SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 17, 2000
__________________________________
(Date of earliest event reported)
CHAMPION INTERNATIONAL CORPORATION
______________________________________________________
(Exact name of Registrant as specified in its charter)
NEW YORK 1-3053 13-1427390
______________ _____________________ __________________
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
One Champion Plaza, Stamford, Connecticut 06921
____________________________________________________________
(Address of principal executive offices, including zip code)
(203) 358-7000
____________________________________________________
(Registrant's telephone number, including area code)
__________________________________________________________________
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On February 17, 2000, Champion International Corporation, UPM-
Kymmene Corporation and Blue Acquisition, Inc. entered into an Agreement
and Plan of Merger, a copy of which is attached hereto and incorporated
herein by reference in its entirety.
In connection with the Agreement and Plan of Merger, Champion
International Corporation and UPM-Kymmene Corporation also entered into
three Stock Option Agreements, copies of which are attached hereto and
incorporated by reference in their entirety.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of February 17, 2000,
among Champion International Corporation, UPM-Kymmene
Corporation and Blue Acquisition, Inc.
2.2 Stock Option Agreement, dated as of February 17, 2000,
between Champion International Corporation and UPM-Kymmene
Corporation.
2.3 Parent Stock Option Agreement, dated as of February 17,
2000, between Champion International Corporation and UPM-
Kymmene Corporation.
2.4 Parent Treasury Stock Option Agreement, dated as of February
17, 2000, between Champion International Corporation and
UPM-Kymmene Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: February 25, 2000
CHAMPION INTERNATIONAL CORPORATION
By: /s/ Lawrence A. Fox
-----------------------------
Name: Lawrence A. Fox
Title: Vice President and Secretary
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of February 17, 2000,
among Champion International Corporation, UPM-Kymmene
Corporation and Blue Acquisition, Inc.
2.2 Stock Option Agreement, dated as of February 17, 2000,
between Champion International Corporation and UPM-Kymmene
Corporation.
2.3 Parent Stock Option Agreement, dated as of February 17,
2000, between Champion International Corporation and UPM-
Kymmene Corporation.
2.4 Parent Treasury Stock Option Agreement, dated as of February
17, 2000, between Champion International Corporation and
UPM-Kymmene Corporation.
============================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UPM-KYMMENE CORPORATION,
BLUE ACQUISITION, INC.
AND
CHAMPION INTERNATIONAL CORPORATION
Dated as of February 17, 2000
============================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Certificate of Incorporation of the Surviving
Corporation. . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 By-Laws of the Surviving Corporation . . . . . . . . . 8
Section 2.4 Directors and Officers of the Surviving
Corporation. . . . . . . . . . . . . . . . . . . . . 8
Section 2.5 Closing. . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III CONVERSION OF SHARES AND RELATED MATTERS . . . . . . . . . 8
Section 3.1 Exchange Ratio; Fractional Shares; Adjustments . . . . 8
Section 3.2 Conversion of Capital Stock. . . . . . . . . . . . . . 8
Section 3.3 Procedure for Election . . . . . . . . . . . . . . . . 9
Section 3.4 Exchange of Certificates . . . . . . . . . . . . . . 10
Section 3.5 Company Stock Options and Stock Rights . . . . . . . 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . 15
Section 4. Representations and Warranties of the Company. . . . 15
Section 4.1 Due Organization, Good Standing and Corporate
Power. . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Authorization and Validity of Agreement. . . . . . . 15
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . 16
Section 4.4 Consents and Approvals; No Violations. . . . . . . . 16
Section 4.5 The Company Reports and Financial Statements . . . . 17
Section 4.6 Information to be Supplied . . . . . . . . . . . . . 18
Section 4.7 Absence of Certain Events. . . . . . . . . . . . . . 18
Section 4.8 Litigation . . . . . . . . . . . . . . . . . . . . . 19
Section 4.9 Title to Properties; Encumbrances. . . . . . . . . . 19
Section 4.10 Compliance with Laws . . . . . . . . . . . . . . . . 19
Section 4.11 Company Employee Benefit Plans . . . . . . . . . . . 20
Section 4.12 Employment Relations and Agreement . . . . . . . . . 21
Section 4.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.14 Intellectual Properties. . . . . . . . . . . . . . . 22
Section 4.15 Broker's or Finder's Fee . . . . . . . . . . . . . . 23
Section 4.16 Environmental Laws and Regulations . . . . . . . . . 23
Section 4.17 State Takeover Statutes. . . . . . . . . . . . . . . 24
Section 4.18 Voting Requirements; Board Approval;
Appraisal Rights . . . . . . . . . . . . . . . . . 24
Section 4.19 Rights Agreement or Plan . . . . . . . . . . . . . . 24
Section 4.20 Pooling Matters; Tax Treatment . . . . . . . . . . . 25
Section 4.21 Opinion of Financial Advisor . . . . . . . . . . . . 25
Section 4.22 Trust Agreement. . . . . . . . . . . . . . . . . . . 25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. . . 25
Section 5. Representations and Warranties of Parent and
Merger Sub . . . . . . . . . . . . . . . . . . . . 25
Section 5.1 Due Organization, Good Standing and Corporate
Power. . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.2 Authorization and Validity of Agreement. . . . . . . 26
Section 5.3 Capitalization . . . . . . . . . . . . . . . . . . . 26
Section 5.4 Consents and Approvals; No Violations. . . . . . . . 27
Section 5.5 Parent Reports and Financial Statements. . . . . . . 28
Section 5.6 Information to be Supplied . . . . . . . . . . . . . 28
Section 5.7 Absence of Certain Events. . . . . . . . . . . . . . 29
Section 5.8 Litigation . . . . . . . . . . . . . . . . . . . . . 29
Section 5.9 Title to Properties; Encumbrances. . . . . . . . . . 30
Section 5.10 Compliance with Laws . . . . . . . . . . . . . . . . 30
Section 5.11 Parent Employee Benefit Plans. . . . . . . . . . . . 30
Section 5.12 Employment Relations and Agreement . . . . . . . . . 31
Section 5.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.14 Intellectual Property. . . . . . . . . . . . . . . . 33
Section 5.15 Broker's or Finder's Fee . . . . . . . . . . . . . . 33
Section 5.16 Environmental Laws and Regulations . . . . . . . . . 33
Section 5.17 Voting Requirements; Board Approval. . . . . . . . . 34
Section 5.18 Pooling Matters; Tax Treatment . . . . . . . . . . . 34
Section 5.19 Ownership of Capital Stock . . . . . . . . . . . . . 34
Section 5.20 No Prior Activities. . . . . . . . . . . . . . . . . 34
Section 5.21 Opinion of Financial Advisor . . . . . . . . . . . . 35
ARTICLE VI TRANSACTIONS PRIOR TO CLOSING DATE . . . . . . . . . . . . 35
Section 6.1 Access to Information Concerning Properties
and Records. . . . . . . . . . . . . . . . . . . . 35
Section 6.2 Confidentiality. . . . . . . . . . . . . . . . . . . 35
Section 6.3 Conduct of the Business of the Company Pending
the Closing Date . . . . . . . . . . . . . . . . . 35
Section 6.4 Conduct of the Business of Parent Pending
the Closing Date . . . . . . . . . . . . . . . . . 38
Section 6.5 The Company Shareholder Meetings; Parent
Shareholder Meetings; Preparation of Proxy
Statement/Prospectus; Short Form Merger. . . . . . 41
Section 6.6 Reasonable Best Efforts. . . . . . . . . . . . . . . 42
Section 6.7 No Solicitation. . . . . . . . . . . . . . . . . . . 43
Section 6.8 Notification of Certain Matters. . . . . . . . . . . 45
Section 6.9 Antitrust Laws . . . . . . . . . . . . . . . . . . . 45
Section 6.10 Directors' and Officers' Insurance . . . . . . . . . 46
Section 6.11 Public Announcements . . . . . . . . . . . . . . . . 47
Section 6.12 Transfer Tax . . . . . . . . . . . . . . . . . . . . 47
Section 6.13 NYSE Listing . . . . . . . . . . . . . . . . . . . . 48
Section 6.14 HSE Listing. . . . . . . . . . . . . . . . . . . . . 48
Section 6.15 Tax and Accounting Treatment . . . . . . . . . . . . 48
Section 6.16 Affiliates of Parent and the Company . . . . . . . . 48
Section 6.17 Employee Benefits. . . . . . . . . . . . . . . . . . 49
Section 6.18 Governance Matters . . . . . . . . . . . . . . . . . 50
Section 6.19 Section 16 Matters . . . . . . . . . . . . . . . . . 51
Section 6.20 Integration Team . . . . . . . . . . . . . . . . . . 51
Section 6.21 Parent Treasury Stock Option Agreement . . . . . . . 51
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
MERGER SUB. . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.1 Conditions Precedent to Obligations of Parent
and Merger Sub . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. . . . 53
Section 8.1 Conditions Precedent to Obligations of the
Company. . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . 56
Section 9.1 Termination. . . . . . . . . . . . . . . . . . . . . 56
Section 9.2 Effect of Termination. . . . . . . . . . . . . . . . 57
Section 9.3 Payment of Certain Fees. . . . . . . . . . . . . . . 58
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.1 Representations and Warranties . . . . . . . . . . . 59
Section 10.2 Extension; Waiver. . . . . . . . . . . . . . . . . . 59
Section 10.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.4 Entire Agreement. . . . . . . . . . . . . . . . . . 60
Section 10.5 Binding Effect; Benefit; Assignment. . . . . . . . . 60
Section 10.6 Amendment and Modification . . . . . . . . . . . . . 60
Section 10.7 Further Actions. . . . . . . . . . . . . . . . . . . 60
Section 10.8 Headings . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.9 Enforcement. . . . . . . . . . . . . . . . . . . . . 61
Section 10.10 Counterparts. . . . . . . . . . . . . . . . . . . . 61
Section 10.11 Applicable Law. . . . . . . . . . . . . . . . . . . 61
Section 10.12 Severability. . . . . . . . . . . . . . . . . . . . 61
Section 10.13 Waiver of Jury Trial. . . . . . . . . . . . . . . . 61
EXHIBITS
EXHIBIT A -- Company Stock Option Agreement
EXHIBIT B -- Parent Treasury Stock Option Agreement
EXHIBIT C -- Parent Stock Option Agreement
EXHIBIT D -- Affiliates' Letter Relating to Pooling (Company)
EXHIBIT E -- Affiliates' Letter Relating to Pooling (Parent)
EXHIBIT F -- Amendment to Parent's Articles of Association
SCHEDULE
Company Disclosure Letter
Parent Disclosure Letter
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 17, 2000 (this
"Agreement"), by and among UPM-KYMMENE CORPORATION, a company organized
under the laws of the Republic of Finland ("Parent"), BLUE ACQUISITION,
INC., a New York corporation and a direct wholly-owned subsidiary of Parent
("Merger Sub"), and CHAMPION INTERNATIONAL CORPORATION, a New York
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent and the Company each
have determined that it is advisable and in the best interests of each
corporation and their respective shareholders to effect a business
combination between Parent and the Company in a merger of equals in order
to achieve long-term strategic and financial benefits, and accordingly have
agreed to effect the merger of Merger Sub with and into the Company, with
the Company as the surviving corporation, upon the terms and subject to the
conditions set forth herein (the "Merger");
WHEREAS, the parties hereto intend that the Merger provided for
herein shall qualify for U.S. federal income tax purposes as a
reorganization (a "368 Reorganization") within the meaning of Section
368(a) of the U.S. Internal Revenue Code of 1986, as amended (together with
the rules and regulations promulgated thereunder, the "Code");
WHEREAS, the parties hereto intend that the Merger be accounted
for as a "pooling-of-interests" for financial reporting purposes;
WHEREAS, as a condition and inducement to Parent's and Merger
Sub's willingness to enter into this Agreement, Parent and the Company are
simultaneously entering into and delivering the Company Stock Option
Agreement in the form attached hereto as Exhibit A (the "Company Stock
Option Agreement");
WHEREAS, as a condition and inducement to the Company's
willingness to enter into this Agreement, Parent and the Company are
simultaneously entering into and delivering (i) the Stock Option Agreement
in the form attached hereto as Exhibit B (the "Parent Treasury Stock Option
Agreement") and (ii) the Stock Option Agreement in the form attached hereto
as Exhibit C (the "Parent Stock Option Agreement", and together with the
Parent Treasury Stock Option Agreement, the "Parent Stock Option
Agreements"); and
WHEREAS, by resolutions duly adopted, the respective Boards of
Directors of the Company, Parent and Merger Sub have approved and adopted
this Agreement, the Company Stock Option Agreement, the Parent Stock Option
Agreements and the transactions contemplated hereby and thereby;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the
following terms shall have the respective meanings specified therefor below
(such meanings to be equally applicable to both the singular and plural
forms of the terms defined).
"Acquisition Agreement" shall have the meaning set forth in
Section 6.7(b).
"ADS Consideration" shall have the meaning set forth in Section
3.2(c).
"Affiliate" of any Person shall mean any Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided that, for the purposes of this definition, "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or partnership interests, by contract or
otherwise.
"Agreement" shall have the meaning set forth in the preamble
hereto.
"Amended Articles" shall have the meaning set forth in Section
6.18(a).
"Antitrust Authorities" shall have the meaning set forth in
Section 6.9(d).
"Antitrust Law" shall have the meaning set forth in Section
6.9(d).
"Articles Amendment" shall have the meaning set forth in Section
6.18(a).
"Authorization" shall mean any consents, approvals and actions
of, filings with and notices to any Governmental Authority.
"BCL" shall have the meaning set forth in Section 2.1(a).
"Business Day" means a day other than a Saturday, a Sunday or a
day on which banks in New York, New York or Helsinki, Finland are permitted
or required to close.
"Certificate of Merger" shall have the meaning set forth in
Section 2.1(a).
"Certificate" shall have the meaning set forth in Section 3.2(c).
"Claims" shall have the meaning set forth in Section 4.16.
"Closing" shall have the meaning set forth in Section 2.5.
"Closing Date" shall have the meaning set forth in Section 2.5.
"Code" shall have the meaning set forth in the second recital
hereto.
"Commission" shall mean the U.S. Securities and Exchange
Commission.
"Company" shall have the meaning set forth in the preamble
hereto.
"Company Common Stock" shall mean the Company's common stock, par
value $0.50 per share.
"Company Director" shall have the meaning set forth in Section
6.18(b).
"Company Disclosure Letter" shall have the meaning set forth in
Section 4.
"Company Employee Benefit Plans" shall have the meaning set forth
in Section 4.11(a).
"Company Intellectual Property" shall have the meaning set forth
in Section 4.14(a).
"Company Material Adverse Effect" shall mean any event, change,
occurrence, effect, fact or circumstance that is materially adverse to (i)
the ability of the Company to perform its obligations under this Agreement
or to consummate the transactions contemplated hereby or (ii) the business,
assets, liabilities, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole, but shall exclude any
material adverse effect arising out of (i) any change in (x) U.S. or global
economic or industry conditions, (y) changes in U.S. or global financial
markets or conditions, (z) any generally applicable change in law, rule or
regulation or U.S. GAAP or interpretation of any of the foregoing and/or
(ii) the announcement of this Agreement or the transactions contemplated
hereby.
"Company Multiemployer Plans" shall have the meaning set forth in
Section 4.11(b).
"Company Options" shall mean the options to purchase shares of
the Company Common Stock, whether issued pursuant to a Company Employee
Benefit Plan or otherwise.
"Company Property" shall have the meaning set forth in Section
4.16.
"Company Recommendation" shall have the meaning set forth in
Section 6.5(a).
"Company SEC Reports" shall have the meaning set forth in Section
4.5(a).
"Company Securities" shall mean shares of the Company Common
Stock and the Company Options.
"Company Shareholder Approval" shall mean the approval of not
less than two-thirds of the vote of all outstanding shares of Company
Common Stock of this Agreement and the Merger at the Company Shareholder
Meeting.
"Company Shareholder Meeting" shall have the meaning set forth in
Section 6.5(a).
"Company Stock Option Agreement" shall have the meaning set forth
in the fourth recital hereto.
"Company Stock Plans" shall have the meaning set forth in Section
3.5(a)(i).
"Company Stock Rights" shall have the meaning set forth in
Section 3.5(a)(ii).
"Competition Act" shall have the meaning set forth in Section 4.4
"Confidentiality Agreement" shall have the meaning set forth in
Section 6.2.
"Contracts" shall have the meaning set forth in Section 4.4.
"Deposit Agreement" shall mean the Amended and Restated Deposit
Agreement, dated as of June 29, 1999, among Parent, Citibank N.A., as
depositary, and all holders and beneficial owners from time to time of the
Parent ADSs.
"Effective Time" shall have the meaning set forth in Section
2.1(a).
"Election Date" shall have the meaning set forth in Section
3.3(a).
"Environmental Claims" shall have the meaning set forth in
Section 4.16.
"Environmental Law" shall have the meaning set forth in Section
4.16.
"ERISA" shall have the meaning set forth in Section 4.11(a).
"European Antitrust Laws" shall have the meaning set forth in
Section 4.4.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning set forth in Section
3.3(a).
"Exchange Fund" shall have the meaning set forth in Section
3.4(a).
"Exchange Rate" means the average currency exchange rate of the
Euro to the US dollar based upon the noon buying rate in the City of New
York for cable transfers in foreign currencies as announced by the Federal
Reserve Bank of New York for customs purposes over the 10 consecutive
Trading Days ending on the second Trading Day immediately prior to the
Effective Time.
"Exchange Ratio" shall have the meaning set forth in Section
3.1(a).
"Exon-Florio" shall have the meaning set forth in Section 4.4.
"Expenses" shall have the meaning set forth in Section 9.3(b).
"Finnish GAAP" shall mean generally accepted accounting
principles of Finland, as in effect from time to time.
"Form F-4" shall have the meaning set forth in Section 5.6(a).
"Funding Amount" shall have the meaning set forth in Section
4.22.
"Governmental Authority" shall have the meaning set forth in
Section 4.4.
"Hazardous Materials" shall have the meaning set forth in Section
4.16.
"HSE" shall mean the Helsinki Stock Exchange.
"HSR Act" shall have the meaning set forth in Section 4.4.
"Indemnified Parties" shall have the meaning set forth in Section
6.10(b).
"Issuance Obligation" shall have the meaning set forth in Section
4.3(a).
"Laws" shall have the meaning set forth in Section 4.4.
"Liens" shall have the meaning set forth in Section 5.3(b).
"Listing Particulars" shall have the meaning set forth in Section
4.6(b).
"Market Act" shall have the meaning set forth in Section 4.6(b).
"Merger" shall have the meaning set forth in the first recital
hereto.
"Merger Consideration" shall have the meaning set forth in
Section 3.2(c).
"Merger Sub" shall have the meaning set forth in the preamble
hereto.
"Merger Sub Common Stock" shall mean Merger Sub's common stock,
par value $0.01 per share.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Options" shall have the meaning set forth in Section 3.5(a)(i).
"Orders" shall have the meaning set forth in Section 4.4.
"Orders of Disposition" shall have the meaning set forth in
Section 6.9(b)(3).
"Ordinary Share Consideration" shall have the meaning set forth
in Section 3.2(c).
"Ordinary Share Election" shall have the meaning set forth in
Section 3.3(a).
"Ordinary Share Election Form" shall have the meaning set forth
in Section 3.3(a).
"Parent" shall have the meaning set forth in the preamble hereto.
"Parent ADRs" shall have the meaning set forth in Section 3.2(c).
"Parent ADSs" shall have the meaning set forth in Section 3.2(c).
"Parent Disclosure Documents" shall have the meaning set forth in
Section 4.6(b).
"Parent Disclosure Letter" shall have the meaning set forth in
Section 5.
"Parent Employee Benefit Plans" shall have the meaning set forth
in Section 5.11(a).
"Parent Intellectual Property" shall have the meaning set forth
in Section 5.14(a).
"Parent Material Adverse Effect" shall mean any event, change,
occurrence, effect, fact or circumstance that is materially adverse to (i)
the ability of Parent to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or (ii) the business,
assets, liabilities, results of operations or financial condition of Parent
and its Subsidiaries, taken as a whole, but shall exclude any material
adverse effect arising out of (i) any change in (x) U.S., Finnish or global
economic or industry conditions, (y) changes in U.S., Finnish or global
financial markets or conditions, (z) any generally applicable change in
law, rule or regulation, Finnish GAAP or U.S. GAAP or interpretation of any
of the foregoing and/or (ii) the announcement of this Agreement or the
transactions contemplated hereby.
"Parent Multiemployer Plan" shall have the meaning set forth in
Section 5.11(b).
"Parent Options" shall have the meaning set forth in Section
6.4(b)(iii).
"Parent Ordinary Shares" shall mean validly issued, fully paid
and nonassessable ordinary shares, with no nominal value, of Parent.
"Parent Property" shall have the meaning set forth in Section
5.16.
"Parent Public Reports" shall have the meaning set forth in
Section 5.5(a).
"Parent Recommendation" shall have the meaning set forth in
Section 6.5(b).
"Parent Share Price" shall mean the product of (x) the weighted
average price per Parent Ordinary Share on the HSE for each of the ten
consecutive Trading Days ending on the second Trading Day immediately
preceding the date of the Effective Time multiplied by (y) the Exchange
Rate.
"Parent Share Rights" shall have the meaning set forth in Section
3.5(a)(ii).
"Parent Shareholder Approval" shall have the meaning set forth in
Section 5.17(a).
"Parent Shareholder Meeting" shall have the meaning set forth in
Section 6.5(b).
"Parent Shares" shall have the meaning set forth in Section
3.2(c).
"Parent Stock Option Agreement" and "Parent Stock Option
Agreements" shall have the meanings set forth in the fifth recital hereto.
"Parent Treasury Stock Option Agreement" shall have the meaning
set forth in the fifth recital hereto.
"Permits" shall have the meaning set forth in Section 4.10(b).
"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a
limited liability company, a group and a government or other department or
agency thereof.
"Preferred Stock" shall have the meaning set forth in Section
4.3(a).
"Proxy Statement Prospectus" means the joint statement proxy
prospectus included in the Registration Statement relating to the Company
Shareholder Meeting.
"Registration Statement" shall have the meaning set forth in
Section 5.6(a).
"Release" shall have the meaning set forth in Section 4.16.
"Returns" shall have the meaning set forth in Section 4.13(a).
"Rule 145 Affiliates" shall have the meaning set forth in Section
6.16.
"Rule 145 Affiliate Agreement" shall have the meaning set forth
in Section 6.16(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Significant Subsidiary" with respect to a Person shall mean any
Subsidiary that constitutes a "significant subsidiary" of such Person
within the meaning of Rule 1-02 of Regulation S-X of the Exchange Act.
"Subsidiary" with respect to a Person shall mean (x) any
partnership of which such Person or any of its Subsidiaries is a general
partner or (y) any other entity in which such Person or any of its
Subsidiaries owns or has the power to vote more than 50% of the equity
interests in such entity having general voting power to participate in the
election of the governing body of such entity.
"Superior Proposal" shall have the meaning set forth in Section
6.7(a).
"Surviving Corporation" shall have the meaning set forth in
Section 2.1(b).
"Takeover Proposal" shall have the meaning set forth in Section
6.7(a).
"Taxes" shall have the meaning set forth in Section 4.13(a).
"Termination Date" shall have the meaning set forth in Section
9.1(d)(i).
"Third Party Acquisition Event" shall have the meaning set forth
in Section 9.3(b).
"368 Reorganization" shall have the meaning set forth in the
second recital hereto.
"Trading Day" shall mean any day on which securities are traded
on the NYSE and the HSE.
"Transfer Taxes" shall have the meaning set forth in Section
6.12.
"Trust Agreement" shall have the meaning set forth in Section
4.22.
"U.S. GAAP" shall mean generally accepted accounting principles
of the United States of America, as in effect from time to time.
"Voting Debt" shall have the meaning set forth in Section 4.3(a).
ARTICLE II
"THE MERGER
Section 2.1 The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, as soon as practicable after satisfaction or,
to the extent permitted hereby, waiver of all conditions to the Merger set
forth herein, a certificate of merger (the "Certificate of Merger") shall
be duly prepared, executed and acknowledged by Merger Sub and the Company
in accordance with the New York Business Corporation Law (the "BCL") and
shall be filed with the Secretary of State of New York. The Merger shall
become effective upon the filing of the Certificate of Merger (or at such
later time reflected in such Certificate of Merger as shall be agreed to by
Parent and the Company). The date and time when the Merger shall become
effective is hereinafter referred to as the "Effective Time."
(b) At the Effective Time, Merger Sub shall be merged with
and into the Company and the separate corporate existence of Merger Sub
shall cease, and the Company shall continue as the surviving corporation
under the laws of the State of New York under the name of "Champion
International Corporation" (the "Surviving Corporation"). Following the
Effective Time, Parent shall (i) take all actions necessary to change its
name to "Champion International" and (ii) for such period of time as the
executive management of Parent shall determine, continue to maintain the
headquarters of the Surviving Corporation in Stamford, Connecticut.
(c) From and after the Effective Time, the Merger shall
have the effects set forth in this Agreement and in Section 906 of BCL.
Section 2.2 Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of the Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
Section 2.3 By-Laws of the Surviving Corporation. The By-Laws
of the Merger Sub, as in effect immediately prior to the Effective Time,
shall be the By-Laws of the Surviving Corporation.
Section 2.4 Directors and Officers of the Surviving Corporation.
At the Effective Time, the directors of Merger Sub immediately prior to the
Effective Time plus at least one person designated by the Company shall be
the directors of the Surviving Corporation, each of such directors to hold
office, subject to the applicable provisions of the BCL and the Certificate
of Incorporation and By-Laws of the Surviving Corporation, until the next
annual shareholders' meeting of the Surviving Corporation and until their
respective successors shall be duly elected or appointed and qualified. At
the Effective Time, the officers of the Company immediately prior to the
Effective Time shall, subject to the applicable provisions of the
Certificate of Incorporation and By-Laws of the Surviving Corporation, be
the officers of the Surviving Corporation until their respective successors
shall be duly elected or appointed and qualified.
Section 2.5 Closing. The closing of the Merger (the "Closing")
shall be held at the offices of White & Case LLP, 1155 Avenue of the
Americas, New York, New York 10036 as soon as practicable, but in any
event within three (3) Business Days after the last of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date) set forth in Articles VII and VIII hereof is satisfied or
waived or at such other time and date as the parties hereto shall agree in
writing. Such date is herein referred to as the "Closing Date".
ARTICLE III
CONVERSION OF SHARES AND RELATED MATTERS
Section 3.1 Exchange Ratio; Fractional Shares; Adjustments. (a)
The "Exchange Ratio" (as the same may be adjusted pursuant to Section
3.2(e)) shall be 1.99.
Section 3.2 Conversion of Capital Stock. At the Effective Time,
by virtue of the Merger:
(a) Cancellation of Treasury Stock and Stock Owned by
Parent and Merger Sub. All shares of Company Common Stock owned by the
Company as treasury stock and any shares of Company Common Stock owned by
Parent, Merger Sub or any Subsidiary of Parent or Merger Sub immediately
prior to the Effective Time shall, by virtue of the Merger, and without any
action on the part of the holder thereof, no longer be outstanding, shall
be canceled and retired without payment of any consideration therefor and
shall cease to exist.
(b) Capital Stock of Merger Sub. Each share of Merger Sub
Common Stock outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Surviving
Corporation.
(c) Conversion of Company Common Stock. Except as provided
in clauses (a) and (b) of this Section 3.2, each share of Company Common
Stock outstanding immediately prior to the Effective Time shall be
converted into and shall be canceled in exchange for the right to receive
from Parent pursuant to Section 3.2(d) a number of Parent Ordinary Shares
equal to the Exchange Ratio, which shall be delivered to the holders of
Company Common Stock (i) in the form of American Depositary Shares (the
"Parent ADSs"), each representing the right to receive one Parent Ordinary
Share (the "ADS Consideration"), or (ii) if and to the extent elected by
any such holder, in the manner provided in Section 3.3, in the form of
Parent Ordinary Shares, in book-entry form (the "Ordinary Share
Consideration" and, together with the ADS Consideration, the "Merger
Consideration"); provided, however, that the Parent ADSs may be evidenced
by one or more American Depositary Receipts ("Parent ADRs") issued in
accordance with the Deposit Agreement. At the Effective Time, all Company
Common Stock shall no longer be outstanding, shall be canceled and retired
and shall cease to exist, and each certificate (a "Certificate") formerly
representing any of such Company Common Stock shall thereafter represent
only the right to receive the Merger Consideration and the right, if any,
to receive pursuant to Section 3.4(e) cash in lieu of fractional Parent
ADSs (or, if applicable, fractional Parent Ordinary Shares) and any
dividend or distribution pursuant to Section 3.4(c), in each case without
interest. Parent shall, following the Closing, pay all stamp duties, stamp
duty reserve tax and other taxes and similar levies imposed in connection
with the issuance or creation of the Parent Ordinary Shares, Parent ADSs
and any Parent ADRs in connection therewith (such Parent Ordinary Shares or
Parent ADSs to be received by a holder may be referred to in this Agreement
as "Parent Shares").
