstanding on such date.
(c) Bid Loans. The Company shall repay to each Bid Loan Bank or
Designated Bidder, as the case may be, that makes any Bid Loan in full the
principal amount of such Bid Loan on the last day of the relevant Interest
Period for such Bid Loan.
2.11 Interest. (a) Each Committed Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the LIBO Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Loans under
Section 2.04), plus the Applicable Margin. Each Bid Loan shall bear interest
on the outstanding principal amount thereof from the relevant Borrowing Date
at a rate per annum equal to the LIBO Rate plus (or minus) the LIBOR Bid
Margin or at the Absolute Rate, as the case may be.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Committed Loans under Section 2.08 or 2.09 for the portion of
the Loans so prepaid and upon payment (including prepayment) in full thereof
and, during the existence of any Event of Default, interest shall be paid on
demand of the Agent at the request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default under subsection 8.01(a), (f) or (g) exists or after
acceleration, the Company shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of
all outstanding Obligations, at a rate per annum equal to (i) in the case of
any Committed Loans, the sum of 2% per annum plus the applicable LIBO Rate or
Base Rate, as the case may be, and the Applicable Margin then in effect for
such Committed Loans, (ii) in the case of any Bid Loans, the sum of 2% per
annum plus the rate of interest otherwise payable in respect of such Bid
Loans, and (iii) in the case of any other Obligations, the Base Rate plus 2%;
provided, however, that, on and after the expiration of any Interest Period
applicable to any Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at
a rate per annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank or Designated Bidder hereunder shall be
subject to the limitation that payments of interest shall not be required for
any period for which interest is computed hereunder, to the extent (but only
to the extent) that contracting for or receiving such payment by such Bank or
Designated Bidder would be contrary to the provisions of any law applicable to
such Bank or Designated Bidder limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank or Designated
Bidder, and in such event the Company shall pay such Bank or Designated Bidder
interest at the highest rate permitted by applicable law.
2.12 Fees. (a) Arrangement and Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay
an agency fee to the Agent for the Agent's own account, as required by the
letter agreement (the "Fee Letter") between the Company and the Arranger and
Agent dated January 24, 1996, as amended.
(b) Bid Auction Fee. The Company shall pay to the Agent, for
the Agent's own account, a bid auction fee in the amount set forth in the Fee
Letter, each time the Company requests the Bid Loan Banks to submit offers to
make Bid Loans.
(c) Facility Fee. The Company shall pay to the Agent for the
account of each Bank a facility fee (the "Facility Fee") on the amount of such
Bank's Revolving Commitment (without regard to usage), computed on a quarterly
basis in arrears on the last Business Day of each calendar quarter, based upon
the average daily amount of such Bank's Revolving Commitment for that quarter,
as calculated by the Agent, at a rate per annum equal to the Applicable Fee
Amount. The Facility Fee shall accrue from the earlier to occur of
(i) May 15, 1996, and (ii) the Closing Date to the Revolving Termination Date
and shall be due and payable quarterly in arrears on the last Business Day of
each quarter commencing on the first such date to occur after the Closing Date
through the Revolving Termination Date, with the final payment to be made on
the Revolving Termination Date; provided that, in connection with any
reduction or termination of the Revolving Commitments under Section 2.07,
accrued Facility Fee calculated for the period ending on such date shall also
be paid on the date of such reduction or termination, with the following
quarterly payment being calculated on the basis of the period from such
reduction or termination date to such quarterly payment date. The Facility
Fee provided in this subsection shall accrue at all times after the above-
mentioned commencement date, including at any time during which one or more
conditions in Article IV are not met.
2.13 Computation of Fees and Interest. (a) All computations of
interest for Base Rate Committed Loans when the Base Rate is determined by
BofA's "reference rate" shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed. All other computations of
fees and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company, the Banks and the Designated Bidders in
the absence of manifest error. The Agent will, at the request of the Company
or any Bank or Designated Bidder, deliver to the Company or such Bank or
Designated Bidder, as the case may be, a statement showing the quotations used
by the Agent in determining any interest rate.
(c) If the Applicable Margin or Applicable Fee Amount is
increased or reduced with respect to any period for which the Company has
already paid interest or Facility Fee, the Agent shall recalculate the
additional interest or Facility Fee due from or to the Company and shall,
within 15 Business Days, give the Company and the Banks notice of such
recalculation.
(i) Any additional interest or Facility Fee due from the
Company shall be paid to the Agent for the account of the Banks on the
next date on which an interest or fee payment is due; provided, however,
that if there are no Loans outstanding or if the Loans are due and
payable, such additional interest or Facility Fee shall be paid promptly
after receipt of written request for payment from the Agent.
(ii) Any interest or Facility Fee refund due to the Company
shall be credited against payments otherwise due from the Company on the
next interest or fee payment due date or, if the Loans have been repaid
and the Banks are no longer committed to lend under this Agreement, the
Banks shall pay the Agent for the account of the Company such interest
or Facility Fee refund not later than five Business Days after written
notice from the Agent to the Banks.
2.14 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Banks and Designated Bidders at the
Agent's Payment Office, and shall be made in Dollars and in immediately
available funds, no later than 11:00 a.m. (San Francisco time) on the date
specified herein. The Agent will promptly distribute to each Bank (or
Designated Bidder) its Pro Rata Share (or other applicable share as expressly
provided herein) of such payment in like funds as received. Any payment
received by the Agent later than 11:00 a.m. (San Francisco time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to
the date on which any payment is due to the Banks or Designated Bidders that
the Company will not make such payment in full as and when required, the Agent
may assume that the Company has made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Bank or
Designated Bidder on such due date an amount equal to the amount then due such
Bank or Designated Bidder. If and to the extent the Company has not made such
payment in full to the Agent, each Bank or Designated Bidder shall repay to
the Agent on demand such amount distributed to such Bank or Designated Bidder,
together with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Bank or Designated Bidder until the
date repaid.
2.15 Payments by the Banks and Designated Bidders to the Agent.
(a) Unless the Agent receives notice from a Bank or Designated Bidder, as the
case may be, on or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Bank or Designated Bidder will not make available as and
when required hereunder to the Agent for the account of the Company the amount
of that Bank's or Designated Bidder's Loan, the Agent may assume that such
Bank or Designated Bidder has made such amount available to the Agent in
immediately available funds on the Borrowing Date and the Agent may (but shall
not be so required), in reliance upon such assumption, make available to the
Company on such date a corresponding amount. If and to the extent any Bank or
Designated Bidder shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank or Designated Bidder shall on
the Business Day following such Borrowing Date make such amount available to
the Agent, together with interest at the Federal Funds Rate for each day
during such period. A notice of the Agent submitted to any Bank or Designated
Bidder with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's or Designated Bidder's Loan
on the Borrowing Date for all purposes of this Agreement. If such amount is
not made available to the Agent on the Business Day following the Borrowing
Date, the Agent will notify the Company of such failure to fund and, upon
demand by the Agent, the Company shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank or Designated Bidder to make any
Loan on any Borrowing Date shall not relieve any other Bank or Designated
Bidder of any obligation hereunder to make a Loan on such Borrowing Date, but
no Bank or Designated Bidder shall be responsible for the failure of any other
Bank or Designated Bidder to make the Loan to be made by such other Bank or
Designated Bidder on any Borrowing Date.
2.16 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank or Designated Bidder shall obtain on account of the
Loans made by it any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its ratable share
(or other share contemplated hereunder) of (i) payments in respect of the
Committed Loans obtained by all the Banks, or (ii) payments in respect of Bid
Loans having the same Borrowing Date, Interest Payment Date and maturity date,
such Bank or Designated Bidder shall immediately (a) notify the Agent of such
fact, and (b) purchase from the other Banks and, if applicable, Designated
Bidders, such participations in the Committed Loans or Bid Loans, as
applicable, made by them as shall be necessary to cause such purchasing Bank
or Designated Bidder to share the excess payment pro rata with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank or Designated Bidder, such
purchase shall to that extent be rescinded and each other Bank or Designated
Bidder shall repay to the purchasing Bank or Designated Bidder the purchase
price paid therefor, together with an amount equal to such paying Bank's or
Designated Bidder's ratable share (according to the proportion of (i) the
amount of such paying Bank's or Designated Bidder's required repayment to (ii)
the total amount so recovered from the purchasing Bank or Designated Bidder)
of any interest or other amount paid or payable by the purchasing Bank or
Designated Bidder in respect of the total amount so recovered. The Company
agrees that any Bank or Designated Bidder so purchasing a participation from
another Bank or Designated Bidder may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but
subject to Section 10.11) with respect to such participation as fully as if
such Bank or Designated Bidder were the direct creditor of the Company in the
amount of such participation. The Agent will keep records (which shall be
rebuttably presumed to be correct) of participations purchased under this
Section and will in each case notify the Banks and, if applicable, Designated
Bidders, following any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Company to each Bank,
Designated Bidder, or the Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for, any Taxes. In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Bank, Designated Bidder or the Agent, then:
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Bank, Designated Bidder or the Agent, as the case
may be, receives and retains an amount equal to the sum it would have
received and retained had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or Designated
Bidder, or the Agent for the account of such Bank or Designated Bidder,
at the time interest is paid, Further Taxes in the amount that the
respective Bank or Designated Bidder specifies as necessary to preserve
the after-tax yield such Bank or Designated Bidder would have received
if such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank,
each Designated Bidder and the Agent for the full amount of (i) Taxes,
(ii) Other Taxes, and (iii) Further Taxes in the amount that the respective
Bank or Designated Bidder specifies as necessary to preserve the after-tax
yield such Bank or Designated Bidder would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were
correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date such Bank, such Designated Bidder or the
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company
of Taxes, Other Taxes or Further Taxes, the Company shall furnish to each
Bank, each Designated Bidder or the Agent the original or a certified copy of
a receipt evidencing payment thereof or other evidence of payment satisfactory
to such Bank, such Designated Bidder or the Agent.
(e) If the Company is required to pay any amount to any Bank or
Designated Bidder pursuant to subsection (b) or (c) of this Section, then such
Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
3.02 Illegality. (a) If any Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office,
or such Bank's Designated Bidders in the case of LIBOR Bid Loans, to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company
through the Agent, any obligation of that Bank or Designated Bidder to make
Offshore Rate Loans (including in respect of any LIBOR Bid Loan as to which
the Company has accepted such Bank's or Designated Bidder's Competitive Bid,
but as to which the Borrowing Date has not arrived) shall be suspended until
such Bank notifies the Agent and the Company that the circumstances giving
rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful for such Bank or
such Bank's Designated Bidders to maintain any Offshore Rate Loan, the Company
shall, upon its receipt of notice of such fact and demand from such Bank (with
a copy to the Agent), prepay in full such Offshore Rate Loans of such Bank (or
of its Designated Bidders) then outstanding, together with interest accrued
thereon and amounts required under Section 3.04, either on the last day of the
Interest Period thereof, if such Bank or any such Designated Bidder may
lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if such Bank or any such Designated Bidder may not lawfully
continue to maintain such Offshore Rate Loan. If the Company is required so
to prepay any Offshore Rate Committed Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Committed Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Committed Loans has been so terminated or suspended, the Company may
elect, by giving notice to the Bank through the Agent that all Loans which
would otherwise be made by the Bank as Offshore Rate Committed Loans shall be
instead Base Rate Committed Loans.
(d) Before giving any notice to the Agent under this Section,
the affected Bank or Designated Bidder shall designate a different Lending
Office with respect to its Offshore Rate Loans if such designation will avoid
the need for giving such notice or making such demand and will not, in the
judgment of such Bank or Designated Bidder, be illegal or otherwise
disadvantageous to such Bank or Designated Bidder.
3.03 Increased Costs and Reduction of Return. (a) If any Bank
determines that, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any
increase in the cost to such Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Committed Loans, then the Company shall be
liable for, and shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent for the account of such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank or Designated Bidder shall have determined that
(i) the introduction of any Capital Adequacy Regulation, (ii) any change in
any Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by such Bank or Designated Bidder (or its Lending
Office) or any corporation controlling such Bank or Designated Bidder with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Bank or Designated Bidder or any
corporation controlling such Bank or Designated Bidder and (taking into
consideration such Bank's, such Designated Bidder's or such corporation's
policies with respect to capital adequacy and such Bank's or Designated
Bidder's desired return on capital) determines that the amount of such capital
is increased as a consequence of its Commitments, Loans, credits or
obligations under this Agreement, then, upon demand of such Bank or Designated
Bidder to the Company through the Agent, the Company shall pay to such Bank or
Designated Bidder, as the case may be, from time to time as specified by such
Bank or Designated Bidder, such additional amounts as are sufficient to
compensate such Bank or Designated Bidder for such increase.