(d) In consideration of the issue to Parent by the
Surviving Corporation of shares of common stock of the Surviving
Corporation pursuant to Section 3.2(b) hereof, Parent shall issue, in
accordance with Section 3.4, such number of Parent Ordinary Shares as is
equal to the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time multiplied by the Exchange Ratio,
(i) to the depositary for the Parent ADSs to permit the issuance of Parent
ADSs and (ii) if elected by any holder of Company Common Stock in the
manner provided in Section 3.3, to the holders of such Company Common Stock
for the purpose of giving effect to the delivery of the Merger
Consideration referred to in Section 3.2(c) in the form of Parent Ordinary
Shares.
(e) In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the Company changes the number
of shares of Company Common Stock, or Parent changes the number of Parent
Ordinary Shares or Parent ADSs, issued and outstanding as a result of a
stock split, stock combination, stock dividend, recapitalization,
redenomination of share capital or other similar transaction, the Exchange
Ratio and other items dependent thereon shall be appropriately adjusted.
Section 3.3 Procedure for Election. (a) Prior to the Effective
Time, Parent shall appoint a bank or trust company reasonably acceptable to
the Company as exchange agent (the "Exchange Agent") for the purposes of
exchanging the Certificates for Parent ADSs or, if and to the extent
elected by a holder of a Certificate, in the manner set forth in this
Section 3.3, for Parent Ordinary Shares in book-entry form. Promptly after
the Effective Time Parent will send, or will cause the Exchange Agent to
send, to each holder of record of Company Common Stock as of the Effective
Time (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be
in customary form and have such other customary provisions as the Surviving
Corporation or Parent may reasonably specify) providing instructions for
use in effecting the surrender of Certificates in exchange for certificates
representing Parent ADRs which represent Parent ADSs or Parent Ordinary
Shares and cash in lieu of fractional Parent ADSs or Parent Ordinary Shares
and (ii) an election form and other appropriate materials (collectively,
the "Ordinary Share Election Form") providing for such holder to elect to
receive the Ordinary Share Consideration with respect to all or any portion
of such holder's shares of Company Common Stock (the "Ordinary Share
Election"). Any shares of Company Common Stock with respect to which there
shall not have been effected such election by submission to the Exchange
Agent of an effective, properly completed Ordinary Share Election Form on
or prior to the date specified in such form (the "Election Date") which
shall be a date that is not more than 60 days following the date of the
Effective Time, shall be converted in the Merger into the right to receive
the ADS Consideration.
(b) Record holders of shares of Company Common Stock who
are nominees only may submit a separate Ordinary Share Election Form for
each beneficial owner for whom such record holder is a nominee; provided,
however, that, at the request of Parent, such record holder shall certify
to the reasonable satisfaction of Parent that such record holder holds such
shares as nominee for the beneficial owner thereof. For purposes of this
Agreement, each beneficial owner for which an Ordinary Share Election Form
is submitted will be treated as a separate holder of shares of Company
Common Stock.
Section 3.4 Exchange of Certificates. (a) Exchange Agent.
Within three Business Days following the Effective Time, Parent shall (i)
allot to the Exchange Agent, as nominee for the benefit of the holders of
Company Common Stock converted into the right to receive the Merger
Consideration, the aggregate number of Parent Ordinary Shares to be issued
pursuant to Section 3.2(d) and (ii) deposit with the Exchange Agent an
amount of cash sufficient to permit the Exchange Agent to make the
necessary payments of cash in lieu of fractional Parent ADSs and Parent
Ordinary Shares in accordance with Section 3.4(e) (such cash and Parent
Ordinary Shares, together with any dividends or distributions with respect
thereto being hereinafter referred to as the "Exchange Fund"), to be held
for the benefit of and distributed to the holders of Company Common Stock
in accordance with this Section. The Exchange Agent shall agree to hold
such Parent Ordinary Shares and funds for delivery as contemplated by this
Section, and upon such additional terms as may be agreed upon by the
Exchange Agent, the Surviving Corporation and Parent shall cause the
Depositary to issue through and upon the instructions of the Exchange
Agent, for the benefit of the holders of shares of the Company Common Stock
converted into the ADS Consideration in accordance with Section 3.2(c),
Parent ADRs representing the number of Parent ADSs issuable pursuant to
Section 3.2(c). Neither the Company, its affiliates nor the holders of
Company Common Stock shall be responsible for any stamp duty reserve tax
payable in connection with the ADS Consideration. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by the Surviving
Corporation on a daily basis; provided that no such investment or loss
thereon shall affect the amounts payable to the Company's shareholders
pursuant to this Article III. Parent and the Surviving Corporation shall
replace any monies lost through an investment made pursuant to this Section
3.4. Any interest and other income resulting from such investments shall
promptly be paid to the Surviving Corporation. All Parent Ordinary Shares
and Parent ADSs to be issued and delivered to the holders of Company Common
Stock in accordance with this Agreement shall, as of the Effective Time,
have been registered under the Securities Act pursuant to a registration
statement on Form F-4 declared effective by the SEC.
(b) Exchange Procedures. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with the letter of
transmittal referred to in Section 3.3(a) duly executed and completed in
accordance with its terms, the holder of such Certificate shall be entitled
to receive in exchange therefor (i) a certificate or certificates
representing one or more Parent ADRs representing, in the aggregate, that
whole number of Parent ADSs and/or that whole number of Parent Ordinary
Shares elected to be received in accordance with Section 3.3, (ii) the
amount of dividends or other distributions, if any, with a record date on
or after the Effective Time which theretofore became payable with respect
to such Parent ADSs and Parent Ordinary Shares, and (iii) the cash amount
payable in lieu of fractional Parent ADSs and Parent Ordinary Shares in
accordance with Section 3.4(e), in each case which such holder has the
right to receive pursuant to the provisions of this Article III, and the
Certificate so surrendered shall forthwith be canceled. In no event shall
the holder of any Certificate be entitled to receive interest on any funds
to be received in the Merger. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, a certificate or certificates representing that whole number of
Parent Ordinary Shares elected to be received in accordance with Section
3.3 and/or one or more Parent ADRs representing, in the aggregate, that
whole number of Parent ADSs, plus the cash amount payable in lieu of
fractional Parent Ordinary Shares and Parent ADSs in accordance with
Section 3.4(e), may be issued to a transferee if the Certificate
representing such Company Common Stock is presented to the Exchange Agent
accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 3.4(b) and subject to
Section 3.4(c), each Certificate shall, after the Effective Time, represent
for all purposes only the right to receive the whole number of Parent
Ordinary Shares and/or Parent ADSs into which the number of shares of
Company Common Stock shown thereon have been converted as contemplated by
this Article III plus the cash amount payable in lieu of fractional Parent
ADSs and Parent Ordinary Shares in accordance with Section 3.4(e).
Notwithstanding the foregoing, certificates representing Company Common
Stock surrendered for exchange by any Person constituting an "Affiliate" of
the Company for purposes of Section 6.16 shall not be exchanged until
Parent has received an Affiliate Agreement (as defined in Section 6.16) as
provided in Section 6.16.
(c) Distributions With Respect To Unexchanged Shares. No
dividends or other distributions declared, made or paid after the Effective
Time with respect to Parent Ordinary Shares with a record date on or after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the Parent Ordinary Shares and Parent ADSs
represented thereby and no cash payment in lieu of fractional Parent
Ordinary Shares and Parent ADSs shall be paid to any such holder pursuant
to Section 3.4(e) until the holder of record of such Certificate shall
surrender such Certificate in accordance with this Section. Subject to the
effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates representing
Parent Ordinary Shares and the Parent ADRs which represent Parent ADSs
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions, if any, with a
record date on or after the Effective Time which theretofore became
payable, but which were not paid by reason of the immediately preceding
sentence, with respect to such Parent Ordinary Shares and Parent ADSs and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date on or after the Effective Time but prior
to surrender and a payment date subsequent to surrender payable with
respect to such Parent Ordinary Shares and Parent ADSs. Dividends or other
distributions with a record date on or after the Effective Time but prior
to surrender of Certificates by holders thereof payable in respect of
Parent Ordinary Shares and Parent ADSs held by the Exchange Agent shall be
held in trust for the benefit of such holders of Certificates.
(d) No Further Ownership Rights In Company Common Stock.
All Parent Ordinary Shares and Parent ADSs issued upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any
cash paid pursuant to Section 3.4(e)) shall be deemed to have been issued
at the Effective Time in full satisfaction of all rights pertaining to the
shares of Company Common Stock represented thereby, subject, however, to
the Surviving Corporation's obligation to pay any dividends which may have
been declared by the Company on the shares of Company Common Stock in
accordance with the terms of this Agreement and which remained unpaid at
the Effective Time. From and after the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further
registration of transfers thereon of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in this
Section.
(e) No Fractional Shares. No certificate or scrip
representing fractional Parent ADSs or Parent Ordinary Shares will be
issued in the Merger upon the surrender for exchange of Certificates, and
such fractional Parent ADS or Parent Ordinary Share interests will not
entitle the owner thereof to vote or to any rights of a holder of Parent
ADSs or Parent Ordinary Shares. In lieu of any such fractional Parent ADS
or Parent Ordinary Share, each holder of Certificates who would otherwise
have been entitled to a fraction of Parent ADS or Parent Ordinary Share in
exchange for such Certificates (after taking into account all Certificates
delivered by such holder) pursuant to this Section shall receive from the
Exchange Agent, as applicable, a cash payment in lieu of such fractional
Parent ADS or Parent Ordinary Share, as the case may be, determined by
multiplying (A) the Parent Share Price by (B) the fractional Parent ADS
interest or Parent Ordinary Share interest, as the case may be, to which
such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the shareholders of the
Company for one (1) year after the Effective Time shall be delivered to or
as directed by Parent, upon demand, and any holders of Certificates who
have not theretofore complied with this Article III shall thereafter look
only to Parent (subject to abandoned property, escheat and other similar
laws) as a general creditor for payment of their claim for Parent ADSs,
Parent Ordinary Shares, any cash in lieu of fractional Parent ADSs and
Parent Ordinary Shares and any dividends or distributions with respect to
Parent ADSs and Parent Ordinary Shares. Neither Parent nor the Surviving
Corporation shall be liable to any holder of any Certificate for Parent
ADSs or Parent Ordinary Shares (or dividends or distributions with respect
to either), or cash payable in respect of fractional Parent ADSs or Parent
Ordinary Shares, delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any securities or amounts
remaining unclaimed by holders of Parent Ordinary Shares five years after
the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
(g) Lost, Stolen or Destroyed Certificates. If any
Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such
person of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration
with respect to the shares of Company Common Stock formerly represented
thereby, any cash in lieu of fractional Parent ADSs or Parent Ordinary
Shares, and unpaid dividends and distributions in respect of or on Parent
ADSs or Parent Ordinary Shares deliverable in respect thereof, pursuant to
this Agreement.
(h) No Liability. None of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect
of any shares of Company Common Stock (or dividends or distributions with
respect thereto) for any amounts paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. Any amounts
remaining unclaimed by any holder of Company Common Stock immediately prior
to such time when such amounts would otherwise escheat to or become the
property of any Governmental Authority (as hereinafter defined), shall, to
the extent permitted by applicable laws, become the property of Parent,
free and clear of all claims or interest of any Person previously entitled
thereto.
(i) Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the Merger
Consideration (and any dividends or distributions thereon) otherwise
payable hereunder to any Person such amounts as it is required to deduct
and withhold with respect to the making of such payment under any provision
of federal, state, local or foreign income tax law. To the extent that the
Surviving Corporation or Parent so withholds those amounts, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
Section 3.5 Company Stock Options and Stock Rights. (a) As soon
as practicable following the date of this Agreement, the Board of Directors
of the Company (or the appropriate committee thereof) shall adopt such
resolutions, take such actions and obtain such consents as may be required
to effect the following, effective at the Effective Time:
(i) each employee, consultant or non-
employee director stock option (each, an "Option") to purchase
shares of Company Common Stock theretofore granted under the
Company's stock plans, programs, arrangements or agreements
("Company Stock Plans") which is outstanding and unexercised
immediately prior to the Effective Time (whether or not vested or
exercisable) shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under such
Option (but taking into account any changes thereto, including
the acceleration thereof, provided for in the applicable Company
Stock Plan resulting from the Merger), with such modifications as
may be required under Finnish law that do not affect the economic
benefits under, or transferability of, such Option, Parent ADSs
or, to the extent elected by the holder thereof prior to the
Effective Time, Parent Ordinary Shares where (x) the number of
Parent ADSs or Parent Ordinary Shares, as applicable, purchasable
upon exercise of each such option shall be equal to the number of
shares of Company Common Stock that were purchasable under such
Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and rounding to the nearest whole Parent ADS or
Parent Ordinary Share, as the case may be, and (y) the per Parent
ADS or per Parent Ordinary Share, as the case may be, exercise
price under each such Option shall be obtained by dividing the
exercise price per Share of Company Common Stock of each such
Option by the Exchange Ratio, and rounding to the nearest penny;
provided, however, that in the case of any Option to which
Section 421 of the Code applies by reason of its qualification
under Section 422 of the Code ("qualified stock options"), the
option price, the number of shares purchasable pursuant to such
Option and the terms and conditions of exercise of such Option
shall be determined in order to comply with Section 424(a) of the
Code; and
(ii) each employee and non-employee director
stock unit, deferred stock award, performance share, phantom
stock award, stock appreciation right and other right to acquire
Company Common Stock or restricted stock or any other interest in
respect of Company Common Stock under any Company Stock Plan
(whether or not vested or exercisable), other than Options
("Company Stock Rights"), outstanding immediately prior to the
Effective Time, shall be deemed to constitute that number of
stock units, deferred stock awards, performance shares, phantom
stock awards or stock appreciation rights or other corresponding
rights, including shares of restricted stock, as the case may be,
with respect to Parent ADSs or, to the extent elected by the
holder thereof prior to the Effective Time, Parent Ordinary
Shares ("Parent Share Rights") equal to the number of applicable
Company Stock Rights held by such holder immediately prior to the
Closing multiplied by the Exchange Ratio, on the same terms and
conditions as were applicable under such Company Stock Right, as
adjusted in accordance with this Section 3.5(a)(ii) with such
modifications as may be required under Finnish law that do not
affect the economic benefits under, or transferability of, such
Company Stock Rights; and rounding to the nearest Parent ADS or
Parent Ordinary Share, and the share value on the grant date with
respect to each Parent Share Right shall be equal to the share
value on the grant date of the corresponding Company Stock Right
as in effect immediately prior to the Effective Time, divided by
the Exchange Ratio, and rounding to the nearest penny.
(b) Prior to the Effective Time, the Company shall use its
reasonable best efforts to take all actions (including, if appropriate,
amending the terms of the Company's stock option or compensation plans or
arrangements) and obtain such consents as are necessary to give the effect
to the transactions contemplated by Section 3.5(a).
(c) Effective at the Effective Time, Parent shall assume
each Option and Company Stock Right in accordance with the terms of the
relevant stock option plan or compensation arrangement under which it was
issued and the stock option agreement by which it is evidenced with such
modifications as may be required under Finnish law that do not affect the
economic benefits under, or transferability of, such Option and Company
Stock Rights. At or prior to the Effective Time, Parent shall take all
corporate action necessary to reserve for issuance and, upon issuance, to
list on the NYSE and the HSE a sufficient number of Parent ADSs and Parent
Ordinary Shares, as the case may be, for delivery upon exercise or vesting
of the Options and Company Stock Rights assumed by it in accordance with
this Section 3.5(c). As soon as practicable after the Effective Time,
Parent shall file a registration statement on Form S-8 (or any successor or
other appropriate forms), or another appropriate form (or shall cause such
Options and Company Stock Rights to be deemed to be an option issued
pursuant to a Parent stock option or compensation plan for which a
sufficient number of Parent ADSs or Parent Ordinary Shares have previously
been registered pursuant to an appropriate registration form), with respect
to the subject of such Options and Company Stock Rights, and shall use its
reasonable best efforts to maintain the effectiveness of such registration
statement(s) (and maintain the current status of the prospectus(es)
contained therein) for so long as such Options and Company Stock Rights
remain outstanding.
(d) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Options and Company Stock Rights
appropriate notices setting forth such holders' rights pursuant to the
applicable Company Stock Plans, and the agreements evidencing the grants of
such Options and Company Stock Rights shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section
3.5 after giving effect to the Merger).
(e) Except as disclosed in writing to Parent prior to the
date hereof, the Company agrees that it will not grant any stock options,
stock appreciation rights, stock units, deferred stock awards or other
rights to acquire Company Common Stock or any other interest in Company
Common Stock or any other equity security of the Company and will not take
any action to accelerate the exercisability of Options or Company Stock
Rights, and/or permit cash payments to holders of Options or Company Stock
Rights with respect to such Options or Company Stock Rights.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4. Representations and Warranties of the Company.
Except as disclosed in (i) the Company disclosure letter delivered
concurrently with the delivery of this Agreement (the "Company Disclosure
Letter") or (ii) the Company SEC Reports (as defined below) made or filed
prior to the date of this Agreement, the Company hereby represents and
warrants to Parent and Merger Sub as follows:
Section 4.1 Due Organization, Good Standing and Corporate Power.
Each of the Company and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) under the laws
of the jurisdiction of its incorporation and each such Person has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to
have such power and authority could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect.
The Company and each of its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so qualified or licensed and in good
standing could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. Other than as set forth
in Section 4.1 of the Company Disclosure Letter, the respective
Certificates of Incorporation and By-Laws or other organizational documents
of the Significant Subsidiaries of the Company do not contain any provision
limiting or otherwise restricting the ability of the Company to control its
Significant Subsidiaries. Section 4.1 of the Company Disclosure Letter
sets forth a list of all Significant Subsidiaries of the Company and their
respective jurisdictions of incorporation or organization and identifies
the Company's (direct or indirect) percentage of equity ownership therein.
Section 4.2 Authorization and Validity of Agreement. The
Company has full corporate power and authority to execute and deliver this
Agreement and the Company Stock Option Agreement, to perform its
obligations hereunder and thereunder and, in the case of this Agreement and
the Parent Stock Option Agreement, subject to obtaining the Company
Shareholder Approval, to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement,
the Company Stock Option Agreement and the Parent Stock Option Agreements
by the Company, and the consummation by it of the transactions contemplated
hereby and thereby, have been duly authorized and unanimously approved by
its Board of Directors and no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance
of this Agreement, the Company Stock Option Agreement or the Parent Stock
Option Agreements by the Company and the consummation of the transactions
contemplated hereby or thereby, other than, in the case of this Agreement,
obtaining the Company Shareholder Approval. This Agreement, the Company
Stock Option Agreement and the Parent Stock Option Agreements have been
duly executed and delivered by the Company and each is a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
Section 4.3 Capitalization. (a) The authorized capital stock
of the Company consists of 250,000,000 shares of Company Common Stock and
8,531,431 shares of preferred stock, par value $ 1.00 per share (the
"Preferred Stock"). At the close of business on February 14, 2000: (i)
96,578,064 shares of Company Common Stock were issued and outstanding; (ii)
12,738,076 shares of Company Common Stock were reserved for issuance under
the Company's stock option and stock benefit plans and arrangements, (iii)
no shares of Preferred Stock were issued and outstanding and (iv)
15,427,059 shares of Company Common Stock were held by the Company in its
treasury. All issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Section 4.3(a) of the Company
Disclosure Letter, there are no outstanding or authorized options,
warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to shares of capital stock or other
equity interests of the Company or any of its Subsidiaries, pursuant to
which the Company or any of its Subsidiaries is or may become obligated to
issue shares of its capital stock or other equity interests or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock or other equity interests of
the Company or any of its Subsidiaries (each an "Issuance Obligation").
There are no outstanding obligations of the Company to repurchase, redeem
or otherwise acquire any outstanding securities of the Company or any
security described in the foregoing sentence. The Company has no
authorized or outstanding bonds, debentures, notes or other indebtedness
the holders of which have the right to vote (or convertible or exchangeable
into or exercisable for securities the holders of which have the right to
vote) with the shareholders of the Company on any matter ("Voting Debt").
Except as set forth in Section 4.3(a) of the Company Disclosure Letter,
there are no restrictions of any kind which prevent or restrict the payment
of dividends by the Company or any of its Subsidiaries and there are no
limitations or restrictions on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests.
(b) All of the issued and outstanding shares of capital
stock of each Significant Subsidiary are validly existing, fully paid and
non-assessable. Except as set forth in the Company SEC Reports or Section
4.3(b) of the Company Disclosure Letter, no Significant Subsidiary of the
Company has outstanding Voting Debt and no Significant Subsidiary of the
Company is bound by, obligated under, or party to an Issuance Obligation
with respect to any security of the Company or any Significant Subsidiary
of the Company and there are no obligations of the Company or any of its
Significant Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding securities of any of its Significant Subsidiaries or any
capital stock of, or other ownership interests in, any of its Significant
Subsidiaries.
(c) Except for the Company's interest in its Significant
Subsidiaries, and as set forth in the Company SEC Reports or Section 4.3(c)
of the Company Disclosure Letter, the Company does not directly or
indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture, limited liability
company or other business association or entity which is material to the
Company and its Subsidiaries, taken as a whole.
Section 4.4 Consents and Approvals; No Violations. Assuming
(i) the filings required under applicable Brazilian antitrust or
competition laws, the Competition Act Canada (the "Competition Act") and
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), are made and the waiting period thereunder (if applicable) has
been terminated or has expired, (ii) voluntary notification under Section
721 of the Defense Production Act of 1950, as amended ("Exon-Florio"), is
made, (iii) the prior notification and reporting requirements of the German
Act Against Restraints in Competition and other antitrust laws of the
member states of the European Union as may be applicable (collectively, the
"European Antitrust Laws") are satisfied and any antitrust
filings/notifications which must or may be effected at the national level
in countries having jurisdiction are made and any applicable waiting
periods thereunder have been terminated or expired, (iv) the prior
notification and reporting requirements of other antitrust or competition
laws as may be applicable, are satisfied and any antitrust
filings/notifications which must or may be effected in countries having
jurisdiction are made, (v) the applicable requirements of the Securities
Act and the Exchange Act are met, (vi) the requirements under any
applicable foreign or state securities or blue sky laws are met, (vii) the
filing of the Certificate of Merger and other appropriate merger documents,
if any, as required by the BCL, are made, (viii) in the case of this
Agreement the Company Shareholder Approval is received, and (ix) the
requirements of any applicable state law relating to the transfer of
contaminated property are met, the execution and delivery of this
Agreement, the Company Stock Option Agreement and the Parent Stock Option
Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not: (A)
violate or conflict with any provision of the Company's Certificate of
Incorporation, or the Company's By-Laws or the comparable governing
documents of any of its Subsidiaries; (B) violate or conflict with any
statute, law, ordinance, rule or regulation (together, "Laws") or any
order, judgment, decree, writ, permit or license (together, "Orders"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political subdivision (a
"Governmental Authority") applicable to the Company or any of its
Subsidiaries or by which any of their respective properties or assets may
be bound; (C) except as set forth in Section 4.4 of the Company Disclosure
Letter, require any filing with, or permit, consent or approval of, or the
giving of any notice to, any Governmental Authority; or (D) except as set
forth in Section 4.4 of the Company Disclosure Letter, result in a
violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any of its Significant Subsidiaries under, or give rise to any obligation,
right of termination, cancellation, acceleration or increase of any
obligation or a loss of a material benefit under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, contract, lease, franchise agreement or other
instrument or obligation of any kind ("Contracts") to which the Company or
any of its Significant Subsidiaries is a party, or by which any such Person
or any of its properties or assets are bound, excluding from the foregoing
clauses (B), (C) and (D) conflicts, violations, breaches, defaults, rights
of payment and reimbursement, terminations, modifications, accelerations
and creations and impositions of Liens which could not reasonably be
expected to, individually or in the aggregate, have a Company Material
Adverse Effect or prevent, materially impair, or materially delay the
ability of the Company to consummate the transactions contemplated by this
Agreement.
Section 4.5 The Company Reports and Financial Statements. (a)
Since December 31, 1997, the Company and, to the extent applicable, its
Subsidiaries, have filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities laws and the
SEC rules and regulations thereunder, and all forms, reports, schedules,
statements, registration statements and other documents filed with the SEC
by the Company and, to the extent applicable, its Subsidiaries have
complied in all material respects with all applicable requirements of the
federal securities laws and the SEC rules and regulations promulgated
thereunder. The Company has, prior to the date of this Agreement, made
available to Parent true and complete copies of all forms, reports,
registration statements and other filings filed by the Company and its
Subsidiaries with the SEC since December 31, 1997 (such forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, are
sometimes collectively referred to as the "Company SEC Reports"), which are
all the documents (other than preliminary materials) that the Company and
its Subsidiaries were required to file with the SEC. As of their
respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and the unaudited consolidated interim
financial statements of the Company included in the Company SEC Reports
were prepared in accordance with U.S. GAAP applied on a consistent basis
(except as may be indicated therein or in the notes or schedules thereto)
and present fairly, in all material respects, the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and changes in
financial position for the periods then ended. The Company has heretofore
provided Parent with true and correct copies of any amendments and/or
modifications to any the Company SEC Reports which have not yet been filed
with the SEC but that are required to be filed with the SEC in accordance
with applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Company SEC
Reports or Section 4.5(b) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), in each case
that is required by U.S. GAAP to be set forth on a consolidated balance
sheet of the Company, except for (i) liabilities and obligations under this
Agreement or incurred in connection with the transactions contemplated
hereby and (ii) liabilities and obligations incurred in the ordinary course
of business consistent with past practice since September 30, 1999 which
could not reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in default in respect of the material terms and conditions
of any indebtedness or other agreement which could reasonably be expected
to, individually or in the aggregate, have a Company Material Adverse
Effect.
Section 4.6 Information to be Supplied. (a) The Proxy
Statement/Prospectus and any other documents to be filed by the Company
with the SEC in connection with the Merger and the other transactions
contemplated hereby will (in the case of the Proxy Statement/Prospectus and
any such other documents filed with the SEC under the Exchange Act or the
Securities Act), comply as to form in all material respects with the
requirements of the Exchange Act and the Securities Act, respectively, and
will not, on the date of its filing or, in the case of the Proxy
Statement/Prospectus, on the date it is mailed to shareholders of the
Company and at the time of the Company Shareholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(b) The information supplied by the Company for inclusion
in any filing by Parent or Merger Sub with the Finnish Financial
Supervision Authority or the HSE in respect of the Merger (including,
without limitation, any listing particulars under the Securities Market Act
of 1989, as amended (the "Market Act"), Chapter 2, Section 3 relating to
Parent Ordinary Shares (the "Listing Particulars") and any shareholder
circular to be distributed to the shareholders of Parent) (together with
any amendments or supplements thereto, the "Parent Disclosure Documents")
will, as of the date of such filing, be, in all material respects, in
accordance with the facts and will not omit anything materially likely to
affect the import of such information.
(c) Notwithstanding the foregoing provisions of this
Section 4.6, no representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Registration
Statement, the Proxy Statement/Prospectus or the Parent Disclosure
Documents based on information supplied by Parent, its Subsidiaries, or
Merger Sub expressly for inclusion or incorporation by reference therein.
Section 4.7 Absence of Certain Events. Except as disclosed in
the Company SEC Reports or in Section 4.7 of the Company Disclosure Letter,
since December 31, 1998, the Company and its Subsidiaries have operated
their respective businesses only in the ordinary course and, except as
disclosed in the Company SEC Reports or in Section 4.7 of the Company
Disclosure Letter, there has not occurred (i) any event, occurrence or
conditions which could reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect; (ii) any damage,
destruction or loss which, individually or in the aggregate, resulted in or
could reasonably be expected to result in, a Company Material Adverse
Effect; or (iii) any increase in the compensation of, or change of control
agreement with, any officer of the Company or any of its Subsidiaries or
any general salary or benefits increase to the employees of the Company or
any of its Subsidiaries other than in the ordinary course of business.
Section 4.8 Litigation. Except as disclosed in Section 4.8 of
the Company Disclosure Letter, there are no investigations, actions, suits
or proceedings pending against the Company or its Subsidiaries or, to the
knowledge of the Company, threatened against the Company or its
Subsidiaries (or any of their respective properties, rights or franchises),
at law or in equity, or before or by any federal or state commission,
board, bureau, agency, regulatory or administrative instrumentality or
other Governmental Authority or any arbitrator or arbitration tribunal,
that could reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect, and, to the knowledge of the
Company, no development has occurred with respect to any pending or
threatened action, suit or proceeding that could reasonably be expected to
result in a Company Material Adverse Effect or could reasonably be expected
to prevent, materially impair or materially delay the consummation of the
transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries is subject to any judgment, order or decree entered in any
lawsuit or proceeding which could reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect.
Section 4.9 Title to Properties; Encumbrances. Except as
disclosed in Section 4.9 of the Company Disclosure Letter, the Company and
each of its Significant Subsidiaries has good, valid and marketable title
to, or, in the case of leased properties, valid leasehold interests in all
of its tangible properties and assets except where the failure to have such
good, valid and marketable title could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect;
in each case subject to no Liens, except for (A) Liens reflected in the
consolidated balance sheet as of September 30, 1999, (B) Liens consisting
of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or
impair the use of, such property by the Company or any of its Significant
Subsidiaries in the operation of its respective business, (C) Liens for
current Taxes, assessments or governmental charges or levies on property
not yet due and delinquent and (D) Liens which could not reasonably be
expected to, individually or in the aggregate, have a Company Material
Adverse Effect. Except as could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect,
(i) the Company and each of its Significant Subsidiaries are in compliance
with the terms of all leases of tangible properties to which they are a
party and under which they are in occupancy, and all such leases are in
full force and effect and (ii) the Company and each Significant Subsidiary
enjoys peaceful and undisturbed possession under all such leases.
Section 4.10 Compliance with Laws. Except as disclosed in the
Company SEC Reports and except as disclosed in Section 4.10 of the Company
Disclosure Letter:
(a) The Company and its Subsidiaries are in compliance with
all applicable federal, state, local and foreign statutes, laws,
regulations, orders, judgments and decrees except where the failure to so
comply could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold, to the extent
legally required, all federal, state, local and foreign permits,
approvals, licenses, authorizations, certificates, rights, exemptions and
orders from Governmental Authorities (the "Permits") that are required for
the operation of the respective businesses of the Company and/or its
Subsidiaries as now conducted, except where the failure to hold any such
Permit could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect, and there has not
occurred any default under any such Permit, except to the extent that such
default could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 4.11 Company Employee Benefit Plans. (a) Set forth in
Section 4.11(a) of the Company Disclosure Letter is an accurate and
complete list of each material domestic or foreign employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder
("ERISA"), whether or not subject to ERISA, and each stock option, stock
appreciation right, restricted stock, stock purchase, stock unit,
performance share, incentive, bonus, profit-sharing, savings, deferred
compensation, health, medical, dental, life insurance, disability,
accident, supplemental unemployment or retirement, employment, severance or
salary or benefits continuation or fringe benefit plan, program,
arrangement, or agreement maintained by the Company or any Affiliate
thereof (including, for this purpose and for the purpose of all of the
representations in this Section 4.11, all employers (whether or not
incorporated) that would be treated together with the Company and/or any
such Affiliate as a single employer within the meaning of Section 414 of
the Code) or to which the Company or any Affiliate thereof contributes (or
has any obligation to contribute), has any liability or is a party
(collectively, the "Company Employee Benefit Plans").
(b) Except as set forth in Section 4.11(b) of the Company
Disclosure Letter or disclosed in the Company SEC Reports, (i) each
Company Employee Benefit Plan is in compliance with all applicable laws
(including, without limitation, ERISA and the Code) and has been
administered and operated in accordance with its terms, in each case except
as would not have a Company Material Adverse Effect; (ii) each Company
Employee Benefit Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and, to the best
knowledge of the Company, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination; (iii) the actuarial present value of the accumulated plan
benefits (whether or not vested) under each Company Employee Benefit Plan
covered by Title IV of ERISA, or which otherwise is a pension plan (as
defined in Section 3(2) of ERISA) or provides for actuarially-determined
benefits (other than any Company Employee Benefit Plan which is a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) (a
"Company Multiemployer Plan")), as of the close of its most recent plan
year did not exceed the market value of the assets allocable thereto; (iv)
no Company Employee Benefit Plan covered by Title IV of ERISA has been
terminated and no proceedings have been instituted to terminate or appoint
a trustee under Title IV of ERISA to administer any such plan; (v) no
Company Employee Benefit Plan (other than any Company Multiemployer Plan)
subject to Section 412 of the Code or Section 302 of ERISA has incurred any
accumulated funding deficiency within the meaning of Section 412 of the
Code or Section 302 of ERISA, or obtained a waiver of any minimum funding
standard or an extension of any amortization period under Section 412 of
the Code or Section 303 or 304 of ERISA; (vi) as of the date of this
Agreement, neither the Company nor any of its Affiliates has incurred any
unsatisfied withdrawal liability under Part 1 of Subtitle E of Title IV of
ERISA to any Company Multiemployer Plan, and the aggregate liabilities of
the Company and its Affiliates to all Company Multiemployer Plans in the
event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each Company Multiemployer Plan ended prior to the
date hereof, would not have a Company Material Adverse Effect; (vii) the
execution of this Agreement and the consummation of the transactions
contemplated hereby do not constitute a triggering event under any Company
Employee Benefit Plan, policy, arrangement, statement, commitment or
agreement, which (either alone or upon the occurrence of any additional or
subsequent event) will result in any "excess parachute payment," as such
term is defined in Section 280G of the Code, or will result in any
severance, bonus, retirement, job security or similar-type benefit, or
increase any benefits or accelerate the payment or vesting of any benefits
to any employee or former employee or director of the Company or its
Affiliates, other than any benefits, payments, accelerations or increases
(1) under any Company Employee Benefit Plan that is subject to the laws of
a jurisdiction outside the United States or (2) mandated by applicable law;
(viii) no liability, claim, action, litigation, audit, examination,
investigation or administrative proceeding has been made, commenced or, to
the best knowledge of the Company, threatened with respect to any Company
Employee Benefit Plan (other than routine claims for benefits payable in
the ordinary course) which would have a Company Material Adverse Effect;
(ix) except as required to maintain the tax-qualified status of any Company
Employee Benefit Plan intended to qualify under Section 401(a) of the Code,
no condition or circumstance exists that would prevent the amendment or
termination of any Company Employee Benefit Plan; (x) there has been no
amendment to, written interpretation or announcement (whether or not
written) relating to, or change in employee participation or coverage
under, any Company Employee Benefit Plan which would increase materially
the expense of maintaining such Company Employee Benefit Plan above the
level of such expense incurred for the most recently ended fiscal year.
(c) The Company has delivered or caused to be delivered to
Parent or its counsel true and complete copies of each Company Employee
Benefit Plan and any related trust agreement or funding vehicle, together
with all amendments thereto, and, to the extent applicable with respect
thereto, (i) the current summary plan description; (ii) the most recent
annual report on Internal Revenue Service Form 5500-series, including any
attachments thereto; (iv) the most recent financial report; (v) the most
recent actuarial valuation report, and (vi) the most recent determination
letter received from the Internal Revenue Service.
Section 4.12 Employment Relations and Agreement. Except as
could not reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect or as disclosed in the Company SEC
Reports or Section 4.12 of the Company Disclosure Letter, (i) each of the
Company and its Subsidiaries is, and at all times has been, in compliance
with all federal, state or other applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and has not and is not engaged in any unfair labor practice; (ii) no
unfair labor practice complaint against the Company or any of its
Subsidiaries is pending before the National Labor Relations Board; (iii)
during the last three years there has not been any labor strike, dispute,
slowdown or stoppage or, to the Company's knowledge, threatened against or
involving the Company or any of its Subsidiaries; (iv) no representation
question exists respecting the employees of the Company or any of its
Subsidiaries; (v) no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; and (vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its Subsidiaries.
Section 4.13 Taxes. Except as set forth in Section 4.13 of the
Company Disclosure Letter:
(a) Tax Returns. The Company and each of its Subsidiaries
has timely filed or caused to be timely filed with the appropriate Taxing
authorities all Federal income and all other material returns, statements,
forms and reports for Taxes (as hereinafter defined) ("Returns") that are
required to be filed by, or with respect to, the Company and such
Subsidiaries on or prior to the Closing Date. The Returns as filed were
correct and complete in all material respects. "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental
charges including, without limitation, all Federal, state, local, foreign
and other income, franchise, profits, capital gains, capital stock,
transfer, sales, use, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a
combined, consolidated, unitary or affiliated group or of a contractual
obligation to indemnify any person or other entity.
(b) Payment of Taxes. All material Taxes and Tax
liabilities of the Company and its Subsidiaries that have become due and
payable have been timely paid or fully provided for as a liability on the
financial statements of the Company and its Subsidiaries in accordance with
U.S. GAAP.
(c) Other Tax Matters. Neither the Company nor any of its
Subsidiaries has been or is the subject of an audit, other examination,
matter in controversy, proposed adjustment, refund litigation or other
proceeding with respect to Taxes by the Tax authorities of any nation,
state or locality which could reasonably be expected to result in a
material Tax liability, nor has the Company or any of its Subsidiaries
received any notices from any Tax authority relating to any issue which
could reasonably be expected to result in a material Tax liability.
(d) Neither the Company nor any of its Subsidiaries has
been included in any "consolidated," "unitary" or "combined" Return (other
than Returns which include only the Company and any Subsidiaries of the
Company) provided for under the laws of the United States, any foreign
jurisdiction or any state or locality with respect to material Taxes for
any taxable period for which the statute of limitations has not expired.
(e) All material Taxes which the Company or any of its
Subsidiaries is (or was) required by law to withhold or collect have been
duly withheld or collected, and have been timely paid over to the proper
authorities to the extent due and payable.
(f) There are no Tax sharing, allocation, indemnification
or similar agreements (in writing) in effect as between the Company, any
Subsidiary, or any predecessor or Affiliate of any of them and any other
party under which the Company (or any of its Subsidiaries) could be liable
for any material Taxes of any party other than the Company or any
Subsidiary of the Company.
(g) Neither the Company nor any of its Subsidiaries has
applied for, been granted, or agreed to any accounting method change for
which it will be required to take into account any adjustment under Section
481 of the Code or any similar provision of the Tax laws of any nation,
state or locality.
(h) Neither the Company nor any of its Subsidiaries has, as
of the Closing Date, entered into an agreement or waiver extending any
statute of limitations relating to the payment or collection of U.S.
federal income Taxes of the Company or any of its Subsidiaries.
(i) No election under 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
Section 4.14 Intellectual Properties. Except as could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(a) The Company or one of its Subsidiaries exclusively
owns, without restrictions, or is licensed to use, the rights to all
patents, trademarks, trade names, service marks, copyrights together with
any registrations and applications therefor, Internet domain names, net
lists, schematics, inventories, technology, trade secrets, source codes,
know-how, computer software programs or applications including, without
limitation, all object and source codes and tangible or intangible
proprietary information or material that are used in the business of the
Company and any of its Subsidiaries as currently conducted (the "Company
Intellectual Property"). Neither the Company nor any of its Subsidiaries
is, or as a result of the execution, delivery or performance of the
Company's obligations hereunder will be, in violation of, or lose any
rights pursuant to, any Company Intellectual Property.
(b) No claims with respect to the Company Intellectual
Property have been asserted or, to the knowledge of the Company, are
threatened by any Person nor does the Company or any of its Subsidiaries
know of any valid grounds for any bona fide claims against the use by the
Company or any of its Subsidiaries of any Company Intellectual Property, or
challenging the ownership, validity, enforceability or effectiveness of any
of the Company Intellectual Property. All granted and issued patents and
all registered trademarks and service marks and all copyrights held by the
Company or any of its Subsidiaries are valid, enforceable and subsisting.
To the Company's knowledge, there has not been and there is not any
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property by any third Person, including, without limitation,
any employee or former employee.
(c) Except as set forth in Section 4.14(c) of the Company
Disclosure Letter, no owned Company Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting
in any manner the licensing thereof by the Company or any of its
Subsidiaries.
Section 4.15 Broker's or Finder's Fee. Except for the fees of
Goldman, Sachs & Co. (whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm, a true and
correct copy of which has been previously delivered to Parent by the
Company), no agent, broker, Person or firm acting on behalf of the Company
is, or will be, entitled to any fee, commission or broker's or finder's
fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated
hereby.
Section 4.16 Environmental Laws and Regulations. Except as
could not reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect and except as set forth in Section 4.16
of the Company Disclosure Letter, (i) Hazardous Materials have not been
generated, used, treated or stored on, transported to or from or Released
or disposed of on, any Company Property except in compliance with
applicable Environmental Laws, (ii) the Company and each of its
Subsidiaries are in compliance with all applicable Environmental Laws and
the requirements of any permits issued under such Environmental Laws with
respect to any Company Property, (iii) there are no past, pending or, to
the Company's knowledge, threatened Environmental Claims against the
Company or any of its Subsidiaries or any Company Property and (iv) there
are no facts or circumstances, conditions or occurrences regarding the
business, assets or operations of the Company or any Company Property that
could reasonably be anticipated to form the basis of an Environmental Claim
against the Company or any of its Subsidiaries or any Company Property.
For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Company Property" means any real property and
improvements owned, leased or operated by the Company or any of its
Subsidiaries; (ii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon
gas; (B) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," or
words of similar import, under any applicable Environmental Law; and (C)
any other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority; (iii) "Environmental
Law" means any federal, state, foreign or local statute, law, rule,
regulation, ordinance, code or rule of common law and any judicial or
administrative interpretation thereof binding on the Company or its
operations or property as of the date hereof and Closing Date, including
any judicial or administrative order, consent decree or judgment, relating
to the environment, health or Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. section 9601 et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. section 6901
et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
section 2601 et seq.; the Clean Air Act, 42 U.S.C. section 7401 et seq.;
Oil Pollution Act of 1990, 33 U.S.C. section 2701 et seq.; the Safe
Drinking Water Act, 42 U.S.C. section 300f et seq.; and their state and
local counterparts and equivalents; and (iv) "Environmental Claims" means
any and all administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings under any Environmental Law or any permit
issued under any such Environmental Law (for purposes of this subclause
(iv), "Claims"), including, without limitation, (A) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (B) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment;
and (v) "Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying or seeping into or
upon any land or water or air, or otherwise entering into the environment.
Section 4.17 State Takeover Statutes. The Board of Directors of
the Company has approved the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Merger, this Agreement, the
Company Stock Option Agreement and the other transactions contemplated by
this Agreement the provisions of Section 912 of the BCL. Except for
Section 912 of the BCL (which has been rendered inapplicable), no other
takeover statute or similar statute or regulation of any state is
applicable to the Merger, this Agreement, the Company Stock Option
Agreement and the other transactions contemplated hereby and thereby.
Section 4.18 Voting Requirements; Board Approval; Appraisal
Rights. (a) The affirmative vote of the holders of at least two-thirds of
the outstanding shares of the Company Common Stock (voting as one class,
with each share of the Company Common Stock having one (1) vote) entitled
to be cast approving this Agreement is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve this
Agreement, the Merger, the Company Stock Option Agreement and the
transactions contemplated hereby and thereby.
(b) The Board of Directors of the Company has, as of the
date of this Agreement, (i) determined that the Merger is fair to, and in
the best interests of the Company and its shareholders, (ii) approved this
Agreement, the Company Stock Option Agreement and the transactions
contemplated hereby and thereby and (iii) resolved to recommend that the
shareholders of the Company approve and adopt this Agreement and the
Company Stock Option Agreement and approve the Merger.
(c) No holder of Company Common Stock will have appraisal
rights under Section 910 of the BCL as a result of, or in connection with,
the Merger.
Section 4.19 Rights Agreement or Plan. The Company is not a
party to, and has no obligation under, any rights agreement or similar
shareholder rights plan.
Section 4.20 Pooling Matters; Tax Treatment. (a) The Company
intends that the Merger be accounted for under the "pooling of interests"
method under U.S. GAAP and the requirements of Opinion No. 16 (Business
Combinations) of the Accounting Principles Board of the American Institute
of Certified Public Accountants and the rules and regulations of the SEC.
The Company will request a letter addressed to it from Arthur Andersen LLP
dated as of the Effective Time, and (if and when obtained) a copy of it
will be delivered to Parent. Such letter shall state that Arthur Andersen
LLP believes that the Company is a pooling candidate for purposes of the
transactions contemplated hereby.
(b) Neither the Company nor any of its Affiliates has taken
or agreed to take any action or is aware of any fact or circumstance that
would prevent the Merger from qualifying (i) for "pooling of interests"
accounting treatment as described in Section 4.20(a) above or (ii) as a 368
Reorganization.
Section 4.21 Opinion of Financial Advisor. The Company has
received the opinion of Goldman, Sachs & Co. to the effect that, as of the
date of this Agreement, the Exchange Ratio is fair to the holders of the
Company Common Stock from a financial point of view, and a copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to
Parent; it being understood and acknowledged by Parent and Merger Sub that
such opinion has been rendered for the benefit of the Board of Directors of
the Company, and is not intended to, and may not, be relied upon by Parent,
its Affiliates or their respective shareholders.
Section 4.22 Trust Agreement. Section 4.22 of the Company
Disclosure Letter sets forth the total amount of funds (the "Funding
Amount") estimated to be sufficient to fund the Company's obligation under
the Trust Agreement, dated as of February 19, 1987, between the Company and
Fleet National Bank of Connecticut, as amended (the "Trust Agreement"),
with respect to the executives listed therein. The estimate of the Funding
Amount was prepared in good faith based on all relevant information which
is reasonably necessary for the Company to determine the Funding Amount.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5. Representations and Warranties of Parent and Merger
Sub. Except as disclosed in (i) Parent's disclosure letter delivered
concurrently with the delivery of this Agreement (the "Parent Disclosure
Letter") or (ii) the Parent Public Reports (as defined below) made or filed
prior to the date of this Agreement, each of Parent and Merger Sub hereby
represents and warrants, jointly and severally, to the Company as follows:
Section 5.1 Due Organization, Good Standing and Corporate Power.
Each of Parent and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) under the laws
of its jurisdiction of incorporation and each such Person has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, except where the failure
to be so organized, existing and in good standing could not reasonably be
expected to, individually or in the aggregate, have a Parent Material
Adverse Effect. Parent and each of its Significant Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or
licensed and in good standing could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect.
Other than as set forth in Section 5.1 of the Parent Disclosure Letter, the
respective Certificates of Incorporation and By-Laws or other
organizational documents of the Significant Subsidiaries of Parent do not
contain any provision limiting or otherwise restricting the ability of
Parent to control its Significant Subsidiaries. Section 5.1 of the Parent
Disclosure Letter sets forth a list of all Significant Subsidiaries of
Parent and their respective jurisdictions of incorporation or organization
and identifies Parent's (direct or indirect) percentages of equity
ownership therein.
Section 5.2 Authorization and Validity of Agreement. Each of
Parent and Merger Sub has full corporate power and authority to execute and
deliver this Agreement and, in the case of Parent, the Parent Stock Option
Agreements, to perform its obligations hereunder and thereunder and (in the
case of this Agreement and the Parent Stock Option Agreement subject to
obtaining the Parent Shareholder Approval) to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance
of this Agreement, the Company Stock Option Agreement and the Parent Stock
Option Agreements by Parent and Merger Sub, and the consummation by each
such party of the transactions contemplated hereby and thereby, have been
duly authorized and unanimously approved by the respective Board of
Directors of Parent and the Merger Sub and no other corporate action on
the part of either of Parent or Merger Sub is necessary to authorize the
execution, delivery and performance of this Agreement, the Company Stock
Option Agreement or the Parent Stock Option Agreements by each of Parent
and Merger Sub and the consummation of the transactions contemplated hereby
or thereby, other than, in the case of this Agreement and the Parent Stock
Option Agreement, obtaining the Parent Shareholder Approval. This
Agreement, the Company Stock Option Agreement and the Parent Stock Option
Agreements have each been duly executed and delivered by each of Parent and
Merger Sub and each is a valid and binding obligation of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance
with its terms, except that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and by general equitable principles.
Section 5.3 Capitalization. (a) The authorized share capital
of Parent consists solely of 595,238,095 Parent Ordinary Shares. At the
close of business on February 14, 2000: (i) 267,005,913 Parent Ordinary
Shares were issued and outstanding, (ii) 6,000,000 Parent Ordinary Shares
are subject to future issuance pursuant to Parent's share options and
incentive schemes, (iii) 7,538,000 Parent Ordinary Shares are held by
Parent in treasury and (iv) a subordinated convertible bond loan with an
initial principal amount of FIM 960,000,000 of which, as of January 31,
2000, FIM 546,820,000 was outstanding. All of the issued Parent Ordinary
Shares are, and all Parent Ordinary Shares to be issued as the Merger
Consideration either as Parent Ordinary Shares or in the form of Parent
ADS, pursuant to Section 3.2(c) will be, upon issuance, duly authorized,
validly issued and fully paid and entitling the voters thereof to voting
rights (it being understood that a holder of Parent ADSs may not vote the
underlying Parent Ordinary Shares unless such holder first cancels such
ADSs and has the underlying Parent Ordinary Shares registered in the
holder's name in the shareholder register of the Finnish Central Securities
Depositary), and either the holders of any class of outstanding shares of
Parent will not be entitled to preemptive rights or other rights to acquire
Parent Ordinary Shares or Parent ADS to be issued as part of the Merger
Consideration or will have duly and irrevocably waived such rights (as part
of the Parent Shareholder Approval) prior to the Effective Time. Section
5.3(a) of the Parent Disclosure Letter sets forth the registered owners of
more than five percent of the issued and outstanding shares of each class
of capital stock of Parent. Except as set forth in the Parent Public
Reports or on Section 5.3(a) of the Parent Disclosure Letter, there (i) are
no outstanding Issuance Obligations pursuant to which Parent or any of
Parent's Subsidiaries is or may become obligated to issue any Parent
Ordinary Shares or other equity interests of Parent or shares of capital
stock or other equity interests of any of Parent's Subsidiaries or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any Parent Ordinary Shares or other equity interests of
Parent or shares of capital stock or other equity interests of any of its
Subsidiaries, (ii) is no Voting Debt of Parent or any of its Significant
Subsidiaries. Except as set forth in Section 5.3(c) of the Parent
Disclosure Letter, Parent does not own, directly or indirectly, any capital
stock or other equity, ownership or proprietary interest in any Person
(other than any Subsidiary of Parent).
(b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $.01 per share, all of which are
validly issued and outstanding, fully paid and nonassessable and are owned
by Parent free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, charges or other encumbrances
of any nature or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be
provided under applicable Federal or state securities laws) (collectively,
"Liens").
(c) All of the issued and outstanding shares of capital
stock of each Significant Subsidiary are validly existing, fully paid and
non-assessable. Except as set forth in the Parent Public Reports or
Section 5.3(c) of the Parent Disclosure Letter, no Significant Subsidiary
of Parent has outstanding Voting Debt and no Significant Subsidiary of
Parent is bound by, obligated under, or party to an Issuance Obligation
with respect to any security of Parent or any Significant Subsidiary of
Parent and there are no obligations of Parent or any of its Significant
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of any of its Significant Subsidiaries or any capital stock of,
or other ownership interests in, any of its Significant Subsidiaries.
(d) Except for Parent's interest in its Significant
Subsidiaries, and as set forth in the Parent Public Reports or Section
5.3(d) of the Parent Disclosure Letter, Parent does not directly or
indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture, limited liability
company or other business association or entity which is material to Parent
and its Subsidiaries, taken as a whole.
Section 5.4 Consents and Approvals; No Violations. Assuming (i)
the filings required under applicable Brazilian antitrust or competition
laws, the Competition Act and the HSR Act are made and the waiting period
thereunder (if applicable) has been terminated or has expired, (ii)
voluntary notification under Exon-Florio is made, (iii) the prior
notification and reporting requirements of the European Antitrust Laws are
met and any antitrust filings/notifications which must or may be effected
at the national level in countries having jurisdiction are made and any
applicable waiting periods thereunder have been terminated or expired, (iv)
the prior notification and reporting requirements of other antitrust or
competition laws as may be applicable are satisfied and any antitrust
filings/notifications which must or may be effected in countries having
jurisdiction are made, (v) the applicable requirements of the Securities
Act and the Exchange Act are met, (vi) the applicable requirements under
any applicable foreign or state securities or blue sky laws are met, (vii)
the requirements under the Market Act, any regulations promulgated
thereunder and the rules of the HSE, in respect of the listing of the
Parent Ordinary Shares to be issued hereunder are met, (viii) the filing of
the Certificate of Merger and other appropriate merger documents, if any,
as required by the BCL, are made, (ix) in the case of this Agreement and
the Parent Stock Option Agreement the Parent Shareholder Approval is
received, and (x) the requirements of any applicable state law relating to
the transfer of contaminated property are met, the execution and delivery
of this Agreement, the Stock Option Agreement and the Parent Stock Option
Agreements by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby do not and will not:
(A) violate or conflict with any provision of the Articles of Association
of Parent or the Certificate of Incorporation or By-Laws of any of its
Subsidiaries; (B) violate or conflict with any Laws or Orders of any
Governmental Authority applicable to Parent or any of its Subsidiaries or
by which either of their respective properties or assets may be bound; (C)
except as set forth in Section 5.4 of the Parent Disclosure Letter, require
any filing with, or permit, consent or approval of, or the giving of any
notice to any Governmental Authority; or (D) except as set forth in Section
5.4 of the Parent Disclosure Letter, result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Significant Subsidiaries or
give rise to any obligation, right of termination, cancellation,
acceleration or increase of any obligation or a loss of a material benefit
under, any of the terms, conditions or provisions of any Contracts which
Parent or any of its Significant Subsidiaries is a party, or by which any
such Person or any of its properties or assets may be bound, excluding from
the foregoing clauses (B), (C) and (D) conflicts, violations, breaches,
defaults, rights of payment and reimbursement, terminations, modifications,
accelerations and creations and impositions of Liens which could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect or prevent, materially impair, or materially delay
the ability of Parent to consummate the transactions contemplated by this
Agreement.
Section 5.5 Parent Reports and Financial Statements. (a) Since
June 29, 1999, Parent and, to the extent applicable, its Subsidiaries have
filed all forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities laws and the SEC rules and
regulations thereunder, and all forms, reports, schedules, statements,
registration statements and other documents filed with the SEC by Parent
have complied in all material respects with all applicable requirements of
the federal securities laws and the SEC rules and regulations thereunder.
Parent has, prior to the date of this Agreement, made available to the
Company true and complete copies of all forms, reports, registration
statements and other filings filed by Parent and, to the extent applicable,
its Subsidiaries with the SEC since June 29, 1999 and with the HSE since
December 31, 1997, (such forms, reports, registration statements and other
filings, together with any exhibits, any amendments thereto and information
incorporated by reference therein, are sometimes collectively referred to
as the "Parent Public Reports"). As of their respective dates, the Parent
Public Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements
and the unaudited consolidated interim financial statements of the Company
included in the Parent Public Reports were prepared in accordance with
Finnish GAAP applied on a consistent basis (except as may be indicated
therein or in the notes or schedules thereto) and present fairly, in all
material respects, the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and changes in financial position for the
periods then ended. Parent has heretofore provided the Company with true
and correct copies of any amendments and/or modifications to any Parent
Public Reports which have not yet been filed with the SEC but that are
required to be filed with the SEC in accordance with applicable federal
securities laws and the SEC rules.