3.04 Funding Losses. The Company shall reimburse each Bank and each
Designated Bidder, and hold each Bank and each Designated Bidder harmless
from, any, loss or expense which such Bank or such Designated Bidder may
sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a
Committed Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment of any
Committed Loan in accordance with any notice delivered under Section 2.08
or 2.09;
(d) the prepayment (including pursuant to Section 2.08, 2.09 or
3.02(b)) or other payment (including after acceleration thereof) of any
Offshore Rate Loan or Absolute Rate Bid Loan on a day that is not the last day
of the relevant Interest Period; or
(e) the conversion under Section 2.04 of any Offshore Rate
Committed Loan to a Base Rate Committed Loan on a day that is not the last day
of the relevant Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained.
3.05 Inability to Determine Rates. If the Agent or the Majority Banks
shall have determined that for any reason adequate and reasonable means do not
exist for determining the LIBO Rate for any requested Interest Period with
respect to a proposed borrowing of Offshore Rate Loans, or conversion into or
continuation of Offshore Rate Committed Loans, or that the LIBO Rate
applicable pursuant to subsection 2.11(a) for any requested Interest Period
with respect to a borrowing of Offshore Rate Loans, or a conversion into or
continuation of Offshore Rate Committed Loans, does not adequately and fairly
reflect the cost to the Banks of funding such Loans, the Agent will promptly
so notify the Company and each Bank. Thereafter, the obligation of the Banks
to make or maintain Offshore Rate Loans hereunder shall be suspended until the
Agent upon the instruction of the Majority Banks revokes such notice in
writing. Upon receipt of such notice, the Company may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it with
respect to such Offshore Rate Committed Loans. If the Company does not revoke
such notice as to any proposed Offshore Rate Committed Loans, the Banks shall
make, convert or continue any such Offshore Rate Committed Loans, as proposed
by the Company, in the amount specified in the applicable notice submitted by
the Company, but such Offshore Rate Committed Loans shall be made, converted
or continued as Base Rate Committed Loans instead of Offshore Rate Committed
Loans. Any outstanding Competitive Bid Request for LIBOR Bid Loans or notice
of acceptance by the Company of any Competitive Bids for LIBOR Bid Loans will
be deemed automatically revoked.
3.06 Reserves on Offshore Rate Committed Loans. The Company shall pay
to each Bank, as long as such Bank shall be required under regulations of the
FRB to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional interest on the unpaid principal amount of each
Offshore Rate Committed Loan equal to the actual costs of such reserves
allocated to such Offshore Rate Committed Loan by the Bank (as determined by
the Bank in good faith, which determination shall be rebuttable presumptive
evidence of the accuracy of such determination), payable on each date on which
interest is payable on such Committed Loan, provided the Company shall have
received at least 15 days' prior written notice (with a copy to the Agent) of
such additional interest from the Bank. If a Bank fails to give notice 15
days prior to the relevant Interest Payment Date, such additional interest
shall be payable 15 days from receipt of such notice.
3.07 Certificates of Banks. Any Bank or Designated Bidder claiming
reimbursement or compensation under this Article III shall deliver to the
Company (with a copy to the Agent) a certificate setting forth in reasonable
detail the amount payable to such Bank or Designated Bidder hereunder and such
certificate shall be rebuttable presumptive evidence of the accuracy of such
determination. If any Bank or Designated Bidder fails to notify the Company
that such Bank or Designated Bidder intends to claim any such reimbursement or
compensation in respect of a claim under Section 3.03, 3.04 or 3.06 within six
months after such Bank or Designated Bidder has, or with reasonable diligence
should have, knowledge of its claim therefor, the Company shall not be
obligated to compensate such Bank or Designated Bidder for the amount of such
Bank's or Designated Bidder's claim accruing prior to the date which is six
months before the date on which such Bank or Designated Bidder first notifies
the Company that it intends to make such claim; it being understood that the
calculation of the actual amounts may not be possible within such period and
that such Bank or Designated Bidder may provide such calculation as soon as
reasonably practicable thereafter without affecting or limiting the Company's
payment obligations hereunder.
3.08 Substitution of Banks. Upon the receipt by the Company from any
Bank or Designated Bidder (an "Affected Bank") of a claim for payment or
compensation under Section 3.01 or 3.02 that the Company deems to be material
or a notice under Section 3.03, the Company may at its expense (i) request one
or more of the other Banks to acquire and assume all or part of such Affected
Bank's Loans and Commitment, or (ii) designate a replacement bank to acquire
and assume all or a ratable part of all of such Affected Bank's Loans and
Commitment (a "Replacement Bank"). Any such designation of a Replacement Bank
under clause (ii) shall be subject to the prior written consent of the Agent
(which consent shall not be unreasonably withheld).
3.09 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to make
its initial Committed Loan hereunder, and to receive through the Agent the
initial Competitive Bid Request, is subject to the condition that the Agent
shall have received on or before the Closing Date all of the following, in
form and substance satisfactory to the Agent and each Bank, and in sufficient
copies for each Bank:
(a) Credit Agreement and Notes. This Agreement executed by each
party thereto, and Notes executed by the Company for the Banks requesting
Notes;
(b) Resolutions; Incumbency.
(A) Copies of the resolutions of the board of directors of
the Company authorizing the transactions contemplated hereby, certified
as of the Effective Date by the Secretary or an Assistant Secretary of
the Company; and
(B) A certificate of the Secretary or Assistant Secretary
of the Company, dated the Effective Date, certifying the names, titles
and true signatures of the officers of the Company authorized to
execute, deliver and perform, as applicable, this Agreement, and all
other Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation of the
Company as in effect on the Effective Date, certified by the Secretary
of State (or similar, applicable Governmental Authority) of the
Company's state of incorporation as of a recent date and by the
Secretary or Assistant Secretary of the Company as of the Effective Date
and the bylaws of the Company as in effect on the Effective Date,
certified by the Secretary or Assistant Secretary of the Company as of
the Effective Date; and
(ii) a certificate of existence for the Company from the
Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation as of a recent date, together with a
bring-down certificate by facsimile, dated the Effective Date or not
more than one Business Day prior thereto;
(d) Legal Opinions.
(i) an opinion of Miller, Nash, Wiener, Hager & Carlsen,
counsel to the Company, dated the Closing Date, and addressed to the
Agent and the Banks, substantially in the form of Exhibit D; and
(ii) a favorable opinion of Brobeck, Phleger &
Harrison LLP, special counsel to the Agent, dated the Closing Date;
(e) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent due and payable as
of the Closing Date, together with Attorney Costs of BofA to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute BofA's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the Closing Date (provided that
such estimate shall not thereafter preclude final settling of accounts between
the Company and BofA), including any such costs, fees and expenses arising
under or referenced in Sections 2.12 and 10.04;
(f) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating:
(i) that the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on
and as of such date;
(ii) that no Default or Event of Default exists or would
result from the initial Borrowing;
(iii) the Debt Ratings, as of such date; and
(iv) that there has occurred since December 31, 1995, no
event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect or, to the best knowledge of the
Company, a Target Business Material Adverse Effect;
(g) Acquisition. A certificate of a Responsible Officer, dated
as of the Closing Date, stating that all material conditions precedent to the
consummation of the Acquisition shall have been fulfilled in all material
respects, including approval by the Board of Directors of the Company (other
than any conditions relating to the closing of the transactions contemplated
by this Agreement or otherwise relating to the funding of the purchase price
payment owing with respect to the Acquisition);
(h) Approvals and Consents. A certificate of a Responsible
Officer, dated as of the Closing Date, stating that all approvals and consents
necessary or advisable in connection with the Acquisition have been duly
obtained or made and remain in effect, with all applicable waiting periods
having expired or having been terminated without any action having been taken
by any Person or Governmental Authority to enjoin, restrict or prevent the
consummation of the Acquisition or otherwise to impose any materially adverse
conditions upon the consummation of the Acquisition or on the operations of
the Company and its Subsidiaries after the consummation of the Acquisition;
(i) No Litigation. A certificate of a Responsible Officer,
dated as of the Closing Date, to the effect that (to the best knowledge of
such Responsible Officer) no legal or administrative proceedings, governmental
investigations or other legal or regulatory developments, actual or
threatened, shall be pending by or before any Governmental Authority with
respect to the Acquisition or the making of the Loans hereunder that seek to
enjoin, restrict or prevent the consummation of the Acquisition or the making
of any Loans hereunder or otherwise to impose materially adverse conditions
upon the consummation of the Acquisition or the making of any Loans or on the
operations of the Company and its Subsidiaries after the Acquisition or that
could, if adversely determined, have a Material Adverse Effect or a Target
Business Material Adverse Effect;
(j) Company Financial Statements. The audited consolidated
financial statements of the Company and its Subsidiaries for the fiscal year
ending December 31, 1995;
(k) Pro Forma Financial Statements and Projections. The pro
forma financial statements of the Company and its Subsidiaries, assuming the
consummation of the Acquisition, for the fiscal year ended December 31, 1995,
and projected for the fiscal years 1996 through 2000; and
(l) Other Documents. Such other approvals, opinions, documents
or materials as the Agent or any Bank may reasonably request.
Additionally, the obligation of each Bank to make its initial
Committed Loan hereunder, and to receive through the Agent the initial
Competitive Bid Request, is subject to the further condition that there has
occurred no event or circumstance that has resulted or could reasonably be
expected to result in a Target Business Material Adverse Effect.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Committed Loan to be made by it, and the obligation of any Bid Loan Bank
or Designated Bidder to make any Bid Loan as to which the Company has accepted
the relevant Competitive Bid (including its initial Loan), is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date:
(a) Notice of Borrowing. As to any Committed Loan, the Agent
shall have received (with, in the case of the initial Loan only, a copy for
each Bank) a Notice of Borrowing;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and
as of such Borrowing Date with the same effect as if made on and as of such
Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date; and except that this subsection (b) shall be
deemed instead to refer to the last day of the most recent year for which
financial statements have then been delivered in respect of the representation
and warranty made in Section 5.11(a));
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing; and
(d) No Material Adverse Effect. There has occurred since the
end of the most recent fiscal year of the Company, no event or circumstance
that has resulted or could reasonably be expected to result in a Material
Adverse Effect.
Each Notice of Borrowing and Competitive Bid Request submitted by the Company
hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice or request and as of each
Borrowing Date, that the conditions in this Section 4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
5.01 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation or partnership duly organized or formed, as
the case may be, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals (i) to own its assets and carry on its
business, and (ii) to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified, licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property
or the conduct of its business requires such qualification, license or good
standing; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (b)(i), clause (c) or clause (d),
to the extent that the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and each other Loan
Document to which the Company is a party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any material
Contractual Obligation to which the Company is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Company
or its property is subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company of
the Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
5.05 Litigation. Except as specifically disclosed in the Company's
Form 10K with respect to its fiscal year ending in December 1995, there are no
actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company, or its
Subsidiaries or any of their respective properties which: (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) if determined adversely to
the Company or its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein
or therein provided.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company. Neither the Company nor
any Subsidiary is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect, or
that would create an Event of Default under subsection 8.01(e).
5.07 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal
or state law, except where noncompliance could not reasonably be expected to
result in a Material Adverse Effect. Each Plan which is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter
from the IRS and to the best knowledge of the Company, nothing has occurred
which would cause the loss of such qualification. The Company and each ERISA
Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) except as set forth in Schedule 5.07, no Pension Plan has any
Unfunded Pension Liability; (iii) neither the Company nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the Company nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither the Company nor any
ERISA Affiliate has engaged in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by Section
6.10 and Section 7.05. Neither the Company nor any Subsidiary is generally
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.
5.09 Title to Properties; Liens. (a) The Company and each Subsidiary
have good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of
their respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect.
(b) The property of the Company and its Subsidiaries is subject to
no Liens, other than Permitted Liens.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
the Company or any Subsidiary that would, if made, have a Material Adverse
Effect.