(b) Except as set forth or provided in the Parent Public
Reports or Section 5.5(b) of the Parent Disclosure Letter, neither Parent
nor any of its Subsidiaries has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), in each case that is
required by Finnish GAAP to be set forth on a consolidated balance sheet of
Parent, except for (i) liabilities and obligations disclosed or provided
for in the Parent Public Reports; (ii) liabilities and obligations under
this Agreement or incurred in connection with the transactions contemplated
hereby or thereby; and (iii) liabilities and obligations incurred in the
ordinary course of business consistent with past practice since September
30, 1999 which could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect. Neither Parent nor any
of its Subsidiaries is in default in respect of the material terms and
conditions of any indebtedness or other agreement which could reasonably be
expected to, individually or in the aggregate, have a Parent Material
Adverse Effect.
Section 5.6 Information to be Supplied. (a) The registration
statement on Form F-4 ("Form F-4") to be filed with the SEC by Parent in
connection with the issuance of Parent ADSs and Parent Ordinary Shares in
the Merger, as amended or supplemented from time to time (as so amended and
supplemented, the "Registration Statement"), and any other documents to be
filed by Parent with the SEC or any other Governmental Authority in
connection with the Merger and the other transactions contemplated hereby
will (in the case of the Registration Statement and any such other
documents filed with the SEC under the Securities Act or the Exchange Act)
comply as to form, in all material respects, with the requirements of the
Exchange Act and the Securities Act, respectively, and will not, on the
date of its filing or, in the case of the Registration Statement, at the
time it becomes effective under the Securities Act, or at the date the
Proxy Statement/Prospectus is mailed to shareholders of the Company and at
the time of the Company Shareholder Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(b) The Parent Disclosure Documents will, at all relevant
times, include all information relating to Parent and its Subsidiaries
which is required to enable the Parent Disclosure Documents and the parties
hereto to comply in all material respects with all Finnish statutory and
other legal and regulatory provisions (including, without limitation, the
Market Act and the rules and regulations made thereunder, and the rules and
requirements of the HSE) and all such information contained in such
documents will, as of the date of such filing, be in all material respects,
in accordance with the facts and will not omit anything materially likely
to affect the import of such information.
(c) Notwithstanding the foregoing provisions of this
Section 5.6, no representation or warranty is made by Parent with respect
to statements made or incorporated by reference in the Registration
Statement or the Listing Particulars based on information supplied by the
Company expressly for inclusion or incorporation by reference therein or
based on information which is not made in or incorporated by reference in
such documents but which should have been disclosed pursuant to Section
4.6.
Section 5.7 Absence of Certain Events. Except as disclosed in
Parent Public Reports or in Section 5.7 of the Parent Disclosure Letter or
as required or expressly permitted by this Agreement, since December 31,
1998, Parent and its Subsidiaries have operated their respective businesses
only in the ordinary course consistent with past practices and, except as
disclosed in Parent Public Reports or in Section 5.7 of the Parent
Disclosure Letter, there has not occurred (i) any event, occurrence or
conditions which could reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect; (ii) any damage,
destruction or loss which, individually or in the aggregate, resulted in or
could reasonably be expected to result in, a Parent Material Adverse
Effect; or (iii) any increase in the compensation of any officer of Parent
or any of its Subsidiaries or any general salary or benefits increase to
the employees of Parent or any of its Subsidiaries other than in the
ordinary course of business.
Section 5.8 Litigation. Except as disclosed in Section 5.8 of
Parent Disclosure Letter, there are no investigations, actions, suits or
proceedings pending against Parent or its Subsidiaries or, to the knowledge
of Parent, threatened against Parent or its Subsidiaries (or any of their
respective properties, rights or franchises), at law or in equity, or
before or by any federal or state commission, board, bureau, agency,
regulatory or administrative instrumentality or other Governmental Entity
or any arbitrator or arbitration tribunal, that could reasonably be
expected to, individually or in the aggregate, have a Parent Material
Adverse Effect, and, to the knowledge of Parent, no development has
occurred with respect to any pending or threatened action, suit or
proceeding that could reasonably be expected to result in a Parent Material
Adverse Effect or could reasonably be expected to prevent, materially
impair or materially delay the consummation of the transactions
contemplated hereby. Neither Parent nor any of its Subsidiaries is subject
to any judgment, order or decree entered in any lawsuit or proceeding which
could reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect.
Section 5.9 Title to Properties; Encumbrances. Parent and each
of its Subsidiaries has good, valid and marketable title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of
its tangible properties and assets except where the failure to have such
good, valid and marketable title could not reasonably be expected to have a
Parent Material Adverse Effect; in each case subject to no Liens, except
for (A) Liens reflected in the consolidated balance sheet as of September
30, 1999, (B) Liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract
from the value of, or impair the use of, such property by Parent or any of
its Subsidiaries in the operation of its respective business, (C) Liens for
current Taxes, assessments or governmental charges or levies on property
not yet due and delinquent and (D) Liens which could not reasonably be
expected to have a Parent Material Adverse Effect. Except as could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect, (i) Parent and each of its Significant
Subsidiaries are in compliance with the terms of all leases of tangible
properties to which they are a party and under which they are in occupancy,
and all such leases are in full force and effect and (ii) Parent and each
of its Significant Subsidiaries enjoys peaceful and undisturbed possession
under all such leases.
Section 5.10 Compliance with Laws. Except as disclosed in the
Parent Public Reports and except as described in Section 5.10 of the Parent
Disclosure Letter:
(a) Parent and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
orders, judgments and decrees except where the failure to so comply could
not reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect.
(b) Parent and its Subsidiaries hold, to the extent legally
required, all Permits that are required for the operation of the business
of Parent and/or its Subsidiaries as now conducted, except where the
failure to hold any such Permit could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect,
and there has not occurred any default under any such Permit, except to the
extent that such default could not reasonably be expected to, individually
or in the aggregate, have a Parent Material Adverse Effect.
Section 5.11 Parent Employee Benefit Plans. (a) Set forth in
Section 5.11(a) of the Parent Disclosure Letter is an accurate and complete
list of each material domestic or foreign employee benefit plan, within the
meaning of Section 3(3) of ERISA, whether or not subject to ERISA, and each
stock option, stock appreciation right, restricted stock, stock purchase,
stock unit, performance share, incentive, bonus, profit-sharing, savings,
deferred compensation, health, medical, dental, life insurance, disability,
accident, supplemental unemployment or retirement, employment, severance or
salary or benefits continuation or fringe benefit plan, program,
arrangement, or agreement maintained by Parent or any Affiliate thereof
(including, for this purpose and for the purpose of all of the
representations in this Section 5.11, all employers (whether or not
incorporated) that would be treated together with Parent and/or any such
Affiliate as a single employer within the meaning of Section 414 of the
Code) or to which Parent or any Affiliate thereof contributes (or has any
obligation to contribute), has any liability or is a party (collectively,
the "Parent Employee Benefit Plans").
(b) Except as set forth in Section 5.11(b) of the Parent
Disclosure Letter or disclosed in the Parent Public Reports, (i) each
Parent Employee Benefit Plan is in compliance with all applicable laws
(including, without limitation, applicable under Finnish law, ERISA and the
Code) and has been administered and operated in accordance with its terms,
in each case except as would not have a Parent Material Adverse Effect;
(ii) each Parent Employee Benefit Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and, to the best
knowledge of Parent, no event has occurred and no condition exists which
could reasonably be expected to result in the revocation of any such
determination; (iii) the actuarial present value of the accumulated plan
benefits (whether or not vested) under each Parent Employee Benefit Plan
covered by Title IV of ERISA, or which otherwise is a pension plan (as
defined in Section 3(2) of ERISA) or provides for actuarially-determined
benefits (other than any Parent Employee Benefit Plan which is a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) (a "Parent
Multiemployer Plan")), as of the close of its most recent plan year did not
exceed the market value of the assets allocable thereto; (iv) no Parent
Employee Benefit Plan has been terminated and no proceedings have been
instituted to terminate or appoint a trustee to administer any such plan,
except for any such termination or appointment of a trustee that would not
have a Parent Material Adverse Effect; (v) no Parent Employee Benefit Plan
(other than any Parent Multiemployer Plan) subject to Section 412 of the
Code or Section 302 of ERISA has incurred any accumulated funding
deficiency within the meaning of Section 412 of the Code or Section 302 of
ERISA, or obtained a waiver of any minimum funding standard or an extension
of any amortization period within the meaning of Section 412 of the Code or
Section 303 or 304 of ERISA; (vi) as of the date of this Agreement, neither
Parent nor any of its Affiliates has incurred any unsatisfied withdrawal
liability under Part 1 of Subtitle E of Title IV of ERISA to any Parent
Multiemployer Plan, and the aggregate liabilities of Parent and its
Affiliates to all Parent Multiemployer Plans in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of
each Parent Multiemployer Plan ended prior to the date hereof, would not
have a Parent Material Adverse Effect; (vii) the execution of this
Agreement and the consummation of the transactions contemplated hereby do
not constitute a triggering event under any Parent Employee Benefit Plan,
policy, arrangement, statement, commitment or agreement, which (either
alone or upon the occurrence of any additional or subsequent event) will
result in any "excess parachute payment," as such term is defined in
Section 280G of the Code, or will result in any severance, bonus,
retirement, job security or similar-type benefit, or increase any benefits
or accelerate the payment or vesting of any benefits to any employee or
former employee or director of Parent or its Affiliates, other than any
benefits, payments, accelerations or increases (1) under any Parent
Employee Benefit Plan that is subject to the laws of a jurisdiction outside
of the United States or (2) mandated by applicable law; (viii) no
liability, claim, action, litigation, audit, examination, investigation or
administrative proceeding has been made, commenced or, to the best
knowledge of Parent, threatened with respect to any Parent Employee Benefit
Plan (other than routine claims for benefits payable in the ordinary
course) which would have a Parent Material Adverse Effect; (ix) except as
required to maintain the tax-qualified status of any Parent Employee
Benefit Plan intended to qualify under applicable law, no condition or
circumstance exists that would prevent the amendment or termination of any
Parent Employee Benefit Plan; (x) there has been no amendment to, written
interpretation or announcement (whether or not written) relating to, or
change in employee participation or coverage under, any Parent Employee
Benefit Plan which would increase materially the expense of maintaining
such Parent Employee Benefit Plan above the level of such expense incurred
for the most recently ended fiscal year.
(c) Parent has delivered or caused to be delivered to the
Company or its counsel true and complete copies of each Parent Employee
Benefit Plan and any related trust agreement or funding vehicle, together
with all amendments thereto, and, to the extent applicable with respect
thereto, (i) the current summary plan description; (ii) the most recent
annual report on Internal Revenue Service Form 5500-series, including any
attachments thereto; (iv) the most recent financial report; (v) the most
recent actuarial valuation report, and (vi) the most recent determination
letter received from the Internal Revenue Service.
Section 5.12 Employment Relations and Agreement. Except as
could not reasonably be expected to, individually or in the aggregate, have
a Parent Material Adverse Effect or as disclosed in the Parent Public
Reports or Section 5.12 of the Parent Disclosure Letter, (i) each of Parent
and its Subsidiaries is, and at all times since December 31, 1998 has been,
in compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor
practice; (ii) no unfair labor practice complaint against Parent or any of
its Subsidiaries is pending before the National Labor Relations Board;
(iii) during the last three years there has not been any labor strike,
dispute, slowdown or stoppage or, to Parent's knowledge, threatened against
or involving Parent or any of its Subsidiaries; (iv) no representation
question exists respecting the employees of Parent or any of its
Subsidiaries; (v) no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; and (vi) no collective bargaining agreement is currently being
negotiated by Parent or any of its Subsidiaries.
Section 5.13 Taxes. Except as set forth in Section 5.13 of the
Parent Disclosure Letter:
(a) Tax Returns. Parent and each of its Subsidiaries has
timely filed or caused to be timely filed with the appropriate taxing
authorities all Finnish income and all other material Returns that are
required to be filed by, or with respect to, Parent and such subsidiaries
on or prior to the Closing Date. The Returns as filed were correct and
complete in all material respects.
(b) Payment of Taxes. All material Taxes and Tax
liabilities of Parent and its Subsidiaries that have become due and payable
have been timely paid or fully provided for as a liability on the financial
statements of Parent and its Subsidiaries in accordance with Finnish GAAP.
(c) Other Tax Matters. Neither Parent nor any of its
Subsidiaries has been or is the subject of an audit, other examination,
matter in controversy, proposed adjustment, refund litigation or other
proceeding with respect to Taxes by the Tax authorities of any nation,
state or locality which could reasonably be expected to result in a
material Tax liability, nor has Parent or any of its Subsidiaries received
any notices from any Tax authority relating to any issue which could
reasonably be expected to result in a material Tax liability.
(d) Neither Parent nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return (other than
Returns which include only Parent and any Subsidiaries of Parent) provided
for under the laws of Finland, or any other jurisdiction or any state or
locality with respect to material Taxes for any taxable period for which
the statute of limitations has not expired.
(e) All material Taxes which Parent or any of its
Subsidiaries is (or was) required by law to withhold or collect have been
duly withheld or collected, and have been timely paid over to the proper
authorities to the extent due and payable.
(f) There are no Tax sharing, allocation, indemnification
or similar agreements (in writing) in effect as between Parent, any
Subsidiary, or any predecessor or Affiliate of any of them and any other
party under which Merger Sub or Parent (or any of its Subsidiaries) could
be liable for any material Taxes of any party other than Parent or any
Subsidiary of Parent.
(g) Neither Parent nor any of its Subsidiaries has, as of
the Closing Date entered into an agreement or waiver extending any statute
of limitations relating to the payment or collection of material Taxes of
Parent or any of its Subsidiaries.
(h) No holder of Company Common Stock will be subject to
any Tax imposed by The Republic of Finland as a result of the receipt of
Parent Shares in the Merger unless such holder has a connection to Finland
other than solely the ownership or receipt of Parent Shares.
(i) Parent has no plan or intention to dispose of any
Company Common Stock acquired in the Merger, or to cause the Company to
dispose of substantially all of the Company's assets, in a manner that will
cause gain to be recognized pursuant to Treasury Regulation Section
1.367(a)-8(e) by a holder that is a 5% transferee shareholder (as defined
in Treasury Regulations Section 1.367(a)-3(c)(5)(ii)).
Section 5.14 Intellectual Property. Except as could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect:
(a) Parent or one of its Subsidiaries exclusively owns,
without restrictions, or is licensed to use, the rights to all patents,
trademarks, trade names, service marks, copyrights together with any
registrations and applications therefor, internet domain names, net lists,
schematics, inventories, technology, trade secrets, source codes, know-how,
computer software programs or applications including, without limitation,
all object and source codes and tangible or intangible proprietary
information or material that are used in the business of Parent and any of
its Subsidiaries as currently conducted (the "Parent Intellectual
Property"). Neither Parent nor any of its Subsidiaries is, or as a result
of the execution, delivery or performance of Parent's obligations hereunder
will be, in violation of, or lose any rights pursuant to, any Parent
Intellectual Property.
(b) No claims with respect to Parent Intellectual Property
have been asserted or, to the best knowledge of Parent, are threatened by
any Person nor does Parent or any of its Subsidiaries know of any valid
grounds for any bona fide claims against the use by Parent or any of its
Subsidiaries of any Parent Intellectual Property, or challenging the
ownership, validity, enforceability or effectiveness of any of the Parent
Intellectual Property. All granted and issued patents and all registered
trademarks and service marks and all copyrights held by Parent or any of
its Subsidiaries are valid, enforceable and subsisting. To Parent's best
knowledge, there has not been and there is not any unauthorized use,
infringement or misappropriation of any of the Parent Intellectual Property
by any third Person, including, without limitation, any employee or former
employee.
(c) Except as set forth in Section 5.14(c) of the Parent
Disclosure Letter, no owned Parent Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting
in any material manner the licensing thereof by Parent or any of its
Subsidiaries.
Section 5.15 Broker's or Finder's Fee. Except for Chase
Securities Inc. (whose fees and expenses as financial advisor to Parent and
Merger Sub will be paid by Parent or Merger Sub in accordance with their
agreement with such firm, a true and correct copy of which has been
previously delivered to the Company by Parent), no agent, broker, Person or
firm acting on behalf of Parent or Merger Sub is, or will be, entitled to
any fee, commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by, or under common
control with any of the parties hereto, in connection with this Agreement
or any of the transactions contemplated hereby.
Section 5.16 Environmental Laws and Regulations. Except as
could not reasonably be expected to, individually or in the aggregate, have
a Parent Material Adverse Effect and except as set forth in Section 5.16 of
the Parent Disclosure Letter, (i) Hazardous Materials have not been
generated, used, treated or stored on, transported to or from or Released
or disposed of, on any Parent Property except in compliance with applicable
Environmental Laws, (ii) Parent and each of its Subsidiaries are in
compliance with all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws with respect to any Parent
Property, (iii) there are no past, pending or, to Parent's knowledge,
threatened Environmental Claims against Parent or any of its Subsidiaries
or any Parent Property and (iv) there are no facts or circumstances,
conditions or occurrences regarding the business, assets or operations of
Parent or any Parent Property that could reasonably be anticipated to form
the basis of an Environmental Claim against Parent or any of its
Subsidiaries or any Parent Property.
For purposes of this Agreement, "Parent Property" means any real
property and improvements owned, leased or operated by Parent or any of its
Subsidiaries.
Section 5.17 Voting Requirements; Board Approval. (a) The
affirmative vote of the holders of at least two-thirds of the outstanding
Parent Ordinary Shares (voting as one class, with each Parent Ordinary
Share having one (1) vote) represented and voting at the Parent Shareholder
Meeting (as hereinafter defined) approving (i) the transactions
contemplated by this Agreement, the Company Stock Option Agreement and the
Parent Stock Option Agreement, (ii) the issuance of Parent Ordinary Shares
and options exercisable for and other rights to acquire Parent Ordinary
Shares hereunder and thereunder and (iii) the amendments to Parent's
Articles of Association necessary to give effect to the transactions
contemplated by this Agreement ("Parent Shareholder Approval") is the only
vote of the holders of any class or series of shares of Parent necessary to
approve the matters set forth in clause (i), (ii) and (iii) of this Section
5.17(a).
(b) The Board of Directors of Parent has, as of the date of
this Agreement, (i) determined that the Merger is advisable and fair to,
and in the best interests of Parent and its shareholders, (ii) approved
this Agreement, the Company Stock Option Agreement, the Parent Stock Option
Agreements and the transactions contemplated hereby and thereby and (iii)
resolved to recommend that the shareholders of Parent approve and adopt the
transactions contemplated by this Agreement and the Parent Stock Option
Agreement, approve the issuance of the Parent Ordinary Shares, approve the
amendments to the Articles of Association and approve the Merger.
Section 5.18 Pooling Matters; Tax Treatment. (a) Parent
intends that the Merger be accounted for under the 'pooling of interests"
method under Finnish GAAP and U.S. GAAP, as to U.S. GAAP under the
principles set forth in Accounting Principles Board Opinion No. 16,
Accounting for Business Combinations, and the accounting rules of the SEC.
Parent will request a letter addressed to it from SVC
PricewaterhouseCoopers Oy as to Finnish GAAP, and PricewaterhouseCoopers
LLP, as to U.S. GAAP dated as the Effective Time, and (if and when such
letter is obtained) a copy will be delivered to the Company. Such letter
shall state that PricewaterhouseCoopers LLP believes that the Merger should
be accounted for as a "pooling of interests" as described in the first
sentence of Section 4.20(a).
(b) Except as set forth in Section 5.18(b) of the Parent
Disclosure Letter, neither Parent nor any of its Affiliates has taken or
agreed to take any action or is aware of any fact or circumstance that
would prevent the Merger from qualifying (i) for "pooling of interests"
accounting treatment as described in the first sentence of Section 4.20(a)
or (ii) as a 368 Reorganization.
Section 5.19 Ownership of Capital Stock. Except as set forth in
the Parent Disclosure Letter, neither Parent nor any of its Subsidiaries
beneficially owns, directly or indirectly, any capital stock of the Company
or is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any capital stock of
the Company, other than as contemplated by this Agreement.
Section 5.20 No Prior Activities. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated by this
Agreement, has no Subsidiaries and has undertaken no business or activities
other than in connection with entering into this Agreement and engaging in
the transactions contemplated hereby.
Section 5.21 Opinion of Financial Advisor. Parent has received
the opinion of Chase Securities, Inc., dated the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair, from a
financial point of view, to the holders of the Parent Ordinary Shares, a
copy of which opinion has been, or promptly upon receipt thereof will be,
delivered to the Company; it being understood and acknowledged by the
Company that such opinion has been rendered for the benefit of the Board of
Directors of Parent, and is not intended to, and may not, be relied upon by
the Company, its Affiliates or their respective shareholders.
ARTICLE VI
TRANSACTIONS PRIOR TO CLOSING DATE
Section 6.1 Access to Information Concerning Properties and
Records. During the period commencing on the date hereof and ending on the
earlier of (i) the Closing Date and (ii) the date on which this Agreement
is terminated pursuant to Section 9.1 hereof, each of the Company and
Parent shall, and each shall cause each of its Subsidiaries to, upon
reasonable notice, afford the other party, and its respective counsel,
accountants, consultants and other authorized representatives, access
during normal business hours to its and its Subsidiaries' employees,
properties, books and records in order that they may have the opportunity
to make such investigations as they shall desire of its and its
Subsidiaries' affairs; such investigation shall not, however, affect the
representations and warranties made by the Company or Parent in this
Agreement. The Company shall furnish promptly to Parent and Merger Sub and
Parent and Merger Sub shall furnish promptly to the Company (x) a copy of
each form, report, schedule, statement, registration statement and other
document filed by it or its Subsidiaries during such period pursuant to the
requirements of Federal, state or foreign securities laws and (y) all other
information concerning its or its Subsidiaries' business, properties and
personnel as Parent, Merger Sub or the Company may reasonably request.
Each of the Company and Parent agrees to cause its officers and employees
to furnish such additional financial and operating data and other
information and respond to such inquiries as the other party shall from
time to time reasonably request.
Section 6.2 Confidentiality. Information obtained by the
Company and Parent and their respective counsel, accountants, consultants
and other authorized representatives pursuant to Section 6.1 hereof shall
be subject to the provisions of the Confidentiality Agreement by and
between the Company and Parent dated April 20, 1999 (the "Confidentiality
Agreement").
Section 6.3 Conduct of the Business of the Company Pending the
Closing Date. The Company agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement or
otherwise consented to or approved in writing by Parent (which consent or
approval shall not be unreasonably withheld or delayed), during the period
commencing on the date hereof until the Effective Time:
(a) the Company and each of its Subsidiaries shall conduct
their respective operations in all material respects only according to
their ordinary and usual course of business consistent with past practice
and shall use their reasonable best efforts to preserve intact their
respective business organization, keep available the services of their
officers and employees and maintain satisfactory relationships with
licensors, suppliers, distributors, clients, joint venture partners and
others having significant business relationships with them;
(b) Except as set forth in Section 6.3(b) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries shall:
(i) make any change in or amendment to the
Company's Certificate of Incorporation or its By-Laws (or
comparable governing documents);
(ii) issue or sell, or authorize to issue or
sell, any shares of its capital stock or any other securities, or
issue or sell, or authorize to issue or sell, any securities
convertible into, or options, warrants or rights to purchase or
subscribe to, or enter into any arrangement or contract with
respect to the issuance or sale of, any shares of its capital
stock or any other securities, or make any other changes in its
capital structure, other than (i) the issuance of Company Common
Stock upon the exercise of Options or in connection with Company
Stock Rights outstanding on the date hereof, in each case in
accordance with their present terms or pursuant to Options or
other Company Stock Rights granted pursuant to clause (ii) below,
(ii) the granting of Options or Company Stock Rights granted
under the Company Stock Plans in effect on the date hereof in the
ordinary course of business consistent with past practice not in
excess of the amounts set forth in Section 6.3(b) of the Company
Disclosure Letter, (iii) issuances by a wholly-owned Subsidiary
of the Company of capital stock to such Subsidiary's parent, the
Company or another wholly-owned Subsidiary of the Company, (iv)
issuances of Company Common Stock upon the conversion of
convertible securities of the Company outstanding as of the date
of this Agreement or (v) issuances of Company Common Stock under
the Company Stock Option Agreement;
(iii) declare, pay or set aside any dividend
or other distribution or payment with respect to, or split,
combine, redeem or reclassify, or purchase or otherwise acquire,
any shares of its capital stock or its other securities, other
than dividends payable by a wholly-owned Subsidiary of the
Company to the Company or another wholly-owned Subsidiary of the
Company (it being understood that the Company's Board of
Directors may declare and the Company may pay quarterly dividends
of not more than $0.25 per share on the schedule which has been
publicly announced by the Company on or prior to the date of this
Agreement);
(iv) other than in connection with
transactions permitted by Section 6.3(b)(v), incur any capital
expenditures or any obligations or liabilities in respect
thereof, except for those (A) contemplated by the capital
expenditure budgets for the Company and its Subsidiaries made
available to Parent, (B) incurred in the ordinary course of
business of the Company and its Subsidiaries or (C) not otherwise
described in clauses (A) and (B) which, in the aggregate, do not
exceed $25 million;
(v) acquire (whether pursuant to merger,
stock or asset purchase or otherwise) in one transaction or
series of related transactions (A) any assets (including any
equity interests) having a fair market value in excess of $25
million, or (B) all or substantially all of the equity interests
of any Person or any business or division of any Person having a
fair market value in excess of $25 million;
(vi) except in the ordinary course of
business consistent with past practice and except to the extent
required under existing employee and director benefit plans,
agreements or arrangements as in effect on the date of this
Agreement, increase the compensation or fringe benefits of any of
its directors, officers or employees or grant any severance or
termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or
severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its
Subsidiaries, or establish, adopt, enter into or amend in any
material respect or terminate any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any directors, officers
or employees;
(vii) transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of, encumber or subject to any
Lien, any material assets, other than in the ordinary course of
business;
(viii) except as required by applicable law
or U.S. GAAP, make any material change in its method of
accounting;
(ix) adopt or enter into a plan of complete
or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger) or any
agreement relating to a Takeover Proposal, except as provided for
in Section 6.7;
(x) (A) incur any material indebtedness for
borrowed money or guarantee any such indebtedness of another
Person, other than indebtedness owing to or guarantees of
indebtedness owing to the Company or any direct or indirect
wholly-owned Subsidiary of the Company or (B) make any loans or
advances to any other Person, other than to the Company or to any
direct or indirect wholly-owned Subsidiary of the Company,
except, in the case of clause (A), for borrowings in the ordinary
course of business consistent with past practice, including
without limitation borrowings under existing credit facilities
described in the Company SEC Reports in the ordinary course of
business consistent with past practice for working capital
purposes;
(xi) accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or
other compensation or benefits;
(xii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) over $15 million,
individually or in the aggregate, other than the payment,
discharge or satisfaction (A) of any such claims, liabilities or
obligations in the ordinary course of business and consistent
with past practice or (B) of claims, liabilities or obligations
reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto)
contained in the Company SEC Reports;
(xiii) enter into any agreement,
understanding or commitment that materially restrains, limits or
impedes the Company's or any of its Subsidiaries' ability to
compete with or conduct any business or line of business,
including, but not limited to, geographic limitations on the
Company's or any of its Subsidiaries' activities;
(xiv) plan, announce, implement or effect
any material reduction in labor force, lay-off, early retirement
program, severance program or other program or effort concerning
the termination of employment of employees of the Company or its
Subsidiaries, provided, however, that routine employee
terminations for cause shall not be considered subject to this
clause
(xv) take any action or fail to take any
action which action or failure to act would prevent, or would be
reasonably likely to prevent, the Merger from qualifying (A) for
'pooling of interests" accounting treatment or (B) as a 368
Reorganization;
(xvi) take any action including, without
limitation, the adoption of any shareholder rights plan or
amendments to its Certificate of Incorporation or By-Laws (or
comparable governing documents), which would, directly or
indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights and receive the benefits of a
shareholder with respect to, securities of the Company that may
be acquired or controlled by Parent or Merger Sub or permit any
shareholder to acquire securities of the Company on a basis not
available to Parent or Merger Sub in the event that Parent or
Merger Sub were to acquire any shares of the Company Common
Stock;
(xvii) materially modify, amend or terminate
any material contract to which it is a party or waive any of its
material rights or claims except in the ordinary course of
business consistent with past practice; or
(xviii) agree, in writing or otherwise, to
take any of the foregoing actions.
Section 6.4 Conduct of the Business of Parent Pending the
Closing Date. Parent agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement or
otherwise consented to or approved in writing by the Company (which consent
or approval shall not be unreasonably withheld or delayed), during the
period commencing on the date hereof until the Effective Time:
(a) Parent and each of its Subsidiaries shall conduct their
respective operations in all material respects only according to their
ordinary and usual course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others having
significant business relationships with them;
(b) Except as set forth in Section 6.4(b) of the Parent
Disclosure Letter, neither Parent nor any of its Subsidiaries shall:
(i) except as contemplated by this
Agreement, make any change in or amendment to Parent's Articles
of Association or other comparable governing documents (including
without limitation the Deposit Agreement governing the Parent
ADSs) that is adverse to the holders of Parent Ordinary Shares or
the Parent ADSs;
(ii) make any material change to Merger
Sub's Certificate of Incorporation;
(iii) issue or sell, or authorize to issue
or sell, any of its capital shares or any other securities, or
issue or sell, or authorize to issue or sell, any securities
convertible into, or options, warrants or rights to purchase or
subscribe to, or enter into any arrangement or contract with
respect to the issuance or sale of, any of its capital shares or
any other securities, or make any other changes in its capital
structure, other than (i) the issuance of Parent Ordinary Shares
upon the exercise of options to purchase Parent Ordinary Shares
("Parent Options") or in connection with any Parent Share Rights
outstanding on the date hereof, in each case in accordance with
their present terms or pursuant to Parent Options or other Parent
Share Rights granted pursuant to clause (ii) below, (ii) the
granting of Parent Options or Parent Share Rights granted under
Parent's share schemes, plans, programs, arrangement or
agreements in effect on the date hereof in the ordinary course of
business consistent with past practice not in excess of the
amounts set forth in Section 6.4(b) of the Parent Disclosure
Letter, (iii) issuances by a wholly-owned Subsidiary of Parent of
capital stock to such Subsidiary's parent, the Company or another
wholly-owned Subsidiary of the Company, (iv) issuances of Parent
Ordinary Shares upon the conversion of convertible securities of
Parent outstanding as of the date of this Agreement or (v)
issuances of Parent Ordinary Shares under the Parent Stock Option
Agreements;
(iv) declare, pay or set aside any dividend
or other distribution or payment with respect to, or split,
combine, redeem or reclassify, or purchase or acquire, any of its
capital shares or its other securities, other than dividends
payable by a wholly-owned Subsidiary of Parent to Parent or
another wholly owned Subsidiary of Parent (it being understood
that the Parent's Board of Directors may recommend a dividend for
the year ending December 31, 1999 in an amount not to exceed Euro
1.25 per share which may be paid by Parent);
(v) other than in connection with
transactions permitted by Section 6.4(b)(vi), incur any capital
expenditures or any obligations or liabilities in respect
thereof, except for those (A) contemplated by the capital
expenditure budgets for Parent's Subsidiaries made available to
the Company, (B) incurred in the ordinary course of business of
Parent and Parent's Subsidiaries or (C) not otherwise described
in clauses (A) and (B) which, in the aggregate, do not exceed $30
million;
(vi) acquire (whether pursuant to merger,
stock or asset purchase or otherwise) in one transaction or
series of related transactions (A) any assets (including any
equity interests) having a fair market value in excess of $30
million, or (B) all or substantially all of the equity interests
of any Person or any business or division of any Person having a
fair market value in excess of $30 million;
(vii) except in the ordinary course of
business consistent with past practice and except to the extent
required under existing employee and director benefit plans,
agreements or arrangements as in effect on the date of this
Agreement, increase the compensation or fringe benefits of any of
its directors, officers or employees or grant any severance or
termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or
severance agreement or arrangement with any present or former
director, officer or other employee of Parent or any of its
Subsidiaries, or establish, adopt, enter into or amend in any
material respect or terminate any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any directors, officers
or employees;
(viii) transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of, encumber or subject to any
lien, any material assets other than in the ordinary course of
business;
(ix) except as required by applicable law,
Finnish GAAP or the International Accounting Standards, make any
material change in its method of accounting;
(x) adopt or enter into a plan or complete
or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Parent
or any of its Subsidiaries (other than the Merger) or any
agreement relating to a Takeover Proposal, except as provided for
in Section 6.7;
(xi) (A) incur any material indebtedness for
borrowed money or guarantee any such indebtedness of another
Person, other than indebtedness owing to or guarantees of
indebtedness owing to Parent or any direct or indirect wholly-
owned Subsidiary of Parent or (B) make any loans or advances to
any other Person, other than to Parent or to any direct or
indirect wholly-owned Subsidiary of the Parent, except, in the
case of clause (A), for borrowings in the ordinary course of
business consistent with past practice, including without
limitation borrowings under existing credit facilities described
in the Parent Public Reports in the ordinary course of business
consistent with past practice for working capital purposes;
(xii) accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, share option, insurance or
other compensation or benefits;
(xiii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) over $15 million,
individually or in the aggregate, other than the payment,
discharge or satisfaction (A) of any such claims, liabilities or
obligations in the ordinary course of business and consistent
with past practice or (B) of claims, liabilities or obligations
reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto)
contained in the Parent Public Reports;
(xiv) enter into any agreement,
understanding or commitment that materially restrains, limits or
impedes Parent's or any of its Subsidiaries' ability to compete
with or conduct any business or line of business, including, but
not limited to, geographic limitations on Parent's or any of its
Subsidiaries' activities;
(xv) plan, announce, implement or effect any
material reduction in labor force, lay-off, early retirement
program, severance program or other program or effort concerning
the termination of employment of employees of Parent or its
Subsidiaries, provided, however, that routine employee
terminations for cause shall not be considered subject to this
clause (xv);
(xvi) take any action including, without
limitation, the adoption of any shareholder rights plan or
amendments to its Articles of Association (or comparable
governing documents), which would, directly or indirectly,
restrict or impair the ability of the Company to vote, or
otherwise to exercise the rights and receive the benefits of a
shareholder with respect to, securities of Parent that may be
acquired or controlled by the Company or permit any shareholder
to acquire securities of Parent on a basis not available to the
Company in the event that the Company were to acquire any Parent
Ordinary Shares;
(xvii) materially modify, amend or terminate
any material contract to which it is a party or waive any of its
material rights or claims except in the ordinary course of
business consistent with past practice;
(xviii) take any action or fail to take any
action which action or failure to act would prevent, or would be
reasonably likely to prevent, the Merger from qualifying for
"pooling of interests" accounting treatment or a 368
Reorganization; or
(xix) agree, in writing or otherwise, to
take any of the foregoing actions.
Section 6.5 The Company Shareholder Meetings; Parent Shareholder
Meetings; Preparation of Proxy Statement/Prospectus; Short Form Merger.
(a) The Company Shareholder Meetings. The Company, acting
through its Board of Directors, shall, in accordance with applicable law,
duly call, convene and hold a meeting of the holders of the Company Common
Stock (the "Company Shareholder Meeting") as soon as reasonably practicable
for the purpose of voting upon this Agreement and the Merger and the
Company agrees that this Agreement and the Merger shall be submitted at
such meeting. The Company shall take all action necessary to solicit from
its shareholders proxies, and shall take all other action necessary and
advisable, to secure the vote of shareholders required by applicable law
and the Company's Certificate of Incorporation or By-Laws to obtain the
approval for this Agreement and the Merger. Unless the Board of Directors
of the Company otherwise determines (based on a majority vote of the Board
of Directors in its good faith judgment that such other action is necessary
to comply with its fiduciary duty to shareholders under applicable law
after receiving the advice of outside legal counsel), (i) the Company's
Board of Directors shall recommend approval and adoption by its
shareholders of this Agreement (the "Company Recommendation"), (ii) neither
the Company's Board of Directors nor any committee thereof shall amend,
modify, withdraw, condition or qualify the Company Recommendation in a
manner adverse to Parent or take any action or make any statement
inconsistent with the Company Recommendation and (iii) the Company shall
take all lawful action to solicit the Company Shareholder Approval.
(b) Parent Shareholder Meeting. Parent, acting through its
Board of Directors, shall, in accordance with applicable law, duly call,
convene and hold a meeting of the holders of Parent Ordinary Shares (the
"Parent Shareholder Meeting") as soon as practicable for the purpose of
voting upon the transactions contemplated by this Agreement, including the
Merger, the Parent Stock Option Agreement and the issuance of Parent
Ordinary Shares and Options exercisable for Parent Ordinary Shares
hereunder and thereunder and Parent agrees that this Agreement and the
issuance of Parent Ordinary Shares and Options exercisable for or other
rights to acquire Parent Ordinary Shares hereunder and thereunder shall be
submitted at such meeting. Parent shall take all action necessary and
advisable to secure the vote of shareholders required by applicable law and
Parent's Articles of Association to obtain the approval for the
transactions contemplated by this Agreement, including the Merger, the
Parent Stock Option Agreement, the matters referred to in Section 5.17 and
the issuance of Parent Ordinary Shares and Options exercisable for or other
rights to acquire Parent Ordinary Shares. Unless the Board of Directors of
Parent otherwise determines (based on a majority vote of the Board of
Directors in its good faith judgment that such other action is necessary to
comply with its fiduciary duty to shareholders under applicable law after
receiving the advice of outside legal counsel), (i) Parent's Board of
Directors shall recommend approval by its shareholders of the transactions
contemplated by this Agreement (the "Parent Recommendation"), (ii) neither
Parent's Board of Directors nor any committee thereof shall amend, modify,
withdraw, condition or qualify the Parent Recommendation in a manner
adverse to the Company or take any action or make any statement
inconsistent with the Parent Recommendation and (iii) Parent shall take all
lawful action, consistent with past practice, to solicit the Parent
Shareholder Approval.
(c) Preparation of Registration Statement and Proxy
Statement/Prospectus. Promptly after the date hereof, Parent and the
Company shall prepare and Parent shall file with the SEC the Registration
Statement, in which the Proxy Statement/Prospectus will be included as
Parent's prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing and
to keep the Registration Statement effective as long as is necessary to
consummate the Merger. The Company shall mail the Proxy
Statement/Prospectus to its shareholders as promptly as practicable after
the Registration Statement is declared effective under the Securities Act
and, if necessary, after the Proxy Statement/Prospectus shall have been so
mailed, promptly circulate amended, supplemental or supplemented proxy
material, and, if required in connection therewith, resolicit proxies.
Parent shall also take any action required to be taken under any applicable
state securities or blue sky laws in connection with the issuance of Parent
ADSs and Parent Ordinary Shares in the Merger. No amendment or supplement
to the Proxy Statement/Prospectus will be made by the Company or Parent
without the approval of the other party, which will not be unreasonably
withheld or delayed. Each party will advise the other party, promptly
after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification
of Parent ADSs or Parent Ordinary Shares issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement/Prospectus or comments thereon and
responses thereto or requests by the SEC for additional information. If
at any time prior to the Effective Time, the Company or Parent discovers
any information relating to either party, or any of their respective
Affiliates, officers or directors, that should be set forth in an amendment
or supplement to the Proxy Statement/Prospectus, so that such document
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and, to the extent required by law or
regulation, disseminated to the shareholders of the Company and Parent.
Section 6.6 Reasonable Best Efforts. Subject to the terms and
conditions provided herein and in Section 6.9, each of the Company and
Parent shall, and shall cause each of its Subsidiaries to, cooperate and
use their reasonable best efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement including, without limitation, the Company's and Parent's
reasonable best efforts to obtain, prior to the Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company or
Parent, as the case may be, and their respective Subsidiaries as are
necessary for consummation of the transactions contemplated by this
Agreement and in order to comply with applicable Laws, including Laws
restricting the foreign ownership of assets; provided, however, that no
loan agreement or contract for borrowed money shall be repaid except as
currently required by its terms, in whole or in part, and no contract shall
be amended to increase the amount payable thereunder or otherwise to be
more burdensome to the Company or any of its Subsidiaries or Parent or any
of its Subsidiaries in order to obtain any such consent, approval or
authorization without first obtaining the written approval of Parent or the
Company, respectively.
Section 6.7 No Solicitation. (a) Each of Parent and the
Company shall and shall use its reasonable best efforts to cause its
Affiliates and each of their respective officers, directors, employees,
financial advisors, attorneys and other advisors, representatives and
agents to immediately cease any discussions or negotiations with third
parties with respect to any Takeover Proposal (as defined below). Each of
Parent and the Company shall not, nor shall it authorize or permit any of
its Affiliates to, nor shall it authorize or permit any officer, director
or employee of or any financial advisor, attorney or other advisor,
representative or agent of it or any of its Affiliates, to (i) directly or
indirectly solicit, facilitate, initiate or encourage the making or
submission of, any Takeover Proposal (including without limitation, with
respect to the Company, the taking of any action which would make Section
912 of the BCL inapplicable to a Takeover Proposal), (ii) enter into any
agreement, arrangement or understanding with respect to any Takeover
Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any
other transaction contemplated by this Agreement, (iii) initiate or
participate in any way in any discussions or negotiations regarding, or
furnish or disclose to any Person (other than a party to this Agreement)
any information with respect to, or take any other action to facilitate or
in furtherance of any inquiries or the making of any proposal that
constitutes, or could reasonably be expected to lead to, any Takeover
Proposal or (iv) grant any waiver or release under any standstill or
similar agreement with respect to any class of such party's equity
securities; provided, that prior to the Effective Time, in response to an
unsolicited Takeover Proposal that did not result from the breach of this
Section 6.7 and following delivery to the other party of notice of the
Takeover Proposal in compliance with its obligations under Section 6.7(d)
hereof, such party may participate in discussions or negotiations with or
furnish information (pursuant to a confidentiality agreement with customary
terms to any third party which makes a bona fide written Takeover Proposal
if (A) a majority of its Board of Directors reasonably determines in good
faith (after consultation with an independent, nationally recognized
investment bank) that taking such action could be reasonably likely to lead
to the delivery to it of a Superior Proposal and (B) a majority of its
Board of Directors determines in good faith (after receiving the advice of
outside legal counsel) that it is necessary to take such actions(s) in
order to comply with its fiduciary duties under applicable law. Without
limiting the foregoing, each of Parent and the Company agrees that any
violation of the restrictions set forth in this Section 6.7(a) by any of
such party's, or any of its Subsidiaries', officers, employees, Affiliates
or directors or any advisor, representative, consultant or agent retained
by such party or any of its Subsidiaries or any of their Affiliates in
connection with the transactions contemplated hereby, whether or not such
Person is purporting to act on behalf of such party or any of its
Subsidiaries, shall constitute a breach of this Section 6.7(a) by such
party.
For purposes of this Agreement, "TAKEOVER PROPOSAL" means, with
respect to either Parent or the Company any inquiry, proposal or offer from
any Person or group relating to (i) any direct or indirect acquisition or
purchase of 15% or more of the assets of such party or any of its
Significant Subsidiaries or 15% or more of any class of equity securities
of such party or any of its Significant Subsidiaries, (ii) any tender offer
or exchange offer that, if consummated, would result in any Person
beneficially owning all or any portion of any class of equity securities of
such party or any of its Significant Subsidiaries or (iii) any merger,
consolidation, business combination, sale of all or any substantial portion
of the assets, recapitalization, liquidation or a dissolution of, or
similar transaction of such party or any of its Significant Subsidiaries
other than the Merger; and "SUPERIOR PROPOSAL" means a bona fide written
Takeover Proposal made by a third party to purchase, in the case of the
Company, at least two-thirds of the outstanding equity securities of the
Company, and in the case of Parent, at least two-thirds of the outstanding
equity securities of Parent, in each case pursuant to a tender offer,
exchange offer, merger or other business combination (x) on terms which a
majority of the members of such party's Board of Directors determine in
their good faith reasonable judgment (after consultation with an
independent, nationally recognized investment bank) to be superior to such
party and its shareholders (in their capacity as shareholders) from a
financial point of view (taking into account, among other things, all
legal, financial, regulatory and other aspects of the proposal and identity
of the offeror) as compared to the transactions contemplated hereby and, in
the case of the Company, any alternative proposed by Parent or Merger Sub
in accordance with Section 9.1(c)(ii) and (y) is reasonably capable of
being consummated.
(b) Each of Parent and the Company agrees that, except as
set forth in Section 6.7(c), neither its Board of Directors nor any
committee thereof shall (i) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (ii) approve, recommend or cause it to
enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement")
related to any Takeover Proposal.
(c) Each of Parent and the Company agrees that,
notwithstanding anything to the contrary herein, prior to the Effective
Time, such party and/or such party's Board of Directors may take the
actions otherwise prohibited by Section 6.7(b) if (i) a third party makes a
Superior Proposal, (ii) such party complies with its obligations under
Section 6.7(d), (iii) in the case of the Company, all of the conditions to
the Company's right to terminate this Agreement in accordance with Section
9.1(c)(ii) hereof have been satisfied (including the expiration of the
three (3) Business Day period described therein and the payment of all
amounts required pursuant to Section 9.3 hereof) and (iv) in the case of
the Company, simultaneously therewith, this Agreement is terminated in
accordance with Section 9.1(c)(ii) hereof.
(d) Each of Parent and the Company agrees that in addition
to the obligations of such party set forth in paragraphs (a), (b) and (c)
of this Section 6.7, promptly on the date of receipt thereof, such party
shall advise the other party in writing of any request for information or
any Takeover Proposal, or any inquiry, discussions or negotiation with
respect to any Takeover Proposal, the terms and conditions of such request,
Takeover Proposal, inquiry, discussion or negotiation and such party shall
promptly provide to the other party copies of any written materials
received by such party in connection with any of the foregoing, and the
identity of the Person or group making any such request, Takeover Proposal
or inquiry or with whom any discussion or negotiations are taking place.
Each of Parent and the Company agrees that it shall keep the other party
fully informed of the status and details (including amendments or proposed
amendments) of any such request, Takeover Proposal or inquiry and keep the
other party fully informed as to the material details of any information
requested of or provided by such party and as to the details of all
discussions or negotiations with respect to any such request, Takeover
Proposal or inquiry. Each of Parent and the Company agrees that such party
shall simultaneously provide to the other party any non-public information
concerning such party provided to any other Person or group in connection
with any Takeover Proposal which was not previously provided to Parent.
(e) Each of Parent and the Company agrees that nothing
contained in this Section 6.7 shall prohibit it from taking and disclosing
to its shareholders a position contemplated by Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with respect to any tender offer.
(f) Each of Parent and the Company agrees that immediately
following the execution of this Agreement, (i) it shall request each Person
which has heretofore executed a confidentiality agreement in connection
with such Person's consideration of acquiring Parent or the Company or any
portion thereof to return or destroy (which destruction shall be certified
in writing by an executive officer of such Person) all confidential
information heretofore furnished to such Person by or on its behalf and
(ii) it shall cease and cause to be terminated immediately all existing
discussions or negotiations with any Person conducted heretofore with
respect to, or that could reasonably be expected to lead to, any Takeover
Proposal.
Section 6.8 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent and Merger Sub shall give prompt
notice to the Company, of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be likely to cause any
representation or warranty contained in this Agreement to be untrue in any
material respect at any time from the date of this Agreement to the
Effective Time. Each of the Company and Parent shall give prompt notice to
the other party of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
Section 6.9 Antitrust Laws. (a) Each party hereto shall (i)
take promptly all actions necessary to make the filings required of it or
any of its Affiliates under any applicable Antitrust Laws in connection
with this Agreement and the transactions contemplated hereby, (ii) comply
at the earliest practicable date with any formal or informal request for
additional information or documentary material received by it or any of its
affiliates from any Antitrust Authority and (iii) cooperate with one
another in connection with any filing under applicable Antitrust Laws and
in connection with resolving any investigation or other inquiry concerning
the transactions contemplated by this Agreement initiated by any Antitrust
Authority.
(b) Each party hereto shall use its reasonable best efforts
to resolve such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law.
Without limiting the generality of the foregoing, "reasonable best efforts"
shall include, without limitation:
(i) in the case of each of Parent and the
Company:
(A) filing with the appropriate
Antitrust Authorities at the earliest practicable date
a Notification and Report Form or other applicable
notification with respect to the transactions
contemplated by this Agreement;
(B) if Parent or the Company
receives a formal request for information and documents
from an Antitrust Authority, substantially complying
with such formal request at the earliest practicable
date following the date of its receipt thereof; and
(C) opposing vigorously any
litigation relating to the Merger or the transactions
contemplated hereby, including, without limitation,
promptly appealing any adverse court order, provided,
however, that if any order, injunction or decree
prohibiting the Merger or the transactions contemplated
hereby remains in effect on January 31, 2001, Parent
may terminate this Agreement provided it is then
entitled to terminate this Agreement pursuant to
Section 9.1(d).
(ii) in the case of the Company only,
subject to Parent's compliance with clause (i) above, not
frustrating or impeding Parent's strategy or negotiating
positions with any Antitrust Authority; and
(iii) in the case of Parent and Merger Sub
only, subject to the Company's compliance with clause (i) above,
to accept an order requiring Parent, Merger Sub or the Company to
agree or commit to divest, hold separate, offer for sale,
abandon, limit its operations of or take similar action with
respect to any assets (tangible or intangible) or any business
interest of it or any of their Subsidiaries (including without
limitation, the Surviving Corporation after consummation of the
Merger) as are necessary to permit Parent and Merger Sub to
otherwise fully consummate the Merger (an "Order of
Disposition"); provided, however, that nothing in this Agreement
shall require Parent or any of its Subsidiaries to comply with or
accept Orders of Disposition which, if complied with, could
reasonably be expected to, individually or in the aggregate, have
a Parent Material Adverse Effect.
(c) Each party hereto shall promptly inform the other
parties of any material communication made to, or received by such party
from, any Antitrust Authority or any other governmental or regulatory
authority regarding any of the transactions contemplated hereby.
(d) For purposes of this Agreement, (i) "Antitrust
Authorities" means the Federal Trade Commission, the Antitrust Division,
the attorneys general of the several states of the United States, the
antitrust authorities of Brazil, Canada, Germany and any other governmental
authority having jurisdiction with respect to the transactions contemplated
hereby pursuant to applicable Antitrust Laws and (ii) "Antitrust Law" means
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, the Competition Act (Canada),
European Antitrust Laws and all other federal, state and foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines,
and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or
restraint of trade.
Section 6.10 Directors' and Officers' Insurance. (a) The
certificate of incorporation and the by-laws of the Surviving Corporation
shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's certificate of
incorporation and by-laws on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) For a period of six years from the Effective Time, the
Surviving Corporation shall either (x) maintain in effect the Company's
current directors' and officers' liability insurance covering those Persons
who are currently covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to Parent) (the "Indemnified Parties"); provided,
however, that in no event shall Parent be required to expend in any one
year an amount in excess of 225% of the annual premiums currently paid by
the Company for such insurance; provided further that if the annual
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount; provided further
that the Surviving Corporation may substitute for such the Company policies
with at least the same coverage containing terms and conditions which are
no less advantageous and provided that said substitution does not result in
any gaps or lapses in coverage with respect to matters occurring prior to
the Effective Time or (y) if such insurance coverage is not otherwise
available, cause Parent's directors' and officers' liability insurance then
in effect to cover those Persons who are covered on the date of this
Agreement by the Company's directors' and officers' liability insurance
policy with respect to those matters covered by the Company's directors'
and officers' liability policy.
(c) The Surviving Corporation shall indemnify all
Indemnified Parties to the fullest extent permitted by applicable law with
respect to all acts and omissions arising out of such individuals' services
as officers, directors, employees or agents of the Company or any of its
Subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees of the Company or any of its Subsidiaries, occurring prior to the
Effective Time including, without limitation, the transactions contemplated
by this Agreement. Without limitation of the foregoing, in the event any
such Indemnified Party is or becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter,
including without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, the
Surviving Corporation, from and after the Effective Time, shall pay, as
incurred, such Indemnified Party's reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in
connection therewith. Subject to Section 6.10(d) below, the Surviving
Corporation shall pay all reasonable expenses, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing this Section
6.10 or any action involving an Indemnified Party resulting from the
transactions contemplated by this Agreement.
(d) Any Indemnified Party wishing to claim indemnification
under paragraph (a) or (c) of this Section 6.10, upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly notify the
Surviving Corporation thereof. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Surviving Corporation shall have the right, from
and after the Effective Time, to assume the defense thereof (with counsel
engaged by the Surviving Corporation to be reasonably acceptable to the
relevant Indemnified Party) and the Surviving Corporation shall not be
liable to such Indemnified Party for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, (ii) such Indemnified Party will
cooperate in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its
prior written consent; provided that the Surviving Corporation shall not
have any obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law.
Section 6.11 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated
by this Agreement and shall not issue any such press release or make any
such public statement prior to such consultation and review by the other
party of such release or statement or without the prior consent of the
other party, which shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party, issue such
press release or make such public statement as may be required by law or
any listing agreement with a national securities exchange or automated
quotation system which Parent or the Company is a party to, if it has used
all reasonable efforts to consult with the other party and to obtain such
party's consent but has been unable to do so in a timely manner.
Section 6.12 Transfer Tax. The Company and Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and
stamp taxes, any transfer, recording, registration and other fees and any
similar taxes which become payable in connection with the transactions
contemplated by this Agreement (together with any related interest,
penalties or additions to tax, "Transfer Taxes"). All Transfer Taxes shall
be paid by the Company and expressly shall not be a liability of any holder
of the Company Common Stock.
Section 6.13 NYSE Listing. Parent shall use its reasonable best
efforts to cause Parent Ordinary Shares and Parent ADSs to be issued in
connection with the Merger to be listed on the NYSE, subject to official
notice of issuance.
Section 6.14 HSE Listing. Parent shall use its reasonable best
efforts to cause Parent Ordinary Shares to be issued in connection with the
Merger to be listed on the HSE promptly following the due issuance thereof.
Section 6.15 Tax and Accounting Treatment. (a) Prior to the
Effective Time, each party shall use its reasonable best efforts to cause
the Merger to qualify as a 368 Reorganization and to qualify for "pooling-
of-interests" accounting treatment, and will not take any action reasonably
likely to cause the Merger not so to qualify. Parent and the Merger Sub
acknowledge that the Company shall have the option of obtaining either a
ruling (the "367 Ruling") from the Internal Revenue Service to the effect
that the parties to this Agreement, in effecting the Merger, would be in
substantial compliance with the "substantiality test" set forth in Treas.
Reg. Section 1.367(a)-3(c)(3)(iii) or an opinion (the "367 Opinion") from
counsel to the Company that such substantiality test is satisfied, it being
understood that the Company may pursue both options simultaneously. The
Company shall use its reasonable best efforts to obtain the 367 Ruling and
the 367 Opinion and Parent and Merger Sub shall use its reasonable best
efforts to assist, and shall reasonably cooperate with, the Company in
obtaining the 367 Ruling and the 367 Opinion (including by providing
customary representations).
(b) Each party shall use its reasonable best efforts to
obtain the opinions referred to in Sections 4.20 and 5.18.
(c) The Company shall prepare and timely file all reports,
forms, returns, or other information required to be filed by it in order
for the Merger to qualify for an exception to the general rule of Section
367(a)(1) of the Code. After the Merger, Parent shall cause the Surviving
Corporation to prepare and timely file (to the extent legally entitled to
do so) all reports, forms, returns, or other information required to be
filed by the Company after the Merger in order for the Merger to qualify
for an exception to the general rule of Section 367(a)(1) of the Code.
(d) After the Merger, Parent agrees that it shall provide
the information required by Treasury Regulation Section 1.367(a)-
8(b)(1)(vi) for the applicable period in order to ensure that any holder of
Company Common Stock that is a five-percent transferee shareholder (as
defined in Treasury Regulation Section 1.367(a)-3(c)(5)(ii)) that filed a
gain recognition agreement (as defined in Treasury Regulation Section
1.367(a)-(8)) with respect to the Merger is entitled to nonrecognition
treatment for U.S. federal income tax purposes.
(e) Parent shall not take, and, after the Merger, Parent
shall cause the Company not to take, any position with respect to Taxes
that is inconsistent with the treatment of the Merger as a 368
Reorganization.