5.11 Financial Condition. (a) The audited consolidated financial
statements of the Company and its Subsidiaries for the fiscal year ended
December 31, 1995:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein;
(ii) are complete and accurate in all material respects and
fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations and cash
flows for the period covered thereby; and
(iii) show all material Indebtedness and other liabilities,
direct or contingent, of the Company and its consolidated Subsidiaries
as of the date thereof.
(b) The pro forma financial statements of the Company and its
Subsidiaries for the fiscal year ended December 31, 1995, referred to in
subsection 4.01(k) were prepared in accordance with GAAP, are complete and
accurate in all material respects and fairly present the pro forma financial
condition of the Company and its Subsidiaries as of the date thereof, and the
financial projections also referred to in subsection 4.01(k) represent the
Company's best estimates and assumptions as to future performance, which the
Company believes to be fair and reasonable as of the time made in the light of
current and reasonably foreseeable business conditions.
(c) Since December 31, 1995, there has been no Material Adverse
Effect.
(d) Since December 31, 1995, to the best of the Company's
knowledge, there has been no Target Business Material Adverse Effect.
5.12 Environmental Matters. The Company conducts in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on its business, operations and properties, and
as a result thereof the Company has reasonably concluded that such
Environmental Laws and Environmental Claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary is an "Investment Company" within the meaning
of the Investment Company Act of 1940. The Company is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code or any
other Federal or state statute or regulation, in each case limiting its
ability to incur Indebtedness for borrowed money.
5.14 No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, Etc. The Company or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Company or
any Subsidiary infringes upon any rights held by any other Person, no claim or
litigation regarding any of the foregoing is pending or, to the best knowledge
of the Company, threatened, and, to the best knowledge of the Company, no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or proposed, which, in any such case,
could reasonably be expected to have a Material Adverse Effect.
5.16 Insurance. The properties of the Company and its Subsidiaries are
insured with financially sound and reputable insurance companies not
Affiliates of the Company, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Company or
such Subsidiary operates, except to the extent the Company and its
Subsidiaries maintain a plan or plans of self-insurance to such extent and
covering such risks as is usual for companies of similar size engaged in
similar businesses and owning similar properties.
5.17 Full Disclosure. None of the representations or warranties made
by the Company in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in
any exhibit, report, statement or certificate furnished by or on behalf of the
Company or any Subsidiary in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the Company to
the Banks prior to the Effective Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to the Agent, in
form and detail satisfactory to the Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year (commencing with the fiscal year ending December 31,
1996), a copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated
statements of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of KPMG Peat Marwick LLP
or another nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such consolidated
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted
or limited examination by the Independent Auditor of any material portion of
the Company's or any Subsidiary's records; and
(b) as soon as available, but not later than 60 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy of
the unaudited consolidated balance sheet of the Company and its Subsidiaries
as of the end of such quarter and the related consolidated statements of
income, shareholders' equity and cash flows for the period commencing on the
first day and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position, the
results of operations and the cash flows of the Company and the Subsidiaries.
As to any information contained in materials furnished pursuant to
subsection 6.02(b), the Company shall not be separately required to furnish
such information under subsection (a) or (b) above, but the foregoing shall
not be in derogation of the obligation of the Company to furnish the
information and materials described in subsection (a) and (b) above at the
times specified therein.
6.02 Certificates; Other Information. The Company shall furnish to the
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.01(a) and (b), a Compliance Certificate executed
by a Responsible Officer;
(b) promptly, copies of all financial statements and reports
that the Company sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K,
10Q and 8K) that the Company or any Subsidiary may make to, or file with, the
SEC; and
(c) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as
the Agent, at the request of any Bank, may from time to time reasonably
request.
6.03 Notices. The Company shall promptly notify the Agent and each
Bank:
(a) of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any matter that has resulted or may result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Company or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any of the following events affecting
the Company or any ERISA Affiliate (but in no event more than 10 days after
such event), and deliver to the Agent and each Bank a copy of any notice with
respect to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Company or any ERISA
Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability
of any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any
ERISA Affiliate if such adoption or commencement results in a material
increase in total contributions or Unfunded Pension Liability; or
(iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability; and
(d) of any change in the Company's Debt Ratings.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 6.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.
6.04 Preservation of Corporate Existence, Etc. Except as permitted by
Sections 7.02 and 7.03, the Company shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its legal
existence and good standing under the laws of its state or jurisdiction of
incorporation or formation, except (in the case of any Subsidiary) where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business,
to preserve its business organization and goodwill, except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect;
and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably
be expected to have a Material Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain and preserve,
and shall cause each Subsidiary to maintain and preserve, all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted and make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and except as
permitted by Section 7.02 or Section 7.03.
6.06 Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, except to the
extent the Company and its Subsidiaries maintain a plan or plans of self-
insurance to such extent and covering such risks as is usual for companies of
similar size engaged in similar businesses and owning similar properties.
6.07 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
its respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property not constituting a Permitted Lien; and
(c) all Indebtedness, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness;
except, in each case referred to in clause (a) or (c), to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
6.08 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it or its business
(including ERISA and all Environmental Laws), except such as may be contested
in good faith or as to which a bona fide dispute may exist and except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.09 Maintenance of Books and Records; Inspection. The Company shall
maintain, and shall cause each Subsidiary to maintain, proper books of record
and account in conformity with GAAP consistently applied. The Company shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial,
operating and other records, and make copies thereof or abstracts therefrom,
and to discuss their respective affairs, finances and accounts with their
respective directors, officers, and independent public accountants, all at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company.
6.10 Use of Proceeds. The Company shall use the proceeds of the Loans
to finance the Acquisition, to refinance existing Indebtedness of the Company
as of the Closing Date, and for working capital and other general corporate
purposes not in contravention of any Requirement of Law or of any Loan
Document.
ARTICLE II
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"):
(a) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.07(a);
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty,
which are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property subject thereto, or if such reserve or other appropriate provision,
if any, required by GAAP shall have been made therefor;
(c) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(d) Liens securing (i) the non-delinquent performance of bids,
trade contracts (other than for borrowed money), leases, statutory
obligations, (ii) contingent obligations on surety and appeal bonds, and (iii)
other non-delinquent obligations of a like nature; in each case, incurred in
the ordinary course of business, provided all such Liens in the aggregate
would not (even if enforced) cause a Material Adverse Effect;
(e) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
Liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $25,000,000;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which do not in the
aggregate materially detract from the value of the properties subject thereto
or, in the aggregate, interfere with the ordinary conduct of the businesses of
the Company and its Subsidiaries;
(g) Liens on assets of Persons which become Subsidiaries of the
Company after the date of this Agreement; provided, however, that such Liens
existed at the time the respective Persons became Subsidiaries and were not
created in anticipation thereof;
(h) purchase money security interests on any property acquired
or held by the Company or its Subsidiaries securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such property; provided that (i) any such Lien attaches to such property
concurrently with or within 20 days after the acquisition thereof, and
(ii) such Lien attaches solely to the property so acquired in such transaction
and fixed improvements or accessions thereto, if any, then existing or
thereafter erected thereon;
(i) Liens securing obligations in respect of capital leases on
assets subject to such leases;
(j) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Company or
any Subsidiary to provide collateral to the depository institution;
(k) Liens on any property or assets of a Subsidiary in favor of
the Company or another Subsidiary;
(l) Liens in connection with leases or subleases in the ordinary
course of business;
(m) customary Liens in connection with documentary letters of
credit, provided that such Liens are limited to the goods and documents
covered by such letters of credit and proceeds thereof;
(n) the extension, renewal or replacement of any Lien permitted
by subsection 7.01(h) in connection with the extension, renewal or refinancing
of the Indebtedness secured thereby, provided that any extension, modification
or renewal Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of such Indebtedness being extended, renewed or
refinanced does not increase;
(o) Liens in connection with industrial development bonds;
(p) Liens on assets in connection with pending dispositions of
such assets permitted under Section 7.03; and
(q) consensual Liens securing Indebtedness of the Company and
its Subsidiaries not otherwise falling in any of the foregoing subsections so
long as the aggregate outstanding amount of such Indebtedness secured by such
Liens and any Liens referred to in subsection (e), plus the total net amount
of discounted future rental obligations under any lease transactions referred
to in Section 7.04, does not exceed 10% of Consolidated Net Tangible Assets.
7.02 Restrictions on Fundamental Changes. The Company shall not, and
shall not suffer or permit any Subsidiary to, merge, consolidate with or into,
or acquire all or substantially all of the assets of, any Person, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its
assets (upon voluntary liquidation or otherwise), to the Company or to a
Wholly-Owned Subsidiary;
(c) pursuant to a disposition of assets permitted by
Section 7.03; and
(d) any Subsidiary or the Company may acquire all or
substantially all of the assets or capital stock and/or other ownership
interest of any Person, and the Company may merge with or into any Person;
provided that (i) immediately before and after giving effect to any such
merger or acquisition no Default shall exist, and (ii) in the case of a merger
involving the Company, the Company is the corporation surviving the merger.
7.03 Disposition of Assets. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(c) the lease or sublease of assets by the Company or any
Subsidiary in the ordinary course of business;
(d) the sale of short-term money market investments in the
ordinary course of business pursuant to the Company's usual and customary cash
management policies and procedures;
(e) dispositions of assets by the Company or any Subsidiary to
the Company or any Subsidiary pursuant to reasonable business requirements and
in the ordinary course of business;
(f) exchanges of assets by the Company or any Subsidiary for
other assets, in the ordinary course of business, with Persons who are not
Affiliates of the Company or such Subsidiary, if (i) the assets to be received
in exchange are of an equivalent fair market value to the assets to be
exchanged; and (ii) at the time of such exchange, no Default or Event of
Default exists or shall result from such exchange;
(g) any sale of assets (other than in connection with the
Acquisition) representing a part of any Person or assets acquired after the
Closing Date; provided that such sale occurs within 180 days subsequent to
such acquisition and such sale is made in good faith to a Person that is not
an Affiliate of the Company or any of its Subsidiaries pursuant to an arm's-
length transaction;
(h) sale and leaseback transactions permitted by Section 7.04;
and
(i) dispositions not otherwise permitted hereunder which are
made for fair market value; provided that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such disposition,
(ii) the aggregate value of all assets so sold by the Company and its
Subsidiaries shall not exceed in any fiscal year 10% of Consolidated Net
Tangible Assets, and (iii) if any Term Loans are outstanding, the Net Proceeds
are paid over to the Agent for the account of the Banks as a prepayment of the
Term Loans in accordance with the requirements of Section 2.09; and provided
further that at any time that Term Loans are outstanding, dispositions
described in this subsection (i) which involve an amount exceeding 10% of
Consolidated Net Tangible Assets in any fiscal year will be permitted
hereunder if the Net Proceeds are so paid over to the Agent for the account of
the Banks as a prepayment of the Term Loans in accordance with the
requirements of Section 2.09.
7.04 Sales and Leasebacks. The Company shall not, and shall not permit
any of its Subsidiaries to, become liable, directly or indirectly, with
respect to any lease of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which the Company or such
Subsidiary has sold or transferred or is to sell or transfer to any other
Person or (ii) which the Company or such Subsidiary intends to use for
substantially the same purposes as any other property which has been or is to
be sold or transferred by the Company or such Subsidiary to any other Person
in connection with such lease, unless the total net amount of discounted
future rental obligations under any such leases, plus the amount of
Indebtedness referred to in subsection 7.01(q) and Liens referred to in
subsection 7.01(e), would not together exceed 10% of Consolidated Net Tangible
Assets.
7.05 Use of Proceeds. (a) The Company shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Company or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any
portion of the Loan proceeds (i) knowingly to purchase Ineligible Securities
from the Arranger during any period in which the Arranger makes a market in
such Ineligible Securities, (ii) knowingly to purchase during the underwriting
or placement period Ineligible Securities being underwritten or privately
placed by the Arranger, or (iii) to make payments of principal or interest on
Ineligible Securities underwritten or privately placed by the Arranger and
issued by or for the benefit of the Company or any Affiliate of the Company.
The Arranger is a registered broker-dealer and permitted to underwrite and
deal in certain Ineligible Securities.
7.06 Interest Coverage Ratio. The Company shall not permit its
Consolidated Interest Coverage Ratio, for any period of four consecutive
fiscal quarters of the Company, to be less than 1.50 to 1.0, calculated as of
the end of such period.
7.07 Maximum Funded Debt to Capitalization. The Company shall not
permit Consolidated Funded Debt to be an amount which exceeds (a) 60% of
Capitalization at any time during the period from the date of this Agreement
through the earlier of (i) March 31, 1997, and (ii) the repayment in full of
the Term Loans, or (b) 55% of Capitalization thereafter, in each case
calculated as at the last day of any fiscal quarter.
7.08 Transactions with Affiliates. The Company shall not, and shall
not suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
7.09 ERISA. The Company shall not, and shall not suffer or permit any
of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably expected to result in liability of the
Company in an aggregate amount in excess of $25,000,000; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
7.10 Change in Business. The Company shall not, and shall not suffer
or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Company
and its Subsidiaries on the date hereof.
7.11 Accounting Changes. The Company shall not, and shall not suffer
or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary, except to change the fiscal
year of a Subsidiary acquired in connection with an acquisition to conform its
fiscal year to the Company's.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or any amount
of interest on any Bid Loan, or (ii) within five days after the same becomes
due, any other interest, or any fee or any other amount payable hereunder or
under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty
by the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Sections 7.02, 7.03, 7.05, 7.06
or 7.07; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 30 days after the
earlier of the date of its discovery by any elected or appointed officer of
the Company or the date upon which written notice thereof is given to the
Company by the Agent or any Bank; or
(e) Cross-Default. (i) The Company or any Subsidiary (A) fails
to make any payment in respect of any Indebtedness having an aggregate
principal amount outstanding of more than $25,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise)
and such failure continues after the applicable grace or notice period, if
any, specified in the relevant document on the date of such failure; or
(B) fails to perform or observe any other condition or covenant, or any other
event shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness, and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document
on the date of such failure if the effect of such failure, event or condition
is to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
such Indebtedness to be declared to be due and payable prior to its stated
maturity; or
(f) Insolvency; Voluntary Proceedings. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process shall
not be released, vacated or fully bonded within 45 days after commencement,
filing or levy; (ii) the Company or any Subsidiary admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company or any Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of $25,000,000; (ii) the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $25,000,000; or (iii) the Company or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $25,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving aggregate liability (to the
extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related or unrelated
series of transactions, incidents or conditions, of $25,000,000 or more, and
the same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of 30 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be
any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Adverse Change. There occurs a Material Adverse Effect.
8.02 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the obligation of each Bank to make any Loans
hereunder to be terminated, whereupon such obligation and such Bank's
Commitment shall be terminated;
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 8.01 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the
obligation of each Bank to make Loans shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without
further act of the Agent or any Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization; "Agent". Each Bank hereby
irrevocably (subject to Section 9.09) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.
9.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company), independent accountants and other experts selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Majority Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance
with a request or consent of the Majority Banks, or when expressly required
hereby, all Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter sent (or made available) by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to such Bank,
unless an officer of the Agent responsible for the transactions contemplated
by the Loan Documents shall have received notice from such Bank prior to the
Closing Date specifying its objection thereto and either such objection shall
not have been withdrawn by notice to the Agent to that effect on or prior to
the Closing Date or, if any Borrowing on the Closing Date has been requested,
the Bank shall not have made available to the Agent on or prior to the Closing
Date the Bank's ratable portion of any Borrowing.
9.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the
Agent shall have received written notice from a Bank or the Company referring
to this Agreement, describing such Default or Event of Default and stating
that such notice is a "notice of default". The Agent will notify the Banks of
its receipt of any such notice. The Agent shall take such action with respect
to such Default or Event of Default as may be requested by the Majority Banks
in accordance with Article VIII; provided, however, that unless and until the
Agent has received any such request, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and credit- worthiness of
the Company. Except for notices, reports and other documents expressly herein
required to be furnished to the Banks by the Agent, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may
come into the possession of any of the Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), in
accordance with the Banks' Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Bank shall be liable for
the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities to the extent they are found by a final decision of a court of
competent jurisdiction to have resulted solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank shall reimburse the Agent within five days of demand for its ratable
share of any reasonable costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Agent hereunder
and without notice to or consent of the Banks. The Banks acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA shall have
the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" include BofA in its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If
the Agent resigns under this Agreement, the Majority Banks shall appoint from
among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall
mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Majority Banks
appoint a successor agent as provided for above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 before the payment of any
interest or fees in the first calendar year and before the payment of
any interest or fees in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224 before
the payment of any interest or fees is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during which
interest or fees may be paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company owing to such Bank,
such Bank agrees to notify the Agent of the percentage amount in which it is
no longer the beneficial owner of Obligations of the Company owing to such
Bank. To the extent of such percentage amount, the Agent will treat such
Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of
the Company owing to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any payment to such Bank an
amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax imposed
by Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered or was not properly executed, or because
such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Banks under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
(f) Each Bank referred to in subsection (a) represents and
warrants to the Company and the Agent that, as of the Effective Date, under
currently applicable law and treaties no taxes will be required to be withheld
by the Company with respect to any payments to be made to such Bank hereunder
or under any Note held by it.
9.11 Co-Agents; Lead Managers. None of the Banks identified on the
facing page or signature pages of this Agreement as a "co-agent" or "lead
manager" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Banks as such.
Without limiting the foregoing, none of the Banks so identified as a "co-
agent" or "lead manager" shall have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied,
and will not rely, on any of the Banks so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Company therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Banks (or by the Agent at the
written request of the Majority Banks) and the Company and acknowledged by the
Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all the Banks and the Company and acknowledged by the Agent, do
any of the following:
(a) at any time that a Default or Event of Default exists, waive
any of the conditions contained in Article IV;
(b) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 8.02);
(c) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document (including the date of any mandatory prepayment hereunder);
(d) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other
amounts payable hereunder or under any other Loan Document;
(e) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(f) amend this Section, Section 2.16, the definition of
"Majority Banks" herein, or any provision herein providing for consent or
other action by all Banks or some specified amount of Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Majority Banks or all
the Banks, as the case may be, affect the rights or duties of the Agent under
this Agreement or any other Loan Document, and (ii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed by
the parties thereto.
10.02 Notices. (a) All notices, requests, consents, approvals, waivers
and other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 10.02, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 10.02; or, as directed to the Company
or the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Company and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the
date deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agent and the Banks shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be
affected in any way or to any extent by any failure by the Agent and the Banks
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at variance with
the terms understood by the Agent and the Banks to be contained in the
telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent, any Designated Bidder or any
Bank, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to subsection 4.01(e)) for all costs
and expenses incurred by BofA (including in its capacity as Agent) in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement, any Loan Document and
any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by BofA (including in its capacity as
Agent) with respect thereto; and
(b) pay or reimburse the Agent, the Arranger, each Bank and each
Designated Bidder within five Business Days after demand for all costs and
expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an
Event of Default or after acceleration of the Loans (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding).
10.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Agent-Related Persons, and each Bank, each Designated Bidder and each
of their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Bank) be
imposed on, incurred by or asserted against any such Indemnified Person in any
way relating to or arising out of the Acquisition, this Agreement or any
document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under
or in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding
or appellate proceeding) related to or arising out of the Acquisition, this
Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities to the extent they are found by a final decision of a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
10.06 Payments Set Aside. To the extent that the Company makes a
payment to the Agent, any Designated Bidder or any Bank, or the Agent, any
Designated Bidder or any Bank exercises its right of set-off, and such payment
or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Agent, such
Designated Bidder or such Bank in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any Insolvency Proceeding or
otherwise, then (a) to the extent of such recovery the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Bank and each Designated Bidder severally agrees to
pay to the Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.
10.08 Assignments, Participations, Etc. (a) Any Bank may, with the
written consent of the Company and the Agent (which in each case shall not be
unreasonably withheld), at any time assign and delegate to one or more
Eligible Assignees (each an "Assignee") all, or any ratable part of all, of
the Loans, the Commitment and the other rights and obligations of such Bank
hereunder; provided, however, that (i) no written consent of the Company shall
be required during the existence of a Default or an Event of Default; (ii) no
written consent of the Company or the Agent shall be required in connection
with any assignment and delegation by a Bank to an Eligible Assignee that is
another Bank or an Affiliate of such Bank; and (iii) any such assignment to an
Eligible Assignee that is not a Bank hereunder shall be equal to or greater
than $10,000,000; and provided further, however, that the Company and the
Agent may continue to deal solely and directly with such Bank in connection
with the interest so assigned to an Assignee until (A) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Bank and the Assignee; (B) such Bank and its Assignee
shall have delivered to the Company and the Agent an Assignment and Acceptance
substantially in the form of Exhibit E ("Assignment and Acceptance") together
with any Note or Notes subject to such assignment; and (C) the assignor Bank
or Assignee has paid to the Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and, if required, provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Loan Documents; provided, however, that the assignor Bank shall not
relinquish its rights under Article III or under Sections 10.04 and 10.05 to
the extent such rights relate to the time prior to the effective date of the
Assignment and Acceptance.
(c) Within five Business Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and payment
of the processing fee (and provided that it consents to such assignment in
accordance with subsection 10.08(a)), the Company shall execute and deliver to
the Agent, any new Notes requested by such Assignee evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, replacement Notes as requested by the
assignor Bank in the principal amount of the Loans retained by the assignor
Bank (such Notes to be in exchange for, but not in payment of, the Notes held
by such Bank, if any). Immediately upon payment of the Agent's processing fee
due under subsection 10.08(a) this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom.
The Commitment allocated to each Assignee shall reduce the Commitment of the
assigning Bank pro tanto.
(d) Any Bank or Designated Bidder may at any time sell to one or
more commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank or Designated Bidder (the
"Originator") hereunder and under the other Loan Documents; provided, however,
that (i) the Originator's obligations under this Agreement shall remain
unchanged, (ii) the Originator shall remain solely responsible for the
performance of such obligations, (iii) the Company and the Agent shall
continue to deal solely and directly with the Originator in connection with
the Originator's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first proviso to Section
10.01. In the case of any such participation, the Participant shall not have
any rights under this Agreement, or any of the other Loan Documents, and all
amounts payable by the Company hereunder shall be determined as if such
Originator had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank or Designated Bidder (as the case may be) under this
Agreement.
(d) Notwithstanding any other provision in this Agreement, any
Bank or Designated Bidder may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement
and the Note held by it in favor of any Federal Reserve Bank in accordance
with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section
203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.09 Designated Bidders. Any Bid Loan Bank may designate one or more
Designated Bidders to have a right to offer and make Bid Loans pursuant to
Section 2.06; provided, however, that (i) no such Bank may make more than two
such designations, (ii) each such Bank making any such designation shall
retain the right to make Bid Loans, and (iii) the parties to each such
designation shall execute and deliver to the Agent a Designation Agreement.
Upon its receipt of an appropriately completed Designation Agreement executed
by a designating Bid Loan Bank and a designee representing that it is a
Designated Bidder, the Agent will accept such Designation Agreement and give
prompt notice thereof to the Company, whereupon such designation of such
Designated Bidder shall become effective and such Designated Bidder shall
become a party to this Agreement as a "Designated Bidder."
10.10 Confidentiality. Each Bank and each Designated Bidder agrees to
take and to cause its Affiliates to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Company and provided to it by
the Company or any Subsidiary, or by the Agent on the Company's or such
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as
a result of disclosure by such Bank or Designated Bidder, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a confidentiality agreement
with the Company known to such Bank or Designated Bidder; provided, however,
that any Bank or Designated Bidder may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
such Bank or Designated Bidder is subject or in connection with an examination
of such Bank or Designated Bidder by any such authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which
the Agent, any Bank, Designated Bidder or their respective Affiliates may be
party; (E) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Loan Document; (F) to such Bank's
or Designated Bidder's independent auditors and other professional advisors;
(G) to any Participant or Assignee, actual or potential, provided that such
Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; (H) as to any Bank or Designated
Bidder or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Bank or Designated Bidder or
such Affiliate; and (I) to its Affiliates.