Section 6.16 Affiliates of Parent and the Company. (a) Not
less than 45 days prior to the Effective Time, the Company shall deliver to
Parent a letter identifying all Persons who, to the Company's knowledge, at
the time of the Company Shareholder Meeting or at the Effective Time, may
be deemed to be "affiliates" of the Company for purposes of Rule 145 under
the Securities Act or who may otherwise be deemed to be Affiliates of the
Company (the "Rule 145 Affiliates"). The Company shall use its reasonable
best efforts to cause each Person who is identified as a Rule 145 Affiliate
in such list to deliver to Parent on or prior to the 30th day prior to the
Effective Time, a written agreement, in the form attached hereto as Exhibit
D (a "Rule 145 Affiliate Agreement").
(b) Not less than 45 days prior to the Effective Time,
Parent shall deliver to the Company a letter identifying all persons who,
in the judgment of Parent, may be deemed "affiliates" for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such list shall be updated as necessary to reflect changes
from the date hereof. Parent shall use its reasonable best efforts to
cause each person identified on such list to deliver to the Company not
less than 30 days prior to the Effective Time a written agreement in the
form attached as Exhibit F hereto.
Section 6.17 Employee Benefits. (a) Parent covenants and
agrees that, during the period commencing at the Effective Time through at
least December 31, 2001, it will provide (or shall cause the Surviving
Corporation to provide) nonrepresented current and former employees of the
Company and its Subsidiaries with salary and benefits under employee
benefit plans that are no less favorable, in the aggregate, than those
currently provided by the Company and its Subsidiaries to such employees
(including benefits pursuant to qualified and nonqualified retirement
plans, savings plans, medical, dental, disability and life insurance plans
and programs, deferred compensation arrangements, bonus and incentive
compensation plans, and retiree benefit plans, policies and arrangements).
For purposes of any employee benefit plan or arrangement currently
maintained by the Surviving Corporation, Parent shall cause the Surviving
Corporation to recognize service with the Company and its Subsidiaries and
any predecessor entities (and any other service credited by the Company
under similar benefit plans) for all purposes (including for vesting,
eligibility to participate, severance, and benefit accrual); and Parent and
the Surviving Corporation shall recognize (or cause to be recognized)
service with the Company and its Subsidiaries and any predecessor entities
(and any service credited by the Company under similar benefit plans) for
purposes of vesting, eligibility to participate and severance under any
employee benefit plan or arrangement maintained by Parent, the Surviving
Corporation or any Subsidiary of Parent and for purposes of benefit accrual
under any employee welfare benefit plan or arrangement maintained by
Parent, the Surviving Corporation or Parent; provided, however, that solely
to the extent necessary to avoid duplication of benefits, amounts payable
under employee benefit plans provided by Parent, the Surviving Corporation
or a Parent Subsidiary may be reduced by amounts payable under similar
Company Employee Benefit Plans with respect to the same periods of
service). Any benefits accrued by employees of the Company or any
Subsidiary of the Company prior to the Effective Time under any defined
benefit pension plan currently maintained by the Company or any Subsidiary
of the Company that employ a final average pay formula shall be calculated
based on the employees' final average pay with Parent, the Surviving
Corporation or any Parent Subsidiary or other Affiliate employing the
employees for as long as the current final average pay benefit formula
under such plan is in effect. From and after the Effective Time, Parent
and the Surviving Corporation shall, and Parent shall cause the
Subsidiaries of Parent to, (i) waive any pre-existing condition limitations
to the extent that the employees or their beneficiaries are not subject to
such pre-existing condition limitations under the comparable Company
Employee Benefit Plans prior to the Effective Time, and (ii) credit any
deductibles and out-of-pocket expenses that are applicable and/or covered
under the Company Employee Benefit Plans, and are incurred by the employees
and their beneficiaries during the portion of the calendar year prior to
participation in the benefit plans provided by Parent, the Surviving
Corporation and any Subsidiary of Parent. The provisions of this Section
6.17 shall not create in any employee or former employee of the Company or
any Subsidiary of the Company any rights to employment or continued
employment with Parent, the Surviving Corporation or the Company or any of
their respective Subsidiaries or Affiliates or any right to specific terms
or conditions of employment.
(b) During the period commencing at the Effective Time and
through at least December 31, 2001, Parent and the Surviving Corporation
shall honor, and Parent shall cause its Subsidiaries to honor, in
accordance with its terms, the Company's Severance Policy in effect as of
the Closing Date as set forth in Section 6.17 of the Company Disclosure
Letter.
(c) In addition, Parent shall cause the Surviving
Corporation to honor, in accordance with their terms, any individual
employment, change of control, severance, retirement or termination
agreement between the Company or any Subsidiary of the Company, and any
current or former officer, director or employee of the Company or any
Subsidiary of the Company, including the Company's incentive programs and
change in control agreements between the Company and certain of its
officers, in each case as set forth in Section 6.17 of the Company
Disclosure Letter (including the Trust Agreement), except as otherwise
agreed to by any such officer, director or employee.
(d) The provisions of this Section 6.17 shall apply to
employees of the Company and its Subsidiaries whose terms and conditions of
employment are not subject to a collective bargaining agreement and, to the
extent required by a collective bargaining agreement, to employees of the
Company and its Subsidiaries whose terms and conditions of employment are
subject to a collective bargaining agreement.
(e) Parent acknowledges that a "Potential Change in
Control" has occurred as defined in the Trust Agreement and that the
Company shall deliver the Funding Amount to the trustee under the Trust
Agreement.
(f) Parent agrees that the consummation of the Merger shall
constitute a "Change in Control" of the Company for all purposes within the
meaning of all applicable compensation or benefit plans or agreements of
the Company and its subsidiaries, including without limitation, the Company
Stock Plans and the employment agreements set forth on the Company
Disclosure Letter.
(g) The Company shall deliver to Parent copies of all
notices, schedules and other documents it proposes to deliver to, or
receives from, the trustee under the Trust Agreement after the date hereof,
or in connection with the transactions contemplated hereby, including,
without limitation, the Payment Schedule, as defined in the Trust
Agreement. Parent shall have a reasonable opportunity to review such
notices, schedules and other documents proposed to be delivered to such
trustee prior to such delivery thereof.
Section 6.18 Governance Matters. (a) Prior to the Effective
Time, the Board of Directors of Parent shall take all action necessary to
cause the Articles of Association of Parent and the rules of the Management
Board to the extent necessary to be amended as of the Effective Time to
incorporate the provisions set forth in Exhibit F (such amendment, the
"Articles Amendment," and Parent's Articles of Association as so amended,
the "Amended Articles").
(b) Prior to the Effective Time, the Board of Directors of
Parent shall take all action necessary to (i) cause the Board of Directors
of Parent to include, as of the Effective Time, Richard E. Olson, Kenwood
C. Nichols plus up to four independent directors of the Company proposed by
Mr. Olson who are reasonably acceptable to Parent (each, a "Company
Director"); provided, however, that if any such person declines to serve as
a director of Parent, Parent's obligations under this Section 6.18(b) with
respect to such person(s) shall cease unless another nominee is proposed by
the Company who is reasonably acceptable to Parent, (ii) cause the Board of
Directors to consist of up to 17 people, (iii) cause the Management Board
of Parent to consist, as of the Effective Time, of eight persons, (x) five
of whom shall be current members of the Management Board of Parent, and (y)
three of whom shall be Richard E. Olson, Kenwood C. Nichols and Michael J.
Corey. Each Company Director appointed pursuant to Section 6.18(b)(i)
shall serve until the next following annual meeting of Parent's
shareholders or until their successors are duly elected and qualified.
(c) Promptly after the Effective Time, Parent shall take
all actions necessary to cause each committee of the Board of Directors of
Parent to include at least one Company Director.
(d) Effective as of the Effective Time, Parent shall take
all actions necessary to cause (i) Richard E. Olson to be appointed
Executive Vice President of Parent; (ii) Kenwood C. Nichols to be appointed
Executive Vice President of Parent and (iii) Michael J. Corey to be
appointed Senior Vice President of Parent.
Section 6.19 Section 16 Matters. Prior to the Effective Time,
Parent and the Company shall take all such steps as may be required to
cause any dispositions of Company Common Stock (including derivative
securities with respect to the Company Common Stock) resulting from the
transactions contemplated by this Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to the Company to be exempt under Rule 16b-3 promulgated under
the Exchange Act, such steps to be taken in accordance with the No-Action
Letter, dated January 12, 1999, issued by the Securities and Exchange
Commission to Skadden, Arps, Slate, Meagher & Flom LLP.
Section 6.20 Integration Team. Promptly after the date hereof,
Parent will establish an integration team (the "Integration Team"). The
Integration Team will be comprised of senior executive officers of Parent
and the Company and, to the extent appropriate, other management members
from both Parent and the Company. The Integration Team will review its
recommendations with the Management Board of Parent. The Parent's chief
executive officer will work closely with the Integration Team which is
responsible for proposing alternatives and recommendations regarding the
matters and issues arising in connection with the integration of the two
companies and their respective businesses, assets and organizations. The
Parent's chief executive officer ultimately has the responsibility for
approving the recommendations and alternatives of the Integration Team.
Section 6.21 Parent Treasury Stock Option Agreement. Parent
agrees to reserve a sufficient number of Parent Ordinary Shares held by
Parent in treasury ("Treasury Shares") which are the subject of the Parent
Treasury Stock Option Agreement; provided, however, Parent may not sell any
of the Treasury Shares without (i) giving the Company prior written notice
that it is required to sell such Treasury Shares in order to obtain the
letter from PricewaterhouseCoopers LLP referred to in Section 7.1(k) and
(ii) obtaining the written consent of the Company, which consent shall not
be unreasonably withheld.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
Section 7.1 Conditions Precedent to Obligations of Parent and
Merger Sub. The respective obligations of Parent and Merger Sub to effect
the Merger are subject to the satisfaction or waiver (subject to applicable
law), at or prior to the Effective Time, of each of the following
conditions:
(a) Approval of Shareholders. Each of the Company
Shareholder Approval and the Parent Shareholder Approval shall have been
obtained;
(b) HSR Act. Any waiting period (and any extension
thereof) under the HSR Act applicable to the Merger shall have expired or
been terminated;
(c) European Antitrust Laws. Any approvals or consents,
including that of the German Federal Cartel Office, required by European
Antitrust Laws, shall have been received and any waiting periods required
by such Laws shall have been observed;
(d) Competition Act (Canada). The waiting period under
Section 123 of the Competition Act (Canada) shall have expired and Parent
shall have been advised in writing by the Commissioner of Competition that
he has determined not to make an application for an order under Section 92
of the Competition Act (Canada) in respect of the transactions contemplated
by this Agreement that could reasonably be expected to have a Parent
Material Adverse Effect;
(e) Exon-Florio. The review periods, if applicable, under
Exon-Florio shall have expired or have been terminated;
(f) Injunction. No preliminary or permanent injunction or
other order shall have been issued by any federal, state or foreign court
or by any federal, state or foreign governmental or regulatory agency, body
or authority and be in effect at the Effective Time which prohibits,
restrains, restricts or enjoins the consummation of the Merger, provided,
however, that, in the case of a decree, injunction or other order, each of
the parties shall have used reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible
any such decree, injunction or other order that may have been entered;
(g) Statutes. No federal, state or foreign statute, rule,
regulation, executive order, decree or order of any kind shall have been
enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits, restrains, restricts or enjoins the consummation
of the Merger or has the effect of making the Merger illegal;
(h) No Material Adverse Effect. Since the date hereof, no
event shall have occurred that has had or could reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect;
(i) NYSE Listing. Parent ADSs and Parent Ordinary Shares
to be issued in the Merger shall have been authorized for listing on the
NYSE, subject to official notice of issuance;
(j) HSE Listing. Parent Ordinary Shares to be issued in
the Merger shall have been authorized for listing on the HSE following the
due issuance thereof.
(k) Pooling Letters. Parent shall have received a letter
from PricewaterhouseCoopers LLP and SVH PricewaterhouseCoopers Oy each
dated as of the Closing Date and addressed to Parent stating that such firm
believes that the Merger should be treated as a "pooling of interests" in
conformity with Finnish GAAP (with respect to SVH PricewaterhouseCoopers
Oy) and U.S. GAAP, as described in Accounting Principles Board Opinion No.
16 and applicable accounting rules of the SEC (with respect to
PricewaterhouseCoopers LLP), and such letters shall not have been withdrawn
or modified in any material respect and (ii) the Company shall have
received a letter from Arthur Andersen LLP dated as of the Closing Date and
addressed to the Company and Parent, stating that Arthur Andersen LLP
believes that the Company is a pooling candidate for purposes of the
transactions contemplated in conformity with U.S. GAAP as described in
Accounting Principles Board Opinion No. 16 and applicable rules and
regulations of the SEC and such letter shall not have been withdrawn or
modified in any material respect.
(l) Proxy Statement/Prospectus. (A) The Proxy
Statement/Prospectus shall have become effective in accordance with the
provisions of the Securities Act, no stop order suspending the
effectiveness of the Proxy Statement/Prospectus shall have been issued by
the SEC and no proceedings for that purpose shall have been initiated by
the SEC and not concluded or withdrawn and (B) all state securities or
blue sky authorizations necessary to carry out the transactions
contemplated hereby shall have been obtained and be in effect;
(m) Representations and Warranties True. (A) The
representations and warranties of the Company contained herein that are
qualified by reference to a Company Material Adverse Effect shall be true
and correct when made and on the Closing Date (except for representations
and warranties made as of a specified date, which need be true and correct
only as of the specified date), as if made on and as of such date and (B)
all other representations and warranties of the Company shall have been
true and correct when made and on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be
true and correct only as of the specified date) as if made on and as of
such date, except for such inaccuracies as are not reasonably likely to,
individually or in the aggregate, result in a Company Material Adverse
Effect;
(n) Performance. The Company shall have performed or
complied in all material respects with all agreements and conditions
contained herein required to be performed or complied with by it prior to
or at the time of the Closing;
(o) Compliance Certificate. The Company shall have
delivered to Parent a certificate, dated the date of the Closing, signed by
the Chief Executive Officer or Chief Financial Officer of the Company,
certifying as to the fulfillment of the conditions specified in Sections
7.1(m) and (n); and
(p) Other Authorizations. All Authorizations (other than
those specified in Section 7.1(b), (c), (d) and (e) hereof) required in
connection with the execution and delivery of this Agreement and the
performance of the obligations hereunder shall have been made or obtained,
and all required waiting periods shall have been observed, without any
limitation, restriction or condition (including the registration of the
capital increase of Parent's share capital representing Parent Ordinary
Shares required to be issued in connection with the delivery of the Merger
Consideration) that has or could reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect, a Company Material
Adverse Effect (or an effect on Parent and its Subsidiaries that were such
effect applied to the Company and its Subsidiaries, would constitute a
Company Material Adverse Effect), except for such Authorizations the
failure of which to have been made or obtained does not and could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect, a Company Material Adverse Effect (or an effect on
Parent and its Subsidiaries that were such effect applied to the Company
and its Subsidiaries, would constitute a Company Material Adverse Effect)
and except for such Authorizations that are required by Laws to be
obtained, or such waiting periods required by Laws, to be observed, prior
to the Effective Time.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
Section 8.1 Conditions Precedent to Obligations of the Company.
The obligations of the Company to effect the Merger is subject to the
satisfaction or waiver (subject to applicable law), at or prior to the
Effective Time, of each of the following conditions:
(a) Approval of Shareholders. Each of the Company
Shareholder Approval and the Parent Shareholder Approval shall have been
obtained;
(b) HSR Act. Any waiting period (and any extension
thereof) under the HSR Act applicable to the Merger shall have expired or
been terminated;
(c) European Antitrust Laws. Any approvals or consents,
including that of the German Federal Cartel Office, required by European
Antitrust Laws, shall have been received and any waiting periods required
by such Laws shall have been observed;
(d) Competition Act (Canada). The waiting period under
Section 123 of the Competition Act (Canada) shall have expired and Parent
shall have been advised in writing by the Commissioner of Competition that
he has determined not to make an application for an order under Section 92
of the Competition Act (Canada) in respect of the transactions contemplated
by this Agreement that could reasonably be expected to have a Parent
Material Adverse Effect;
(e) Exon-Florio. The review periods, if applicable, under
Exon-Florio shall have expired or have been terminated;
(f) Injunction. No preliminary or permanent injunction or
other order shall have been issued by any federal, state or foreign court
or by any federal, state or foreign governmental or regulatory agency, body
or authority and be in effect at the Effective Time which prohibits,
restrains, restricts or enjoins the consummation of the Merger; provided,
however, that, in the case of a decree, injunction or other order, each of
the parties shall have used reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible
any such decree, injunction or other order that may have been entered;
(g) Statutes. No federal, state or foreign statute, rule,
regulation, executive order, decree or order of any kind shall have been
enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits restrains, restricts or enjoins the consummation
of the Merger or has the effect of making the Merger illegal;
(h) No Material Adverse Effect. Since the date hereof, no
event shall have occurred that has had or could reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
(i) HSE Listing. Parent Ordinary Shares to be issued in
the Merger shall have been authorized for listing on the HSE following the
due issuance thereof.
(j) NYSE Listing. Parent ADSs and Parent Ordinary Shares
to be issued in the Merger shall have been authorized for listing on the
NYSE, subject to official notice of issuance;
(k) Pooling Letters. The Company shall have received a
letter from Arthur Andersen LLP dated as of the Closing Date and addressed
to the Company and Parent stating that Arthur Andersen LLP believes that
the Company is a pooling candidate for purposes of the transactions
contemplated in conformity with U.S. GAAP, as described in Accounting
Principles Board Opinion No. 16 and applicable rules and regulations of the
SEC, and such letter shall not have been withdrawn or modified in any
material respect and (ii) Parent shall have received a letter from
PricewaterhouseCoopers LLP and SVH PricewaterhouseCoopers Oy each dated as
of the Closing Date and addressed to Parent stating that such firm believes
that the Merger should be treated as a "pooling of interests" in conformity
with Finnish GAAP (with respect to SVH PricewaterhouseCoopers Oy) and U.S.
GAAP, as described in Accounting Principles Board Opinion No. 16 and
applicable accounting rules of the SEC (with respect to
PricewaterhouseCoopers LLP), and such letters shall not have been withdrawn
or modified in any material respect.
(l) Proxy Statement/Prospectus. (A) The Proxy
Statement/Prospectus shall have become effective in accordance with the
provisions of the Securities Act, no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated by the
SEC and not concluded or withdrawn and (B) all state securities or blue
sky authorizations necessary to carry out the transactions contemplated
hereby shall have been obtained and be in effect;
(m) Tax Opinion. The Company shall have received an
opinion of Skadden, Arps, Slate, Meagher & Flom LLP in form and substance
reasonably satisfactory to the Company on the basis of certain facts,
representations and assumptions set forth in such opinion, dated as of the
date of the filing of the Certificate of Merger, to the effect that (i) the
Merger will be treated for U.S. Federal income tax purposes as a 368
Reorganization, (ii) each of Parent, Merger Sub and the Company will be a
party to the reorganization within the meaning of Section 368(b) of the
Code and (iii) no gain or loss should be recognized by the Company as a
result of the Merger, such opinion to be premised on, at the Company's
option, the 367 Ruling or the 367 Opinion, in each case, reasonably
satisfactory to the Company. In rendering such opinion, such counsel shall
be entitled to rely upon customary representations of officers of the
Company and Parent;
(n) Representations and Warranties True. (A) The
representations and warranties of Parent and Merger Sub contained herein
that are qualified by reference to a Parent Material Adverse Effect shall
be true and correct when made and on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be
true and correct only as of the specified date), as if made on and as of
such date and (B) all other representations and warranties of Parent and
Merger Sub shall have been true and correct when made and on and as of the
Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct only as of the specified
date) as if made on and as of such date, except for such inaccuracies as
are not reasonably likely to, individually or in the aggregate, result in a
Parent Material Adverse Effect;
(o) Performance. Parent shall have performed or complied
in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at the
time of the Closing;
(p) Compliance Certificate. Parent shall have delivered to
the Company a certificate, dated the date of the Closing, signed by the
Chief Executive Officer or any Chief Financial Officer of Parent,
certifying as to the fulfillment of the conditions specified in Sections
8.1(n) and (o).
(q) Other Authorizations. All Authorizations (other than
those specified in 8.1(b), (c), (d) and (e) hereof) required in connection
with the execution and delivery of this Agreement and the performance of
the obligations hereunder shall have been made or obtained, and all
required waiting periods shall have been observed, without any limitation,
restriction or condition (with the exception of the registration of the
capital increase of Parent's share capital representing Parent's Ordinary
Shares required to be issued in connection with the delivery of the Merger
Consideration) that has or could reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect (or an effect on
the Company and its Subsidiaries that were such effect applied to Parent
and its Subsidiaries, would constitute a Parent Material Adverse Effect),
except for such Authorizations, the failure of which to have been made or
obtained does not and could not reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect (or an effect on
the Company and its Subsidiaries that were such effect applied to Parent
and its Subsidiaries, would constitute a Parent Material Adverse Effect)
and except for such Authorizations that are required by Laws to be
obtained, or such waiting period required by Laws to be observed, prior to
the Effective Time.
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the Company
Shareholder Approval or the Parent Shareholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent:
(i) if, prior to the Effective Time, the
Company has breached in any material respect any representation,
warranty, covenant or other agreement contained in this
Agreement, which (i) would give rise to the failure of a
condition set forth in clause (m) or (n) of Section 7.1, (ii)
cannot be or has not been cured prior to the Termination Date and
(iii) has not been waived by Parent pursuant to the provisions
hereof;
(ii) if, at any time prior to the Effective
Time, (A) the Company, or its Board of Directors, as the case may
be, shall have (w) entered into any agreement with respect to any
Takeover Proposal other than the Merger and other than a
confidentiality agreement permitted under Section 6.7, (x)
amended, conditioned, qualified, withdrawn or modified, or
proposed or resolved to do so, in a manner adverse to Parent or
Merger Sub, its approval and recommendation of the Merger and
this Agreement, or (y) approved or recommended, or proposed to
approve or recommend, any Takeover Proposal other than the
Merger, or (B) the Company or the Company's Board of Directors or
any committee thereof shall have resolved to do any of the
foregoing; or
(iii) if the Company breaches any of its
obligations under Section 6.7 or Section 9.1(c)(ii) hereof;
(c) by the Company:
(i) if, prior to the Effective Time, Parent
or Merger Sub has breached in any material respect any
representation, warranty, covenant or other agreement contained
in this Agreement which (i) would give rise to the failure of a
condition set forth in clauses (n) and (o) of Section 8.1, (ii)
cannot be or has not been cured prior to the Termination Date and
(iii) has not been waived by the Company pursuant to the
provisions hereof;
(ii) if a Superior Proposal is received by
the Company and the Board of Directors of the Company reasonably
determines in good faith (after receiving the advice of outside
legal counsel) that it is necessary to terminate this Agreement
and enter into an agreement to effect the Superior Proposal to
comply with its fiduciary duties under applicable law; provided,
that the Company may not terminate this Agreement pursuant to
this Section 9.1(c)(ii) unless and until (i) three (3) Business
Days have elapsed following delivery to Parent of a written
notice of such determination by the Board of Directors and during
such three (3) Business Day period the Company has fully
cooperated with Parent including, without limitation, informing
Parent of the terms and conditions of such Superior Proposal, and
the identity of the Person making such Superior Proposal, with
the intent of enabling both parties to agree to a modification of
the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected; (ii) at the end
of such three (3) Business Day period the Takeover Proposal
continues to constitute a Superior Proposal and the Board of
Directors of the Company confirms its determination (after
receiving the advice of outside legal counsel) that it is
necessary to terminate this Agreement and enter into an agreement
to effect the Superior Proposal to comply with its fiduciary
duties under applicable law; and (iii) (x) at or prior to such
termination, Parent has received all fees and Expenses set forth
in Section 9.3 hereof by wire transfer in same day funds and (y)
immediately following such termination the Company enters into a
definitive acquisition, merger or similar agreement to effect the
Superior Proposal; or
(iii) if, at any time prior to the Effective
Time, (A) Parent or Merger Sub or either of their respective
Board of Directors, as the case may be, shall have (x) entered
into any agreement with respect to a Takeover Proposal other than
the Merger and other than a confidentiality agreement permitted
under Section 6.7, (y) amended, conditioned or qualified,
withdrawn or modified, or proposed or resolved to withdraw or
modify, in a manner adverse to the Company, its approval and
recommendation of the Merger and this Agreement or (B) Parent or
Parent's Board of Directors or any committee thereof shall have
resolved to do any of the foregoing.
(d) by either Parent or the Company:
(i) if the Effective Time has not occurred
on or prior to January 31, 2001 (the "Termination Date");
provided, that the right to terminate this Agreement pursuant to
this clause shall not be available to any party whose failure to
fulfill any material obligation of this Agreement or other
material breach of this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to have occurred
on or prior to the aforesaid date or the basis of such
termination;
(ii) if any court of competent jurisdiction
or any Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently restricting,
enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable and prior
to such termination, the parties shall have used reasonable best
efforts to resist, resolve, or lift, as applicable, such
judgment, injunction, order or decree;
(iii) at the Parent Shareholder Meeting
(including any adjournment or postponement thereof), the Parent
Shareholder Approval shall not have been obtained; or
(iv) at the Company Shareholder Meeting
(including any adjournment or postponement thereof), the Company
Shareholder Approval shall not have been obtained.
Section 9.2 Effect of Termination. In the event of termination
of this Agreement by Parent or the Company, as provided in Section 9.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent or Merger Sub or their
respective officers or directors (except as set forth in Section 4.15,
Section 5.15, Section 6.2, this Section 9.2 and Sections 9.3, 10.3, 10.4,
10.5, 10.13 and 10.14, which shall survive the termination); provided,
however, that nothing contained in this Section 9.2 or in Section 9.3 shall
relieve any party hereto from any liability for any breach of this
Agreement.
Section 9.3 Payment of Certain Fees. (a) If this Agreement is
terminated by Parent in accordance with Section 9.1(b)(i),
9.1(b)(ii)(A)(w), 9.1(b)(ii)(A)(y), 9.1(b)(ii)(B) (unless related to a
resolution to take any of the actions set forth in Section
9.1(b)(ii)(A)(x), in which case Section 9.3(c) shall apply) or 9.1(b)(iii)
hereof then the Company shall (A) reimburse Parent for all of its Expenses
and (B) pay to Parent in immediately available funds a termination fee in
an amount equal to $200 million (the "Termination Fee").
(b) If this Agreement is terminated by Parent or the
Company pursuant to Section 9.1(d)(iv) hereof and (x) a Takeover Proposal
has been made and publicly announced or communicated to the Company's
shareholders after the date of this Agreement and prior to the Company
Shareholder Meeting and, to the extent applicable, (y) concurrently with or
within twelve (12) months of the date of such termination a Third Party
Acquisition Event occurs, then the Company shall (i) within one Business
Day of the date of termination pursuant to Section 9.1(d)(iv) (A) pay to
Parent 50% of the Termination Fee and (B) reimburse Parent for all of its
Expenses, and (ii) within one Business Day of the occurrence of such a
Third Party Acquisition Event (including any revisions or amendments
thereto) pay to Parent 50% of the Termination Fee.
A "Third Party Acquisition Event" means (i) the consummation of a
Takeover Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and
its Subsidiaries, taken as a whole, or any such transaction that, if it had
been proposed prior to the termination of this Agreement would have
constituted a Takeover Proposal or (ii) the entering into by the Company or
any of its Subsidiaries of a definitive agreement with respect to any such
transaction.
"Expenses" shall mean documented and reasonable out-of-pocket
fees and expenses up to a maximum aggregate amount of $10 million incurred
or paid in connection with the Merger or the consummation of any of the
transactions contemplated by this Agreement, including, but not limited to,
all filing fees, printing fees and reasonable fees and expenses of law
firms, commercial banks, investment banking firms, accountants, experts and
consultants.
(c) If this Agreement is terminated by Parent pursuant to
Section 9.1(b)(ii)(A)(x), then (i) the Company shall (A) pay to Parent 50%
of the Termination Fee and (B) reimburse Parent for all of its Expenses and
(ii) if concurrently with or within 12 months after such termination a
Third Party Acquisition Event occurs, then the Company shall pay to Parent
50% of the Termination Fee within one Business Day of the occurrence of
such a Third Party Acquisition Event (including any revisions or amendments
thereto).
(d) If this Agreement is terminated by the Company pursuant
to Section 9.1(c)(i), then Parent shall (A) reimburse the Company for all
of its Expenses and (B) pay to the Company the Termination Fee.