10.11 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank and each Designated Bidder is authorized at any time
and from time to time, without prior notice to the Company, any such notice
being waived by the Company to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Bank or Designated Bidder to or for the credit or the account
of the Company against any and all Obligations owing to such Bank or
Designated Bidder, now or hereafter existing, irrespective of whether or not
the Agent or such Bank or Designated Bidder shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Bank and each Designated Bidder agrees promptly to notify
the Company and the Agent after any such set-off and application made by such
Bank or Designated Bidder; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.
10.12 Notification of Addresses, Lending Offices, Etc. Each Bank and
each Designated Bidder shall notify the Agent in writing of any changes in the
address to which notices to such Bank or Designated Bidder should be directed,
of addresses of any Lending Office, of payment instructions in respect of all
payments to be made to it hereunder and of such other administrative
information as the Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks, the
Designated Bidders, the Agent, the Agent-Related Persons, and the Indemnified
Persons and their permitted successors and assigns, and no other Person shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any of the
other Loan Documents.
10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE
AGENT, THE DESIGNATED BIDDERS AND THE BANKS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE COMPANY, THE AGENT, THE DESIGNATED BIDDERS AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT, THE DESIGNATED BIDDERS AND THE BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS, THE DESIGNATED
BIDDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE COMPANY, THE BANKS, THE DESIGNATED BIDDERS AND THE AGENT
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks, the Designated Bidders and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, oral or
written, relating to the subject matter hereof and thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California, by their proper and
duly authorized officers as of the day and year first above written.
WILLAMETTE INDUSTRIES, INC.
By: /s/ signature
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as Agent
By: /s/ signature
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as a Bank
By: /s/ signature
Title:
ABN AMRO BANK N.V.
as a Co-Agent and as a Bank
By: ABN AMRO North America, Inc.
as agent
By: /s/ signature
Title:
By: /s/ signature
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as a Co-Agent and as a Bank
By: /s/ signature
Title:
NATIONSBANK, N.A.
as a Co-Agent and as a Bank
By: /s/ signature
Title:
WACHOVIA BANK OF GEORGIA, N.A.
as a Co-Agent and as a Bank
By: /s/ signature
Title:
DEUTSCHE BANK AG, LOS ANGELES BRANCH AND/OR CAYMAN ISLANDS BRANCH
as a Lead Manager and as a Bank
By: /s/ signature
Title:
FIRST INTERSTATE BANK OF OREGON, N.A.
as a Lead Manager and as a Bank
By: /s/ signature
Title:
MELLON BANK, N.A.
as a Lead Manager and as a Bank
By: /s/ signature
Title:
PNC BANK, NATIONAL ASSOCIATION
as a Lead Manager and as a Bank
By: /s/ signature
Title:
ROYAL BANK OF CANADA
as a Lead Manager and as a Bank
By: /s/ signature
Title:
TORONTO DOMINION (TEXAS), INC.
as a Lead Manager and as a Bank
By: /s/ signature
Title:
THE BANK OF NEW YORK
By: /s/ signature
Title:
THE BANK OF NOVA SCOTIA
By: /s/ signature
Title:
BANQUE PARIBAS
By: /s/ signature
Title:
By: /s/ signature
Title:
CREDIT LYONNAIS, NEW YORK BRANCH
By: /s/ signature
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
SAN FRANCISCO AGENCY
By: /s/ signature
Title:
THE NORTHERN TRUST COMPANY
By: /s/ signature
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ signature
Title:
By: /s/ signature
Title:
THE SANWA BANK, LIMITED
By: /s/ signature
Title:
SOCIETE GENERALE
By: /s/ signature
Title:
UNITED STATES NATIONAL BANK OF OREGON
By: /s/ signature
Title:
<PAGE>
<TABLE>
<CAPTION>
ANNEX I
PRICING GRID
(Basis points per annum)
Debt Rating
[S&P and Moody's Revolving
Level respectively] Loan LIBO Term Loan
Facility Rate LIBO Rate
Fee Spread Spread
<S> <C> <C> <C> <C>
Level 1 A or above 7 13 20
or
A2 or above
Level 2 A- 9 16 25
or
A3
Level 3 BBB+ 10 20 30
or
Baa1
Level 4 BBB 12.5 22.5 35
or
Baa2
Level 5 BBB- or below 17.5 32.5 50
or
Baa3 or below
or unrated
</TABLE>
For purposes of determining the Applicable Margin and the
Applicable Fee Amount:
(a) If a difference exists in the Debt Ratings of Moody's and
S&P, the higher of such Debt Ratings will determine the relevant pricing
Level, unless the Debt Rating is less than Baa3, in the case of Moody's, or
less than BBB-, in the case of S&P, in which case the lower of such Debt
Ratings will apply.
(b) Any change in the Applicable Margin or the Applicable Fee
Amount shall become effective five Business Days after any public announcement
of any Debt Rating requiring such a change.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro
Revolving Term Rata
Bank Commitment Commitment Share
<S> <C> <C> <C>
BANK OF AMERICA
NATIONAL TRUST AND
SAVINGS
ASSOCIATION $96,969,696.98 $63,030,303.02 9.69696970%
ABN AMRO BANK,
N.V. $75,757,575.76 $49,242,424.24 7.57575758%
MORGAN GUARANTY
TRUST COMPANY OF
NEW YORK $75,757,575.76 $49,242,424.24 7.57575758%
NATIONSBANK, N.A. $75,757,575.76 $49,242,424.24 7.57575758%
WACHOVIA BANK OF
GEORGIA, N.A. $75,757,575.76 $49,242,424.24 7.57575758%
DEUTSCHE BANK AG $48,484,848.48 $31,515,151.52 4.84848485%
FIRST INTERSTATE
BANK OF OREGON,
N.A. $48,484,848.48 $31,515,151.52 4.84848485%
MELLON BANK, N.A. $48,484,848.48 $31,515,151.52 4.84848485%
PNC BANK, NATIONAL
ASSOCIATION $48,484,848.48 $31,515,151.52 4.84848485%
ROYAL BANK OF
CANADA $48,484,848.48 $31,515,151.52 4.84848485%
TORONTO DOMINION
(TEXAS), INC. $48,484,848.48 $31,515,151.52 4.84848485%
THE BANK OF NEW
YORK $30,909.090.91 $20,090,909.09 3.09090909%
THE BANK OF NOVA
SCOTIA $30,909.090.91 $20,090,909.09 3.09090909%
BANQUE PARIBAS $30,909.090.91 $20,090,909.09 3.09090909%
CREDIT LYONNAIS $30,909.090.91 $20,090,909.09 3.09090909%
</TABLE>
<PAGE>
SCHEDULE 5.07
ERISA MATTERS
Willamette contributes to the Central States Southeast and
Southwest Areas Pension Fund with respect to certain of its collectively
bargained employees at its Louisville Corrugated operation. At the end of
1993, Willamette's estimated withdrawal liability from that Plan was $293,000.
Willamette has no current plans to withdraw from that Plan.
Willamette contributes on two small units of employees in New
Jersey to two separate multiemployer Pension Plans, one of which is believed
to not be well funded and the funding situation of the other Plan is not
known. Willamette would not have any material withdrawal liability from
either Plan and has no current plans to withdraw.
Willamette sponsors the Penntech Papers, Inc., Hourly Retirement
Plan which was acquired from Penntech Papers. That Plan had an Unfunded
Pension Liability of approximately $1,000,000 at the beginning of 1996.
Willamette sponsors the Willamette Industries, Inc., Corrugating
Medium Mill Hourly Employees' Retirement Plan. That Plan had an Unfunded
Pension Liability of approximately $200,000 at the beginning of 1996.
<PAGE>
SCHEDULE 10.02
OFFSHORE AND DOMESTIC LENDING OFFICES;
ADDRESSES FOR NOTICES
WILLAMETTE INDUSTRIES, INC.
WILLAMETTE INDUSTRIES, INC.
3800 First Interstate Tower
1300 S.W. Fifth Avenue
Portland, Oregon 97201
Attention: Mr. J.A. Parsons
Executive Vice President and
Chief Financial Officer
Telephone: (503) 227-5581
Facsimile: (503) 223-5604
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Borrowing notices, Notices of
Conversion/Continuation and Payments:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Ms. Annie Cuenco
Telephone: (415) 436-2775
Facsimile: (415) 436-2700
All other notices:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Credit Products #3838
555 California Street, 41st Floor
San Francisco, California 94104
Attention: Mr. Michael J. Balok, Managing Director
Telephone: (415) 622-2018
Facsimile: (415) 622-4585
AGENT'S PAYMENT OFFICE:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
ABA No. 1210-0035-8
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Account No.: 12330-15113
Reference: Willamette Industries
Attention: Agency Management Services #5596
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Attention: Ms. Terry Peach
Telephone: (510) 675-7350
Facsimile: (510) 675-7531
All other notices:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Credit Products #3838
555 California Street, 41st Floor
San Francisco, California 94104
Attention: Mr. Michael J. Balok, Managing Director
Telephone: (415) 622-2018
Facsimile: (415) 622-4585
ABN AMRO BANK N.V.
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
ABN AMRO BANK, N.V.
Seattle Branch
One Union Square
600 University Street
Suite 2323
Seattle, WA 98101-2070
Attention: Ms. Suzanne Smith
Telephone: (206) 587-0281
Facsimile: (206) 682-5641
All other notices:
ABN AMRO BANK, N.V.
Seattle Branch
One Union Square
600 University Street
Suite 2323
Seattle, WA 98101-2070
Attention: Mr. Jim Rice, Vice President
Telephone: (206) 587-2360
Facsimile: (206) 682-5641
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713
Attention: Ms. Debra Jones
Telephone: (302) 634-1940
Facsimile: (302) 634-1091
All other notices:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
20/60 Wall Street
New York, NY 10260-0060
Attention: Mr. David Ellis, Vice President
Telephone: (212) 648-7638
Facsimile: (212) 648-5014
NATIONSBANK, N.A.
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
NATIONSBANK, N.A.
101 North Tryon Street, 15th Floor
Charlotte, NC 20255
Attention: Ms. Karen Withrow
Telephone: (704) 388-1114
Facsimile: (704) 386-8694
All other notices:
NATIONSBANK, N.A.
100 North Tryon Street, 8th Floor
Charlotte, NC 28255
Attention: Mr. Michael Short, Vice President
Telephone: (704) 386-6274
Facsimile: (704) 386-3271
WACHOVIA BANK OF GEORGIA, N.A.
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
WACHOVIA BANK OF GEORGIA, N.A.
191 Peachtree Street, N.E.
28th Floor
Atlanta, GA 30303
Attention: Mr. William F. Hamlet
Telephone: (404) 332-5570
Facsimile: (404) 332-6898
All other notices:
WACHOVIA BANK OF GEORGIA, N.A.
191 Peachtree Street, N.E.
28th Floor
Atlanta, GA 30303
Attention: Mr. William F. Hamlet
Telephone: (404) 332-5570
Facsimile: (404) 332-6898
DEUTSCHE BANK AG
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
DEUTSCHE BANK AG
Los Angeles Branch and/or
Cayman Islands Branch
550 South Hope Street
Suite 1850
Los Angeles, CA 90071
Attention: Ms. Anne Norwood
Telephone: (213) 630-7682
Facsimile: (213) 630-3436
All other notices:
DEUTSCHE BANK AG
Los Angeles Branch
550 South Hope Street
Suite 1850
Los Angeles, CA 90071
Attention: Mr. Ron Moore
Director
Telephone: (213) 630-7690
Facsimile: (213) 630-3436
FIRST INTERSTATE BANK OF OREGON, N.A.
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
FIRST INTERSTATE BANK OF OREGON, N.A.
P.O. Box 3330
Portland, OR 92708
Attention: Ms. Yolanda Alfonso
Telephone: (503) 614-6459
Facsimile: (503) 614-5878
All other notices:
FIRST INTERSTATE BANK OF OREGON, N.A.
1300 S.W. Fifth Avenue
Mail Code T-19
Portland, OR 97201
Attention: Mr. Daniel S. Park
Vice President and Senior Relationship Manager
Telephone: (503) 220-4859
Facsimile: (503) 220-4896
MELLON BANK, N.A.
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
MELLON BANK, N.A.
3 Mellon Bank Center, Room 2304
Pittsburgh, PA 15259
Attention: Mr. Damon Carr
Telephone: (412) 234-1872
Facsimile: (412) 234-5049
All other notices:
MELLON BANK, N.A.
300 South Grand Avenue
Suite 3800
Los Angeles, CA 90071
Attention: Ms. Susan Dalton, Vice President
Telephone: (213) 680-7352
Facsimile: (213) 626-3745
PNC BANK, NATIONAL ASSOCIATION
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
PNC BANK, NATIONAL ASSOCIATION, Pittsburgh, Pennsylvania
c/o Los Angeles Loan Production Office
55 South Lake Avenue
Suite 650
Pasadena, CA 91101
Attention: Ms. Pam Fox
Telephone: (818) 568-8950
Facsimile: (818) 568-0653
All other notices:
PNC BANK, NATIONAL ASSOCIATION
55 South Lake Avenue
Suite 650
Pasadena, CA 91101
Attention: Mr. John Heskett
Assistant Vice President
Telephone: (818) 568-9138
Facsimile: (818) 568-0653
ROYAL BANK OF CANADA
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
ROYAL BANK OF CANADA
Grand Cayman (North America No. 1) Branch
c/o New York Branch
Financial Square, 23rd Floor
New York, New York 10005-3531
Attention: Ms. Linda Smith, Loans Administration
Telephone: (212) 428-6323
Facsimile: (212) 428-2372
All other notices:
ROYAL BANK OF CANADA
Grand Cayman (North America No. 1) Branch
c/o New York Branch
Financial Square, 23rd Floor
New York, New York 10005-3531
Attention: Manager, Credit Administration
Telephone: (212) 428-6311
Facsimile: (212) 428-2372
With a copy to:
ROYAL BANK OF CANADA
600 Wilshire Boulevard
Suite 800
Los Angeles, CA 90017
Attention: Mr. Brian Dixon
Senior Manager
Telephone: (213) 955-5316
Facsimile: (213) 955-5350
TORONTO DOMINION (TEXAS), INC.
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
TORONTO DOMINION (TEXAS), INC.
909 Fannin Street
Houston, Texas 77010
Attention: Mr. David G. Parker
Telephone: (713) 653-8248
Facsimile: (713) 951-9921
All other notices:
TORONTO DOMINION (TEXAS), INC.
31 West 52nd Street
18th Floor
New York, NY 10019
Attention: Mr. Carlton Higbie
Telephone: (212) 468-0493
Facsimile: (212) 397-4135
THE BANK OF NEW YORK
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
THE BANK OF NEW YORK
1 Wall Street, 22nd Floor
New York, NY 10286
Attention: Sandra Morgan/Dawn Hertling
Telephone: (212) 635-6743/6742
Facsimile: (212) 635-6877/6399
All other notices:
THE BANK OF NEW YORK
10990 Wilshire Boulevard
Suite 1125
Los Angeles, CA 90024
Attention: Mr. Robert Louk
Vice President
Telephone: (310) 996-8663
Facsimile: (310) 996-8667
THE BANK OF NOVA SCOTIA
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
THE BANK OF NOVA SCOTIA, Portland, Oregon
c/o The Bank of Nova Scotia
600 Peachtree Street N.E.
Suite 2700
Atlanta, GA 30308
Attention: Mr. Craig Subryan
Telephone: (404) 877-1563
Facsimile: (404) 888-8998
All other notices:
THE BANK OF NOVA SCOTIA
888 S.W. Fifth Avenue
Suite 750
Portland, OR 97204-2078
Attention: Mr. Daryl Hogge
Telephone: (503) 222-4169
Facsimile: (503) 222-5502
BANQUE PARIBAS
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
BANQUE PARIBAS
2029 Century Park East, Suite 3900
Los Angeles, CA 90067
Attention: Ms. Shirley Williams
Telephone: (310) 551-7360
Facsimile: (310) 553-1504
All other notices:
BANQUE PARIBAS
2029 Century Park East, Suite 3900
Los Angeles, CA 90067
Attention: Ms. Lynne Lueders
Telephone: (310) 551-7319
Facsimile: (310) 556-8759
CREDIT LYONNAIS
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
CREDIT LYONNAIS
New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Ms. Kathy Daniele
Telephone: (212) 261-7341
Facsimile: (212) 459-3179
All other notices:
CREDIT LYONNAIS
New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Mr. Rod Hurst
Vice President
Telephone: (212) 261-7362
Facsimile: (212) 459-3179
THE INDUSTRIAL BANK OF JAPAN, LIMITED
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
THE INDUSTRIAL BANK OF JAPAN, LIMITED
San Francisco Agency
555 California Street
Suite 3110
San Francisco, CA 94104
Attention: Ms. Jeanette O'Donnell
Telephone: (415) 693-1831
Facsimile: (415) 982-1917
All other notices:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
San Francisco Agency
555 California Street
Suite 3110
San Francisco, CA 94104
Attention: Mr. Clifford White, Vice President
Telephone: (415) 693-1823
Facsimile: (415) 982-1917
THE NORTHERN TRUST COMPANY
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
THE NORTHERN TRUST COMPANY
50 South LaSalle Street
Chicago, IL 60675
Attention: Ms. Linda Honda
Telephone: (312) 444-3532
Facsimile: (312) 630-1566
All other notices:
THE NORTHERN TRUST COMPANY
50 South LaSalle Street
Chicago, IL 60675
Attention: Mr. John D. Fumagalli
Vice President
Telephone: (312) 444-5048
Facsimile: (312) 444-5055
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK NEDERLAND"
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
RABOBANK NEDERLAND
245 Park Avenue
New York, NY 10167
Attention: Ms. Annette Brown
Telephone: (212) 916-3702
Facsimile: (212) 916-7930
All other notices:
RABOBANK NEDERLAND
Three Embarcadero Center
Suite 930
San Francisco, CA 94111-4057
Attention: Mr. John J. McHugh
Telephone: (415) 986-4258
Facsimile: (415) 986-8349
THE SANWA BANK, LIMITED
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
THE SANWA BANK, LIMITED
601 South Figueroa Street
Mail Code W5-4
Los Angeles, CA 90017
Attention: Mr. Washington A. Boza
Telephone: (213) 896-7434
Facsimile: (213) 623-4912
All other notices:
THE SANWA BANK, LIMITED
601 South Figueroa Street
Mail Code W5-4
Los Angeles, CA 90017
Attention: Mr. Steve Yamada
Vice President
Telephone: (213) 986-7547
Facsimile: (213) 623-4912
SOCIETE GENERALE
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
SOCIETE GENERALE
2029 Century Park East, Suite 2900
Los Angeles, CA 90067
Attention: Tulinh Wu
Telephone: (310) 788-7117
Facsimile: (310) 203-0539
All other notices:
SOCIETE GENERALE
One Montgomery Street
Suite 3220
San Francisco, CA 94104
Attention: Mr. Alec Neville
Telephone: (415) 433-8400
Facsimile: (415) 989-9922
UNITED STATES NATIONAL BANK OF OREGON
Domestic and Offshore Lending Office
(Borrowing notices, Notices of
Conversion/Continuation, and Payments):
UNITED STATES NATIONAL BANK OF OREGON
555 S.W. Oak Street
Suite 400
Portland, OR 97204
Attention: Ms. Loretta Frazier
Telephone: (503) 275-6558
Facsimile: (503) 275-4600
All other notices:
UNITED STATES NATIONAL BANK OF OREGON
555 S.W. Oak Street
Suite 400
Portland, OR 97204
Attention: Ms. Janice T. Thede
Vice President
Telephone: (503) 275-4942
Facsimile: (503) 275-5428
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
Date: ______________
To: Bank of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, Willamette Industries, Inc. (the "Company"), refers to
the Credit Agreement, dated as of May 10, 1996 (as extended, renewed, amended
or restated from time to time, the "Credit Agreement"), among the Company, the
several financial institutions from time to time party thereto (the "Banks"),
the Co-Agents party thereto, and Bank of America National Trust and Savings
Association, as Agent (the "Agent"), the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.03 of the Credit Agreement, of the Committed Borrowing specified
below:
1. The Business Day of the proposed Committed Borrowing is
_______________.
2. The Committed Borrowing is in respect of [$________ of Term
Loans [and $______ of Revolving Loans]]1 [Revolving Loans].
3. The aggregate amount of the proposed Committed Borrowing is
$_____________________.
4. The Committed Borrowing is to be comprised of $___________ of
[Base Rate Committed Loans] [Offshore Rate Committed Loans].
[5. The duration of the Interest Period for the Offshore Rate
Committed Loans included in the Committed Borrowing shall be _____
months.]
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Committed
Borrowing, before and after giving effect thereto and to the application of
the proceeds therefrom:
(a) the representations and warranties of the Company contained
in Article V of the Credit Agreement are true and correct as though made
on and as of such date, except to the extent such representations and
warranties expressly refer to an earlier date, in which case they are
true and correct as of such date, and except that this notice shall be
deemed instead to refer to the last day of the most recent year for
which financial statements have then been delivered in respect of the
representation and warranty made in Section 5.11(a) of the Credit
Agreement;
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing;
(c) there has occurred since the end of the most recent fiscal
year of the Company no event or circumstance that has resulted or could
reasonably be expected to result in a Material Adverse Effect; and
(d) the Company's Debt Ratings are as follows: .
WILLAMETTE INDUSTRIES, INC.
By:
Title:
- ---------------------------------
1) Closing Date only.
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date: _______________
To: Bank of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, Willamette Industries, Inc. (the "Company"), refers to
the Credit Agreement, dated as of May 10, 1996 (as extended, renewed, amended
or restated from time to time, the "Credit Agreement"), among the Company, the
several financial institutions from time to time party thereto (the "Banks"),
the Co-Agents party thereto, and Bank of America National Trust and Savings
Association, as Agent (the "Agent"), the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.04 of the Credit Agreement, of the [conversion] [continuation] of
Loans specified below:
1. The Conversion/Continuation Date is ______________.
2. The aggregate amount of the Committed Loans to be [converted]
[continued] is $_______________.
3. The Loans are to be [converted into] [continued as] [Offshore
Rate Committed Loans] [Base Rate Committed Loans].
[4. The duration of the Interest Period for the Offshore Rate
Committed Loans included in the [conversion] [continuation] shall be ___
months.]
WILLAMETTE INDUSTRIES, INC.
By:
Title:
<PAGE>
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
WILLAMETTE INDUSTRIES, INC.
Financial Statements Date: ______________
Reference is made to that certain Credit Agreement dated as of May 10,
1996 (as extended, renewed, amended or restated from time to time, the "Credit
Agreement"), among Willamette Industries, Inc. (the "Company"), the several
financial institutions from time to time party thereto, (the "Banks"), the Co-
Agents party thereto and Bank of America National Trust and Savings
Association, as Agent (in such capacity, the "Agent"). Unless otherwise
defined herein, capitalized terms used herein have the respective meanings
assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Company hereby certifies as
of the date hereof that he/she is the [Chief Financial Officer] [Corporate
Controller] [Treasurer] of the Company, and that, as such, he/she is
authorized to execute and deliver this Certificate to the Banks and the Agent
on the behalf of the Company and its consolidated Subsidiaries, and that:
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 6.01(a) of the Credit
Agreement.]
1. Attached hereto are true and correct copies of the audited
consolidated balance sheet of the Company and its Subsidiaries as at the end
of the fiscal year ended _______________ and the related consolidated
statements of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, accompanied by the opinion of the Independent Auditor,
which opinion (a) states that such consolidated financial statements present
fairly the financial position for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years and (b) is not qualified
or limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any Subsidiary's records.
or
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 6.01(b) of the Credit
Agreement.]
1. Attached hereto are true and correct copies of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end
of the fiscal quarter ended _____________ and the related consolidated
statements of income, shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such quarter, which
fairly present, in accordance with GAAP (subject to ordinary, good faith year-
end audit adjustments), the financial position, the results of operations and
the cash flows of the Company and the Subsidiaries.
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial
or otherwise) of the Company during the accounting period covered by the
attached financial statements.
3. The Company, during such period, has observed, performed or
satisfied all of its covenants and other agreements, and satisfied every
condition in the Credit Agreement to be observed, performed or satisfied by
the Company, and the undersigned has no knowledge of any Default or Event of
Default.