(e) Any payment of the Termination Fee (and reimbursement
of Expenses) pursuant to this Section 9.3 shall be made within one Business
Day after termination of this Agreement (or as otherwise expressly set
forth in this Agreement) by wire transfer of immediately available funds.
If either party fails to pay to (or reimburse) the other party any fee or
expense due hereunder (including the Termination Fee), such party shall pay
the costs and expenses (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other legal action,
taken to collect payment, together with interest on the amount of any
unpaid fee and/or expense at the publicly announced prime rate of Citibank,
N.A. from the date such fee was required to be paid to the date it is paid.
ARTICLE X
MISCELLANEOUS
Section 10.1 Representations and Warranties. The respective
representations and warranties of the Company, on the one hand, and Parent
and Merger Sub, on the other hand, contained herein or in any certificates
or other documents delivered prior to or at the Closing shall not be deemed
waived or otherwise affected by any investigation made by any party. Each
and every such representation and warranty shall expire with, and be
terminated and extinguished by, the Closing and thereafter none of the
Company, Parent or Merger Sub shall be under any liability whatsoever with
respect to any such representation or warranty. This Section 10.1 shall
have no effect upon any other obligation of the parties hereto, whether to
be performed before or after the Effective Time.
Section 10.2 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Directors of the Company, Parent or Merger Sub, may
(i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by any other applicable
party or in any document, certificate or writing delivered pursuant hereto
by any other applicable party or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of
any party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
Section 10.3 Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given
if delivered in person or mailed, certified or registered mail with postage
prepaid, or sent by telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
Telecopy: 203-358-6562
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: 212-735-2000
Attention: Blaine V. Fogg, Esq.
Joseph A. Coco, Esq.
(b) if to either Parent or Merger Sub, to it at:
UPM-Kymmene Corporation
Etelaesplanadi 2
P.O. Box 380
FIN-00101 Helsinki
Finland
Telecopy: 011-358-204-150-304
Attention: Reko Aalto-Setala
in each case, with a copy (which shall not
constitute notice) to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: 212-354-8113
Attention: Timothy B. Goodell, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the
date of delivery unless if mailed, in which case on the third (3rd)
Business Day after the mailing thereof except for a notice of a change of
address, which shall be effective only upon receipt thereof.
Section 10.4 Entire Agreement. This Agreement and the annex,
schedules and other documents referred to herein or delivered pursuant
hereto, collectively contain the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersede all prior
agreements and understandings, oral and written, with respect thereto,
other than the confidentiality provisions of the Confidentiality Agreement.
Section 10.5 Binding Effect; Benefit; Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and, with respect to the provisions of Sections 6.10, 6.17(c) and
6.18 hereof, shall inure to the benefit of the Persons or entities
benefiting from the provisions thereof who are intended to be third-party
beneficiaries thereof and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger
Sub may assign and transfer its right and obligations hereunder to any of
its Affiliates. Except as provided in the immediately preceding sentence,
nothing in this Agreement, expressed or implied, is intended to confer on
any Person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
Section 10.6 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in writing by
the parties hereto in any and all respects before the Effective Time
(notwithstanding any shareholder approval), by action taken by the Board of
Directors and the Executive Board of Parent and the respective Boards of
Directors of Merger Sub and the Company or by the respective officers
authorized by such Executive Board or Boards of Directors or otherwise, as
the case may be; provided, however, that after any such shareholder
approval, no amendment shall be made which by law requires further approval
by such shareholders without such further approval.
Section 10.7 Further Actions. Each of the parties hereto agrees
that, except as otherwise provided in this Agreement and subject to its
legal obligations, it will use its reasonable best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions
are within its control, and to do all things reasonably necessary to
consummate the transactions contemplated hereby.
Section 10.8 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only,
do not constitute a part of this Agreement and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 10.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It
is accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy
to which they are entitled at law or in equity.
Section 10.10 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, and
all of which together shall be deemed to be one and the same instrument.
Section 10.11 Applicable Law. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws rules thereof.
Section 10.12 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or
against its regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 10.13 Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this
Agreement or the transactions contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company
have caused this Agreement to be executed by their respective officers
thereunto duly authorized, all as of the date first above written.
UPM-KYMMENE CORPORATION
By /s/ Juha Niemela
------------------------------------
Name: Juha Niemela
Title: President and Chief Executive
Officer
By /s/ Reko Aalto-Steala
------------------------------------
Name: Reko Aalto-Setala
Title: General Counsel
BLUE ACQUISITION, INC.
By /s/ Kari Toikka
------------------------------------
Name: Kari Toikka
Title: President
By /s/ Reko Aalto-Steala
------------------------------------
Name: Reko Aalto-Setala
Title: General Counsel
CHAMPION INTERNATIONAL CORPORATION
By /s/ Richard E. Olson
------------------------------------
Name: Richard E. Olson
Title: Chairman and Chief Executive
Officer
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of February 17, 2000 is by
and between CHAMPION INTERNATIONAL CORPORATION, a New York corporation (the
"Company"), and UPM-KYMMENE CORPORATION, a corporation organized under the
laws of the Republic of Finland ("Grantee").
RECITALS
WHEREAS, Grantee, the Company and Blue Acquisition, Inc. ("Merger
Sub") propose to enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), providing for, among other
things, a merger (the "Merger") of Merger Sub with and into the Company;
and
WHEREAS, as a condition and inducement to Grantee's willingness
to enter into the Merger Agreement, Grantee has requested that the Company
agree, and the Company has agreed, to grant Grantee the Option (as defined
below).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, the Company and Grantee agree as
follows:
1. Capitalized Terms. Certain capitalized terms used in this
Agreement are defined in Annex A hereto and are used herein with the
meanings therein ascribed. Those capitalized terms used but not defined
herein (including in Annex A hereto) that are defined in the Merger
Agreement are used herein with the same meanings as ascribed to them
therein; provided, however, that, as used in this Agreement, "Person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions set
forth herein, the Company hereby grants to Grantee an irrevocable option
(the "Option") to purchase up to 19,219,034 shares (as adjusted as set
forth herein) (the "Option Shares") of common stock, par value $.50 per
share (the "Shares"), of the Company (being 19.9% of the number of shares
outstanding on February 17, 2000 before such issuance), at a purchase price
per share equal to the Exercise Price (as defined below).
(b) Exercise Price. The exercise price, as adjusted as set
forth herein (the "Exercise Price"), of the Option shall be $66.00 per
Option Share.
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event and shall remain
in full force and effect until the earliest to occur of (i) the Effective
Time, (ii) six months after the first occurrence of an Exercise Event (or
if, at the expiration of such six months after the first occurrence of an
Exercise Event, the Option cannot be exercised by reason of any applicable
Order, Law or Regulation, 10 business days after such impediment to
exercise shall have been removed, but in no event under this clause (ii)
later than the first anniversary of the Exercise Event), (iii) termination
of the Merger Agreement in accordance with its terms other than a
termination with respect to which an Exercise Event shall occur and (iv)
the date on which Grantee shall have received the Profit Cap pursuant to
Section 7 (the "Option Term"). If the Option is not theretofore exercised,
the rights and obligations set forth in this Agreement shall terminate at
the expiration of the Option Term. "Exercise Event" shall mean any of the
events giving rise to the obligation of the Company to pay the Termination
Fee under Section 9.3 of the Merger Agreement.
(d) Exercise of Option.
(i) Grantee may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of an Exercise Event
during the Option Term. Notwithstanding the expiration of the Option Term,
Grantee shall be entitled to purchase those Option Shares with respect to
which it has exercised the Option in accordance with the terms hereof prior
to the expiration of the Option Term.
(ii) If Grantee wishes to exercise the Option, it shall send a
written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total
number of Option Shares it intends to purchase pursuant to such exercise
and (ii) a place and a date (the "Closing Date") not earlier than three
Business Days nor later than 15 Business Days from the Notice Date for the
closing of the purchase and sale pursuant to the Option (the "Closing");
provided that such closing shall be held only if (A) such purchase would
not otherwise violate or cause the violation of applicable Law (including
the Hart-Scott-Rodino Antitrust Improvements Act of 1976), (B) no Law or
Regulation shall have been adopted or promulgated, and no Order shall be in
effect, which prohibits delivery of such Option Shares (and the parties
shall use their reasonable best efforts to have any such Order vacated or
reversed), and (C) any prior notification to or approval of any other
regulatory authority in the United States or elsewhere required in
connection with such purchase shall have been made or obtained, other than
those which if not made or obtained would not reasonably be expected to
result in a significant detriment to the Company and its Subsidiaries taken
as a whole.
(iii) If the Closing cannot be effected by reason of a
restriction set forth in Clause (A), (B) or (C) of the proviso in Section
2(d)(ii), the Closing Date shall be extended to the tenth Business Day
following the expiration or termination of such restriction. Without
limiting the foregoing, if prior notification to, or Authorization of, any
Governmental Entity is required in connection with the purchase of such
Option Shares by virtue of the application of such Law, Regulation or
Order, Grantee and, if applicable, the Company shall promptly file the
required notice or application for Authorization and Grantee, with the
cooperation of the Company, shall expeditiously process the same.
(iv) Notwithstanding Section 2(d)(iii), if the Closing Date shall
not have occurred within twelve months after the first occurrence of an
Exercise Event as a result of one or more restrictions imposed by the
application of any Law, Regulation or Order, the exercise of the Option
effected on the Notice Date shall be deemed to have expired.
(e) Payment and Delivery of Certificates.
(i) At each Closing, Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated
by the Company an amount equal to the Exercise Price multiplied by the
number of Option Shares to be purchased on such Closing Date.
(ii) At each Closing, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all
Liens, and Grantee shall deliver to the Company its written agreement that
Grantee will not offer to sell or otherwise dispose of such Option Shares
in violation of applicable Law or the provisions of this Agreement.
(f) Certificates. Certificates for the Option Shares delivered
at each Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF FEBRUARY 17, 2000. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) a new certificate or certificates
evidencing the same number of Shares will be issued to Grantee in lieu of
the certificate bearing the above legend, and such new certificate shall
not bear such legend, insofar as it applies to the Securities Act, if
Grantee shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission, or an opinion of counsel
in form and substance reasonably satisfactory to the Company and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that
do not require the retention of such reference.
(g) If at the time of issuance of any Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase
rights or similar securities to holders of Shares, then each Option Share
purchased pursuant to the Option shall also include rights with terms
substantially the same as and at least as favorable to Grantee as those
issued to other holders of Shares.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Shares by reason of stock
dividend, stock split, split-up, combination, reclassification,
recapitalization, exchange of shares, dividend, dividend payable in any
other securities or similar event, the type and number of Shares or
securities subject to the Option, and the Exercise Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the same class and number of outstanding shares or
other securities or property that Grantee would have received in respect of
the Shares if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable.
(b) If any additional Shares are issued after the date of this
Agreement (other than pursuant to an event described in Section 3(a)
above), the number of Shares then remaining subject to the Option shall be
adjusted so that, after such issuance of additional Shares, such number of
Shares then remaining subject to the Option, together with shares
theretofore issued pursuant to the Option, equals 19.9% of the number of
Shares then issued and outstanding. In no event shall the number of Option
Shares exceed 19.9% of the number of Shares issued and outstanding at the
time of exercise (without giving effect to the issuance of any Shares
subject to or issued pursuant to the Option).
(c) To the extent any of the provisions of this Agreement apply
to the Exercise Price, they shall be deemed to refer to the Exercise Price
as adjusted pursuant to this Section 3.
(d) Without limiting the foregoing, whenever the number of
Option Shares purchasable upon exercise of the Option is adjusted as
provided in this Section 3, the Exercise Price per Option Share shall be
adjusted by multiplying the Exercise Price by a fraction, the numerator of
which is equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which is equal to the number of Option
Shares purchasable after the adjustment.
(e) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that the Company
enters into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and the Company will not be
the continuing or surviving corporation in such consolidation or merger,
(ii) to permit any Person, other than Grantee or one of its Subsidiaries,
to merge into the Company and the Company will be the continuing or
surviving corporation, but in connection with such merger, the shares of
Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of
the Company or any other Person or cash or any other property, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
Person, other than Grantee or one of its Subsidiaries, then, and in each
such case, the agreement governing such transaction will make proper
provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of
Option Shares had the Option been exercised immediately prior to such
consolidation, merger, sale or transfer or the record date therefor, as
applicable. The Company shall take such steps in connection with such
consolidation, merger, liquidation or other such transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option.
4. Purchase Not For Distribution. Grantee hereby represents
and warrants to the Company that any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be taken with a
view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
5. Repurchase at the Option of Grantee.
(a) At the request of Grantee made at any time and from time to
time after the occurrence of an Exercise Event and prior to 120 days after
the expiration of the Option Term (the "Put Period"), the Company (or any
successor thereto) shall, at the election of Grantee (the "Put Right"),
repurchase from Grantee (i) that portion of the Option relating to all or
any part of the Unexercised Option Shares (or as to which the Option has
been exercised but the Closing has not occurred) and (ii) all or any
portion of the Shares purchased by Grantee pursuant hereto and with respect
to which Grantee then has ownership. The date on which Grantee exercises
its rights under this Section 5 is referred to as the "Put Date." Such
repurchase shall be at an aggregate price (the "Put Consideration") equal
to the sum of:
(i) the aggregate Exercise Price paid by Grantee for any Option
Shares which Grantee owns and as to which Grantee is exercising the Put
Right;
(ii) the excess, if any, of the Applicable Price for a Share over
the Exercise Price paid by Grantee for each Option Share as to which
Grantee is exercising the Put Right multiplied by the number of such
shares; and
(iii) the excess, if any, of (x) the Applicable Price for a
Share over (y) the Exercise Price multiplied by the number of Unexercised
Option Shares as to which Grantee is exercising the Put Right. Upon
exercise of its right pursuant to this Section 5(a) and the receipt by
Grantee of the Put Consideration, the obligation of the Company to deliver
Option Shares pursuant to Section 3 shall be terminated with respect to the
number of Option Shares for which the Company shall have elected to be paid
the Put Consideration.
(b) If Grantee exercises its rights under this Section 5, the
Company shall, within five Business Days after the Put Date, pay the Put
Consideration in immediately available funds to an account specified by
Grantee, and Grantee shall promptly thereupon surrender to the Company the
Option or portion of the Option and the certificates evidencing the Shares
purchased thereunder.
(c) If the Option has been exercised, in whole or in part, as to
any Option Shares subject to the Put Right but the Closing thereunder has
not occurred, the payment of the Put Consideration shall, to that extent,
render such exercise null and void.
(d) Notwithstanding any provision to the contrary in this
Agreement Grantee may not exercise its rights pursuant to this Section 5 in
a manner that would result in Total Profit of more than the Profit Cap;
provided, however, that nothing in this sentence shall limit Grantee's
ability to exercise the Option in accordance with its terms.
6. Registration Rights.
(a) The Company shall, if requested by Grantee at any time and
from time to time during the Registration Period, as expeditiously as
practicable, prepare, file and cause to be made effective up to two
registration statements under the Securities Act if such registration is
required in order to permit the offering, sale and delivery of any or all
Shares or other securities that have been acquired by or are issuable to
Grantee upon exercise of the Option in accordance with the intended method
of sale or other disposition stated by Grantee, including, at the sole
discretion of the Company, a "shelf" registration statement under Rule 415
under the Securities Act or any successor provision, and the Company shall
use all reasonable efforts to qualify such shares or other securities under
any applicable state securities laws. The Company shall use all reasonable
efforts to cause each such registration statement to become effective, to
obtain all consents or waivers of other parties that are required therefor
and to keep such registration statement effective for such period not in
excess of 90 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a
registration statement and to maintain its effectiveness may be suspended
for one or more periods of time not exceeding 90 days in the aggregate if
the Board of Directors of the Company shall have determined in good faith
that the filing of such registration or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect the Company. For purposes of determining
whether two requests have been made under this Section 6, only requests
relating to a registration statement that has become effective under the
Securities Act shall be counted. The Registration Expense shall be for the
account of the Company.
(b) Grantee shall provide all information reasonably requested
by the Company for inclusion in any registration statement to be filed
hereunder. Grantee shall choose the managing underwriter in any
registration contemplated by this Section 6. If during the Registration
Period the Company shall propose to register under the Securities Act the
offering, sale and delivery of Shares for cash for its own account or for
any other stockholder of the Company pursuant to a firm underwriting, it
shall, in addition to the Company's other obligations under this Section 6,
allow Grantee the right to participate in such registration provided that
Grantee participates in the underwriting; provided, however, that, if the
managing underwriter of such offering advises the Company in writing that
in its opinion the number of Shares requested to be included in such
registration exceeds the number that can be sold in such offering without
adversely affecting the Offering Price, the Company shall, after fully
including therein all securities to be sold by the Company, include the
shares requested to be included therein by Grantee pro rata (based on the
number of Shares intended to be included therein) with the shares intended
to be included therein by Persons other than the Company.
(c) In connection with any offering, sale and delivery of Shares
pursuant to a registration statement effected pursuant to this Section 6,
the Company and Grantee shall provide each other and each underwriter of
the offering with customary representations, warranties and covenants,
including covenants of indemnification and contribution and, with respect
to an underwritten offering, enter into an underwriting agreement and other
documents in form and substance customary for transactions of such type.
7. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement in no
event shall Grantee's Total Profit exceed the Profit Cap and, if it
otherwise would exceed such amount, Grantee, at its sole election, shall
either (i) deliver to the Company for cancellation Shares (or other
securities into which such Option Shares are converted or exchanged)
previously purchased by Grantee, (ii) pay cash or other consideration to
the Company, (iii) reduce the number of Shares subject to the Option or
(iv) undertake any combination thereof, so that Grantee's Total Profit
shall not exceed the Profit Cap after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, this
Stock Option may not be exercised for a number of Option Shares that would,
as of any Notice Date, result in a Notional Total Profit of more than the
Profit Cap, and, if exercise of the Option otherwise would exceed the
Profit Cap, Grantee, at its sole option, may (in addition to the actions
specified in Section 7(a)) (i) reduce the number of Option Shares subject
to the Option or (ii) increase the Exercise Price for that number of Option
Shares set forth in the Exercise Notice so that the Notional Total Profit
shall not exceed the Profit Cap; provided, however, that nothing in this
sentence shall restrict any exercise of the Option otherwise permitted by
this Section 7(b) on any subsequent date at the Exercise Price set forth in
Section 2(b) if such exercise would not then be restricted under this
Section 7(b).
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive,
nor relieve the Company's obligation to pay, any Termination Fee provided
for in Section 9.3 of the Merger Agreement; provided that if and to the
extent the Total Profit received by Grantee would exceed the Profit Cap
following receipt of such payment, Grantee shall be obligated to promptly
comply with the terms of Section 7(a).
(d) For purposes of Section 7(a) and clause (ii) of the
definition of Total Profit, the value of any Option Shares delivered by
Grantee to the Company shall be the Applicable Price of such Option
Shares.
8. Additional Covenants of the Company. (a) If the Shares or
any other securities then subject to the Option are then listed on the
NYSE, the Company, upon the occurrence of an Exercise Event, will promptly
file an application to list on the NYSE the Shares or other securities then
subject to the Option and will use all reasonable efforts to cause such
listing application to be approved as promptly as practicable.
(b) The Company will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
permit the exercise of the Option in accordance with the terms and
conditions hereof, as soon as practicable after the date hereof, including
making any appropriate filing pursuant to the HSR Act and any other
applicable law, supplying as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and any other applicable law, and taking all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(c) The Company agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by it.
(d) The Company shall take all such steps as may be required to
cause any acquisitions or dispositions by Grantee (or any affiliate who may
become subject to the reporting requirements of Section 16(a) of the
Exchange Act) of any Shares acquired in connection with this Agreement
(through conversion or exercise of the Option or otherwise) to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
(e) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary; Severability.
Except as otherwise set forth in the Merger Agreement, this Agreement
(including the Merger Agreement and the other documents and instruments
referred to herein and therein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) is
not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York, regardless
of the Laws that might otherwise govern under applicable principles of
conflicts of law.
(f) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
If to the Company to:
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
Telecopy: (203) 358-6562
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: (212) 735-2000
Attention: Blaine V. Fogg, Esq.
Joseph A. Coco, Esq.
If to Grantee to:
UPM-Kymmene Corporation
Etelaesplanadi 2
P.O. Box 380
FIN-00101 Helsinki
Telecopy: 011-358-204-150-304
Attention: Reko Aalto-Setala
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: Timothy B. Goodell, Esq.
(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original and
all of which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold,
assigned or otherwise disposed of or transferred by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Grantee may assign this Agreement
to a wholly owned Subsidiary of Grantee; provided, however, that no such
assignment shall have the effect of releasing Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(j) Further Assurances. In the event of any exercise of the
Option by Grantee, the Company and Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(k) Specific Performance. The parties hereto hereby acknowledge
and agree that the failure of any party to this Agreement to perform its
agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will
not be an adequate remedy. Accordingly, each of the parties hereto hereby
consents to the granting of equitable relief (including specific
performance and injunctive relief) by any court of competent jurisdiction
to enforce any party's obligations hereunder. The parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for
any failure to perform this Agreement.
IN WITNESS WHEREOF, the Company and Grantee have caused this
Stock Option Agreement to be signed by their respective officers thereunto
duly authorized, all as of the day and year first written above.
CHAMPION INTERNATIONAL
CORPORATION
By: /s/ Richard E. Olson
------------------------------------
Name: Richard E. Olson
Title: Chairman and Chief Executive
Officer
UPM-KYMMENE CORPORATION
By: /s/ Juha Niemela
------------------------------------
Name: Juha Niemela
Title: President and Chief Executive
Officer
By /s/ Reko Aalto-Setala
------------------------------------
Name: Reko Aalto-Setala
Title: General Counsel
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall
have the meanings set forth below unless the context shall otherwise
require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price", as of any date, means the highest of (i) the
highest purchase price per Share paid or proposed to be paid by any third
Person for Shares pursuant to any Takeover Proposal for or with the Company
made on or prior to such date, and (ii) the Current Market Price. If the
consideration to be offered, paid or received pursuant to the foregoing
clause (i) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally recognized
investment banking firm jointly selected by Grantee and the Company.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals
granted by any Governmental Entity.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday in the United States or in Finland.
"Closing" shall have the meaning ascribed to such term in Section
2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Current Market Price" shall mean, as of any date, the average of
the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Shares as reported on the New York Stock Exchange Composite Tape during the
ten consecutive trading days ending on (and including) the trading day
immediately prior to such date or, if the Shares are not quoted thereon, on
The Nasdaq Stock Market or, if the Shares are not quoted thereon, on the
principal trading market (as defined in Regulation M under the Exchange
Act) on which such shares are traded as reported by a recognized source
during such ten trading day period.
"Exercise Event" shall have the meaning ascribed to such term in
Section 2(c).
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Governmental Entity" shall mean any federal, state or foreign
governmental or regulatory agency, body or authority.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of
Governmental Entities having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
adverse claim, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature thereof or the filing of
or agreement to give financing statement under the Laws of any
jurisdiction.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that
the Option were exercised on such date for such number of Option Shares and
assuming that such Option Shares, together with all other Option Shares
previously acquired upon exercise of the Option and held by Grantee as of
such date, were sold for cash at the closing market price per Share as of
the close of business on the preceding trading day (less customary
brokerage commissions).
"Option" shall have the meaning ascribed to such term in Section
2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any
Governmental Entity.
"Profit Cap" shall mean $210 million.
"Put Consideration" shall have the meaning ascribed to such term
in Section 5 herein.
"Put Date" shall have the meaning ascribed to such term in
Section 5 herein.
"Put Period" shall have the meaning ascribed to such term in
Section 5 herein.
"Put Right" shall have the meaning ascribed to such term in
Section 5 herein.
"Registration Expenses" shall mean the expenses associated with
the preparation and filing of any registration statement pursuant to
Section 6 herein and any sale covered thereby (including any fees related
to blue sky qualifications and filing fees in respect of the National
Association of Securities Dealers, Inc.), but excluding underwriting
discounts or commissions or brokers' fees in respect to shares to be sold
by Grantee and the fees and disbursements of Grantee's counsel.
"Registration Period" shall mean the period of two years
following the first exercise of the Option by Grantee.
"Regulation" shall mean any rule or regulation of any
Governmental Entity having the effect of Law or of any rule or regulation
of any self-regulatory organization, such as the NYSE.
"Total Profit" shall mean (i) the aggregate amount (before income
taxes) of (A) any excess of (x) the net cash amounts plus the fair market
value of any other consideration (net of expenses incurred) received by
Grantee pursuant to a sale of the Option Shares (or securities into which
such shares are converted or exchanged) over (y) Grantee's aggregate
purchase price for such Option Shares (or other securities) plus (B) any
amounts received by Grantee from the Company or concurrently being paid to
Grantee pursuant to Section 9.3 of the Merger Agreement minus (ii) the
amounts of any cash previously paid by Grantee to the Company pursuant to
Section 7 of this Agreement plus the value of the Option Shares (or other
securities) previously delivered to the Company pursuant to Section 7 of
this Agreement plus (iii) any amounts paid to Grantee pursuant to an
exercise of Grantee's rights under Section 5.
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares
as to which the Option remains unexercised from time to time.
PARENT STOCK OPTION AGREEMENT
This PARENT STOCK OPTION AGREEMENT dated as of February 17, 2000 is
by and between Champion International Corporation, a New York corporation
("Grantee"), and UPM-Kymmene Corporation, a corporation organized under the
laws of the Republic of Finland ("Company").
RECITALS
WHEREAS, Grantee, the Company and Blue Acquisition, Inc. ("Merger
Sub") propose to enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), providing for, among other
things, a merger (the "Merger") of Merger Sub with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement, Grantee has requested that the Company
agree, and the Company has agreed, to grant Grantee the Option (as defined
below).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, the Company and Grantee agree, subject
to Section 7, as follows:
1. Capitalized Terms. Certain capitalized terms used in this
Agreement are defined in Annex A hereto and are used herein with the
meanings therein ascribed. Those capitalized terms used but not defined
herein (including in Annex A hereto) that are defined in the Merger
Agreement are used herein with the same meanings as ascribed to them
therein; provided, however, that, as used in this Agreement, "Person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions set
forth herein, the Company hereby grants to Grantee an irrevocable option
(the "Option") to purchase up to 66,334,802 ordinary shares (as adjusted as
set forth herein) (the "Option Shares") with no nominal value (the
"Shares") of the Company (being 19.9% of the number of shares outstanding
on February 14, 2000 before such issuance), at a purchase price per share
equal to the Exercise Price (as defined below).
(b) Exercise Price. The exercise price, as adjusted as set forth
herein (the "Exercise Price"), of the Option shall be Eur33.90 per Option
Share.
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event and shall remain
in full force and effect until the earliest to occur of (i) the Effective
Time, (ii) six months after the first occurrence of an Exercise Event (or
if, at the expiration of such six months after the first occurrence of an
Exercise Event, the Option cannot be exercised by reason of any applicable
Order, Law or Regulation, 10 Business Days after such impediment to
exercise shall have been removed, but in no event under this clause (ii)
later than the first anniversary of the Exercise Event), (iii) termination
of the Merger Agreement in accordance with its terms other than a
termination with respect to which an Exercise Event shall occur and (iv)
the date on which Grantee shall have received the Profit Cap pursuant to
Section 5 (the "Option Term"). If the Option is not theretofore exercised,
the rights and obligations set forth in this Agreement shall terminate at
the expiration of the Option Term. "Exercise Event" shall mean (A) any of
the events giving rise to the obligation of the Company to pay the
Termination Fee under Section 9.3 of the Merger Agreement; (B) termination
of the Merger Agreement by Grantee under Section 9.1(c)(iii) and
(C) termination of the Merger Agreement under Section 9.1(d)(iii) and a
Takeover Proposal has been made and publicly announced or communicated to
the Company's shareholders after the date of this Agreement and prior to
the Parent's Shareholders Meeting.
(d) Exercise of Option.
(i) Grantee may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of an Exercise Event
during the Option Term. Notwithstanding the expiration of the Option Term,
Grantee shall be entitled to purchase those Option Shares with respect to
which it has exercised the Option in accordance with the terms hereof prior
to the expiration of the Option Term.
(ii) If Grantee wishes to exercise the Option, it shall send a
written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total
number of Option Shares it intends to purchase pursuant to such exercise
and (ii) a date (the "Closing Date") not earlier than three Business Days
nor later than 15 Business Days from the Notice Date for the closing of the
purchase and sale pursuant to the Option (the "Closing"); provided that
such closing shall be held only if (A) such purchase would not otherwise
violate or cause the violation of applicable Law (including the Hart-Scott-
Rodino Antitrust Improvements Act of 1976), (B) no Law or Regulation shall
have been adopted or promulgated, and no Order shall be in effect, which
prohibits delivery of such Option Shares (and the parties shall use their
reasonable best efforts to have any such Order vacated or reversed), and
(C) any prior notification to or approval of any other regulatory authority
in the United States or elsewhere required in connection with such purchase
shall have been made or obtained, other than those which if not made or
obtained would not reasonably be expected to result in a significant
detriment to the Company and its Subsidiaries taken as a whole.
(iii) If the Closing cannot be effected by reason of a
restriction set forth in Clause (A), (B) or (C) of the proviso in Section
2(d)(ii), the Closing Date shall be extended to the tenth Business Day
following the expiration or termination of such restriction. Without
limiting the foregoing, if prior notification to, or Authorization of, any
Governmental Entity is required in connection with the purchase of such
Option Shares by virtue of the application of such Law, Regulation or
Order, Grantee and, if applicable, the Company shall promptly file the
required notice or application for Authorization and Grantee, with the
cooperation of the Company, shall expeditiously process the same.
(iv) Notwithstanding Section 2(d)(iii), if the Closing Date shall
not have occurred within twelve months after the first occurrence of an
Exercise Event as a result of one or more restrictions imposed by the
application of any Law, Regulation or Order, the exercise of the Option
effected on the Notice Date shall be deemed to have expired.
(e) Payment and Delivery of Shares.
(i) On each Closing Date, Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated
by the Company an amount equal to the Exercise Price multiplied by the
number of Option Shares to be purchased on such Closing Date.
(ii) On each Closing Date, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to
Grantee, in Grantee's book-entry account in the Finnish Book-Entry
Securities System, such number of Shares representing the Option Shares to
be purchased at such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all
Liens, and Grantee shall deliver to the Company its written agreement that
Grantee will not offer to sell or otherwise dispose of such Option Shares
in violation of applicable Law or the provisions of this Agreement.
(f) If at the time of issuance of any Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase
rights or similar securities to holders of Shares, then each Option Share
purchased pursuant to the Option shall also include rights with terms
substantially the same as and at least as favorable to Grantee as those
issued to other holders of Shares.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Shares by reason of stock
dividend, stock split, split-up, combination, reclassification,
recapitalization, exchange of shares, dividend, dividend payable in any
other securities or similar event, the type and number of Shares or
securities subject to the Option, and the Exercise Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the same class and number of outstanding shares or
other securities or property that Grantee would have received in respect of
the Shares if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable.
(b) If any additional Shares are issued after the date of this
Agreement (other than pursuant to an event described in Section 3(a) above
and other than as permitted by the Merger Agreement), the number of Shares
then remaining subject to the Option shall be adjusted so that, after such
issuance of additional Shares, such number of Shares then remaining subject
to the Option, together with shares theretofore issued pursuant to the
Option and the Parent Treasury Option, equals 19.9% of the number of Shares
then issued and outstanding. In no event shall the number of Option Shares
plus the number of Shares purchased pursuant to the Parent Treasury Option
exceed 19.9% of the number of Shares issued and outstanding at the time of
exercise (without giving effect to the issuance of any Shares subject to or
issued pursuant to the Option or the Parent Treasury Option).
(c) To the extent any of the provisions of this Agreement apply to
the Exercise Price, they shall be deemed to refer to the Exercise Price as
adjusted pursuant to this Section 3.
(d) Without limiting the foregoing, whenever the number of Option
Shares purchasable upon exercise of the Option is adjusted as provided in
this Section 3, the Exercise Price per Option Share shall be adjusted by
multiplying the Exercise Price by a fraction, the numerator of which is
equal to the number of Option Shares purchasable prior to the adjustment
and the denominator of which is equal to the number of Option Shares
purchasable after the adjustment.
(e) Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event that the Company enters into an
agreement (i) to consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and the Company will not be the
continuing or surviving corporation in such consolidation or merger, (ii)
to permit any Person, other than Grantee or one of its Subsidiaries, to
merge into the Company and the Company will be the continuing or surviving
corporation, but in connection with such merger, the ordinary shares of the
Company outstanding immediately prior to the consummation of such merger
will be changed into or exchanged for ordinary shares or other securities
of the Company or any other Person or cash or any other property, or (iii)
to sell or otherwise transfer all or substantially all of its assets to any
Person, other than Grantee or one of its Subsidiaries, then, and in each
such case, the agreement governing such transaction will make proper
provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of
Option Shares had the Option been exercised immediately prior to such
consolidation, merger, sale or transfer or the record date therefor, as
applicable. The Company shall take such steps in connection with such
consolidation, merger, liquidation or other such transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option.
4. Purchase Not For Distribution. Grantee hereby represents and
warrants to the Company that any Option Shares or other securities acquired
by Grantee upon exercise of the Option will not be taken with a view to the
public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration
under the Securities Act.
5. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement in no
event shall Grantee's Total Profit exceed the Profit Cap and, if it
otherwise would exceed such amount, Grantee, at its sole election, shall
either (i) pay cash or other consideration to the Company, (ii) reduce the
number of Shares subject to the Option or (iii) undertake any combination
thereof, so that Grantee's Total Profit shall not exceed the Profit Cap
after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Stock Option may not be exercised for a number of Option Shares that would,
as of any Notice Date, result in a Notional Total Profit of more than the
Profit Cap, and, if exercise of the Option otherwise would exceed the
Profit Cap, Grantee, at its sole option, may (in addition to the actions
specified in Section 5(a)) (i) reduce the number of Option Shares subject
to the Option or (ii) increase the Exercise Price for that number of Option
Shares set forth in the Exercise Notice so that the Notional Total Profit
shall not exceed the Profit Cap; provided, however, that nothing in this
sentence shall restrict any exercise of the Option otherwise permitted by
this Section 5(b) on any subsequent date at the Exercise Price set forth in
Section 2(b) if such exercise would not then be restricted under this
Section 5(b).
(c) Notwithstanding any other provision of this Agreement, nothing
in this Agreement shall affect the ability of Grantee to receive, nor
relieve the Company's obligation to pay, any Termination Fee provided for
in Section 9.3 of the Merger Agreement; provided that if and to the extent
the Total Profit received by Grantee would exceed the Profit Cap following
receipt of such payment, Grantee shall be obligated to promptly comply with
the terms of Section 5(a).
(d) For purposes of Section 5(a) and clause (ii) of the definition
of Total Profit, the value of any Option Shares delivered by Grantee to the
Company shall be the Applicable Price of such Option Shares.
6. Additional Covenants of the Company.
(a) If the Shares or any other securities then subject to the
Option are then listed on the HSE, the Company, upon the occurrence of an
Exercise Event, will promptly file an application to list on the HSE the
Shares or other securities then subject to the Option, following the
issuance thereof and will use all reasonable efforts to cause such listing
application to be approved as promptly as practicable.
(b) The Company will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
permit the exercise of the Option in accordance with the terms and
conditions hereof, as soon as practicable after the date hereof, including
making any appropriate filing pursuant to the HSR Act and any other
applicable law, supplying as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and any other applicable law, and taking all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(c) The Company agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by it.
(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
7. Shareholder Approval; Enforceability. Notwithstanding
anything to the contrary, this Agreement, the performance of the
obligations and covenants of the Company contained herein and Grantee's
rights under Section 2(d) hereof, are subject in their entirety to the
Company obtaining the required approval of its shareholders. In the event
of a failure to obtain such approval in the meeting of the Company's
shareholders where such approval is first sought, this Agreement shall
forthwith become void and there shall be no liability hereunder on the part
of the Company or Grantee. Subject to complying with its fiduciary duties,
as set forth in Section 6.5(b) of the Merger Agreement, the Company's Board
of Directors shall recommend the approval and adoption by its shareholders
of this Agreement.
8. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary. Except as
otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein
and therein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (ii) is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York, regardless
of the Laws that might otherwise govern under applicable principles of
conflicts of law.
(f) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses or sent by
electronic transmission to the telecopier number specified below:
If to Grantee to:
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
Telecopy: (203) 358-6562
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: (212) 735-2000
Attention: Blaine V. Fogg, Esq.
Joseph A. Coco, Esq.
If to the Company to:
UPM-Kymmene Corporation
Etelaesplanadi 2
P.O. Box 380
FIN-00101 Helsinki
Telecopy: 011-358-204-150-304
Attention: Reko Aalto-Setala
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: Timothy B. Goodell, Esq.
(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original and
all of which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold,
assigned or otherwise disposed of or transferred by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Grantee may assign this Agreement
to a wholly owned Subsidiary of Grantee; provided, however, that no such
assignment shall have the effect of releasing Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(j) Further Assurances. In the event of any exercise of the
Option by Grantee, the Company and Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(k) Specific Performance. The parties hereto hereby acknowledge
and agree that the failure of any party to this Agreement to perform its
agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will
not be an adequate remedy. Accordingly, each of the parties hereto hereby
consents to the granting of equitable relief (including specific
performance and injunctive relief) by any court of competent jurisdiction
to enforce any party's obligations hereunder. The parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for
any failure to perform this Agreement.
IN WITNESS WHEREOF, the Company and Grantee have caused this
Parent Stock Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first written above.
CHAMPION INTERNATIONAL CORPORATION
By: /s/ Richard E. Olson
-------------------------------------------
Name: Richard E. Olson
Title: Chairman and Chief Executive Officer
UPM-KYMMENE CORPORATION
By: /s/ Juha Niemela
-------------------------------------------
Name: Juha Niemela
Title: President and Chief Executive Officer
By: /s/ Reko Aalto-Setala
-------------------------------------------
Name: Reko Aalto-Setala
Title: General Counsel
SCHEDULE OF DEFINED TERMS
The following terms when used in the Parent Stock Option
Agreement shall have the meanings set forth below unless the context shall
otherwise require:
"Agreement" shall mean this Parent Stock Option Agreement.
"Applicable Price", as of any date, means the highest of (i) the
highest purchase price per Share paid or proposed to be paid by any third
Person for Shares pursuant to any Takeover Proposal for or with the Company
made on or prior to such date, and (ii) the Current Market Price. If the
consideration to be offered, paid or received pursuant to the foregoing
clause (i) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally recognized
investment banking firm jointly selected by Grantee and the Company.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals
granted by any Governmental Entity.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday in the United States or in Finland.
"Closing" shall have the meaning ascribed to such term in Section
2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Current Market Price" shall mean, as of any date, the average of
the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Shares as reported on the HSE during the ten consecutive trading days
ending on (and including) the trading day immediately prior to such date
or, if the Shares are not quoted thereon, on the principal trading market
(as defined in Regulation M under the Exchange Act) on which such shares
are traded as reported by a recognized source during such ten trading day
period.
"Exercise Event" shall have the meaning ascribed to such term in
Section 2(c).
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Governmental Entity" shall mean any federal, state or foreign
governmental or regulatory agency, body or authority.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of
Governmental Entities having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
adverse claim, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature thereof or the filing of
or agreement to give financing statement under the Laws of any
jurisdiction.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that
the Option were exercised on such date for such number of Option Shares and
assuming that such Option Shares, together with all other Option Shares
previously acquired upon exercise of the Option and held by Grantee as of
such date, were sold for cash at the closing market price per Share as of
the close of business on the preceding trading day (less customary
brokerage commissions).
"Option" shall have the meaning ascribed to such term in Section
2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Parent Treasury Option" shall mean Grantee's option to purchase
Shares pursuant to the Parent Treasury Stock Option Agreement.
"Parent Treasury Stock Option Agreement" shall mean the Parent
Treasury Stock Option Agreement dated as of February 17, 2000, between
Grantee and the Company.
"Order" shall mean any judgment, order or decree of any
Governmental Entity.
"Profit Cap" shall mean $210 million.
"Regulation" shall mean any rule or regulation of any
Governmental Entity having the effect of Law or of any rule or regulation
of any self-regulatory organization, such as the NYSE and the HSE.
"Total Profit" shall mean (i) the aggregate amount (before income
taxes) of (A) any excess of (x) the net cash amounts plus the fair market
value of any other consideration (net of expenses incurred) received by
Grantee pursuant to a sale of the Option Shares (or securities into which
such shares are converted or exchanged) over (y) Grantee's aggregate
purchase price for such Option Shares (or other securities) plus (B) any
amounts received by Grantee from the Company or concurrently being paid to
Grantee pursuant to Section 9.3 of the Merger Agreement minus (ii) the
amounts of any cash previously paid by Grantee to the Company pursuant to
Section 5 of this Agreement.
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares
as to which the Option remains unexercised from time to time.
PARENT TREASURY STOCK OPTION AGREEMENT
This PARENT TREASURY STOCK OPTION AGREEMENT dated as of
February 17, 2000 is by and between CHAMPION INTERNATIONAL CORPORATION, a
New York corporation ("Grantee"), and UPM-KYMMENE CORPORATION, a
corporation organized under the laws of the Republic of Finland (the
"Company").
RECITALS
WHEREAS, Grantee, the Company and Blue Acquisition, Inc. ("Merger
Sub") propose to enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), providing for, among other
things, a merger (the "Merger") of Merger Sub with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's willingness
to enter into the Merger Agreement, Grantee has requested that the Company
agree, and the Company has agreed, to grant Grantee the Option (as defined
below).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, the Company and Grantee agree as
follows:
1. Capitalized Terms. Certain capitalized terms used in this
Agreement are defined in Annex A hereto and are used herein with the
meanings therein ascribed. Those capitalized terms used but not defined
herein (including in Annex A hereto) that are defined in the Merger
Agreement are used herein with the same meanings as ascribed to them
therein; provided, however, that, as used in this Agreement, "Person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions set
forth herein and in the Merger Agreement, the Company hereby grants to
Grantee an irrevocable option (the "Option") to purchase up to 7,538,000
ordinary shares (as adjusted as set forth herein) of the Company (the
"Option Shares") no nominal value (the "Shares"), held by the Company in its
treasury (being 2.82% of the number of shares outstanding on February 14,
2000 before such issuance), at the Exercise Price (as defined below).
(b) Exercise Price. The exercise price, as adjusted as set
forth herein (the "Exercise Price") of the Option shall be equal to the
closing sales price of the Shares on the HSE on the Notice Date (as defined
in Section 2(d)(ii)).
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event and shall remain
in full force and effect until the earliest to occur of (i) the Effective
Time, (ii) six months after the first occurrence of an Exercise Event (or
if, at the expiration of such six months after the first occurrence of an
Exercise Event, the Option cannot be exercised by reason of any applicable
Order, Law or Regulation, 10 business days after such impediment to
exercise shall have been removed, but in no event under this clause (ii)
later than the first anniversary of the Exercise Event), (iii) the receipt
by the Company of Grantee's consent to the Company's sale of the Option
Shares pursuant to Section 6.21 of the Merger Agreement, (iv) the Company
receiving the required approval of its shareholders of the Parent Stock
Option Agreement, (v) termination of the Merger Agreement in accordance
with its terms other than a termination with respect to which an Exercise
Event shall occur and (vi) the date on which Grantee shall have received
the Profit Cap pursuant to Section 5 (the "Option Term"). If the Option is
not theretofore exercised, the rights and obligations set forth in this
Agreement shall terminate at the expiration of the Option Term. "Exercise
Event" shall mean (A) any of the events giving rise to the obligation of
the Company to pay the Termination Fee under Section 9.3 of the Merger
Agreement, (B) termination of the Merger Agreement by Grantee under Section
9.1(c)(iii) and (C) termination of the Merger Agreement by Grantee or the
Company under Section 9.1(d)(iii) and a Takeover Proposal has been made and
publicly announced or communicated to the Company's shareholders after the
date of this Agreement and prior to the Parent Shareholder Meeting.
(d) Exercise of Option.
(i) Grantee may exercise the Option, in whole or in part,
at any time and from time to time following the occurence of an
Exercise Event during the Option Term. Notwithstanding the
expiration of the Option Term, Grantee shall be entitled to
purchase those Option Shares with respect to which it has
exercised the Option in accordance with the terms hereof prior to
the expiration of the Option Term.
(ii) If Grantee wishes to exercise the Option, it shall send
a written notice (an "Exercise Notice") (the date of which being
herein referred to as the "Notice Date") to the Company no later
than 2:00 p.m. (Helsinki time) specifying the total number of
Option Shares it intends to purchase pursuant to such exercise;
provided that the issuance of Option Shares pursuant to such
Exercise Notice shall only be completed if (A) such purchase
would not otherwise violate or cause the violation of applicable
Law (including the Hart-Scott-Rodino Antitrust Improvements Act
of 1976), (B) no Law or Regulation shall have been adopted or
promulgated, and no Order shall be in effect, which prohibits
delivery of such Option Shares (and the parties shall use their
reasonable best efforts to have any such Order vacated or
reversed), and (C) any prior notification to or approval of any
other regulatory authority in the United States or elsewhere
required in connection with such purchase shall have been made or
obtained, other than those which if not made or obtained would
not reasonably be expected to result in a significant detriment
to the Company and its Subsidiaries taken as a whole.
(iii) The delivery of, and payment for, the Option
Shares to be purchased pursuant to an Exercise Notice delivered
in accordance with Section 2(d)(ii) shall, to the extent
reasonably possible pursuant to the rules and regulations of the
HSE, be completed as a stock exchange trade using the settlement
system of the HSE and shall be completed (the "Closing") on the
third trading date of the HSE following the Notice Date or on
such other date which shall be the settlement date in the
settlement system of the HSE when the Notice Date is deemed to be
the trade date (the "Closing Date"). In order to facilitate the
completion of such delivery of, and payment for, the Option
Shares as stock exchange trades, each party will use the services
of a Finland based securities broker in effecting such trades.
(iv) In the event the delivery of, and payment for, the
Option Shares in respect of which an Exercise Notice has been
given pursuant to subparagraph (ii) above cannot be completed in
accordance with subparagraph (iii) above, the Closing Date for
such delivery of, and payment for, the Option Shares shall be
specified in such Exercise Notice or shall otherwise be specified
by Grantee in writing and shall be a date nor earlier than three
Business Days nor later than 15 Business Days from the Notice
Date. In such case:
(x) On each Closing Date, Grantee shall pay to the
Company in immediately available funds by wire transfer to a
bank account designated by the Company an amount equal to
the Exercise Price multiplied by the number of Option Shares
to be purchased on such Closing Date.
(y) On each Closing Date, simultaneously with the
delivery of immediately available funds as provided above,
the Company shall deliver to Grantee, in Grantee's book-
entry account in the Finnish Book-entry Securities System,
such number of Shares representing the Option Shares to be
purchased at such Closing, which Option Shares shall be duly
authorized, validly issued, fully paid and nonassessable and
free and clear of all Liens, and Grantee shall deliver to
the Company its written agreement that Grantee will not
offer to sell or otherwise dispose of such Option Shares in
violation of applicable Law or the provisions of this
Agreement.
(v) If the Closing cannot be effected by reason of a
restriction set forth in Clause (A), (B) or (C) of the proviso in
Section 2(d)(ii), the Closing Date shall be extended to the tenth
Business Day following the expiration or termination of such
restriction. Without limiting the foregoing, if prior
notification to, or Authorization of, any Governmental Entity is
required in connection with the purchase of such Option Shares by
virtue of the application of such Law, Regulation or Order,
Grantee and, if applicable, the Company shall promptly file the
required notice or application for Authorization and Grantee,
with the cooperation of the Company, shall expeditiously process
the same.
(vi) Notwithstanding Section 2(d)(v), if the Closing Date
shall not have occurred by the first anniversary of the first
occurrence of an Exercise Event as a result of one or more
restrictions imposed by the application of any Law, Regulation or
Order, the exercise of the Option effected on the Notice Date
shall be deemed to have expired.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Shares by reason of stock
dividend, stock split, split-up, combination, reclassification,
recapitalization, exchange of shares, dividend, dividend payable in any
other securities or similar event, the type and number of Shares or
securities subject to the Option shall be adjusted appropriately, and
proper provision shall be made in the agreements governing such
transaction, so that Grantee shall receive upon exercise of the Option the
same class and number of outstanding shares or other securities or property
that Grantee would have received in respect of the Shares if the Option had
been exercised immediately prior to such event, or the record date
therefor, as applicable.
(b) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that the Company
enters into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and the Company will not be
the continuing or surviving corporation in such consolidation or merger,
(ii) to permit any Person, other than Grantee or one of its Subsidiaries,
to merge into the Company and the Company will be the continuing or
surviving corporation, but in connection with such merger, the ordinary
shares of the Company outstanding immediately prior to the consummation of
such merger will be changed into or exchanged for stock or other securities
of the Company or any other Person or cash or any other property, or (iii)
to sell or otherwise transfer all or substantially all of its assets to any
Person, other than Grantee or one of its Subsidiaries, then, and in each
such case, the agreement governing such transaction will make proper
provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of
Option Shares had the Option been exercised immediately prior to such
consolidation, merger, sale or transfer or the record date therefor, as
applicable. The Company shall take such steps in connection with such
consolidation, merger, liquidation or other such transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option.
4. Purchase Not For Distribution. Grantee hereby represents
and warrants to the Company that any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be taken with a
view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
5. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement in no
event shall Grantee's Total Profit exceed the Profit Cap and, if it
otherwise would exceed such amount, Grantee, at its sole election, shall
either (i) pay cash or other consideration to the Company, (ii) reduce the
number of Shares subject to the Option or (iii) undertake any combination
thereof, so that Grantee's Total Profit shall not exceed the Profit Cap
after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Stock Option may not be exercised for a number of Option Shares that would,
as of any Notice Date, result in a Notional Total Profit of more than the
Profit Cap, and, if exercise of the Option otherwise would exceed the
Profit Cap, Grantee, at its sole option, may (in addition to the actions
specified in Section 5(a)) (i) reduce the number of Option Shares subject
to the Option or (ii) increase the Exercise Price for that number of Option
Shares set forth in the Exercise Notice so that the Notional Total Profit
shall not exceed the Profit Cap; provided, however, that nothing in this
sentence shall restrict any exercise of the Option otherwise permitted by
this Section 5(b) on any subsequent date at the Exercise Price set forth in
Section 2(b) if such exercise would not then be restricted under this
Section 5(b).
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive,
nor relieve the Company's obligation to pay, any Termination Fee provided
for in Section 9.3 of the Merger Agreement; provided that if and to the
extent the Total Profit received by Grantee would exceed the Profit Cap
following receipt of such payment, Grantee shall be obligated to promptly
comply with the terms of Section 5(a).
(d) For purposes of Section 5(a) and clause (ii) of the
definition of Total Profit, the value of any Option Shares delivered by
Grantee to the Company shall be the Applicable Price of such Option Shares.
6. Additional Covenants of the Company.
(a) If the Shares or any other securities then subject to the
Option are then listed on the HSE, the Company, upon the occurrence of an
Exercise Event, will promptly file an application to list on the HSE the
Shares or other securities then subject to the Option, following the due
issuance thereof and will use all reasonable efforts to cause such listing
application to be approved as promptly as practicable.
(b) The Company will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
permit the exercise of the Option in accordance with the terms and
conditions hereof, as soon as practicable after the date hereof, including
making any appropriate filing pursuant to the HSR Act and any other
applicable law, supplying as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and any other applicable law, and taking all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(c) The Company agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by it.
(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
(e) The Company agrees that, during the Option Term, it shall
not sell any of the Option Shares except to Grantee upon exercise of the
Option or upon receipt of the consent of Grantee pursuant to Section 6.21
of the Merger Agreement.
7. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel. Grantee shall be liable for any stamp
duties, transfer taxes or any similar taxes or duties payable in connection
with the transfer and purchase of Option Shares pursuant to this Agreement.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary. Except as
otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein
and therein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (ii) is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York, regardless
of the Laws that might otherwise govern under applicable principles of
conflicts of law.
(f) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
If to Grantee to:
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
Telecopy: (203) 358-6562
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: (212) 735-2000
Attention: Blaine V. Fogg, Esq.
Joseph A. Coco, Esq.
If to the Company to:
UPM-Kymmene Corporation
Etelaesplanadi 2
P.O. Box 380
FIN-00101 Helsinki
Telecopy: 011-358-204-150-304
Attention: Reko Aalto-Setala
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: Timothy B. Goodell, Esq.
(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original and
all of which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold,
assigned or otherwise disposed of or transferred by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Grantee may assign this Agreement
to a wholly owned Subsidiary of Grantee; provided, however, that no such
assignment shall have the effect of releasing Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(j) Further Assurances. In the event of any exercise of the
Option by Grantee, the Company and Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(k) Specific Performance. The parties hereto hereby acknowledge
and agree that the failure of any party to this Agreement to perform its
agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will
not be an adequate remedy. Accordingly, each of the parties hereto hereby
consents to the granting of equitable relief (including specific
performance and injunctive relief) by any court of competent jurisdiction
to enforce any party's obligations hereunder. The parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for
any failure to perform this Agreement.
IN WITNESS WHEREOF, the Company and Grantee have caused this
Parent Treasury Stock Option Agreement to be signed by their respective
officers thereunto duly authorized, all as of the day and year first
written above.
CHAMPION INTERNATIONAL CORPORATION
By: /s/ Richard R. Olson
------------------------------------------
Name: Richard R. Olson
Title: Chairman and Chief Executive Officer
UPM-KYMMENE CORPORATION
By: /s/ Juha Niemela
------------------------------------------
Name: Juha Niemela
Title: President and Chief Executive Officer
By: /s/ Reko Aalto-Setala
------------------------------------------
Name: Reko Aalto-Setala
Title: General Counsel
Annex A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Parent Treasury Stock Option
Agreement shall have the meanings set forth below unless the context shall
otherwise require:
"Agreement" shall mean this Parent Treasury Stock Option
Agreement.
"Applicable Price", as of any date, means the highest of (i) the
highest purchase price per Share paid or proposed to be paid by any third
Person for Shares pursuant to any Takeover Proposal for or with the Company
made on or prior to such date and (ii) the Current Market Price. If the
consideration to be offered, paid or received pursuant to the foregoing
clause (i) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally recognized
investment banking firm jointly selected by Grantee and the Company.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals
granted by any Governmental Entity.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday in the United States or Helsinki, Finland.
"Closing" shall have the meaning ascribed to such term in Section
2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Current Market Price" shall mean, as of any date, the average of
the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Shares as reported on the HSE during the ten consecutive trading days
ending on (and including) the trading day immediately prior to such date
or, if the Shares are not quoted thereon, on the principal trading market
(as defined in Regulation M under the Exchange Act) on which such shares
are traded as reported by a recognized source during such ten trading day
period.
"Exercise Event" shall have the meaning ascribed to such term in
Section 2(c) herein.
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2(b) herein.
"Governmental Entity" shall mean any federal, state or foreign
governmental or regulatory agency, body or authority.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of
Governmental Entities having the effect of law in each such jurisdiction.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that
the Option were exercised on such date for such number of Option Shares and
assuming that such Option Shares, together with all other Option Shares
previously acquired upon exercise of the Option and held by Grantee as of
such date, were sold for cash at the closing market price per Share as of
the close of business on the preceding trading day (less customary
brokerage commissions).
"Option" shall have the meaning ascribed to such term in Section
2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any
Governmental Entity.
"Parent Stock Option Agreement" shall mean the Parent Stock
Option Agreement dated as of February 17, 2000 by and between Grantee and
the Company.
"Profit Cap" shall mean $210 million.
"Regulation" shall mean any rule or regulation of any
Governmental Entity having the effect of Law or of any rule or regulation
of any self-regulatory organization, such as the NYSE and the HSE.
"Total Profit" shall mean (i) the aggregate amount (before income
taxes) of (A) any excess of (x) the net cash amounts plus the fair market
value of any other consideration (net of expenses incurred) received by
Grantee pursuant to a sale of the Option Shares (or securities into which
such shares are converted or exchanged) over (y) Grantee's aggregate
purchase price for such Option Shares (or other securities) plus (B) any
amounts received by Grantee from the Company or concurrently being paid to
Grantee pursuant to Section 9.3 of the Merger Agreement minus (ii) the
amounts of any cash previously paid by Grantee to the Company pursuant to
Section 5 of this Agreement.
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares
as to which the Option remains unexercised from time to time.