4. The representations and warranties of the Company contained in
Article V of the Credit Agreement are true and correct as though made on and
as of the date hereof (except to the extent such representations and
warranties relate to an earlier date, in which case they shall be true and
correct as of such date; and except that this notice shall be deemed instead
to refer to the last day of the most recent year for which financial
statements have then been delivered in respect of the representation and
warranty made in Section 5.11(a) of the Credit Agreement).
5. The following financial covenant analyses and information set forth
on Schedule 1 attached hereto are true and accurate on and as of the date of
this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
______________.
WILLAMETTE INDUSTRIES, INC.
By:
Title:
<PAGE>
SCHEDULE 1
to the Compliance Certificate
Dated _ _ _ _ _ _ _ _ _ _ _ _ / For the fiscal [quarter] [year] ended
_ _ _ _ _ _ _ _ _ _.
Section 7.06--Interest Required/
Coverage Ratio Actual Permitted
(A) Consolidated EBITDA minus [to be
Capital Expenditures: calculated
on a rolling
four quarter
basis]
(1) Consolidated EBITDA
calculation:
consolidated net income $
plus Consolidated $
Interest Expense
plus income taxes $
plus depreciation, $
amortization and other
non-cash expenses
Consolidated EBITDA $
(2) Capital Expenditures $
(other than Excluded
Capital Expenditures
referred to in the
definition thereof)
(1) minus (2) $
(B) Consolidated Gross $
Interest Expense
Ratio of (A) Not less
to (B) than 1.50 to
1.0
Section 7.07--Maximum Funded Required/
Debt to Capitalization Actual Permitted
(A) Consolidated Funded Debt $ [to be
calculated
as of the
end of each
fiscal
quarter]
(B) Capitalization
(Consolidated Funded Debt
plus Net Worth)
1.
(1) Consolidated Funded Debt $
(2) Net Worth $
(1) plus (2) $
(A) as a percentage of (B) % [maximum of
60% through
March 31,
1997 (or, if
earlier,
date of
repayment of
all Term
Loans), and
maximum of
55%
thereafter]
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________ is made between __________________ (the
"Assignor") and ________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement dated as
of May 10, 1996 (as amended, restated, modified, supplemented or renewed, the
"Credit Agreement"), among Willamette Industries, Inc. (the "Company"), the
several financial institutions from time to time party thereto (including the
Assignor, the "Banks"), the Co-Agents party thereto, and Bank of America
National Trust and Savings Association, as agent for the Banks (the "Agent").
Any terms defined in the Credit Agreement and not defined in this Assignment
and Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Revolving Loans to the Company in an aggregate amount not
to exceed $__________ (the "Revolving Commitment");
WHEREAS, [the Assignor has made Loans in the aggregate principal amount
of $__________ to the Company] [no Loans are outstanding under the Credit
Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Revolving Commitment, [together with a corresponding portion of
each of its outstanding Loans], in an amount equal to $__________ (the
"Assigned Amount"), on the terms and subject to the conditions set forth
herein and the Assignee wishes to accept assignment of such rights and to
assume such obligations from the Assignor on such terms and subject to such
conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except
as provided in this Assignment and Acceptance) ___% (the "Assignee's
Percentage Share") of (A) the Revolving Commitment [and the Loans] of the
Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the
obligations of a Bank under the Credit Agreement, including the requirements
concerning confidentiality and the payment of indemnification, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by it
as a Bank. It is the intent of the parties hereto that the Revolving
Commitment of the Assignor shall, as of the Effective Date, be reduced by an
amount equal to the Assigned Amount and the Assignor shall relinquish its
rights and be released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee; provided, however,
that the Assignor shall not relinquish its rights under Article III or
Sections 10.04 and 10.05 of the Credit Agreement to the extent such rights
relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Revolving Commitment will
be $__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Revolving Commitment will
be $__________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on
the Effective Date in immediately available funds an amount equal to
$__________, representing the Assignee's Percentage Share of the principal
amount of all Loans previously made by the Assignor to the Company under the
Credit Agreement and outstanding on the Effective Date.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent
a processing fee in the amount specified in Section 10.08 of the Credit
Agreement.
3. Reallocation of Payments. Any interest, fees and other payments
accrued to the Effective Date with respect to the Revolving Commitment [and
Loans] shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the Assigned
Amount shall be for the account of the Assignee. Each of the Assignor and the
Assignee agrees that it will hold in trust for the other party any interest,
fees and other amounts which it may receive to which the other party is
entitled pursuant to the preceding sentence and pay to the other party any
such amounts which it may receive promptly upon receipt.
4. Independent Credit Decision. The Assignee: (a) acknowledges that it
has received a copy of the Credit Agreement and the Schedules and Exhibits
thereto, together with copies of the most recent financial statements referred
to in Section 5.11 or Section 6.01 of the Credit Agreement, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Assignment and Acceptance;
and (b) agrees that it will, independently and without reliance upon the
Assignor, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date
for this Assignment and Acceptance shall be ______________ (the "Effective
Date"); provided that the following conditions precedent have been satisfied
on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) any consent of the Company and the Agent required for
an effective assignment of the Assigned Amount by the Assignor to the
Assignee under Section 10.08 of the Credit Agreement shall have been
duly obtained and shall be in full force and effect as of the Effective
Date;
(iii) the Assignee shall pay to the Assignor all amounts
due to the Assignor under this Assignment and Acceptance;
(iv) the processing fee referred to in Section 2(b) hereof
and in Section 10.08 of the Credit Agreement shall have been paid to the
Agent; and
(v) the Assignor and Assignee shall have complied with the
other requirements of Section 10.08 of the Credit Agreement and with the
requirements of Sections 9.10 and 10.10 of the Credit Agreement (in each
case to the extent applicable).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgement by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
6. Agent. The Assignee hereby appoints and authorizes the Assignor to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Banks pursuant to the
terms of the Credit Agreement. [The Assignee shall assume no duties or
obligations held by the Assignor in its capacity as Agent under the Credit
Agreement.] [INCLUDE ONLY IF ASSIGNOR IS AGENT]
7. Withholding Tax. The Assignee (a) represents and warrants to the
Bank, the Agent and the Company that under applicable law and treaties no tax
will be required to be withheld by the Bank with respect to any payments to be
made to the Assignee hereunder, and (b) agrees to furnish (if it is organized
under the laws of any jurisdiction other than the United States or any State
thereof) to the Agent and the Company prior to the time that the Agent or
Company is required to make any payment of interest or fees hereunder,
duplicate executed originals of either U.S. Internal Revenue Service Form 4224
or U.S. Internal Revenue Service Form 1001 (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms 4224 or 1001 upon the expiration of any
previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by the Assignee, as and when required under the Credit Agreement.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to
fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than those
referred to in Section 5(a)(ii) hereof and any already given or obtained) for
its due execution, delivery and performance of this Assignment and Acceptance,
and apart from any agreements or undertakings or filings required by the
Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and
(iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of the Company, or the performance or
observance by the Company, of any of its respective obligations under the
Credit Agreement or any other instrument or document furnished in connection
therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than those
referred to in Section 5(a)(ii) hereof and any already given or obtained) for
its due execution, delivery and performance of this Assignment and Acceptance;
and apart from any agreements or undertakings or filings required by the
Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance;
(iii) this Assignment and Acceptance has been duly executed and delivered by
it and constitutes the legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights
and to general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances. The Assignor and the Assignee each hereby
agrees to execute and deliver such other instruments, and take such other
action, as either party may reasonably request in connection with the
transactions contemplated by this Assignment and Acceptance, including the
delivery of any notices or other documents or instruments to the Company or
the Agent, which may be required in connection with the assignment and
assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No
failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. THE ASSIGNOR
AND THE ASSIGNEE EACH IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN CALIFORNIA OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS ASSIGNMENT AND ACCEPTANCE AND
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR FEDERAL COURT. EACH PARTY
TO THIS ASSIGNMENT AND ACCEPTANCE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS ASSIGNMENT AND ACCEPTANCE OR ANY DOCUMENT
RELATED HERETO, AND PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, AND ANY RELATED DOCUMENTS AND
AGREEMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY EITHER OF THE PARTIES
AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. EACH OF THE PARTIES ALSO AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
[Other provisions to be added as may be negotiated between the Assignor and
the Assignee, provided that such provisions are not inconsistent with the
Credit Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
<PAGE>
SCHEDULE 1
to the Assignment and Acceptance Agreement
Date: ___________________
Bank of America National Trust
and Savings Association,
as Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services #5596
Willamette Industries, Inc.
3800 First Interstate Tower
1300 S.W. Fifth Avenue
Portland, Oregon 97201
Attention: ________________
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of May 10, 1996 (as amended,
restated, modified, supplemented or renewed from time to time, the "Credit
Agreement") among Willamette Industries, Inc. (the "Company"), the Banks
referred to therein, the Co-Agents referred to therein, and Bank of America
National Trust and Savings Association, as Agent. Terms defined in the Credit
Agreement are used herein as therein defined.
1. We hereby give you notice of[, and request the consent of [the
Company and] the Agent to,] the assignment by ________________________ (the
"Assignor") to ____________________ (the "Assignee") of ____% of the right,
title and interest of the Assignor in and to the Credit Agreement (including,
without limitation, the right, title and interest of the Assignor in and to
the Revolving Commitment of the Assignor and all outstanding Loans made by the
Assignor) pursuant to that certain Assignment and Acceptance Agreement, dated
as of ___________ (the "Assignment and Acceptance Agreement") between Assignor
and Assignee, a copy of which Assignment and Acceptance Agreement is attached
hereto. Before giving effect to such assignment the Assignor's Revolving
Commitment is $___________ and the aggregate principal amount of its
outstanding Loans is $____________.
2. The Assignee agrees that, upon receiving the consent of the
Company and the Agent to such assignment (if applicable) and from and after
the Effective Date (as such term is defined in Section 5 of the Assignment and
Acceptance Agreement), the Assignee shall be bound by the terms of the Credit
Agreement, with respect to the interest in the Credit Agreement assigned to it
as specified above, as fully and to the same extent as if the Assignee were
the Bank originally holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Domestic Lending Office:
Assignee name:
Address:
Attention:
Telephone: ( )
Facsimile: ( )
(B) Offshore Lending Office:
Assignee name:
Address:
Attention:
Telephone: ( )
Facsimile: ( )
(C) Notice Address:
Assignee name:
Address:
Attention:
Telephone: ( )
Facsimile: ( )
(D) Payment Instructions:
Account No.:
At:
Reference:
Attention:
This Notice of Assignment may be executed by the Assignor and the
Assignee in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute one and the same notice and agreement.
Adjusted Revolving Commitment:
[ASSIGNOR]
$
Adjusted Pro Rata Share:
_______%
<PAGE>
By:
Title:
Revolving Commitment:
$
Pro Rata Share:
_______%
<PAGE>
[ASSIGNEE]
By:
Title:
[CONSENTED TO this _____ day of___________________:
WILLAMETTE INDUSTRIES, INC.
By
Title ]
ACKNOWLEDGED [AND CONSENTED TO] this ____ day of ________:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
By:
Title:
<PAGE>
EXHIBIT F
INVITATION FOR COMPETITIVE BIDS
Via Facsimile
Date: ________________
TO THE BID LOAN BANKS AND DESIGNATED BIDDERS
LISTED ON ANNEX A ATTACHED HERETO
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of May 10,
1996 (as extended, renewed, amended or restated from time to time, the "Credit
Agreement"), among Willamette Industries, Inc. (the "Company"), the Banks
party thereto (the "Banks"), the Co-Agents party thereto, and Bank of America
National Trust and Savings Association, as Agent (the "Agent"). Capitalized
terms used herein have the meanings specified in the Credit Agreement.
Pursuant to subsection 2.06(b) of the Credit Agreement, you are hereby
invited to submit offers to make Bid Loans to the Company based on the
following specifications:
1. Date of Bid Borrowing: ________________;
2. Aggregate amount of Bid Borrowing: $___________;
3. The Bid Loans shall be [LIBOR Bid Loans] [Absolute Rate Bid Loans]
[LIBOR Bid Loans and Absolute Rate Bid Loans]; and
4. Interest Period[s] and requested Interest Payment Dates, if any:
[____________________], [________________] and [________________].
All Competitive Bids must be in the form of Exhibit H to the Credit
Agreement and must be received by the Agent no later than 6:30 a.m. (San
Francisco time) on _______________; provided that terms of the offer or offers
contained in any Competitive Bid(s) to be submitted by the Agent (or any
Affiliate of the Agent) in the capacity of a Bid Loan Bank or Designated
Bidder must be notified to the Company not later than 6:15 a.m. (San Francisco
time) on _____________.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By:
Title:
<PAGE>
ANNEX A
to the Invitation for Competitive Bids
List of Bid Loan Banks and Designated Bidders
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
[______________________________]
Facsimile: (___) ___-____
<PAGE>
EXHIBIT G
COMPETITIVE BID REQUEST
Date: _____________
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of May 10, 1996 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement"), among Willamette Industries, Inc. (the "Company"), the Banks
party thereto (the "Banks"), the Co-Agents party thereto, and Bank of America
National Trust and Savings Association, as Agent (the "Agent"). Capitalized
terms used herein have the meanings specified in the Credit Agreement.
This is a Competitive Bid Request for Bid Loans pursuant to Section 2.06
of the Credit Agreement as follows:
(i) The Business Day of the proposed Bid Borrowing is ____________.
(ii) The aggregate amount of the proposed Bid Borrowing is
$________________.
(iii) The proposed Bid Borrowing to be made pursuant to Section 2.06
shall be comprised of [LIBOR] [Absolute Rate] [LIBOR and Absolute Rate] Bid
Loans.
(iv) The Interest Period[s] [and Interest Payment Dates] for the Bid
Loans comprised in the Bid Borrowing shall be _______________ [,
_________________] and [___________________].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Bid
Borrowing, before and after giving effect thereto and to the application of
the proceeds therefrom:
(a) the representations and warranties of the Company contained
in Article V of the Credit Agreement are true and correct as though made
on and as of such date, except to the extent such representations and
warranties expressly refer to an earlier date, in which case they are
true and correct as of such date; and except that this notice shall be
deemed instead to refer to the last day of the most recent year for
which financial statements have then been delivered in respect of the
representation and warranty made in Section 5.11(a) of the Credit
Agreement;
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Bid Borrowing; and
(c) after giving effect to the Bid Borrowing requested hereby:
(i) the outstanding aggregate principal amount of all Bid Loans made by
all Bid Loan Banks and Designated Bidders, plus the outstanding
aggregate principal amount of all Committed Loans made by all Banks,
will not exceed the combined Commitments; and (ii) the outstanding
aggregate principal amount of all Bid Loans made by all Bid Loan Banks
and Designated Bidders, plus the outstanding aggregate principal amount
of all Revolving Loans made by all Banks, will not exceed the combined
Revolving Commitments.
WILLAMETTE INDUSTRIES, INC.
By:
Title:
<PAGE>
EXHIBIT H
FORM OF COMPETITIVE BID
Date: ________________
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services #5596
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of May 10, 1996 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Willamette Industries, Inc. (the "Company"), the Banks party
thereto, and Bank of America National Trust and Savings Association, as Agent
(the "Agent"). Capitalized terms used herein have the meanings specified in
the Credit Agreement.
In response to the Competitive Bid Request of the Company dated
___________ and in accordance with subsection 2.06(c)(ii) of the Credit
Agreement, the undersigned [Bid Loan Bank] [Designated Bidder] offers to make
Bid Loan[s] thereunder in the following principal amounts[s], at the following
interest rates and for the following Interest Period[s], with Interest Payment
Dates as specified by the Company:
Date of Bid Borrowing: _____________________
Aggregate Maximum Bid Amount: $________________
Offer 1 (Maximum Bid Amount: $________________)
Principal Principal Principal
Amount $__________ Amount $__________ Amount $__________
Interest: Interest: Interest:
[Absolute [Absolute [Absolute
Rate __%] Rate __%] Rate __%]
or or or
[LIBOR [LIBOR [LIBOR
Margin +/-___%] Margin +/-___%] Margin +/-___%]
Interest Interest Interest
Period ___________ Period __________ Period __________
Offer 2 (Maximum Bid Amount: $________________)
Principal Principal Principal
Amount $__________ Amount $__________ Amount $__________
Interest: Interest: Interest:
[Absolute [Absolute [Absolute
Rate __%] Rate __%] Rate __%]
or or or
[LIBOR [LIBOR [LIBOR
Margin +/-___%] Margin +/-___%] Margin +/-___%]
Interest Interest Interest
Period ___________ Period __________ Period __________
Offer 3 (Maximum Bid Amount: $________________)
Principal Principal Principal
Amount $__________ Amount $__________ Amount $__________
Interest: Interest: Interest:
[Absolute [Absolute [Absolute
Rate __%] Rate __%] Rate __%]
or or or
[LIBOR [LIBOR [LIBOR
Margin +/-___%] Margin +/-___%] Margin +/-___%]
Interest Interest Interest
Period ___________ Period __________ Period __________
[NAME OF BID LOAN BANK/
DESIGNATED BIDDER]
By:
Title:
<PAGE>
EXHIBIT I-1
FORM OF COMMITTED LOAN NOTE (REVOLVING LOANS)
U.S. $___________________ Date: _______________
FOR VALUE RECEIVED, the undersigned, Willamette Industries, Inc., an
Oregon corporation (the "Company"), hereby promises to pay to the order of
_________________________ (the "Bank") the principal sum of
___________________ Dollars ($___________________) or, if less, the aggregate
unpaid principal amount of all Revolving Loans made by the Bank to the Company
pursuant to the Credit Agreement, dated as of May 10, 1996 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Company, the Bank, the other financial institutions
from time to time party thereto (the "Banks"), the Co-Agents party thereto and
Bank of America National Trust and Savings Association, as Agent for the Banks
(the "Agent"), on the dates and in the amounts provided in the Credit
Agreement. The Company further promises to pay interest on the unpaid
principal amount of the Revolving Loans evidenced hereby from time to time at
the rates, on the dates, and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount of each Revolving Loan, the
date on which each Revolving Loan is made, and each payment of principal with
respect thereto on the schedule annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof;
provided that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (this "Note").
This Note is one of the Committed Loan Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, which Credit Agreement,
among other things, contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Terms defined in the Credit Agreement are used herein with their defined
meanings therein unless otherwise defined herein.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of California applicable to contracts
made and to be performed entirely within such State.
WILLAMETTE INDUSTRIES, INC.
By:
Title:
<PAGE>
SCHEDULE
to Committed Loan Note (Revolving Loans)
Date Loan Amount of Loan Principal Payment Date Principal
Disbursed Paid
<PAGE>
EXHIBIT I-2
FORM OF COMMITTED LOAN NOTE (TERM LOAN)
U.S. $___________________ Date: _______________
FOR VALUE RECEIVED, the undersigned, Willamette Industries, Inc., an
Oregon corporation (the "Company"), hereby promises to pay to the order of
_________________________ (the "Bank"), on May 15, 1998, the principal sum of
___________________ Dollars ($___________________) or, if less, the aggregate
unpaid principal amount of the Term Loan made by the Bank to the Company
pursuant to the Credit Agreement, dated as of May 10, 1996 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Company, the Bank, the other financial institutions
from time to time party thereto (the "Banks"), the Co-Agents party thereto and
Bank of America National Trust and Savings Association, as Agent for the Banks
(the "Agent"). The Company further promises to pay interest on the unpaid
principal amount of the Term Loan evidenced hereby from time to time at the
rates, on the dates, and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount of and the date on which
the Term Loan is made and each payment of principal with respect thereto on
the schedule annexed hereto and made a part hereof, or on continuations
thereof which shall be attached hereto and made a part hereof; provided that
any failure to endorse such information on such schedule or continuation
thereof shall not in any manner affect any obligation of the Company under the
Credit Agreement and this Promissory Note (this "Note").
This Note is one of the Committed Loan Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, which Credit Agreement,
among other things, contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of California applicable to contracts
made and to be performed entirely within such State.
WILLAMETTE INDUSTRIES, INC.
By:
Title:
<PAGE>
SCHEDULE
to Committed Loan Note (Term Loan)
Date Loan Amount of Loan Principal Payment Date Principal
Disbursed Paid
<PAGE>
EXHIBIT J
FORM OF BID LOAN NOTE
Date: ________________
FOR VALUE RECEIVED, the undersigned, Willamette Industries, Inc., an
Oregon corporation (the "Company"), hereby promises to pay to the order of
_________________________ (the "Bank") the aggregate unpaid principal amount
of all Bid Loans made by the Bank to the Company pursuant to the Credit
Agreement, dated as of May 10, 1996 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Company, the Bank, the other financial institutions from time to time party
thereto (the "Banks"), the Co-Agents party thereto and Bank of America
National Trust and Savings Association, as Agent for the Banks (the "Agent"),
on the dates and in the amounts provided in the Credit Agreement. The Company
further promises to pay interest on the unpaid principal amount of the Bid
Loans evidenced hereby from time to time at the rates, on the dates, and
otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount of and the date on which
each Bid Loan is made, the maturity date therefor and each payment of
principal with respect thereto on the schedules annexed hereto and made a part
hereof, or on continuations thereof which shall be attached hereto and made a
part hereof; provided that any failure to endorse such information on such
schedule or continuation thereof shall not in any manner affect any obligation
of the Company under the Credit Agreement and this Promissory Note (this
"Note").
This Note is one of the Bid Loan Notes referred to in, and is entitled
to the benefits of, the Credit Agreement, which Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
Terms defined in the Credit Agreement are used herein with their defined
meanings therein unless otherwise defined herein.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of California applicable to contracts
made and to be performed entirely within such State.
WILLAMETTE INDUSTRIES, INC.
By:
Title:
<PAGE>
SCHEDULE
to Bid Loan Note
[Absolute Rate Bid Loans]
Date Loan Amount of Matyurity Date Principal
Date
Disbursed Loan Payment
Principal
Paid
<PAGE>
SCHEDULE
to Bid Loan Note
[LIBOR Bid Loans]
Date Loan Amount of Matyurity Date Principal
Date
Disbursed Loan Payment
Principal
Paid
<PAGE>
EXHIBIT K
FORM OF DESIGNATION AGREEMENT
Dated ______________
Reference is made to the Credit Agreement dated as of May 10, 1996
(as extended, renewed, amended or restated from time to time, the "Credit
Agreement"), among Willamette Industries, Inc., an Oregon corporation (the
"Company"), the Banks and Co-Agents party thereto (as defined in the Credit
Agreement) and Bank of America National Trust and Savings Association, as
Agent for the Banks (the "Agent"). Terms defined in the Credit Agreement are
used herein with the same meaning.
_________________ (the "Designator") and ___________________ the
("Designee") agree as follows:
1. The Designator hereby designates the Designee, and the
Designee hereby accepts such designation, to have a right to make Bid Loans
pursuant to Section 2.06 of the Credit Agreement.
2. The Designator makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto or (ii) the financial condition of the Company or the
performance or observance by the Company of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant
thereto.
3. The Designee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
referred to in Section 5.11 or Section 6.01 thereof, and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Designation Agreement; (ii) agrees that it
will, independently and without reliance upon the Agent, the Designator or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Credit Agreement; (iii) confirms that it is an
entity qualified to be a Designated Bidder; (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by it
as a Designated Bidder; (vi) agrees to and accepts all duties, obligations and
responsibilities of a Bank set forth in Article IX of the Credit Agreement and
confirms that said Article shall otherwise apply to the Designated Bidder as
if it were a Bank named therein; and (vii) specifies as its Lending Offices
with respect to Bid Loans (and address for notices) the offices set forth
beneath its name on the signature page hereof.
4. Following the execution of this Designation Agreement by the
Designator and its Designee, it will be delivered to the Agent for acceptance
by the Agent. The effective date of this Designation Agreement shall be as of
the date of acceptance thereof by the Agent (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, the Designee shall be a party to the Credit Agreement as a
"Designated Bidder" with a right to make Bid Loans pursuant to Section 2.06 of
the Credit Agreement and the rights and obligations of a Designated Bidder
related thereto.
6. THIS DESIGNATION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties hereto have caused this
Designation Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
[NAME OF DESIGNATOR]
By:
Title:
[NAME OF DESIGNEE]
By:
Title:
Lending Office(s) (and
address for notices):
Attn.:
Tel.:
Fax:
Attn.:
Tel.:
Fax:
Accepted as of the ___ day
of ______________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
Title:
